10-Q 1 pres10q.txt ============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 2005 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER: 0-20840 PRESIDENT CASINOS, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 51-0341200 ------------------------------- ---------------- (State or other jurisdiction of (I.R.S. Employer incorporation or Identification No.) organization) 1000 North Leonor K. Sullivan Blvd., St. Louis, Missouri 63102 ---------------------------------------------------- Address of principal executive offices-Zip Code 314-622-3000 ---------------------------------------------------- Registrant's telephone number, including area code Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: Common Stock, $.06 par value, 5,033,161 shares outstanding as of July 13, 2005. ============================================================================== 2 PRESIDENT CASINOS, INC. INDEX TO FORM 10-Q Page No. Part I. Financial Information Item 1. Financial Statements Condensed Consolidated Balance Sheets (Unaudited) as of May 31 and February 28, 2005..................................1 Condensed Consolidated Statements of Operations and Net Income (Loss) Per Share Information (Unaudited) for the Three Months Ended May 31, 2005 and 2004....................2 Condensed Consolidated Statements of Cash Flows (Unaudited) for the Three Months Ended May 31, 2005 and 2004....................3 Notes to Condensed Consolidated Financial Statements (Unaudited)......4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................20 Item 3. Quantitative and Qualitative Disclosures About Market Risk....32 Item 4. Controls and Procedures.......................................33 Part II. Other Information Item 1. Legal Proceedings.............................................33 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds...33 Item 3. Defaults Upon Senior Securities...............................33 Item 4. Submission of Matters to a Vote of Security Holders...........34 Item 5. Other Information.............................................34 Item 6. Exhibits......................................................34 Signatures...............................................................38 3

PRESIDENT CASINOS, INC. (DEBTORS-IN-POSSESSION) CONDENSED CONSOLIDATED BALANCE SHEETS (~~UNAUDITED) (~~in thousands, except share ~~per~~ data) ~~Nov.~~May 3031, Feb. 2928, ~~2004~~2005 ~~2004~~2005 -------- -------- ASSETS Current ~~assets~~Assets: Cash and cash equivalents............................................. $ 367,~~508~~828 $ 620,~~665~~706 Restricted cash and cash equivalents.................................. ~~2,114~~-- 2,~~322~~234 Restricted short-term investments..................................... 350 350 ~~Accounts~~Assets ~~receivable, net~~ of ~~allowance~~discontinued ~~for~~operations..................................... ~~doubtful~~38,496 ~~accounts~~93,237 ofAccount ~~$40 and $16~~receivable.................................................... ~~209~~168 ~~302~~-- ~~Other~~Prepaid expenses and other current assets............................. ~~2,822~~134 ~~2,082~~173 --------- --------- Total current assets.............................................. 9106,~~003~~976 11116,~~721~~700 ~~--------- ---------~~ Property and ~~equipment~~Equipment, net ~~of accumulated depreciation of $23,442 and $22,909~~............ ~~46,858 53,727 Assets of discontinued operations~~................................. ~~52,950~~4 ~~51,370~~5 --------- --------- $~~108~~106,~~811~~980 $116,~~818~~705 ========= ========= LIABILITIES AND STOCKHOLDERS' DEFICIT Current ~~liabilities:~~Liabilities ~~Current~~Not ~~portion~~Subject ofto ~~long-term~~Compromise: ~~debt~~Accounts payable.............. ~~$ 39,038 $ -- Accounts payable~~........................................ ~~902~~$ ~~634~~156 $ 641 Accrued payroll and benefits.......................................... ~~1,594~~282 ~~2,286~~339 ~~Accrued~~Other ~~interest~~accrued liabilities............................................. ~~237~~1,577 ~~268~~1,045 ~~Other~~Liabilities ~~accrued~~of ~~liabilities~~discontinued operations................................ 26,~~218~~827 29,~~174~~346 ~~Liabilities~~Current ~~from~~maturities ~~discontinued~~of ~~operations~~long-term debt.................................. ~~8,696~~-- 836,~~735~~621 --------- --------- Total current liabilities.................. ~~52,865 14,097 Long-term liabilities~~.......................~~.....~~ --8,842 4547,~~429~~992 Minority ~~interest~~Interest....................................................... 1819,~~673~~376 1719,~~653~~020 --------- --------- Total liabilities not subject to compromise....................... 7128,~~358~~218 7767,~~179~~012 Liabilities ~~subject~~Subject to ~~compromise~~Compromise....................................... 91,~~865~~844 91,~~988~~850 --------- --------- Total liabilities.............................................. ~~163~~120,~~223~~062 ~~169~~158,~~167~~862 --------- --------- Commitments and ~~contingencies~~Contingent Liabilities.................................. -- -- Stockholders' ~~deficit~~Deficit: Preferred Stock, $0.01 par value per share; 150,000 shares authorized; none issued and outstanding.............................. -- -- Common Stock, $0.06 par value per share; 14,000,000 shares authorized; 5,033,161 shares issued and outstanding.................~~......~~ 302 302 Additional paid-in capital............................................ 101,729 101,729 Accumulated deficit................................................... (~~156~~115,~~443~~113) (~~154~~144,~~380~~188) --------- --------- Total stockholders' deficit....................................... (5413,~~412~~082) (5242,~~349~~157) --------- --------- $~~108~~106,~~811~~980 $116,~~818~~705 ========= ========= See Notes to ~~Condensed~~ Consolidated Financial Statements.

1 4

PRESIDENT CASINOS, INC. (DEBTORS-IN-POSSESSION) CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (~~UNAUDITED) (~~in thousands, except per share data) Three Months ~~Nine Months~~ Ended ~~Nov.~~May 3031, ~~Ended~~2005 ~~Nov. 30,~~ 2004 ~~2003 2004 2003~~ ------ ------ ~~------ ------~~ OPERATING REVENUES~~: Gaming~~...............................~~....~~ $ ~~9,002~~-- $ ~~10,744~~-- $OPERATING ~~31,678~~COSTS $AND 35EXPENSES: Selling,~~474~~ ~~Food~~general and ~~beverage~~administrative............~~............~~ ~~1,905~~736 ~~2,388~~635 ~~4,964~~Depreciation ~~7,517 Hotel.................................... 1,293 1,518 6,863 5,806 Retail~~ and ~~other~~amortization..................~~.......~~ ~~399 511~~ 1~~,462~~ 1~~,838~~ ~~Less promotional allowances.............. (3,359) (4,054) (12,366) (13,497)~~ --------- --------- ~~---------~~Total ~~---------~~operating ~~Net~~costs ~~operating~~and ~~revenues~~expenses...........~~......~~ ~~9,240~~737 ~~11,107~~636 ~~32,601 37,138~~ --------- --------- ~~--------- ---------~~ OPERATING ~~COSTS AND EXPENSES: Gaming~~LOSS................................... 4,881 5,655 16,458 17,744 Food and beverage........................ 922 1,107 3,166 3,384 Hotel.................................... 168 271 638 831 Retail and other......................... 265 284 818 968 Selling, general and administrative...... 3,483 4,021 11,619 12,294 Depreciation and amortization............ 452 499 1,373 1,540 --------- --------- --------- --------- Total operating costs and expenses..... 10,171 11,837 34,072 36,761 --------- --------- --------- --------- OPERATING INCOME (~~LOSS~~737)~~....................~~ (~~931~~636) ~~(730) (1,471) 377~~ --------- --------- ~~--------- ---------~~ OTHER INCOME (EXPENSE): Interest ~~expense (contractual interest of $4,096 and $3,964 for the three- month periods and $12,099 and $11,895 for the nine-month periods)~~income............ ~~(717) (843) (2,189) (2,796) Interest income~~....................~~......~~ 6168 103 ~~23 47~~ Reorganization items, net................ ~~(273) (47) (677) (22) Gain on sale of assets~~......~~.............~~ --(937) --(181) ~~17 13 Other income.............................~~ -- ~~225 125 225~~ --------- --------- ~~--------- ---------~~ Total other income (expense)................. (~~984~~769) (~~655~~178) ~~(2,701) (2,533)~~ --------- --------- ~~--------- ---------~~ LOSS BEFORE MINORITY INTEREST AND DISCONTINUED OPERATIONS........................ (1,~~915~~506) (~~1,385~~814) ~~(4,172) (2,156)~~ Minority interest................................ ~~352~~355 ~~324~~330 ~~1,020 978~~ --------- --------- ~~--------- ---------~~ LOSS FROM CONTINUING OPERATIONS.................. (21,~~267~~861) (1,~~709~~144) ~~(5,192) (3,134)~~ --------- --------- ~~---------~~INCOME ~~---------~~FROM ~~Income~~DISCONTINUED OPERATIONS (~~loss)~~net ~~from~~of ~~discontinued~~income ~~operations.~~tax 1expense of $6,~~499~~007 ~~(885~~and $0)............ 330,~~129~~936 ~~942~~594 --------- --------- ~~--------- ---------~~ NET INCOME (LOSS)................................~~...~~ $ ~~(768) $ (2~~29,~~594)~~075 $ (~~2,063~~550) ~~$ (2,192)~~ ========= ========= ~~========= =========~~ Basic and diluted net loss per share from continuing operations........ ~~$ (0~~.~~45)~~.. $ (0.3437) $ (~~1.03) $ (~~0.6223) Basic and diluted ~~net~~ income ~~(loss)~~ per share from discontinued operations...... ~~$ 0~~.~~30 $ (0~~.~~18)~~............ $ 06.6215 $ 0.1812 --------- --------- ~~--------- ---------~~ Basic and diluted net income (loss) per share....~~...~~ $ (05.~~15)~~78 $ (0.5211) ~~$ (0.41) $ (0.44)~~ ========= ========= ~~========= =========~~ Weighted average common and dilutive potential shares outstanding.................... 5,033 5,033 ~~5,033 5,033~~ ========= ========= ~~========= =========~~ See Notes to Condensed Consolidated Financial Statements.

2 5 PRESIDENT CASINOS, INC. (DEBTORS-IN-POSSESSION) CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (in thousands)

~~Nine~~Three Months Ended ~~Nov.~~May 3031, 2005 2004 ~~2003~~ ------ ------ Net cash used in ~~continuing~~ operating activities............. $ (~~844~~1,444) $ (~~203~~882) --------- --------- Cash flows from investing activities ~~from continuing operations~~: Expenditures for property and equipment......... (~~927~~447) (~~439~~690) ~~Change~~Changes in restricted cash, net.................~~......~~ ~~208~~ 2,~~575~~234 293 Proceeds from ~~sales~~the sale of property and equipment... ~~6,441 13 Purchase of short-term investments~~.............. ~~-- (2) Maturity of short-term investments~~................ --82,000 746,502 --------- --------- Net cash provided by investing activities ~~from continuing operations~~...~~.....~~ 583,~~722~~787 26,~~221~~105 --------- --------- Cash flows from financing activities ~~from continuing operations~~: ~~Repayment~~Payments ofon notes payable....................... (636,~~392~~621) (36,~~551~~392) ~~Minority interest payments......................~~ -- ~~(2)~~ --------- --------- Net cash used in financing activities ~~from continuing operations~~.......~~...........~~ (636,~~392~~621) (36,~~553~~392) --------- --------- Net ~~cash~~increase ~~provided by~~ (~~used~~decrease) in) ~~discontinued~~cash ~~operations~~and cash equivalents............................ 45,722 (1,~~643~~169) ~~895~~Cash and cash equivalents at beginning of period.. 25,106 22,762 --------- --------- ~~Net~~Cash ~~decrease in cash~~ and cash equivalents at end of period......... (3$ 70,~~157)~~828 ~~(640)~~$ 21,593 ========= ========= Cash ~~and~~classified ~~cash~~in ~~equivalents~~continuing atoperations.......... ~~beginning~~$ of67,828 ~~period~~$ 17,193 Cash classified in discontinued operations........ 63,~~665~~000 64,~~708~~400 --------- --------- ~~Cash and cash equivalents at end of period........~~ $ 370,~~508~~828 $ 621,~~068~~593 ========= ========= SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid for interest ~~by continuing operations~~.......................... $ ~~2,220~~465 $ ~~2,124~~740 ========= ========= See Notes to Condensed Consolidated Financial Statements.

