CRAZY MOOSE CASINO, INC.

BALANCE SHEETS

ASSETS

		For the Years Ended December 31,
		2008				2007
Current Assets:
Cash		$	866,038			$	808,030
Cash - restricted			27,356				24,588
Inventory			61,934				60,431
Prepaid expenses			33,104				37,353
Total current assets			988,432				930,402
Property and Equipment:
Computers and equipment			324,193				283,938
Vehicles			10,511				10,511
Leasehold improvements			19,167				5,108
			353,871				299,557
Less:  Accumulated depreciation			211,495				170,328
			142,376				129,229
Total Assets		$	1,130,808			$	1,059,631
LIABILITIES AND STOCKHOLDERS' EQUITY
		December 31,
		2008				2007
Current Liabilities:
Accounts payable		$	83,413			$	59,935
Accrued business and payroll taxes			198,880				207,934
Accrued wages			108,881				105,879
Accrued other liabilities			24,561				33,325
Player supported jackpot deposit			27,356				24,588
Line of credit			150,000				-
Total current liabilities			593,091				431,661
Stockholders' Equity:
Common stock, no par value, 10,000 shares authorized, issued and outstanding			-				-
Retained earnings			537,717				627,970
Total Liabilities and Stockholders' Equity		$	1,130,808			$	1,059,631

CRAZY MOOSE CASINO, INC.

STATEMENTS OF INCOME AND RETAINED EARNINGS

		For the Years Ended December 31,
		2008								2007
Revenue:
Card room		$	5,581,888				74.1	%		$	5,947,395				77.2	%
Food and beverage			1,107,525				14.7				1,157,509				15.0
Pull-tab			607,052				8.1				489,666				6.4
Other			235,667				3.1				106,108				1.4
			7,532,132				100.0				7,700,678				100.0
General and Administrative Expenses			6,428,727				85.4				6,293,667				81.8
Income from Operations			1,103,405				14.6				1,407,011				18.2
Interest Expense			4,072				-				2,736				-
Net Income		$	1,099,333				14.6	%		$	1,404,275				18.2	%
Retained Earnings, January 1		$	627,970							$	439,978
Net Income			1,099,333								1,404,275
Distributions to Stockholders			(1,189,586	)							(1,216,283	)
Retained Earnings, December 31		$	537,717							$	627,970

CRAZY MOOSE CASINO, INC.

STATEMENTS OF CASH FLOWS  

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		For the Years Ended December 31,
		2008				2007
Cash Flows from Operating Activities:
Net income		$	1,099,333			$	1,404,275
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation			41,167				34,842
(Increase) decrease in:
Inventory			(1,503	)			(14,076	)
Prepaid expenses			4,249				4,312
Increase (decrease) in:
Accounts payable			23,478				6,216
Accrued business and payroll taxes			(9,054	)			10,784
Accrued wages			3,002				8,055
Accrued other liabilities			(8,764	)			11,975
Player supported jackpot deposit			2,768				7,450
Net Cash Provided by Operating Activities			1,154,676				1,473,833
Cash Flows from Investing Activities:
Purchase of property and equipment			(54,314	)			(91,580	)
Net Cash Used by Investing Activities			(54,314	)			(91,580	)
Cash Flows from Financing Activities:
Proceeds from line of credit			150,000				-
Repayments of notes payable - stockholders			-				(3,045	)
Distributions to stockholders			(1,189,586	)			(1,216,283	)
Net Cash Used by Financing Activities			(1,039,586	)			(1,219,328	)
Net Increase  in Cash			60,776				162,925
Cash - Beginning of Year			832,618				669,693
Cash - End of Year		$	893,394			$	832,618

CRAZY MOOSE CASINO, INC.

