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SUBSEQUENT EVENT | 3 Months Ended
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Mar. 31, 2020
SUBSEQUENT EVENT [Abstract] |
SUBSEQUENT EVENT | 12. SUBSEQUENT EVENTS Continuation of Temporary Casino Closures. As a precautionary measure against the ongoing spread of COVID-19, various state governments ordered the temporary closure of all casinos in their respective states. As previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, all of the Company’s casinos and related operations temporarily closed in mid-March 2020. While these closures are expected to be temporary, the current circumstances are dynamic and the impacts of COVID-19 on the Company’s business operations, including the duration and impact on overall customer demand, the timing of the reopening of its casinos, the timing of the launch of mobile sports wagering in Indiana and Colorado by the Company’s contracted parties, new information which may emerge concerning the severity of COVID-19, and the actions to contain COVID-19 or treat its impact, among others, cannot be reasonably estimated at this time and the Company anticipates this could have a material adverse impact on its business, results of operations, financial position and cash flows. We currently believe that our properties will reopen to the public according to the following schedule: by May 22, 2020 for the Silver Slipper Casino and Hotel; late May 2020 for Stockman’s Casino and Grand Lodge Casino; early June 2020 for Bronco Billy’s Casino and Hotel; and June 14, 2020 for Rising Star Casino Resort. As COVID-19 is dynamic, such planned opening dates are subject to change. The Company currently believes that, through its current cash balances, it has the liquidity necessary to sustain closure beyond the currently-mandated closure periods. To preserve liquidity, upon the temporary closure of its properties in March 2020, the Company significantly reduced staffing levels at each of its properties and at its corporate office to a small group of essential employees. The Company also elected to suspend construction of the Phase One parking garage at Bronco Billy’s, allowing it to use the cash designated for such construction to provide the Company with additional liquidity until its casinos are permitted to reopen. No assurance can be given that, should the casino closures extend for a prolonged period or if business volumes are significantly impacted after opening and require it to seek additional liquidity, the Company will be able to successfully raise additional funds. As stated above, the Company will work diligently to reopen its casinos as soon as it is permitted to do so. Waiver and Amendment of Debt Covenants. On April 28, 2020, the Company executed the Amendment dated as of April 28, 2020 to amend the Indenture to the Notes, which deleted the total leverage covenant for the period ended March 31, 2020, amongst other items (see Note 5). Sports Wagering in Indiana and Colorado. The Colorado Limited Gaming Control Commission approved the Company for its three permitted “Sports Betting Master Licenses” in March 2020. Additionally, in April 2020, the Company’s three providers for mobile sports wagering were approved for their “Temporary Internet Sports Betting Operator Licenses.” On May 1, 2020, online/mobile sports wagering in Colorado went live, though without significant sporting events and games to wager on. The Company currently expects that at least one of its contracted sports wagering websites will launch in Colorado in the second quarter of 2020, and that all three contracted websites will have launched in Colorado by the end of the third quarter of 2020. In Indiana, one of the Company’s three providers for sports wagering websites launched operations on December 30, 2019. The remaining two companies await licensure. Contractually, these six sports betting agreements in Colorado and Indiana are expected to result in a combined minimum of $7 million per year in revenues for the Company after their launch of operations, with minimal expected related costs. Unsecured Loans Under the CARES Act. On May 8, 2020, two wholly-owned subsidiaries of the Company executed promissory notes (the “Promissory Notes”) evidencing unsecured loans in the aggregate amount of $5,606,200 through programs established under the CARES Act and administered by the U.S. Small Business Administration (the “SBA”). Such funds will be used principally to rehire several hundred employees at Rising Star and Bronco Billy’s in preparation for the reopening of these businesses. The Loans are being made through Zions Bancorporation, N.A. dba Nevada State Bank (the “Lender”), have a two-year term, bear interest at a rate of 1.00% per annum, and mature on May 3, 2022. Monthly principal and interest payments are deferred for six months. Beginning in December 2020, the Company is required to make monthly payments of principal and interest to the Lender. The Loans may be prepaid at any time prior to maturity with no prepayment penalties. Such Loans may be forgiven, either in whole or in part, depending on the amount of such proceeds that are used for certain eligible expenses, including primarily the payroll and health benefits of employees who would otherwise be without jobs or health benefits. The details of such potential loan forgiveness are still being developed by the SBA and there is no certainty that any or all of such Loans will be forgiven. Concessions Obtained for Certain Leases. In the second quarter of 2020, the Company was able to obtain deferments as a direct result of business disruptions from COVID-19 for its operating lease at Bronco Billy’s and its finance lease at Rising Star. Effective March 2020, the Company also obtained rent abatements for April and May of 2020 of its casino land lease at Silver Slipper. For details and discussion of accounting treatment, see Note 3. Subsequently in April 2020 at Bronco Billy’s, the Company executed a letter agreement to the original lease with the landlord, which granted partial lease deferrals for specified amounts (separately, the “First Deferral Amount” and “Second Deferral Amount”). For each of May, June and July of 2020, the First Deferral Amount would reduce the base rent by $8,000. Also, for each of August, September and October of 2020, the Second Deferral Amount would reduce the base rent by $5,300. Altogether, the deferrals totaling $39,900 of undiscounted cash require the Company to make such payments in full no later than December 1, 2021. As the Company determined that this concession affected only the timing of payments, it took the guidance relief of not remeasuring the lease liability and corresponding ROU asset, which would have been required under the existing modification framework in ASC 842. Additionally, the Company will accrue for the full amount of lease expenses corresponding to the respective periods as if no changes to rent payments were made. At Rising Star, the Company was able to obtain approvals from the landlord for deferments of payments due for April and May 2020 until its reopening. A s COVID-19 is dynamic, the Company believes Rising Star will reopen to the public on June 14, 2020, with such planned opening dates subject to change. Altogether, the deferrals amount to approximately $109,000 of undiscounted cash. As the Company determined that this concession affected only the timing of payments, it took the guidance relief of not remeasuring the lease liability and corresponding ROU asset, which would have been required under the existing modification framework in ASC 842. Additionally, the Company will accrue for the full amount of interest expenses corresponding to the respective periods as if no changes to rent payments were made.

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- Definition The entire disclosure for significant events or transactions that occurred after the balance sheet date through the date the financial statements were issued or the date the financial statements were available to be issued. Examples include: the sale of a capital stock issue, purchase of a business, settlement of litigation, catastrophic loss, significant foreign exchange rate changes, loans to insiders or affiliates, and transactions not in the ordinary course of business. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 855 -URI http://asc.fasb.org/topic&trid=2122774 + Details
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