3 6 PRESIDENT CASINOS, INC. (DEBTOR-IN-POSSESSION) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in thousands, except share data and unless otherwise stated) 1. BANKRUPTCY PROCEEDINGS --Overview As used herein, the term "Company" refers to President Casinos, Inc., its wholly-owned subsidiaries, a 95%-owned limited partnership and a limited liability company in which a wholly-owned subsidiary of President Casinos, Inc. owns a Class A ownership interest and in which an entity wholly-owned by the Chairman of President Casinos, Inc. owns a Class B unit and has a preferred right to certain cash flows. As described below, President Casinos, Inc. and certain of its subsidiaries are currently in bankruptcy proceedings. As a result of the Company's relatively high degree of leverage and the need for significant capital expenditures at its St. Louis property, the Company was unable to pay the regularly scheduled interest payments of $6,375 which were each due and payable March 15, and September 15, 2000. Under the indentures pursuant to which the $75,000 13% Senior Exchange Notes (the "Senior Exchange Notes") and $25,000 12% Secured Notes (the "Secured Notes" and, collectively with the Senior Exchange Notes, the "Notes") were issued, an Event of Default occurred on April 15, 2000, and is continuing as of the date hereof. Additionally, PCI was unable to pay the $25,000 principal payment due September 15, 2000 on the Senior Exchange Notes. The holders of at least 25% of the Senior Exchange Notes and the Secured Notes were notified of the defaults and instructed the Indenture Trustee to accelerate the Notes and on August 11, 2000, the holders declared the unpaid principal and interest to be due and payable. As of May 31, 2005, the outstanding principal consists of $56,250 of Senior Exchange Notes and $18,750 of Secured Notes and outstanding interest consists of $10,060 on the Senior Exchange Notes and $3,086 on the Secured Notes. On June 20, 2002, President Casinos, Inc. and its subsidiary, President Riverboat Casino-Missouri, Inc. ("President Missouri"), which owns and operates the St. Louis operations, filed voluntary petitions for reorganization under Chapter 11 of Title 11, United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of Mississippi (the "Mississippi Bankruptcy Court"). On July 9, 2002, President Casinos, Inc.'s subsidiary The President Riverboat Casino- Mississippi, Inc. ("President Mississippi") filed a voluntary reorganization petition in the same Court. On July 11, 2002, substantially all of President Casinos, Inc.'s other operating subsidiaries filed voluntary reorganization petitions under Chapter 11 in the same Mississippi Bankruptcy Court. Subsequently, orders were entered by the Mississippi Bankruptcy Court transferring venue of all of the bankruptcy cases, except President Riverboat Casino-New York, Inc. ("President New York") and President Broadwater Hotel, LLC, to the United States Bankruptcy Court for the Eastern District of Missouri (the "Missouri Bankruptcy Court," and together with the Mississippi Bankruptcy Court, the "Bankruptcy Courts,") where the latter proceeding is now pending and being administered. The Company and its operating subsidiaries, except President Broadwater Hotel, LLC and President New York, each continue in possession and use of their assets as debtors-in-possession. The Company and its operating subsidiaries have had their Missouri Bankruptcy Chapter 11 cases administratively consolidated under the President Casinos, Inc. case. 4 7 Prior to any of the cases being transferred to the Missouri Bankruptcy Court, the Mississippi Bankruptcy Court established "bar dates," all of which have expired, by which all claimants were required to submit and characterize claims against the Company. As part of the Company's Chapter 11 reorganization process, the Company has attempted to notify all known or potential creditors of the filings for the purpose of identifying certain pre- petition claims. In the Company's Chapter 11 cases, substantially all of the Company's liabilities as of the filing date are subject to adjustment under a plan of reorganization. Generally, actions to enforce or otherwise effect repayment of all pre-petition liabilities as well as all pending litigation against the Company are stayed while the Company continues its business operations as debtors-in-possession. Schedules have been filed by the Company with the Bankruptcy Courts setting forth the assets and liabilities of the debtors as of the filing dates as reflected in the Company's accounting records. Differences between amounts reflected in such schedules and claims filed by creditors will be investigated and amicably resolved or adjudicated before the Bankruptcy Court. The ultimate amount and settlement terms for such liabilities are subject to a plan of reorganization. Under the Bankruptcy Code, the Company may elect to assume or reject real estate leases, employment contracts, personal property leases, service contracts and other executory pre-petition contracts and unexpired leases, subject to Bankruptcy Court review. The consummation of a plan of reorganization (a "Plan") is the principal objective of the Company's Chapter 11 filings. A Plan would, among other things, set forth the means for satisfying claims against and interests in the Company, including setting forth the potential distributions on account of such claims and interests, if any. Confirmation of a Plan is subject to certain statutory findings by the Bankruptcy Court. Before a Plan may be distributed for balloting the Court must approve a Disclosure Statement by determining that the Disclosure Statement adequately describes the Plan. Subject to certain exceptions as set forth in the Bankruptcy Code, confirmation of a Plan requires, among other things, a vote on the Plan by certain classes of creditors whose rights or interests are impaired under the Plan. If any impaired class of creditors does not vote to accept the Plan, but all of the other requirements of the Bankruptcy Code are met, the proponent of the Plan may seek confirmation of the Plan pursuant to the "cram down" provisions of the Bankruptcy Code. Under these provisions, the Bankruptcy Court may still confirm a Plan notwithstanding the non-acceptance of the Plan by an impaired class, if, among other things, no claim or interest receives or retains any property under the Plan until each holder of a claim senior to such claim or interest has been paid in full. There can be no assurance that a Plan will be confirmed by the Bankruptcy Court, or that any such Plan will be consummated. On April 15, 2005, the Company sold its Biloxi operations for approximately $82,000. In addition, the Company has an agreement to sell its St. Louis operations for $57,000. If the sale of the Company's St. Louis operations is consummated under the agreed upon terms, the Company would not have any current ongoing business operations. At this time management is unable to predict with certainty whether the sale of its St. Louis operations will be consummated and whether the Company will be able to continue as a going concern or be liquidated. In light of the sale of the Company's Biloxi assets and leasing operations assets, and the pending contract for sale of the St. Louis operations, the Company has one reportable segment from continuing operations consisting of corporate administration. 5 8 -- Biloxi Casino and Hotel Operations President Mississippi, Vegas, Vegas, Inc. ("Vegas, Vegas") and President Broadwater Hotel, L.L.C. ("PBLLC") (collectively, the "Mississippi Affiliates") agreed, with the prior approval of the Bankruptcy Court, to sell substantially all of the real and personal property associated with the Company's Biloxi, Mississippi operations (the "Mississippi Properties") to Broadwater Development, LLP, a Mississippi limited liability partnership (or the assignee or designee thereof) for $82,000, and otherwise on the terms and conditions of a certain Sale and Purchase Agreement dated November 15, 2004 and executed by and among Broadwater Properties, LLC, as purchaser, and the Mississippi Affiliates, as sellers, as amended by an Amendment to Sale and Purchase Agreement dated as of November 29, 2004, assigned on or about January 13, 2005 by Broadwater Properties to Broadwater Development, LLP ("BDLLP", and together with any assignees or designees thereof, the "Mississippi Purchaser"), further modified by a certain Second Amendment to Sale and Purchase Agreement dated January 20, 2005 (as modified and amended, the "Mississippi Asset Sale Agreement"). The Mississippi Asset Sale Agreement further provides that the Mississippi Affiliates shall retain certain excluded assets as therein defined (the "Mississippi Excluded Assets", consisting primarily of cash in bank accounts. Pursuant to a separate Agreement Concerning Assignment dated March 30, 2005 ("Agreement Concerning Assignment") made by and between the Mississippi Affiliates, BDLLP and Silver Slipper Casino Venture, LLC, it was agreed, with the approval of the Bankruptcy Court, that the assets associated with the Company's Mississippi casino would be transferred at the closing of the transaction to Silver Slipper on certain terms and conditions therein stated. The sale of the Mississippi Properties closed effective April 15, 2005 and on May 27, 2005 the Missouri Bankruptcy Court confirmed a Plan of Liquidation (the "Mississippi Plan of Liquidation") for the Mississippi Affiliates that was jointly developed by the Company and its creditors SunAmerica Inc. and McKay Shields LLC in the Company's bankruptcy case. The Mississippi Plan of Liquidation became final on June 7, 2005. Pursuant to the Mississippi Plan of Liquidation, the proceeds of the sale of the Mississippi Properties, following adjustments required under the Mississippi Asset Sale Agreement, together with the proceeds from the liquidation of the Mississippi Excluded Assets, are being allocated and are being distributed to the creditors of the Mississippi Affiliates, including the holders of the Company's Senior Exchange Notes and Secured Notes in the aggregate outstanding principal amount of $75,000 (the "Noteholders") and to J. Edward Connelly Associates, Inc. ("JECA") and certain assignees of JECA. JECA, an entity controlled by John E. Connelly, the Company's Chairman and Chief Executive Officer, holds a Class B membership interest in PBLLC. The Company anticipates that under the Mississippi Plan of Liquidation, creditors of the Mississippi Affiliates, with the exception of the Noteholders, will be paid in full, subject to final determination and settlement of claims and expenses. The Company currently estimates that (i) an aggregate of approximately $27,900 of the indebtedness due the Noteholders could be paid, (ii) in respect of the liquidation preference of its Class B membership interest in PBLLC, JECA could receive approximately $16,600 of the proceeds of the sale of the Mississippi Properties plus accrued interest, and an additional approximately $2,800 of the proceeds of the sale of the Company's St. Louis operations (assuming the sale of the St. Louis operations is consummated in accordance with its present terms as described below and the Noteholders are paid in full). On June 7, 2005, the Company paid $25,625 of the indebtedness due to the Noteholders. Of this amount, $12,028 was applied to principal, $13,146 was applied to accrued interest and $451 to accrued trustee and legal fees incurred by the Noteholders. Additionally, the Company redeemed $14,375 of JECA's Class B membership interest in PBLLC. 6 9 JECA has entered into an agreement (the "JECA Proceeds Distribution Agreement") with John S. Aylsworth, President, Chief Operating Officer and Director of the Company, Terrence L. Wirginis, Vice President and Vice Chairman of the Board and Ralph J. Vaclavik, Senior Vice President and Chief Financial Officer of the Company, pursuant to which upon receipt of funds by JECA toward payment of the liquidation preference of its Class B membership interest in PBLLC, JECA will use its best efforts to pay a percentage of such funds to Messrs. Aylsworth, Wirginis and Vaclavik based on the total sales proceeds to JECA. While final distributions under the Mississippi Plan of Liquidation are subject to final determination and settlement of claims and expenses, the Company currently estimates that the proceeds of the sale of the Mississippi Properties and the anticipated sale of the Company's St. Louis operations (if completed in accordance with its present terms) will be sufficient to repay the Noteholders the outstanding indebtedness under the Notes and, in addition, to satisfy JECA's liquidation preference of its Class B membership interest in PBLLC. Messrs. Aylsworth, Wirginis and Vaclavik would be entitled to receive an aggregate of approximately $4,800, $4,800 and $300, respectively, pursuant to the JECA Distribution Agreement. On June 7, 2005, distributions of $3,539, $3,539 and $219 were made to Messrs. Aylsworth, Wirginis and Vaclavik, respectively, from the $14,375 Class B membership interest redemption. The Mississippi Plan of Liquidation established August 8, 2005 as the Administrative Bar Date, whereby each person or entity may file a claim arising on or after July 9, 2002 and before May 25, 2005 for President Mississippi or arising after July 11, 2002 and before May 25, 2005 for Vegas Vegas and BHI. The Company has attempted to notify its creditors that failure to file a claim against President Mississippi, Vegas Vegas and/or BHI will result in the claim being forever barred and discharged. --St. Louis Casino Operations On September 25, 2003, the Company entered into an agreement with Isle of Capri Casinos, Inc. to sell the assets of its St. Louis operations for approximately $50,000. On May 4, 2004, the Company and Isle of Capri Casinos, Inc. announced they had mutually agreed to terminate the agreement. On August 9, 2004, the Company entered into an agreement with Penn National Gaming, Inc. for the purchase of its St. Louis operations. The agreement was submitted to the Missouri Bankruptcy Court for review and was amended on September 17, 2004. Under the terms of the agreement, the stock of President Missouri was to be sold for approximately $28,000, subject to working capital adjustments and subject to higher and better offers. On October 7, 2004, an auction was held in accordance with Section 363 of the Bankruptcy Code. Pursuant to an agreement submitted September 30, 2004, Columbia Sussex, Inc. ("Columbia Sussex") was the winning over-bidder for the St. Louis casino operations for a purchase price of approximately $57,000, subject to closing adjustments. The Company and Columbia Sussex have entered into a Riverboat Casino Sale and Purchase Agreement dated as of September 30, 2004 (as amended, the "President Missouri Sale Agreement"). On October 13, 2004, the Missouri Bankruptcy Court entered an order approving the sale of the stock of President Missouri to Columbia Sussex pursuant to the President Missouri Sale Agreement. The closing of the transaction is contingent upon approval by the Missouri Gaming Commission and other closing conditions. As more particularly described in the President Missouri Sale Agreement, certain assets of President Missouri are excluded from the transaction, including, among other things, an office building located in Laclede's Landing in the City of St. Louis, Missouri, and certain specified causes of action, cash on hand, tax refunds, insurance coverages and receivables, and certain inventory (the "Missouri Excluded Assets"). The deadline for closing the President Missouri 7 10 Sale Agreement was extended from August 1, 2005 to October 31, 2005, and any extension beyond this date will require the consent of both parties. The sale of the stock of President Missouri is subject to, among other things, the confirmation by the Missouri Bankruptcy Court of a Plan of Reorganization of President Missouri under Chapter 11 of the Bankruptcy Code. On May 25, 2005, the Company filed with the Missouri Bankruptcy Court a disclosure statement (the "Disclosure Statement") setting forth the terms of a Plan of Reorganization (the "Missouri Plan of Reorganization") that