DETAILS OF GENERAL AND ADMINISTRATIVE EXPENSES

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		For the Years Ended December 31,
		2008								2007
Salaries and wages		$	2,513,291				33.4	%		$	2,337,961				30.4	%
Food and beverage			757,982				10.1				743,305				9.7
Licensing and business taxes			747,550				9.9				779,645				10.1
Pull-tab prizes			464,832				6.2				361,603				4.7
Rent			404,385				5.4				546,938				7.1
Payroll taxes			413,479				5.5				431,981				5.6
Advertising			222,985				3.0				179,286				2.3
Equipment leases			141,156				1.9				140,022				1.8
Supplies			122,593				1.6				136,702				1.8
Utilities			89,933				1.2				93,435				1.2
Repairs and maintenance			70,431				0.9				64,550				0.8
Office			68,654				0.9				60,632				0.8
Insurance			53,843				0.7				54,968				0.7
Pull-tabs			52,411				0.7				49,615				0.6
Bank charges			50,011				0.7				43,763				0.6
Depreciation			41,167				0.5				34,842				0.5
Comps and discounts			33,707				0.5				34,611				0.5
Dues and subscriptions			30,869				0.4				30,297				0.4
Professional fees			35,025				0.5				26,098				0.3
Guest entertainment			25,250				0.3				47,907				0.6
Employee benefits			22,370				0.3				15,505				0.2
Shuttle			9,879				0.1				12,919				0.2
China and smallwares			9,578				0.1				8,325				0.1
Uniforms			9,135				0.1				11,747				0.2
Laundry and linens			8,659				0.1				10,139				0.1
Security			8,460				0.1				8,604				0.1
Travel			8,122				0.1				10,166				0.1
Merchandise			4,909				0.1				3,904				0.1
NSF checks			4,363				0.1				10,890				0.2
Contributions			3,698				-				3,307				-
		$	6,428,727				85.4	%		$	6,293,667				81.8	%

NOTES TO FINANCIAL STATEMENTS

DECEMBER 31, 2008 and 2007  

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NOTE 1:   Nature of Operations and Significant Accounting Policies

Nature of operations:

The Company provides gaming and food and beverage services through the ownership and operation of a casino located in Pasco, Washington.  The major source of the Company’s revenues is derived from gaming operations.

Use of estimates:

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

Casino revenue:

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

Property and equipment:

Property, plant and equipment are stated at cost.  Depreciation is computed using the straight-line method based upon the estimated useful lives of the related assets.  Expenditures for maintenance and repairs are charged directly to the appropriate operating account at the time the expense is incurred.  Expenditures determined to represent additions and betterments are capitalized.

Advertising costs:

The Company expenses advertising costs as they are incurred and advertising communication costs the first time the advertising takes place.  Advertising expense for the years ended December 31, 2008 and 2007, was $222,985 and $179,286, respectively.

Inventory:

Inventory is stated at lower of cost or market using the first-in, first-out (FIFO) method, and consists primarily of food and beverage items.

Pull-tab revenue:

Pull-tab revenue is recorded on gross cash receipts from closed games and games still in play.  Pull-tab revenue is reported to taxing authorities on gross cash receipts from closed games resulting in temporary differences.  The difference in pull-tab revenue recorded and pull-tab revenue reported to taxing authorities for the years ended December 31, 2008 and 2007, was $1,672   and $1,983, respectively.

Promotional allowances:

Promotional allowances represent goods and services, which would be accounted for as revenue if sold, that a casino gives to customers as an inducement to gamble at that establishment.  Revenue does not include the retail amount of merchandise, food, and beverage provided gratuitously to customers, which was $495,683 and $490,320 for the years ended December 31, 2008 and 2007, respectively.

(continued)

 

 

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CRAZY MOOSE CASINO, INC.

NOTES TO FINANCIAL STATEMENTS (continued)

DECEMBER 31, 2008 and 2007  

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NOTE 1:   Nature of Operations and Significant Accounting Policies (continued)

Reclassification:

Certain amounts in the 2007 financial statements have been reclassified to conform to the 2008 presentation.

