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MINNEAPOLIS-Lakes Entertainment Inc., which currently has development and management agreements with six separate Tribes for 10 new casino operations nationally, was unable to comply with today's extended filing deadline for its 10-Q with the Securities and Exchange Commission. The filing delay is in response to comments Lakes received from the SEC staff on Lakes' annual report on Form 10-K for the year ended Dec. 28, 2003, in which the SEC staff questioned Lakes' accounting for development costs and advances related to Indian casinos.
Tim Cope, Lakes' president and chief financial officer, says that the company has been in discussions with the SEC for several months regarding the issue. And although he is unable to predict anything with much certainty, he anticipates the company's financial hurdles to clear within the next six to eight weeks.
The SEC investigation has created a backlog of delayed filings, including the company's annual report for the fiscal year ended Jan. 2, 2005, its Q1 report for the period ended April 3, 2005 and its latest quarterly report ended July 3, 2005. The overdue filings have also struck a nerve with Nasdaq National Market, which delisted the company's common stock on Aug. 10.
Lyle Berman, chairman and chief executive officer, says that despite the company's challenges, Lakes is "not letting this interfere with the business moving forward." That business, referring to the 10 developments the company is planning, will however require additional funding, which Berman says will come from the monetization of the company's poker tour, bank loans or high-yield bonds.
Additionally, Lakes' relationship with Deloitte & Touche, LLP will terminate with the completion of its audit of Lakes' financial statements for the fiscal year ended Jan. 2, 2005 and the filing of its annual report. Deloitte had previously resigned from working with World Poker Tour Enterprises, which is now owned by Lakes. Because the company owns 62% of WPT, the publicly held media company known for its World Poker Tour television series, Deloitte has also resigned as Lakes' auditor.
Lakes Entertainment Inc. currently has development and management agreements with six separate Tribes for new casino operations in Michigan, California, Texas and Oklahoma, a total of nine separate casino sites. In addition, Lakes plans to develop a company-owned casino resort project in Vicksburg, MS.
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