was jointly developed by the Company, its creditors SunAmerica Inc. and McKay Shields LLC, and the Official Unsecured Creditors' Committee in the Company's bankruptcy case. The Missouri Bankruptcy Court approved the sufficiency of the Disclosure Statement at a hearing held June 16, 2005. The Missouri Bankruptcy Court has scheduled a hearing for August 31, 2005 on confirmation of the Missouri Plan of Reorganization. Once confirmed, the Missouri Plan of Reorganization will not become effective unless and until all the other conditions to the closing of the sale to Columbia Sussex are satisfied, including, without limitation, approval of the Missouri Gaming Commission. Pursuant to the Missouri Plan of Reorganization, on the effective date of the Plan the Noteholders and holders of general unsecured claims would be entitled to receive, to the extent funds are available, the amount of their unsecured claims and, in addition, a pro rata share of a separate fund equal to fifty percent of President Missouri's "Adjusted EBITDA" for the period beginning August 1, 2005 and ending on the closing date of the sale of stock of President Missouri. For purposes of such fund, the "Adjusted EBITDA" of President Missouri for such period would be equal to President Missouri's earnings before interest, taxes, depreciation and amortization, less unreimbursed capital expenditures and certain authorized expenses associated with the Company's bankruptcy proceedings and corporate expenses of the Company's affiliates. Management estimates that the proceeds from the sale of the stock of President Missouri and the Missouri Excluded Assets would, if the sale is consummated on its present terms, provide sufficient funds to discharge all of the Company's remaining indebtedness, including the remaining balance due to the Noteholders. In the event the sale agreement is consummated on its terms and proceeds are sufficient to discharge the Company's indebtedness, the Board of Directors will determine whether to liquidate the Company or engage in further business activities, including activities other than gaming. At this time it is not possible to predict whether the sale of the St. Louis operations will be consummated or whether the Company will liquidate or continue business operations in some form. --President Broadwater Hotel, LLC Bankruptcy Proceedings PBLLC, a limited liability company in which Broadwater Hotel, Inc., a wholly-owned subsidiary of the Company ("BHI"), has a Class A ownership interest, was in default under a $30,000 promissory note and associated $7,000 loan fee incurred in connection with the July 1997 purchase by PBLLC of the real estate and improvements utilized in the Company's operations in Biloxi, Mississippi. On April 19, 2001, PBLLC filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Mississippi. PBLLC continued in possession and use of its assets as a debtor-in-possession and had an agreement with its secured lender and largest creditor, approved by the Mississippi Bankruptcy Court, which allowed PBLLC's use of its cash collateral. On October 16, 2001, PBLLC filed its plan of reorganization which would permit PBLLC to restructure its debt obligations in a manner which was 8 11 designed to permit it to continue as a going concern. Subsequently, on February 28, 2003, PBLLC filed Modifications to Debtor's Plan of Reorganization (together with the reorganization plan, the "Modified Plan"). On May 14, 2003, the Mississippi Bankruptcy Court entered the confirmation order confirming the Modified Plan. The Modified Plan became effective on May 28, 2003 and the Company initiated consummation of the Modified Plan at that time. The Modified Plan provided that the unsecured creditors of PBLLC would receive 100% of their claims. Under the Modified Plan, the obligations to the secured lender were modified with respect to the debt amount, the interest rate and the due date. On April 15, 2005, the Modified Indebtedness and accrued interest thereon were fully satisfied by PBLLC from the proceeds of the sale of the Company's Biloxi assets. --Other The Company's ability to continue as a going concern is dependent on its ability to restructure successfully, including selling assets on a timely basis under acceptable terms and conditions, and the ability of the Company to generate sufficient cash to fund future operations. There can be no assurance in this regard. The descriptions of the Company's business, financial condition and prospects contained in this Quarterly Report on Form 10-Q are qualified in their entirety by the foregoing description of the significant risks associated with the Company's bankruptcy proceedings. As of May 31, 2005, the Company had $67,828 of unrestricted cash and cash equivalents. The Company also had $3,000 classified in discontinued operations, representing cash to be retained by the purchasers upon the sale of the St. Louis operations. The Company requires a minimum of approximately $4,000 as working capital for the St. Louis operations. The Company is heavily dependant on cash generated from operations to continue to operate as planned and to make capital expenditures. Management anticipates that its existing available cash and cash equivalents and its anticipated cash generated from operations will be sufficient to fund its ongoing operations during the bankruptcy proceedings. Payments under the Company's defaulted debt obligations generally will be stayed during the bankruptcy proceedings. Costs previously incurred and which will be incurred in the future in connection with the reorganizations have been and will continue to be substantial and, in any event, there can be no assurance that the Company will be able to restructure its indebtedness or that its liquidity and capital resources will be sufficient to maintain its normal operations during the reorganization period. To the extent cash generated from operations is less than anticipated, the Company may be required to curtail certain planned expenditures and/or seek additional financing. 2. BASIS OF PRESENTATION The condensed consolidated financial statements set forth herein include the accounts and operations of President Casinos, Inc., its wholly-owned subsidiaries, a 95%-owned limited partnership and a limited liability company in which a wholly-owned subsidiary of the Company has a Class A ownership interest and in which an entity wholly-owned by the Chairman of the Board of the Company owns a Class B Unit and has preferred rights to certain cash flows. All material intercompany balances and transactions have been eliminated. The accompanying consolidated financial statements are presented in accordance with American Institute of Certified Public Accountants Statement of Position 90-7, "Financial Reporting by Entities in Reorganization under the 9 12 Bankruptcy Code," assuming that the Company will continue as a going concern. The Company is currently operating under the jurisdiction of Chapter 11 of the Bankruptcy Code and the Bankruptcy Courts, and continuation of the Company as a going concern is contingent upon, among other things, its ability to formulate a reorganization which will gain approval of the requisite parties under the Bankruptcy Code and confirmation by the Bankruptcy Courts, its ability to return to profitability, generate sufficient cash flows from operations, and obtain financing sources to meet future obligations. These matters raise substantial doubt about the Company's ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments relating to the outcome of these uncertainties. The accompanying consolidated balance sheets as of May 31, 2005 and February 28, 2005, segregate liabilities subject to compromise, such as unsecured claims, from liabilities not subject to compromise, such as fully secured liabilities and liabilities arising subsequent to filing bankruptcy petitions. A plan of reorganization could materially change the amounts currently recorded in the consolidated financial statements. The consolidated statements that might result from the outcome of this uncertainty may be materially different than those presented herein. Reorganization items represent expenses incurred by the Company as a result of the bankruptcy filings and proceedings which are required to be expensed as incurred. In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting only of normal recurring entries unless otherwise disclosed, necessary to present fairly the Company's financial information for the interim periods presented and have been prepared in accordance with accounting principles generally accepted in the United States of America. The interim results reflected in the condensed consolidated financial statements are not necessarily indicative of results for the full year or other periods. The condensed consolidated financial statements contained herein should be read in conjunction with the audited consolidated financial statements and accompanying notes to the consolidated financial statements included in the Company's Annual Report on Form 10-K for the period ending February 28, 2005. Accordingly, footnote disclosure which would substantially duplicate the disclosure in the audited consolidated financial statements has been omitted in the accompanying unaudited condensed consolidated financial statements. 3. NATURE OF OPERATIONS The Company currently owns and operates a dockside gaming casino in St. Louis, Missouri through its wholly-owned subsidiary, President Missouri. The Company conducted dockside gaming operations in Biloxi, Mississippi through its wholly-owned subsidiary President Mississippi through April 14, 2005, at which time the assets were sold. In addition, the Company owned and managed certain hotel and ancillary facilities associated with its gaming operations in Biloxi, through April 14, 2005, when they, too, were sold. As a result of the sale of the Biloxi operations and the pending sale of the St. Louis operations, the St. Louis gaming operations and Biloxi operations are classified as discontinued operations. 4. PROPERTY AND EQUIPMENT On January 20, 2005, an auction was held under the terms of Section 363 of the United States Bankruptcy Code for the Company's Biloxi operations. Broadwater Development, LLP. was the winning over-bidder for the Biloxi 10 13 operations. On April 15, 2005, the assets of the Biloxi operations were sold. The Company recognized a gain of $27,657, net of income tax expense of $6,007, on the transaction. See "Note 7. Discontinued Operations." On October 7, 2004, an auction was held in accordance with Section 363 of the Bankruptcy Code for the Company's St. Louis operations. Columbia Sussex, Inc. was the winning over-bidder for the common stock of the St. Louis casino operations. On October 13, 2004, the Missouri Bankruptcy Court approved the terms of the agreement. As such, property and equipment of the St. Louis operations have been classified as "Assets of Discontinued Operations" as of May 31, 2005 and February 28, 2005. See "Note 7. Discontinued Operations." The Company consummated a sale agreement for its 36,000 square foot office building in St. Louis for $1,825 on June 23, 2005. Management estimates that a gain of approximately $370 will be recognized during the second quarter. The building houses the Company's executive offices and certain casino administrative staff. Upon closing, certain areas of the building were leased back by the Company. Approximately 5,400 square feet is being leased by the Company's casino operation, with such lease's initial term ending November 30, 2005 with two one-month extensions. An additional area of approximately 1,400 square feet is being leased by the Company's corporate administration with such lease's initial term ending December 31, 2005 with three one-month extensions at the option of the Company, and three additional months that can be terminated at the discretion of either the landlord or tenant. On March 16, 2004, the Company sold the 179-room Broadwater Tower Hotel for $6,500 to Ocean Beach Club at Biloxi, LLC. The Company's other hotel, the 333-room President Broadwater Resort, was not included in this transaction. The net proceeds of the transaction were used to reduce the debt of the Company's subsidiary, PBLLC. In connection with the transaction the Company also entered into an initial lease and options to renew the lease. The options were extended on a month to month basis and remained in effect through the date on which the Biloxi operations were sold. 5. LONG-TERM DEBT AND CURRENT PORTION OF LONG-TERM DEBT As of May 31, 2005, and February 28, 2005, the Company's $75,000 noteholder debt was classified as liabilities subject to compromise. The M/V "President Casino-Mississippi" note was classified as liabilities of discontinued operations. See "Note 6. Liabilities Subject to Compromise and Reorganization Items, Net" and "Note 7. Discontinued Operations." Broadwater Hotel Note In conjunction with the purchase of the Broadwater Property, PBLLC borrowed the sum of $30,000 from a third party lender (the "Original Indebtedness"). Except as set forth in the promissory note and related security documents, PBLLC's obligations under the Indebtedness were nonrecourse and secured by the Broadwater Property, its improvements and leases thereon. The Original Indebtedness bears interest at a stipulated variable rate per annum equal to the greater of (i) 8.75% or (ii) 4% plus the LIBOR 30-day rate. PBLLC was obligated under the Original Indebtedness to make monthly payments of interest accruing under the Indebtedness, and was obligated to repay the Indebtedness in full on July 22, 2000. In addition, PBLLC was obligated to pay to the lender a loan fee in the amount of $7,000 which was fully earned and non-refundable when the Original Indebtedness was due. Neither the Original Indebtedness nor the loan fee payments were made on the due date and the Original Indebtedness was in default through the effective date of the 11 14 Modified Plan discussed below. PBLLC continued to make monthly interest payments accruing on the $30,000 principal through April 19, 2001, when the Company announced that PBLLC had filed for reorganization under Chapter 11 in the Mississippi Bankruptcy Court. On October 16, 2001, PBLLC filed its plan of reorganization. Subsequently, on February 28, 2003, PBLLC filed Modifications to Debtor's Plan of Reorganization (together with the reorganization plan, the "Modified Plan"). On May 14, 2003, the Mississippi Bankruptcy Court entered the confirmation order confirming the Modified Plan. The Modified Plan became effective on May 28, 2003 and the Company consummated the Modified Plan at that time. The Modified Plan provides that the unsecured creditors of PBLLC will receive 100% of their claims. Under the Modified Plan, the obligations to the lender were modified with respect to the debt amount, the interest rate and the due date, and was re-documented substantially along the lines of the Original Indebtedness, including the non-recourse provision, (the "Modified Indebtedness"). On May 28, 2003, the Company paid the lender $3,551 pursuant to the Modified Plan. In March 2004, the Company paid $6,392 of principal from the proceeds of the sale of the Broadwater Tower. The principal amount of the Modified Indebtedness earned interest at a rate of 12.75% per annum until the obligation was satisfied. The maturity date of the Modified Indebtedness was June 1, 2005. Interest was payable during the term of the Modified Indebtedness on the adjusted loan obligation amount. PBLLC was required to pay interest earned on the adjusted loan obligation monthly from May 28, 2003 at a rate of the greater of 7.75% per annum or LIBOR plus 4% per annum floating through the term of the Modified Indebtedness. On April 15, 2005, the Modified Indebedness and interest thereon were fully satisfied from the proceeds on the sale of the Broadwater property. The Company recognized a gain of $2,416 as of February 28, 2005 to write the principal amount down to the subsequent liquidated payment amount. This adjustment was recorded in discontinued operations. 6. LIABILITIES SUBJECT TO COMPROMISE AND REORGANIZATION ITEMS, NET The components of liabilities subject to compromise are as follows:

~~Nov.~~May 3031, Feb. 2928, ~~2004~~2005 ~~2004~~2005 ------ ------ Senior Exchange Notes, 13%...................... $ 56,250 $ 56,250 Secured Notes, 12%,.............................. 18,750 18,750 Accrued interest................................ 13,~~027~~146 13,~~027~~146 Accounts payable and other accrued expenses..... 3,~~837~~698 3,~~961~~704 --------- --------- Total liabilities subject to compromise...... $ 91,~~865~~844 $ 91,~~988~~850 ========= =========

Senior Exchange Notes and Secured Notes The Senior Exchange Notes rank equal in right of payment to all present and future senior debt, as defined in the indenture governing the Senior Exchange Notes (the "Note Indenture"), of the Company and its subsidiaries are currently due and payable. In addition, the Senior Exchange Notes are unconditionally guaranteed, jointly and severally on a senior basis, by all of 12 15 the Company's restricted subsidiaries (the "Guarantors"), and, under certain circumstances, the Company's future subsidiaries, although the subsidiary guarantee from The Connelly Group, LP ("TCG") is limited in amount and was zero as of May 31, 2005 and February 28, 2005. As security for the obligations of the Company and the Guarantors under the Senior Exchange Notes, the Company and the Guarantors have pledged their equity interests in each Guarantor and certain indebtedness from, and certain investments in, certain gaming ventures. The Note Indenture contains certain restrictive covenants which, among other things, limit the Company's Guarantors' ability to pay dividends, incur additional indebtedness (exclusive of $15,000 of senior debt), issue preferred stock, create liens on certain assets, merge or consolidate with another company and sell or otherwise dispose of all or substantially all of its properties or assets. On December 3, 1998, the Company repurchased $25,000 of its Senior Exchange Notes. The repurchased notes were used to satisfy the $25,000 principal payment due September 15, 1999 on the Company's $100,000 Senior Exchange Notes. The repurchase was funded by the issuance of $25,000 of new 12% notes due September 15, 2001 (the "Secured Notes"). The Secured Notes have no mandatory redemption obligation and are secured by a mortgage on the "Admiral" as well as subsidiary guarantees. See "Note 1. Bankruptcy Proceedings" regarding default of the Senior Exchange Notes and Secured Notes. 7. DISCONTINUED OPERATIONS Following an auction held on January 20, 2005, under the terms of Section 363 of the United States Bankruptcy Code, three subsidiaries of President Casinos, Inc., namely President Mississippi, Vegas Vegas, Inc., and PBLLC (collectively, "Sellers"), on the one hand, and Broadwater Development, LLP ("Purchaser") on the other, entered into a Second Amendment to Sale and Purchase Agreement (the "Second Amendment") pursuant to which the Purchaser agreed to acquire from the Sellers substantially all of the real and personal property associated with the Company's Biloxi operations for $82,000, subject to certain closing adjustments. Prior to the auction, on January 13, 2005, the Purchaser received an assignment of all the right, title and interest of Broadwater Properties, LLC in and to that certain Sale and Purchase Agreement dated as of November 15, 2004, as amended by the Amendment to Sale and Purchase Agreement dated as of November 29, 2004 (as amended, the "Purchase Agreement") which had been previously executed by the Sellers with respect to the sale of the Company's Biloxi operations. A hearing to approve the auction results and sale to the Purchaser was held before the United States Bankruptcy Court for the Eastern District of Missouri on January 26, 2005, and the court issued an order approving the auction results and the sale on February 7, 2005. On April 15, 2005, the Company completed the sale, subject to certain post-closing adjustments. The Company recognized a gain of $27,657, net of income tax expense of $6,007, as a result of the transaction. On August 9, 2004, the Company entered into an agreement with Penn National Gaming, Inc. for the purchase of its St. Louis operations. The agreement was submitted to the Missouri Bankruptcy Court for review and was amended on September 17, 2004. Under the terms of the agreement, the stock of President Missouri was to be sold for approximately $28,000, subject to working capital adjustments and subject to higher and better offers. On October 7, 2004, an auction was held in accordance with Section 363 of the Bankruptcy Code. 13 16 Pursuant to an agreement submitted September 30, 2004, Columbia Sussex, Inc. ("Columbia Sussex") was the winning over-bidder for the St. Louis casino operations for a purchase price of approximately $57,000, subject to closing adjustments. The Company and Columbia Sussex have entered into a Riverboat Casino Sale and Purchase Agreement dated as of September 30, 2004 (as amended, the "President Missouri Sale Agreement"). On October 13, 2004, the Missouri Bankruptcy Court entered an order approving the sale of the stock of the Company to Columbia Sussex pursuant to the President Missouri Sale Agreement. The closing of the transaction is contingent upon approval by the Missouri Gaming Commission and other closing conditions. As more particularly described in the President Missouri Sale Agreement, certain assets of President Missouri are excluded from the transaction, including, among other things, an office building located at Laclede's Landing in the City of St. Louis, Missouri, and certain specified causes of action, cash on hand, tax refunds, insurance coverages and receivables, and certain inventory (the "Missouri Excluded Assets"). The deadline for the closing of the President Missouri Sale Agreement has been extended from August 1, 2005 to October 31, 2005, and any extension beyond this date will require the consent of both parties. The Company sold one of two vessels accounted for in its leasing segment during May 2003 and the second vessel was foreclosed on by the lender which held a Preferred First Fleet Mortgage collateralizing debt owed to them. In accordance with the Financial Accounting Standards Board SFAS No. 144 "Accounting for the Impairment and Disposal of Long-Lived Assets," ("SFAS 144")the St. Louis and Biloxi operations and leasing segment are accounted for as discontinued operations, as follows:

~~Nov.~~May 3031, Feb. 2928, ~~2004~~2005 ~~2004~~2005 ------ ------ ASSETS Cash and cash equivalents.................. $ 203,~~115~~000 $ 164,~~097~~400 Receivables................................ ~~218~~246 ~~364~~784 Inventories................................ ~~513~~517 ~~480~~947 Prepaid expenses........................... 12,~~628~~506 12,~~791~~591 Deferred tax asset......................... -- 5,707 Property and equipment..................... 3032,~~476~~227 3278,~~638~~808 --------- --------- $ 5238,~~950~~496 $ 5193,~~370~~237 ========= ========= LIABILITIES M/V "President Casino-Mississippi" note payable............................. $ ~~1,700~~750 $ ~~2,100~~750 Accounts payable........................... 782 1,~~070~~729 ~~751~~ Accrued payroll and benefits............... 1,~~874~~868 2,~~139~~741 Accrued income tax payable................. 300 -- Accrued interest payable................... ~~772~~-- ~~720~~221 Other accrued liabilities.................. 3,~~280~~127 3,~~025~~905 --------- --------- $ 86,~~696~~827 $ 89,~~735~~346 ========= =========

14 17

~~Three~~May ~~Months Nine Months Ended November 30~~31, ~~Ended~~Feb. ~~November 30~~28, ~~2004~~2005 ~~2003~~2005 ~~2004 2003~~ ------ ------ ~~------~~ASSETS ~~------~~St. ~~OPERATING~~Louis ~~INCOME (LOSS): Biloxi~~ operations....................... $ ~~(255)~~38,486 $ ~~(120) $ 447 $ 2~~37,~~472~~082 ~~Corporate~~Biloxi ~~administration~~operations.......................... ~~(676)~~10 ~~(610) (1~~56,~~918)~~155 ~~(2,095)~~ --------- --------- ~~---------~~$ ~~---------~~38,496 ~~OPERATING~~$ ~~INCOME~~93,237 ~~(LOSS)~~========= ========= LIABILITIES St. Louis operations....................... $ ~~(931)~~5,074 $ ~~(730)~~5,246 $Biloxi (operations.......................... 1,~~471)~~003 3,350 New York leasing operations................ 750 750 --------- --------- $ ~~377~~6,827 ~~=========~~$ ~~=========~~9,346 ========= =========

The Company's St. Louis segment had operating income of $3,073 consisting of revenues of $17,891 and operating expenses of $14,818 during the three-month period ended May 31, 2005, compared to operating income of $1,202, consisting of revenues of $17,540 and operating expenses of $16,338 during the three- month period ended May 31, 2004. Operating expenses include depreciation of $1,495 for the three-month period ended May 31, 2004. The current three-month period excludes depreciation in accordance with SFAS 144. The Company's Biloxi segment had operating income of $453, consisting of revenues of $5,547 and operating expenses of $5,094 during the three-month period ended May 31, 2005, compared to operating income of $350, consisting of revenues of $11,677 and operating expenses of $11,327 during the three-month period ended May 31, 2004. Operating expenses include depreciation of $465 for the three-month period ended May 31, 2004. The sale of the Biloxi property was completed April 15, 2005. M/V "President Casino-Mississippi" Note The Company defaulted under the terms of its M/V "President Casino-Mississippi" note. The M/V "President Casino-Mississippi" was previously operated by the Company as a casino in Biloxi, Mississippi. The vessel and various equipment aboard the M/V "President Casino-Mississippi" collateralize a term note payable which was also personally guaranteed by Mr. Connelly. The Company continued to make the quarterly principal and interest payments on the note prior to the Company's bankruptcy filing. Under the terms of the note agreement, $2,100 principal became due and payable in August 2002 together with interest and costs (the "Note"). In November 2002, the lender brought an action against Mr. Connelly for breach of contract under his personal guarantee. In December 2003, Mr. Connelly satisfied his personal guarantee paying the lender $1,200. In January 2003, the Mississippi Bankruptcy Court granted a motion to relieve the lender from the automatic stay in order to enforce its rights under the Preferred Fleet Ship Mortgage, including but not limited to the right of the lender to seize and sell the vessel. In May 2003, the lender filed a motion with the United States District Court for the Southern District of Illinois for an order directing the Clerk of Court to issue a warrant for the arrest of the M/V "President Casino-Mississippi" pursuant to rules of admiralty and maritime claims. On May 20, 2003, the Court executed the warrant, which allowed the vessel to be 15 18 seized and sold. On April 7, 2004, the vessel was auctioned and the lender offered the highest bid of $500. The Company, President Mississippi, Mr. Connelly and the lender entered into an agreement whereby the Company would satisfy its obligations under the indebtedness, and related costs, for $750. Additionally, Mr. Connelly agreed to forego his rights and assignments. The terms are incorporated in the Mississippi Plan of Liquidation, which was confirmed on May 27, 2005, and became effective on June 7, 2005. Subsequently, the Company paid the lender $750. Pursuant to the agreement between the Company and other parties involved, the Company wrote down its obligations related to the M/V "President Casino-Mississippi" by $2,643 in the fourth quarter of fiscal 2005 to reflect the resolution of the previously recorded contingent loss related to this obligation. Such amount is included in income from discontinued operations. 8. INCOME TAXES The Company recognizes deferred tax assets, net of applicable reserves, related to net operating loss carryforwards and certain temporary differences. Recognition of future tax benefits is based on the extent the realization of such benefit is "more likely than not." As such, the realization of the deferred tax benefit is dependent on the Company's ability to generate future taxable income. Given the level of operations, the increased competition and the overall uncertainty as to the timing of the Company's ability to return to profitability, management determined that the tax benefit did not satisfy the recognition criteria through the period ended February 29, 2004. Accordingly, a 100% valuation allowance was maintained against the Company's deferred tax assets through that time. During the year ended February 28, 2005, the valuation allowance decreased by $5,707 due primarily to the sale and subsequent closure of the Biloxi, Mississippi operations. The sale was expected to generate a gain which made it more likely than not that a portion of the net operating loss carryforward would be realized. The tax benefit related to the reversal of this valuation allowance was recognized in discontinued operations. The gain on the sale of the Company's Biloxi assets has generated federal income taxes of $5,707 which has been offset by a portion of the Company's net operating loss carryforward. The use of the Company's net operating loss carryforward generated an additional $300 of alternative minimum tax liability and credit. Given the level of operations, the increased competition, the contingencies related to the closing of the sale of the St. Louis operations and the overall uncertainty as to the timing of the Company's ability to return to profitability, management determined that the remaining tax benefits do not satisfy the recognition criteria and accordingly the Company maintains a 100% valuation allowance against the Company's deferred tax assets. All state income taxes related to this sale are offset by appropriate state net operating losses. The Company's total income tax expense of $6,007 for the period ending May 31, 2005 is reflected in discontinued operations. There was no income tax expense for the period ending May 31, 2004. 16 19 The components of the net deferred tax asset are as follows:

~~Nov.~~May 3031, Feb. 2928, ~~2004~~2005 ~~2004~~2005 ------ ------ ~~Biloxi~~Deferred ~~operations~~tax assets: Net operating loss carryforward....... $ 68,315 $ 74,022 Pre-opening costs and intangible assets.............................. $1,318 511,~~844~~669 $Accounting ~~59,559~~reserves ~~Corporate~~and ~~assets~~liabilities... 331 (543) Tax credits........................... ~~758~~280 ~~2,630~~280 ~~Development assets~~Other................................. 334 55 --------- --------- 70,~~259~~278 375,~~259~~483 ~~Discontinued~~Less: ~~operations~~Valuation allowance.............~~....~~ 52(62,~~950~~731) 51(61,~~370~~379) --------- --------- ~~Net~~7,547 ~~assets~~14,104 Deferred tax liabilities: Property.............................. ~~$108~~7,~~811~~547 8,397 --------- --------- Net deferred tax asset............. $~~116~~ - $ 5,~~818~~707 ========= =========

There are numerous and complex tax issues associated with the Company's filing for protection under Chapter 11 of the Bankruptcy Code and the future reorganization, such as discharge of indebtedness, sale of property or potential abandonment of assets. The impact of these tax issues will affect the amount of tax attribute carryforwards and deferred taxes; however, such impact cannot be determined at this time. 9. STOCK-BASED COMPENSATION As of May 31, 2005, the Company has three stock Option Plans. The Company applies Accounting Principles Board Opinion No. 25 and related interpretations in accounting for its stock-based compensation plans using the intrinsic value method. Accordingly, no compensation expense is reflected in net income for stock options, as all options granted had an exercise price equal to the market value of the underlying common stock on the date of grant. All of the Company's stock options were vested as of May 31, 2005. Had compensation cost for the Company's Stock Option Plans been determined based on the fair value at the grant dates for awards under those plans consistent with the method of Statement of Financial Accounting Standards No. 123 "Accounting for Stock- Based Compensation," the Company's pro forma net income (loss) and net income (loss) per share would be the same. There were no options granted during either the three-month period ended May 31, 2005 or the fiscal year ended February 28, 2005. 10. COMMITMENTS AND CONTINGENT LIABILITIES Bankruptcy Actions On June 20, 2002, the Company together with its subsidiary, President Missouri, which owns and operates the St. Louis operations, filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Mississippi. On July 9, 2002, the Company's subsidiary President Mississippi filed a voluntary reorganization petition in the same Court. On July 11, 2002, substantially all of the Company's other operating subsidiaries filed voluntary 17 20 reorganization petitions under Chapter 11 in the same Court. Subsequently, orders were entered by the Mississippi Bankruptcy Court transferring venue of all of the Chapter 11 cases, except President Riverboat Casino-New York, Inc. and PBLLC, to the United States Bankruptcy Court for the Eastern District of Missouri, where they are now pending and being administered. President Riverboat Casino-New York, Inc. subsequently had its Chapter 11 case dismissed and PBLLC subsequently emerged from Chapter 11. The Company and its subsidiaries, except as noted above, each continue in possession and use of their assets as debtors-in-possession. See "Note 1. Bankruptcy Proceedings." On April 27, 2003, the Missouri Bankruptcy Court granted a motion for approval of a key employee retention plan for certain corporate and Missouri casino employees (the "Retention Plans"). The motion does not affect any pre- petition employment agreements as to assumption or rejection of pre-petition executory contracts, with the exception that any claim asserted by a key employee on account of a pre-petition employment agreement shall be reduced dollar for dollar by the amounts paid or payable under the retention plan. Under the terms of the Retention Plans for certain Missouri key casino employees, certain key employees will receive 50% of their then salary which will be due and payable on the earlier of the following dates: (i) the date on which all or substantially all of President Missouri's assets are sold or (ii) the date on which the Company terminates substantially all of its ordinary Missouri business operations. Under the terms of the Retention Plans for corporate employees, the Chief Financial Officer will receive one year of his then salary on the date he is discharged from employment and the other named key employees will receive 50% of their then current salary. If at any time prior thereto the corporate key employees' salaries are reduced or he or she is required to move his or her residence from the St. Louis, Missouri metropolitan area, he or she will also receive such payment. In the event of the sale of the Missouri assets, an amount shall be set aside to fund such payments. The aggregate amount of the Missouri retention agreements, including corporate, is $505. On April 1, 2004, the Missouri Bankruptcy Court granted a motion for approval of a key employee retention plan for certain Mississippi casino employees. The terms and conditions are the same as the Missouri key casino employee Retention Plan except the assets and operations refer to those of Mississippi and one key employee receiving his then twelve month salary rather than 50%. The aggregate amount of the Mississippi retention agreements was $314. Such amount was paid on April 15, 2005, upon consummation of the sale. In May 2005, the Compensation Committee of the Board of Directors approved replacement employment agreements for Mr. Connelly, Mr. Aylsworth and Mr. Wirginis. The replacement employment agreements have a six-month term beginning June 1, 2005, and include a salary equal to each executive's current salary. The replacement employment agreements also contain terms and conditions substantially similar to the former employment contracts; provided, however, that the replacement employment agreements do not contain a change in control clause. The Compensation Committee also recommended that each of the executives receive a bonus equal to three months of salary if the executive remains employed at the closing of the sale of the St. Louis operations. The Missouri Bankruptcy Court granted a motion seeking approval of the replacement employment agreements on May 27, 2005. Litigation The Company is from time to time a party to litigation, which may or may not 18 21 be covered by insurance, arising in the ordinary course of its business. Management of the Company does not believe that the outcome of any such litigation will have a material adverse effect on the Company's financial condition or results of operations, or which would have any material adverse impact upon the gaming licenses of the Company's subsidiaries. 11. SEGMENT INFORMATION The Company has one reportable segment from continuing operations consisting of corporate administration. All expenses, assets and additions to property and equipment consist of corporate items. See "Note 6. Discontinued Operations" for the results of the Company's discontinued operations. The Company has no inter-segment sales and accounts for transfers of property and inventory at its net book value at the time of such transfer. 12. INSURANCE RISK The Company was partially self-insured for employee health and workers compensation claims and third party liability costs through April 1999. Effective May 1999, the Company became fully insured for workers compensation claims. The Company continues to be partially self-insured for employee health and third party liability claims. The self-insurance claim liability is based on claims reported and claims incurred but not reported using the Company's historic experience with such matters. The Company does carry business interruption insurance, but due to the current insurance market, the current policy does not cover interruption from either windstorm or flood. 13. RELATED PARTY TRANSACTIONS In connection with the resolution of various bankruptcy issues with respect to the Company's Biloxi operations, JECA entered into an agreement (the "JECA Proceeds Distribution Agreement") with John S. Aylsworth, President, Chief Operating Officer and Director of the Company, Terrence L. Wirginis, Vice President and Vice Chairman of the Board and Ralph J. Vaclavik, Senior Vice President and Chief Financial Officer of the Company, pursuant to which upon receipt of funds by JECA toward payment of the liquidation preference of its Class B membership interest in PBLLC, JECA will use its best efforts to pay a percentage of such funds to Messrs. Aylsworth, Wirginis and Vaclavik based on the total sales proceeds to JECA. While final distributions under the Mississippi Plan of Liquidation are subject to final determination and settlement of claims and expenses, the Company currently estimates that the proceeds of the sale of the Mississippi Properties and the anticipated sale of the Company's St. Louis operations (if completed in accordance with its present terms) will be sufficient to repay the Noteholders the outstanding indebtedness under the Notes and, in addition, to satisfy JECA's liquidation preference of its Class B membership interest in PBLLC. Pursuant to the terms of the Proceeds Distribution Agreement, Messrs. Aylsworth, Wirginis and Vaclavik would be entitled to receive an aggregate of approximately $4,800, $4,800 and $300, respectively. See "Note 1. Bankruptcy Proceedings." 19 22 On June 7, 2005, the Company made a distribution from the proceeds of the sale of the Biloxi assets. JECA's Class B membership interest was partially redeemed for $14,375, of which, Messrs. Aylsworth, Wirginis and Vaclavik were paid $3,539, $3,539 and $219, respectively. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. The following discussion should be read in conjunction with the consolidated financial statements of the Company and the notes thereto included elsewhere in this report and with the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 2005. President Casinos, Inc., President Riverboat Casino-Missouri, Inc., The President Riverboat Casino-Mississippi, Inc., Broadwater Hotel, Inc., PRC Management, Inc., PRC Holdings Corporation, TCG/Blackhawk, Inc. and Vegas Vegas, Inc. have each filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code. See "Note 1. Bankruptcy Proceedings" of the Notes to Condensed Consolidated Financial Statements included in Part I of this report. The Company entered into agreements to sell its St. Louis, Missouri and Biloxi, Mississippi gaming operations. The agreement to sell the Biloxi operations was consummated on April 15, 2005. If the St. Louis agreement is consummated under the current terms, the Company would not have any current ongoing business operations. The sale of the St. Louis operation is subject to numerous closing conditions, including approvals of gaming regulatory authorities. As a result of the foregoing, at this time the Company is unable to predict with certainty whether the sale of St. Louis operations will be consummated, the amount of sale proceeds to be realized by the Company or whether such sale proceeds will be sufficient to discharge the Company's existing indebtedness, and the Company's future ability to continue as a going concern. As a result of the Company's relatively high degree of leverage and the need for significant capital expenditures at its St. Louis property, the Company was unable to pay the regularly scheduled interest payments of $6.4 million that were each due and payable March 15, and September 15, 2000. Under the indentures pursuant to which the $75.0 million 13.0% Senior Exchange Notes (the "Senior Exchange Notes") and the $25.0 million 12% Secured Notes (the "Secured Notes" and collectively with the Senior Exchange Notes, the "Notes") were issued, an Event of Default occurred on April 15, 2000, and is continuing as of the date hereof. Additionally, the Company was unable to pay the $25.0 million principal payment due September 15, 2000 on the Senior Exchange Notes. The holders of at least 25% of the Senior Exchange Notes and the Secured Notes were notified of the defaults and instructed the Indenture Trustee to accelerate the Notes and on August 11, 2000, the holders declared the unpaid principal and interest to be due and payable. On October 10, 2000, the Company sold the assets of its Davenport, Iowa operations for aggregate consideration of $58.2 million in cash. On November 22, 2000, the Company entered into an agreement with a majority of the holders of the Senior Exchange Notes and a majority of the holders of the Secured Notes. The agreement provided for a proposed