Federal income tax:

The Company, with the consent of its stockholders, has elected under the Internal Revenue Code to be an S Corporation.  The stockholders will be taxed personally on the Company’s income.  Therefore, a provision for federal income tax has not been provided.  It is anticipated that dividends will be paid to the shareholders for any related income taxes.

NOTE 2:   Line of Credit

The Company has a line of credit with available borrowing of up to $150,000 to fund operating expenses.  Interest is charged at the Wall Street Journal Prime Rate and is payable on a monthly basis.  The outstanding balance at December 31, 2008 and 2007 was $150,000 and $0, respectively.  The line of credit expires August 2009.

NOTE 3:   Concentrations of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of temporary cash investments within one financial institution.  From time to time, the Company has deposits within one financial institution that exceed the federally insured limit of $250,000.

NOTE 4:   Cash Flow Information

The Company considers all short-term investments with an original maturity of three months or less to be cash equivalents.

The Company had no non-cash transactions for the years ended December 31, 2008 and 2007.

Cash paid for interest and income taxes for the years ended December 31, 2008 and 2007, was as follows:

		2008				2007
Interest		$	4,072			$	2,736
Federal income tax		$	-			$	-

(continued)

 

 

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CRAZY MOOSE CASINO, INC.

NOTES TO FINANCIAL STATEMENTS (continued)

DECEMBER 31, 2008 and 2007  

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NOTE 5:   Restricted Cash

Restricted cash consists of funds the Company has collected from card players to conduct a player supported jackpot (PSJ).

NOTE 6:   Operating Leases

As of December 31, 2008 and 2007, the Company was obligated under the following operating leases:

Related party:

The Company has a lease for its building with a limited liability company owned by the Company’s stockholders.  The lease payments are triple net payable in monthly installments of $18,085, increasing annually, and expire in September 2011.  Rent paid on the lease to the limited liability company for the years ended December 31, 2008 and 2007, totaled $218,634 and $212,275, respectively.

The Company also leases its corporate office on a month-to-month basis from the same limited liability company.  The lease payments are triple net payable in monthly installments of $13,726.  Rent paid to the limited liability company for the years ended December 31, 2008 and 2007, totaled $174,296 and $323,157, respectively.  Included in accrued other liabilities at December 31, 2008 and 2007, is rent payable of $0 and $18,239, respectively.

Operating leases:

The Company leases a parking lot on a month-to-month basis.  The total lease payments are $500 per month.  Rent paid for the parking lot lease for the years ended December 31, 2008 and 2007, totaled $6,275 and $6,000, respectively.

The Company also leases miscellaneous gaming equipment from various companies on a month-to-month basis.  The total lease payments vary from month to month.  Rent expense for the miscellaneous gaming equipment for the years ended December 31, 2008 and 2007, totaled $146,336 and $145,528, respectively.

The future minimum lease payments related to the above leases are as follows:

Years ending December 31,
2009		$	225,000
2010			232,000
2011			178,000
		$	635,000

NOTE 7:   Subsequent Event

As of March 12, 2009, the company entered into an agreement to sell its assets to Nevada Gold & Casinos, Inc., a public entity traded on the New York Stock Exchange under ticker UWN.  The closing date for the sale is expected to take 60-90 days from the date the agreement was signed.

 

(continued)

 

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CRAZY MOOSE CASINO, INC.

NOTES TO FINANCIAL STATEMENTS (continued)

DECEMBER 31, 2008 and 2007  

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NOTE 8:   Related Party

The Company and its related parties (Crazy Moose Casino II, Inc. and Coyote Bob’s, Inc.) have created a Washington State limited liability company (LLC) organized in accordance with Washington Administrative Code (WAC) 458-20-111 - Advances and Reimbursements.  The LLC was created to centralize and allocate common expenses incurred by the Company and its related parties mentioned above.  Included in salaries and payroll taxes were reimbursements of $66,595 and $0, of which $6,350 and $0, are included in accrued wages for the years ended December 31, 2008 and 2007, respectively.  Included in miscellaneous general and administrative expenses were reimbursements of $20,289 and $0, of which $5,773 and $0, are included in accounts payable for the years ended December 31, 2008 and 2007, respectively.