restructuring of the Company's debt obligations under the Notes and the application of certain of the proceeds received by the Company from the sale of the Company's Davenport assets. Approximately $43.0 million of the proceeds from the sale were deposited with a trustee. Of this amount, $12.8 million was used to pay missed interest payments due March 15, 2000 and September 15, 2000 on the Notes; $25.0 million was used to partially redeem the Notes; and $5.2 million 20 23 was used to pay interest due March 15, 2001 on the Notes. Subsequently, the Company was unable to make the principal and interest payments due September 15, 2001. As of May 31, 2005, principal due on the Senior and Secured Notes was $56.2 million and $18.8 million, respectively. The Company subsequently paid $19.4 million and $6.2 million on the Senior and Secured Notes, respectively, from the proceeds of the sale of the Biloxi assets. Due to certain debt covenants and cross default provisions associated with other debt agreements, the Company was also in default under its M/V "President Casino-Mississippi" note. See Liquidity and Capital Resources. Pursuant to the term sheet provisions and the agreement of the Company, the Committee and the Bondholders, on September 25, 2003, the Company entered into an agreement with Isle of Capri Casinos, Inc. to sell the assets of its St. Louis operations for approximately $50.0 million. The agreement was terminated by mutual consent on May 4, 2004. On August 9, 2004, the Company entered into an agreement with Penn National Gaming, Inc. for the purchase of its St. Louis operations. The agreement was submitted to the Missouri Bankruptcy Court for review and was amended on September 17, 2004. Under the terms of the agreement, the stock of the Company was to be sold for approximately $28.0 million, subject to working capital adjustments and subject to higher and better offers. On October 7, 2004, an auction was held in accordance with Section 363 of the Bankruptcy Code. Pursuant to an agreement submitted September 30, 2004, Columbia Sussex, Inc. was the winning over-bidder for the purchase of all of the Company's outstanding stock for a purchase price of approximately $57.0 million, subject to closing adjustments. On October 13, 2004, the Missouri Bankruptcy Court entered an order approving the sale of the stock of the Company to Columbia Sussex. The closing of the transaction, is contingent upon approval by the Missouri Gaming Commission and other closing conditions. The deadline for closing of the sale agreement has been extended from August 1, 2005 to October 31, 2005, and any extension beyond this date will require the consent of both parties. The purchase of the stock of President Missouri is also subject to the confirmation by the Missouri Bankruptcy Court of a plan of reorganization of the Company under Chapter 11 of the Bankruptcy Code (a "Plan of Reorganization"). On May 25, 2005, the Company filed with the Missouri Bankruptcy Court a disclosure statement (the "Disclosure Statement") setting forth the terms of a Plan of Reorganization that was jointly developed by the Company, its creditors SunAmerica Inc. and McKay Shields LLC, and the Official Unsecured Creditors' Committee in the Company's bankruptcy case. The Missouri Bankruptcy Court approved the sufficiency of the Disclosure Statement at a hearing held on June 16, 2005. The Missouri Bankruptcy Court scheduled a hearing on confirmation of the Plan of Reorganization for August 31, 2005. Once confirmed, the Plan of Reorganization will not become effective unless and until all the other conditions to the closing of the sale to Columbia Sussex are satisfied, including, without limitation, approval of the Missouri Gaming Commission. On April 15, 2005, the Company consummated the sale of its Biloxi, Mississippi operations to Broadwater Properties, LLP for approximately $82.0 million, subject to certain post-closing adjustments. The sale was pursuant to an auction and sale process approved by the Missouri Bankruptcy Court. From the proceeds, the Company paid $37.1 million to the lender of the PBLLC debt, to satisfy the outstanding principal and interest in full. The Company invested $45.7 million in certificates of deposit pending approval of the 21 24 Mississippi Plan of Liquidation by the Bankruptcy Court. On March 16, 2004, the Company sold the 179-room Broadwater Tower Hotel for $6.5 million to Ocean Beach Club at Biloxi, LLC. The Company's other hotel, the 333-room President Broadwater Resort, was not included in this transaction. The net proceeds of the transaction were used to reduce the debt of the Company's subsidiary, PBLLC. In connection with the transaction the Company also entered into an initial lease through September 15, 2004, with the new owners whereby the Company would continue to operate the Broadwater Tower Hotel with options for additional extensions. The Company renewed its option through the date of the aforementioned sale. Management believes the Company's liquidity and capital resources will be sufficient to maintain its current operations until the St. Louis operations are sold. However, costs previously incurred and which will be incurred in the future in connection with restructuring the Company's debt obligations and the bankruptcy proceedings have been and will continue to be substantial and, in any event, there can be no assurance that the Company will be able to restructure successfully its indebtedness or that its liquidity and capital resources will be sufficient to maintain its normal operations during the restructuring period. Pursuant to the Missouri Plan of Reorganization, on the effective date of the Plan the Noteholders and holders of general unsecured claims would be entitled to receive, to the extent funds are available, the amount of their unsecured claims and, in addition, a pro rata share of a separate fund equal to fifty percent of President Missouri's "Adjusted EBITDA" for the period beginning August 1, 2005 and ending on the closing date of the sale of stock of President Missouri. For purposes of such fund, the "Adjusted EBITDA" of President Missouri for such period would be equal to President Missouri's earnings before interest, taxes, depreciation and amortization, less unreimbursed capital expenditures and certain authorized expenses associated with the Company's bankruptcy proceedings and corporate expenses of the Company's affiliates. Management estimates that the sale agreement for the St. Louis operations would, if consummated on its present terms, provide sufficient funds to discharge the Company's indebtedness. In the event the sale agreement is consummated on its terms and proceeds are sufficient to discharge the Company's indebtedness, the Board of Directors will determine whether to liquidate the Company or engage in further business activities, including activities other than gaming. At this time it is not possible to predict whether the sale of the St. Louis operations will be consummated or whether the Company will liquidate or continue business operations in some form. Overview The Company's operating results are affected by a number of factors, including competitive pressures, changes in regulations governing the Company's activities, the economic environment and general weather conditions. Consequently, the Company's operating results may fluctuate from period to period and the results for any period may not be indicative of results for future periods. The Company's operations are not significantly affected by seasonality. As a result of the sale of the Biloxi operations in April 2005 and the pending sale agreement for the St. Louis operations, discussed above, the results of operations for these segments are classified in discontinued operations. 22 25 --Competition Competition is intense in the St. Louis market area. There are presently four other casino companies operating five casinos in the market area. Many of these competitors have significantly greater name recognition and financial and marketing resources than the Company. Two of these are Illinois casino companies operating single casino vessels docked on the Mississippi River, one across the Mississippi River from the "Admiral" and the second 20 miles upriver. There are two Missouri casino companies, each of which operates casino vessels approximately 20 miles west of St. Louis on the Missouri River. One company operates two casinos in Maryland Heights, Missouri and the other company operates one casino in the City of St. Charles, Missouri. The operator of the St. Charles casino replaced its facility and reopened with nearly double its prior gaming positions in August 2002. The Missouri Gaming Commission announced that it would consider licensing additional casinos in the St. Louis market. In September 2003, the City of St. Louis and St. Louis County, which are separate political and geographic subdivisions, announced that they were both issuing requests for proposals for a new casino in each jurisdiction. A project proposed by Pinnacle Entertainment, Inc. was selected and approved by the City of St. Louis as its recommendation before the Missouri Gaming Commission. Its proposal includes a casino two blocks from the "Admiral." The St. Louis County Council approved a separate Pinnacle Entertainment, Inc. project in Lemay, Missouri. Various other gaming companies filed proposals. On September 1, 2004, the Missouri Gaming Commission approved Pinnacle Entertainment, Inc. for formal license investigations for both the St. Louis City and St. Louis County projects. Each of the proposals submitted requires significant construction of new infrastructure for the casino and entertainment complexes. Management believes that the licensing of a new casino or casinos in metropolitan St. Louis would have a material adverse effect on the Company's financial condition and results of operations. --Regulatory Matters The Company's Missouri gaming license was renewed on July 8, 2004 for a period through May 2006. Missouri regulations limit the loss per "simulated" cruise per passenger by limiting the amount of chips or tokens a guest may purchase during each two-hour gaming session to $500 (the "loss limit"). The company that operates adjacent casinos is able to offer guests who reach the two-hour loss limit the ability to move to the adjacent casino and continue to play. The lack of a statutory loss limit on Illinois casinos allows them to attract higher stake players. Additionally, their guests are not burdened with the administrative requirements related to the loss limits, which includes the presentation of government issued identification. Any easing of the loss limits in Missouri would be expected to have a positive impact on the Company's St. Louis operations. --Economic Environment The Company's business involves leisure and entertainment. During periods of recession or economic downturn, consumers may reduce or eliminate spending on leisure and entertainment activities. In the event that the St. Louis market suffers adverse economic conditions, the Company's revenues may be materially adversely affected. --Weather Conditions The Company's operating results are susceptible to the effects of floods and 23 26 adverse weather conditions. Historically, the Company has temporarily suspended operations on various occasions as a result of such adversities. Under less severe conditions, high river levels in St. Louis cause reduced parking and a general public perception of diminished access to the casino resulting in decreased revenues. Management believes the relocation of the "Admiral" in December 2000 diminished the negative effects of high water on its St. Louis operations. The Company's Biloxi operations were temporarily closed from noon on September 14 until 7:00 a.m. on September 17, 2004, due to Hurricane Ivan. The Company's Biloxi properties received no significant damage. However, damage caused by Hurricane Ivan to areas east of Biloxi, representing a significant portion of Biloxi's feeder market, was significant. Results of Operations The results of continuing operations for the three-month periods ended May 31, 2005 and May 31, 2004 include only those expenses resulting from corporate administration. The gaming results for the Company's operations in Biloxi, Mississippi and to a lesser significance, the hotel operations in Biloxi (the Broadwater Property) are classified as discontinued operations as a result of the sale of the assets in April 2005. The pending sale of the St. Louis casino requires the Company to classify the St. Louis operations in discontinued operations. Also included in discontinued operations is the Company's former leasing operations. The following table highlights the results of the Company's operations during the periods presented.

~~Nov.~~Three ~~30,~~Months ~~Feb.~~Ended 29May 31, ~~2004~~2005 2004 ------ ------ ~~Property~~(in millions) Continuing Operations Corporate Administration and ~~Equipment:~~Development ~~Biloxi~~operating ~~operations.....................~~loss $ ~~43,593~~(0.7) $ 50(0.6) Discontinued Operations St. Louis,~~461~~ ~~Corporate~~Missouri ~~assets~~Segment Operating revenues 17.9 17.5 Operating income 3.1 1.~~..................~~2 6Biloxi, 7Mississippi ~~Development~~Segment ~~assets~~Operating revenues 5.5 11.7 Operating income 0.5 0.~~................~~4 ~~3,259~~Leasing ~~3,259~~Segment ~~---------~~Operating loss --~~-------~~ ~~Net~~(0.1) ~~Property~~St. ~~and~~Louis ~~Equipment~~operating margin 17.4% 6.~~......~~9% $Biloxi ~~46,858~~operating $margin ~~53,727~~n/a ~~========= =========~~n/a

24 27 The following table highlights cash flows of the Company's operations.

Three Month Period Ended May 31, 2005 Compared to the Three Month Period Ended May 31, 2004 Operating revenues from continuing operations. As of May 31, 2005, the Company had sold it Biloxi operations and had entered into a purchase agreement for the sale of the Company's St. Louis operations which was approved by the Bankruptcy Court. As such, all revenues are classified in discontinued operations. Operating costs and expenses of continuing operations. The Company's consolidated selling, general and administrative expenses were $0.7 million during the three-month period ended May 31, 2005 compared to $0.6 million during the three-month period ended May 31, 2004. Corporate overhead increased $0.1 million primarily as the result of a increase in payroll and payroll benefits due to the accrual of severance for employees who are no longer employed by the Company. Operating income (loss). As a result of the foregoing items, the Company had an operating loss of $0.7 million during the three-month period ended May 31, 2005 compared to an operating loss of $0.6 million during the three-month period ended May 31, 2004. Interest income. The Company had $0.2 million in interest income during the three-month period ended May 31, 2005 compared to less than $0.1 million during the three-month period ended May 31, 2004. The increase in the result of interest earned on the certificates of deposit that were purchased with the proceeds from the sale of the Biloxi assets. Reorganization items. The Company incurred reorganization items of $0.9 million during the three-month period ended May 31, 2005 compared to $0.2 million during the three-month period ended May 31, 2004. Reorganization expense is largely attributable to legal fees associated with the Company's bankruptcy proceedings. The increase in reorganization costs is primarily the result of the costs associated with the Mississippi Plan of Liquidation and $0.5 million accrued for the attorneys of the Noteholders. Minority interest expense. The Company incurred $0.4 million in minority interest expense during the three-month period ended May 31, 2005 compared to $0.3 million during the three-month period ended May 31, 2004. During both periods the minority interest arises from Mr. Connelly's Class B Unit of the Broadwater Property. 27 28 Net loss from continuing operations. As a result of foregoing items, the Company incurred a net loss from continuing operations of $1.3 during the three-month period ended May 31, 2005 compared to a net operating loss of $1.1 million during the three-month period ended May 31, 2004. Discontinued operations. Discontinued operations consists of the Company's St. Louis segment, Biloxi segment and the former vessel leasing segment. St. Louis segment. On August 9, 2004, the Company entered into an agreement with Penn National Gaming, Inc. for the purchase of its St. Louis operations. The agreement was submitted to the Missouri Bankruptcy Court for review and was amended on September 17, 2004. Under the terms of the agreements, the stock of the St. Louis operations was to be sold for approximately $28.0 million, subject to working capital adjustments and subject to a potential overbid. On October 7, 2004, an auction was held in accordance with Section 363 of the Bankruptcy Code. Columbia Sussex, Inc. was the winning over-bidder for the St. Louis casino operations for a purchase price of approximately $57.0 million, subject to closing adjustments. On October 13, 2004, the Missouri Bankruptcy Court approved the terms of the agreement. The closing of the transaction, which is contingent upon licensing by the Missouri Gaming Commission and other typical closing conditions, is anticipated to occur not earlier than the late summer of 2005. The Company's St. Louis operating segment had operating income of $3.1 million, consisting of revenues of $17.9 million and operating expenses of $14.8 million, during the three-month period ended May 31, 2005, compared to operating income of $1.2 million, consisting of revenues of $17.5 million and operating expenses of $16.3 million, during the three-month period ended May 31, 2004. Net revenues increased $0.4 million primarily as a result in a decreased emphasis on promotional allowances for cash back promotions compared to the prior year and increased food and beverage as a result of an increase in volume in the buffet. Operating expenses, other than depreciation, remained the same for both three-month periods. Depreciation expense decreased $1.5 million as a result of ceasing to depreciate assets, in accordance with SFAS 144, effective October 2004. The St. Louis segment had net income of $3.4 million during the three-month period ended May 31, 2005, compared to net income of $1.1 million during the three-month period ended May 31, 2004. Biloxi segment. On April 15, 2005, the Company consummated the sale of substantially all of the assets utilized in its Biloxi operations to Broadwater Development, LLP (the "Purchaser"). The sale was consummated pursuant to the terms and conditions of a Sale and Purchase Agreement, dated as of November 15, 2004, by and between President Mississippi, Vegas Vegas, Inc., PBLLC, (collectively, with President Mississippi and Vegas Vegas, the "Sellers") and Purchaser, as amended by the Amendment to Sale and Purchase Agreement dated as of November 19, 2004, and the Second Amendment to Sale and Purchase Agreement dated as of November 29, 2004 (collectively, the "Sale Agreement"). Pursuant to the Sale Agreement, the Purchaser acquired from the Sellers substantially all of the real and personal property associated with the Company's Biloxi, Mississippi operations. Under the terms of the Sale Agreement, the purchase price was $82.0 million, subject to certain post- closing adjustments. Of this amount, $6.8 million was paid by Silver Slipper Casino Venture LLC, which acquired the right to purchase the gaming casino assets under a separate transaction with the Purchaser. 26 29 The Company's Biloxi operating segment had operating income of $0.5 million, consisting of revenues of $5.6 million and operating expenses of $5.1 million during the three-month period ended May 31, 2005, compared to operating income of $0.4 million, consisting of revenues of $11.7 million and operating expenses of $11.3 million, during the three-month period ended May 31, 2004. During the current fiscal year, the Biloxi segment operated for 45 days before it was sold. Prior year operating expenses include depreciation expense $0.5 million with no comparable expense in the current year. The Company ceased to depreciate assets, in accordance with SFAS 144, effective with the Bankruptcy Court's approval of the sale agreement. The Biloxi segment had net income of $27.6 million during the three-month period ended May 31, 2005, compared to a net loss of $0.3 million during the three-month period ended May 31, 2004. Included in net income for the three-month period ended May 31, 2005 is a $27.7 million gain, net of tax expense of $6.0 million, resulting from the sale of the Biloxi assets. Leasing segment. The leasing segment was operated by President Riverboat Casino-New York, Inc., a wholly-owned subsidiary of the Company. Of the two vessels owned by this segment, the "Surfside Princess" was sold in May 2003. On June 11, 2003, as a result of the Company's default on the debt that the vessel collateralized, the United States Marshall's office served a warrant on the "President Riverboat Casino-Mississippi," the second vessel owned by the leasing segment. On April 7, 2004, the vessel was auctioned. The Company incurred no net income or loss from the leasing segment during the three-month period ended May 31, 2005, compared to a net loss of $0.1 million during the three-month period ended May 31, 2004. On October 17, 2003, the Mississippi Bankruptcy Court issued an order dismissing President Riverboat Casino-New York, Inc.'s Chapter 11 bankruptcy case. As a result of the segment no longer operating under the protection of Chapter 11, the Company accrued interest of $0.1 million on the debt collateralized by the M/V "President Riverboat Casino-Mississippi." The Company also incurred $0.1 million of expense for maintaining the "President Riverboat Casino- Mississippi" until the vessel was auctioned. Net loss. The Company generated net income of $29.1 million during the three-month period ended May 31, 2005, compared to a net loss of $0.6 million during the three-month period ended May 31, 2004. Liquidity and Capital Resources The Company meets its working capital requirements from a combination of internally generated sources including cash from operations and the sale of assets. As discussed above, the Company and its operating subsidiaries, with the exception of PBLLC and President Riverboat Casino-New York, Inc., are operating their businesses as debtors-in-possession under Chapter 11 of the Bankruptcy Code. In addition to the cash requirements necessary to fund ongoing operations, the Company anticipates that it will continue to incur significant professional fees and other restructuring costs in connection with the reorganization. As a result of the uncertainty surrounding the Company's current circumstances, it is difficult to predict the Company's actual liquidity needs and sources at this time. However, based upon current and anticipated levels of operations, during the pendency of the bankruptcy, management believes that its liquidity and capital resources will be 27 30 sufficient to maintain its St. Louis operations at current levels until the pending sale of the property. Costs previously incurred and to be incurred in the future in connection with the reorganization have been and will continue to be substantial and, in any event, there can be no assurance that the Company will be able to reorganize its indebtedness or that its liquidity and capital resources will be sufficient to maintain its normal operations during the reorganization period. The Company's access to additional financing is, and for the foreseeable future will likely continue to be, very limited. Additionally, any significant interruption or decrease in the revenues derived by the Company from its operations would have a material adverse effect on the Company's liquidity and the ability to maintain the Company's operations as presently conducted. As a result of the Company's high degree of leverage and the need for significant capital expenditures at its St. Louis property, the Company was unable to make the regularly scheduled interest payments of $6.4 million that were each due and payable March 15 and September 15, 2000. Under the Indentures pursuant to which the Senior Exchange Notes and Secured Notes were issued, an Event of Default occurred on April 15, 2000, and is continuing as of the date hereof. Additionally the Company did not pay the $25.0 million principal payment due September 15, 2000 on the Senior Exchange Notes. The holders of at least 25% of the Senior Exchange Notes and Secured Notes were notified and instructed the Indenture Trustee to accelerate the Senior Exchange Notes and Secured Notes and on August 11, 2000, the holders declared the unpaid principal and interest to be due and payable. As of May 31, 2005, principal due on the Senior and Secured Notes was $56.2 million and $18.8 million, respectively. The Company's St. Louis operations require approximately $4.0 million to fund daily operations. As of May 31, 2005, the St. Louis operations had $23.2 million of non-restricted cash of which $3.0 million is included in "Assets of Discontinued Operations." Included in cash and cash equivalents is $47.2 million invested in short- term investments with maturities of 90 days or less, which arose primarily from the sale of the Biloxi Properties. The Company is heavily dependent on cash generated from operations to continue to operate as planned in its existing jurisdiction and to make capital expenditures. Management anticipates that its existing available cash and cash equivalents and its anticipated cash generated from operations will be sufficient to fund all of its ongoing operations. The debt obligations will be stayed during the bankruptcy proceedings. To the extent cash generated from operations is less than anticipated, the Company may be required to curtail certain planned expenditures or seek other sources of financing. The Company had $0.4 million in restricted short-term investments as of May 31, 2005, consisting of a certificate of deposit guaranteeing a certain performance obligation required by the Mississippi Gaming Commission. The Company used $1.4 million of cash from operating activities during the three-month period ended May 31, 2005, compared to $0.9 million during the three-month period ended May 31, 2004. Investing activities of the Company generated $83.8 million of cash during 28 31 the three-month period ended May 31, 2005, compared to $6.1 million during the three-month period ended May 31, 2004. During the three-month period ended May 31, 2005, the Company received proceeds from the sale of the Biloxi assets of $82.0 million. During the three-month period ended May 31, 2004, the Company received proceeds from the sale of the Broadwater Tower of $6.5 million. Financing activities of the Company used $36.6 million of cash during the three-month period ended May 31, 2005, compared to $6.4 million during the three-month period ended May 31, 2004. During the three-month period ended May 31, 2005, the Company used proceeds from the sale of the Biloxi assets to pay the debt obligation of PBLLC. During the three-month period ended May 31, 2004, the Company used proceeds from the sale the Broadwater Tower to partially pay PBLLC's debt obligation. In conjunction with the purchase of the Broadwater Property, PBLLC borrowed the sum of $30.0 million from a third party lender, evidenced by a non- recourse promissory note (the "Indebtedness"). PBLLC was obligated under the Indebtedness to make monthly payments of interest accruing under the Indebtedness, and was obligated to repay the Indebtedness in full on July 22, 2000. In addition, PBLLC was obligated to pay to the lender a loan fee in the amount of $7.0 million which was fully earned and non-refundable when the Indebtedness became due. PBLLC continued to make the monthly interest payments accruing on the $30.0 million principal through April 19, 2001, when the Company announced that PBLLC had filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Mississippi. On October 16, 2001, PBLLC filed its plan of reorganization which would permit PBLLC to restructure its debt obligations in a manner which was designed to permit it to continue as a going concern. Subsequently, on February 28, 2003, PBLLC filed Modifications to Debtor's Plan of Reorganization (together with the reorganization plan, the "Modified Plan"). On May 14, 2003, the Mississippi Bankruptcy Court entered the confirmation order confirming the Modified Plan. The Modified Plan became effective on May 28, 2003 and the Company consummated the Modified Plan at that time. The Modified Plan provides that the unsecured creditors of PBLLC receive 100% of their claims. Under the Modified Plan, the obligations to the secured lender were modified with respect to the debt amount, the interest rate and the due date. On April 15, 2005, the Modified Indebtedness and accrued interest thereon were paid in full with the proceeds from the sale of the Broadwater Property. The sale of the Company's Biloxi operations closed effective April 15, 2005 and on May 27, 2005 the Missouri Bankruptcy Court confirmed a Plan of Liquidation (the "Mississippi Plan of Liquidation") for President Mississippi, Vegas, Vegas and PBLLC (the "Mississippi Affiliates") that was jointly developed by the Company and its creditors SunAmerica Inc. and McKay Shields LLC in the Company's bankruptcy case. The Mississippi Plan of Liquidation became final on June 7, 2005. Pursuant to the Mississippi Plan of Liquidation, the proceeds of the sale of the Mississippi Properties, following adjustments required under the Mississippi Asset Sale Agreement, are being allocated and distributed to the creditors of the Mississippi Affiliates, including the holders of the Company's Senior Exchange Notes and Secured Notes in the aggregate outstanding principal amount of $75.0 million (the "Noteholders") and to J. Edward Connelly Associates, Inc. ("JECA") and certain 29 32 assignees of JECA. JECA, an entity controlled by John E. Connelly, the Company's Chairman and Chief Executive Officer, holds a Class B membership interest in PBLLC. The Company anticipates that under the Mississippi Plan of Liquidation, creditors of the Mississippi Affiliates, with the exception of the Noteholders, will be paid in full, subject to final determination and settlement of claims and expenses. The Company currently estimates that (i) an aggregate of approximately $27.9 million of the indebtedness due the Noteholders could be paid, (ii) in respect of the liquidation preference of its Class B membership interest in PBLLC, JECA could receive approximately $16.6 million of the proceeds of the sale of the Mississippi Properties plus accrued interest, and an additional