(concluded)            

 

 

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CRAZY MOOSE CASINO II, INC.

(An S Corporation)

Financial Statements

and Additional Information

December 31, 2008 and 2007

 

 

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INDEPENDENT AUDITORS' REPORT

March 18, 2009

To the Board of Directors

Crazy Moose Casino II, Inc.

Auburn, Washington

We have audited the accompanying balance sheets of Crazy Moose Casino II, Inc. (a Washington S Corporation) as of December 31, 2008 and 2007, and the related statements of income and retained earnings and cash flows for the years then ended.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with United States of America generally accepted auditing standards.  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Crazy Moose Casino II, Inc. as of December 31, 2008 and 2007, and the results of its operations and its cash flows for the years then ended in conformity with United States of America generally accepted accounting principles.

Our audit was conducted for the purpose of forming an opinion on the basic financial statements taken as a whole.  The details of general and administrative expenses on page 10 is presented for purposes of additional analysis and is not a required part of the basic financial statements.  Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

 

 

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CRAZY MOOSE CASINO II, INC.

BALANCE SHEETS  

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ASSETS

		For the Years Ended December 31,
		2008				2007
Current Assets:
Cash		$	471,637			$	556,168
Cash - restricted			12,849				23,552
Inventory			34,681				37,050
Prepaid expenses			21,946				26,852
Total current assets			541,113				643,622
Property and Equipment
Equipment			54,438				-
Less: Accumulated depreciation			(4,394	)			-
			50,044				-
Total Assets		$	591,157			$	643,622
LIABILITIES AND STOCKHOLDERS' EQUITY
		For the Years Ended December 31,
		2008				2007
Current Liabilities:
Accounts payable		$	53,956			$	32,127
Accrued business and payroll taxes			186,259				193,451
Accrued wages			84,713				97,546
Accrued other liabilities			9,192				17,142
Player supported jackpot deposit			12,849				23,552
Current portion of long-term debt			82,448				163,000
Total current liabilities			429,417				526,818
Long-Term Debt:
Notes payable - related party			82,448				251,726
Less:  Current portion included above			82,448				163,000
			-				88,726
Stockholders' Equity:
Common stock, $1 par value, 50,000 shares authorized, issued and outstanding			50,000				50,000
Additional paid-in-capital			252,414				252,414
Retained deficit			(140,674	)			(274,336	)
			161,740				28,078
Total Liabilities and Stockholders' Equity		$	591,157			$	643,622

CRAZY MOOSE CASINO II, INC.

STATEMENTS OF INCOME AND RETAINED EARNINGS  

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		For the Years Ended December 31,
		2008								2007
Revenue:
Card room		$	5,194,579				86.8	%		$	5,573,181				84.8	%
Pull-tab			279,297				4.6				487,701				7.4
Food and beverage			422,751				7.1				419,896				6.4
Other			89,597				1.5				90,734				1.4
			5,986,224				100.0				6,571,512				100.0
General and Administrative Expenses			5,286,454				88.3				5,547,199				84.5
Income from Operations			699,770				11.7				1,024,313				15.5
Interest Expense			15,542				0.3				30,732				0.5
Net Income		$	684,228				11.4	%		$	993,581				15.0	%
Retained Deficit, January 1		$	(274,336	)						$	(459,490	)
Net Income			684,228								993,581
Distributions to Stockholders			(550,566	)							(808,427	)
Retained Deficit, December 31		$	(140,674	)						$	(274,336	)

CRAZY MOOSE CASINO II, INC.

STATEMENT OF CASH FLOWS  

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		For the Years Ended December 31,
		2008				2007