approximately $2.8 million of the proceeds of the sale of the Company's St. Louis operations (assuming the sale of the St. Louis operations is consummated in accordance with its present terms as described below and the Noteholders are paid in full). On June 7, 2005, the Company paid $25.6 million of the indebtedness due to the Noteholders. Additionally, the Company redeemed $14.4 million of JECA's Class B membership interest in PBLLC. The Mississippi Plan of Liquidation established August 8, 2005 as the Administrative Bar Date, whereby each person or entity may file a claim arising on or after July 9, 2002 and before May 25, 2005 for President Mississippi or arising after July 11, 2002 and before May 25, 2005 for Vegas Vegas and BHI. The Company has attempted to notify creditors that failure to file a claim against President Mississippi, Vegas Vegas and/or BHI will result in the claim being forever barred and discharged. The Company defaulted under the terms of its "M/V "President Casino- Mississippi" note. The M/V "President Casino-Mississippi" is the vessel previously operated as a casino in Biloxi, Mississippi and Davenport, Iowa. The vessel and various equipment aboard the M/V "President Casino-Mississippi" collateralize a term note payable which was also personally guaranteed by John E. Connelly, Chairman and Chief Executive Officer of the Company. The Company continued to make the quarterly principal and interest payments on the note prior to the Company's bankruptcy filing. Under the terms of the note agreement, $2.1 million principal became due and payable in August 2002 together with interest and costs (the "Note"). In November 2002, the lender brought an action against Mr. Connelly for breach of contract under his personal guarantee. In December 2003, Mr. Connelly satisfied his personal guarantee paying the lender $1.2 million. In January 2003, the Mississippi Bankruptcy Court granted a motion to relieve the lender from the automatic stay in order to enforce its rights under the Preferred Fleet Ship Mortgage, including but not limited to the right of the lender to seize and sell the vessel. In May 2003, the lender filed a motion with the United States District Court for the Southern District of Illinois for an order directing the Clerk of Court to issue a warrant for the arrest of the M/V "President Casino-Mississippi" pursuant to rules of admiralty and maritime claims. On May 20, 2003, the Court executed the warrant, which allowed the vessel to be seized and sold. On April 7, 2004, the vessel was auctioned and the lender offered the highest bid of $0.5 million. Because the Note was also guaranteed by the Company and President Mississippi, the payment of the personal guarantee triggered a right of contribution to Mr. Connelly from both the Company and the President Mississippi. In addition, Mr. Connelly became partially jointly subrogated to the lender's right under the Note to collect the payment by him from the Company's subsidiary that issued the Note. The Note remained outstanding at year end. The Company, President Mississippi, Mr. Connelly and the lender entered into an agreement whereby the Company would satisfy its obligations under the indebtedness, and related costs, for $0.8 million. Additionally, Mr. Connelly agreed to forego his rights and assignments. The terms are incorporated in the Plan of Reorganization for President Mississippi, which was confirmed on May 27, 2005, and became effective on June 7, 2005, subsequent to which the Company paid the lender $0.8 million in satisfaction of its obligations. Critical Accounting Policies --Significant Accounting Policies and Estimates The Company prepares the consolidated financial statements in conformity with accounting principles generally accepted in the United States. Certain of the Company's accounting policies, including the determination of bad debt reserves, the estimated useful lives assigned to property, plant and equipment, asset impairment, insurance reserves and player point liability require that management apply significant judgment in defining the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. Management's judgments are based on historical experience, terms of existing contracts, observance of trends in the gaming industry and information available from other outside sources. There can be no assurance that actual results will not differ from the Company's estimates. To provide an understanding of the methodology applied, significant accounting policies and basis of presentation are discussed where appropriate in this discussion and analysis and in the notes of the consolidated financial statements. The carrying values of the Company's assets are reviewed when events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Asset impairment is determined to exist if estimated future cash flows, undiscounted and without interest charges, are less than the carrying amount. If it is determined that an impairment loss has occurred, then an impairment loss is recognized in the statement of operations. The resulting impairment loss is measured as the amount by which the carrying amount of the asset exceeds its fair value, estimated using quoted market prices, if available, or other acceptable valuation methodologies, including discounted cash flows or comparable sales. Forward Looking Statements This Quarterly Report on Form 10-Q and certain information provided periodically in writing and orally by the Company's designated officers and agents contain certain statements which constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. The terms "Company," "we," "our" and "us" refer to President Casinos, Inc. The words "expect," "believe," "goal," "plan," "intend," "estimate," and similar expressions and variations thereof are intended to specifically identify forward-looking statements. Those statements appear in this Quarterly Report on Form 10-Q and the documents incorporated herein by reference, particularly "Management's Discussion and Analysis of Financial Condition and Results of Operations," and include statements regarding the intent, belief or current expectations of the Company, its directors or its officers with respect to, among other things: (i) our financial prospects and operations; (ii) our financing plans and our ability to meet our obligations under our debt obligations and obtain satisfactory operating and working capital; (iii) our operating and restructuring strategy; and (iv) the effect 31 34 of competition and regulatory developments on our current and expected future revenues. You are cautioned that any such forward looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those projected in the forward looking statements as a result of various factors. The factors that might cause such differences include, among others, the following: (i) continuation of future operating and net losses by the Company; (ii) the inability of the Company to restructure its debt obligations; (iii) the inability of the Company to obtain sufficient cash from its operations and other resources to fund ongoing obligations and continue as a going concern; (iv) the ability of the Company to develop, prosecute, confirm and consummate one or more plans of reorganization with respect to the Chapter 11 cases; (v) risks associated with third parties proposing and obtaining confirmation of one or more plans of reorganization, or seeking and obtaining approval for the appointment of a Chapter 11 trustee or converting the cases to Chapter 7 cases; (vi) the ability of the Company to obtain trade credit, and shipments and terms with vendors and service providers; (vii) the Company's ability to maintain contracts that are critical to its operations; (viii) potential adverse developments with respect to the Company's liquidity and results of operations; (ix) developments or new initiatives by our competitors in the markets in which we compete; (x) our stock price; (xi) adverse governmental or regulatory changes or actions which could negatively impact our operations; and (xii) other factors including those identified in the Company's filings made from time-to-time with the Securities and Exchange Commission. The Company undertakes no obligation to publicly update or revise forward looking statements to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect the occurrence of unanticipated events. Item 3. Quantitative and Qualitative Disclosures about Market Risk. As of May 31, 2005, the Company had $75.8 million of debt. Of this amount $75.0 million bears contractual interest at fixed rates and is classified as liabilities subject to compromise and $0.8 million bears contractual interest at a fixed rate and is classified as liabilities of discontinued operations. The Company does not have variable rate debt instruments. The Company continues to monitor interest rate markets, but has not engaged in any hedging transactions with respect to such risks. As of May 31, 2005, the Company is obligated to pay under the Class B Unit of Mr. Connelly in PBLLC a priority return based on a percentage per annum equal to the greater of (i) 7.75% or (ii) 4.0% plus LIBOR, as defined by the terms of the agreement, for PBLLC. As of May 31, 2005, the minority interest on the balance sheet is comprised of $19.4 million, related to its obligation to redeem the Class B Unit for $10.0 million, plus any priority return accrued but not paid. On June 7, 2005, the Company redeemed $14.4 million of the Class B Unit, resulting in an outstanding minority interest of $5.0 million. As of May 31, 2005, the interest rate applicable to the debt carried a variable rate of 7.75%. An increase of one percentage point in the average interest rate applicable to the variable rate debt outstanding as of May 31, 2005, would increase the Company's annual contractual interest costs by approximately $0.2 million. Although the Company manages its short-term cash assets to maximize return with minimal risk, the Company does not invest in market rate sensitive instruments for trading or other purposes and the Company is not exposed to foreign currency exchange risks or commodity price risks in its transactions. 32 33 Item 4. Controls and Procedures (a) Evaluation of Disclosure Controls and Procedures The Company carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of the end of the period covered by this Quarterly Report pursuant to Rule 13a-15e of the Securities Exchange Act of 1934, as amended. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the disclosure controls and procedures are effective in timely alerting them to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company's periodic filings with the Securities and Exchange Commission. (b) Changes in Internal Control Over Financial Reporting No changes in the Company's internal control over financial reporting have come to management's attention during the last fiscal quarter that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. Part II. Other Information Item 1. Legal Proceedings Information with respect to legal proceedings to which the Company is a party is disclosed in Note 8 of Notes to Condensed Consolidated Financial Statements included in Part I of this report and is incorporated herein by reference. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Not applicable. Item 3. Defaults Upon Senior Securities The Company has 13.0% Senior Exchange Notes and 12.0% Secured Notes. The Company did not pay the regularly scheduled interest payments of $6.4 million that were each due and payable March 15 and September 15, 2000. Under the Indentures pursuant to which the Senior Exchange Notes and Secured Notes were issued, an Event of Default occurred on April 15, 2000, and is continuing as of the date hereof. Additionally, the Company did not pay the $25.0 million principal payment due September 15, 2000 on the Senior Exchange Notes. In November 2000, the Company paid (i) $12.8 million interest and (ii) $18.75 million and $6.25 million principal on the Senior Exchange Notes and Secured Notes, respectively. The Company did not make the interest payments due September 15, 2001 and March 15, 2002. On June 20, 2002, the Company filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code. The noteholders of the Senior Exchange Notes and the Secured Notes were deemed by management to be undersecured and as a result, interest ceased to accrue as of the date of thereof. Total arrearage as of June 20, 2002, was $56.25 million of principal and $9.3 million of interest on the Senior Exchange Notes and $18.75 million of principal and $2.8 million of interest on the Secured Notes. 33 36 Item 4. Submission of Matters to a Vote of Security Holders Not applicable. Item 5. Other Information Not applicable. Item 6. Exhibits The exhibits filed as part of this report are listed on Index to exhibits accompanying this report. 34 37 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. President Casinos, Inc. ----------------------------- (Registrant) Date: July 13, 2005 /s/ Ralph J. Vaclavik ----------------------------- Ralph J. Vaclavik Senior Vice President and Chief Financial Officer 35 38 INDEX TO EXHIBITS ----------------- EXHIBIT NO. 2 Riverboat Casino Sale and Purchase Agreement entered into as of 30th day of September, 2004, by and among President Casinos, Inc., debtor and debtor-in-possession in a Chapter 11 bankruptcy case, Case No. 02-53005 pending in the United States Bankruptcy Court for the Eastern District of Missouri (the "Company"), President Riverboat Casino-Missouri, Inc. ("President Missouri") and Columbia Sussex, Inc. (9) 2.1 Sale and Purchase Agreement, dated as of November 15, 2004, by and between The President Riverboat Casino-Mississippi, Inc. ("President Mississippi"), Vegas, Vegas, Inc. (each a debtor in Case No. 02-53005-172 pending in the United States Bankruptcy Court for the Eastern District of Missouri), President Broadwater Hotel, LLC ("PBLLC"), on the one hand, and Broadwater Properties, LLC, on the other hand. (10) 2.2 Amendment to Sale and Purchase Agreement, dated as of November 29, 2004, by and between President Mississippi, Vegas, Vegas, Inc. (each a debtor in Case No. 02-53005-172 pending in the United States Bankruptcy Court for the Eastern District of Missouri), PBLLC, on the one hand, and Broadwater Properties, LLC, on the other hand. (11) 3.1 Restated Articles of Incorporation of the Company. (8) 3.2 By-Laws of the Company, as amended. (4) 4.1 Indenture dated as of August 26, 1994, by and among the Company, the Guarantors and United States Trust Company of New York ("U.S. Trust"). (3) 4.1.1 Form of Senior Exchange Note issued pursuant to Indenture. (2) 4.1.2 Warrant Agreement dated as of September 23, 1993, by and between the Company and U.S. Trust, as Warrant agent. (1) 4.1.3 Warrant Agreement dated as of August 26, 1994, by and between the Company and U.S. Trust. (3) 4.1.4 Subsidiary Stock Pledge and Collateral Assignment Agreement dated as of August 26, 1994, by the Company and Subsidiary Pledgors in favor of U.S. Trust, as collateral agent. (3) 4.2 Rights Agreement, dated as of November 20, 1997, between the Company and ChaseMellon Shareholder Services, LLC. (5) 4.3 Agreement to Exchange Securities, dated December 3, 1998 by and among the Company, President Riverboat Casino-Iowa, Inc. ("President Iowa"), President Missouri, President Mississippi, TCG/Blackhawk, Inc. ("Blackhawk"), P.R.C.-Louisiana, Inc., President Riverboat Casino-New York, Inc. ("President New York"), President Casino New Yorker, Inc., PRC Holdings Corporation, PRC Management, Inc. ("PRC Management"), PRCX Corporation, President Riverboat Casino-Philadelphia, Inc. ("President Philadelphia"), Vegas Vegas, Inc., and The Conelly Group, LP ("TCG") and each holder of the Company's 13% Senior Exchange Notes due 2001. (6) 4.3.1 Indenture dated as of December 3, 1998, among The Company, President Iowa, President Missouri, President Mississippi, Blackhawk, P.R.C.-Louisiana, Inc., President New York, President Casino New Yorker, Inc., PRC Holdings Corporation, PRC Management, PRCX Corporation, President Philadelphia, Vegas Vegas, Inc. and TCG and U.S. Trust Company of Texas, N.A. (6) 4.4.2 President Casinos, Inc. Supplemental Indenture with respect to $25,000,000 12% Notes due September 15, 2001. (7) 36 39 4.4.3 President Casinos, Inc. Supplemental Indenture with respect to $75,000,000 13% Senior Notes due September 15, 2001. (7) 31.1 Certification of Chief Executive Officer Pursuant to 18 Rule 131-14(a) under the Securities Exchange Act of 1934, as amended. 31.2 Certification of Chief Financial Officer Pursuant to 18 Rule 131-14(a) under the Securities Exchange Act of 1934, as amended. 32.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes- Oxley Act of 2002. 32.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes- Oxley Act of 2002. (1) Incorporated by reference from the Company's Registration Statement on Form S-4 (File No. 33-71332) filed November 5, 1993. (2) Incorporated by reference from the Company's Registration Statement on Form S-8 dated June 8, 1994. (3) Incorporated by reference from the Company's Registration Statement on Form S-4 (File No. 33-86386) filed November 15, 1994. (4) Incorporated by reference from the Company's Quarterly Report on Form 10-Q for the quarterly period ended August 31, 1997 filed October 10, 1997. (5) Incorporated by reference from the Company's Registration Statement on Form 8-A dated December 5, 1997. (6) Incorporated by reference from the Company's Report on Form 8-K dated December 15, 1998. (7) Incorporated by reference from the Company's Report on Form 8-K dated November 22, 2000. (8) Incorporated by reference from the Company's Registration Statement on Form S-8 dated October 10, 2001. (9) Incorporated by reference from the Company's Quarterly Report on Form 10-Q dated August 31, 2004. (10) Incorporated by reference from the Company's Report on Form 8-K dated November 15, 2004. (11) Incorporated by reference from the Company's Report on Form 8-K dated November 29, 2004. 37

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