10-K 1 d14474e10vk.txt FORM 10-K U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended: December 31, 2003 [ ] TRANSITION REPORT PURSANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________ to __________________ Commission file number 0-31737 WINDSOR WOODMONT BLACK HAWK RESORT CORP. (Exact name of registrant as specified in its charter) Colorado 75-2740870 -------------------------------------- ------------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 111 Richman St. Black Hawk, Colorado 80422 ------------------------------------- (Address of principal executive office) Registrant's Telephone Number: (303) 582-3600 Securities registered under Section 12(b) of the Act: None Securities registered under Section 12(g) of the Act: Common Stock, $0.01 par value (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 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 if disclosure of delinquent filers in response to Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [ ] No [X] We are unable to determine the aggregate market value for the 580,767 shares of the common stock, $0.01 par value per share, held by non-affiliates because there is no trading market for our common stock. The number of shares of common stock of the registrant outstanding as of April 12, 2004 was 1,000,000. While the registrant is currently involved in Chapter 11 Bankruptcy proceedings, no securities have been distributed under a plan confirmed by the court. Document incorporated by reference:

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i PART I ITEM 1. BUSINESS Except for historical information contained herein, the following discussion contains forward-looking statements that involve risks and uncertainties. Such forward-looking statements include, but are not limited to, statements regarding future events and the Company's plans and expectations. The Company's actual results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below under "Factors That May Affect Future Results," as well as those discussed elsewhere in this Form 10-K. We have based the Black Hawk market data and other statistical information in this Annual Report, including parking data, on information supplied by the Colorado Division of Gaming (the "Division of Gaming"), the City of Black Hawk and various public announcements and filings made by some of the casinos in the Black Hawk market. We have also relied on other sources that we believe are reliable. While we believe that the information is accurate, we have not independently verified any of this information or such announcements and filings, and it is possible they may not be accurate in all material respects. In addition, the gaming markets in Colorado and in Black Hawk are subject to continual changes, including changes in the number and size of casinos in such markets. Because of these changes, our estimates of the Casino's expected position in Colorado and in Black Hawk in terms of size, comparable amenities, parking and nearby competition could become inaccurate at any time. As used in this Annual Report, the terms "our company," "we" and "us" refer to Windsor Woodmont Black Hawk Resort Corp., the term "First Mortgage Notes" refers to the $100 million principal amount of 13% First Mortgage Notes due 2005 which we issued under an indenture dated March 14, 2000. "Second Mortgage Notes" refers to the $9,840,233 principal amount subordinated indebtedness comprised of the second mortgage notes held by Hyatt Gaming, defined below. "Hyatt Management Agreement" refers to the casino management agreement between the Company and Hyatt Gaming dated February 2, 2000, as amended on March 14, 2000. The term "Casino" refers to the integrated casino, entertainment and parking facility constructed in Black Hawk, Colorado, operated under the trade name "Mountain High Casino." OVERVIEW Windsor Woodmont Black Hawk Resort Corp. ("Windsor Woodmont" or the "Company") was incorporated in the State of Colorado on January 9, 1998. The Company owns the Mountain High Casino, an upscale, integrated gaming, entertainment and parking facility located in Black Hawk, Colorado, approximately 40 miles from Denver (the "Casino"). The Casino opened on December 20, 2001. The Casino is located at 111 Richman Street, Black Hawk, Colorado, at the intersection of Highway 119 and Richman Street in the center of the Black Hawk gaming district. From opening until May 14, 2003, the Casino was managed by Hyatt Gaming Management, Inc. ("Hyatt Gaming") pursuant to a professional management agreement. On May 14, 2003, the Company assumed management of the Casino. As described below, on November 7, 2002 (the "Petition Date"), we filed a voluntary petition for relief under chapter 11 of the United States Bankruptcy Code (the "Bankruptcy Code"), in the United States Bankruptcy Court for the District of Colorado (the "Bankruptcy Court") as Case No. 02-28089-ABC (the "Chapter 11 Case"). We filed the Chapter 11 Case because we were experiencing difficulties generating sufficient cash flow from operations to meet our financial obligations under the First Mortgage Notes and the Second Mortgage Note, pursuant to the applicable agreements. We are currently acting as a debtor-in-possession on behalf of the bankruptcy estate. PROCEEDINGS UNDER CHAPTER 11 OF THE BANKRUPTCY CODE Our failure to pay the interest on the First Mortgage Notes and the Second Mortgage Note when due on October 15, 2002 constituted an "Event of Default" under such agreements. On October 23, 2002, we received notice from SunTrust Bank ("SunTrust"), as Trustee under the indenture governing the First Mortgage Notes, that the First Mortgage Notes were due and payable immediately. 1 On November 1, 2002, SunTrust, as Trustee under the indenture governing the First Mortgage Notes, obtained a court order for the appointment of a receiver. The receiver operated the Company from November 1, 2002 until the filing of the Chapter 11 Case. On November 7, 2002, we filed the Chapter 11 Case. As of the Petition Date, the Bankruptcy Court assumed jurisdiction over the assets and liabilities of the Company. The receiver was removed and we are currently acting as a debtor-in-possession on behalf of the bankruptcy estate and, as such, are authorized to operate the business subject to Bankruptcy Court supervision. On or about March 17, 2003, the Office of the United States Trustee appointed the Official Committee of Unsecured Creditors (the "Unsecured Creditors Committee") to represent the interests of general unsecured creditors in the Chapter 11 Case. The holders of the First Mortgage Notes, SunTrust, as Trustee under the indenture governing the First Mortgage Notes, Hyatt Gaming and the Unsecured Creditors Committee, among other creditor constituencies, are represented by counsel in the Chapter 11 Case, receive notice of all actions taken by the Company in the Chapter 11 Case, and have been actively involved in the Chapter 11 Case. Prior to the Petition Date we retained Irell & Manella LLP as our lead reorganization counsel in the Chapter 11 Case. We retained Alvarez & Marsal, Inc. as our financial advisor in connection with the Chapter 11 Case and for the preparation of a plan of reorganization. Other professionals have been retained by us in our Chapter 11 Case. All professionals have been employed pursuant to orders of the Bankruptcy Court. The payment of the fees and expenses of the professionals employed by us in the Chapter 11 Case are subject to review and approval by the Bankruptcy Court, after notice and an opportunity for a hearing. We have incurred, and will continue to incur, significant costs associated with our Chapter 11 Case. As a debtor-in-possession, we are authorized to continue to operate as an ongoing business, but may not engage in transactions outside the ordinary course of business without the approval of the Bankruptcy Court, after notice and an opportunity for a hearing. Under the Bankruptcy Code, actions to collect pre-petition indebtedness or enforce pre-petition contractual obligations, as well as most other pending actions against us or property of our estate, are stayed. On December 6, 2002, we filed with the Bankruptcy Court our Schedules of Assets and Liabilities and Statements of Financial Affairs, which were amended on or about March 12, 2003 (the "Schedules"). The Schedules set forth, among other things, our assets and liabilities as shown by our books and records, subject to the assumptions contained in certain notes filed in connection therewith. All of the Schedules are subject to further amendment or modification with notice to those impacted by the amendment or modification. In the Schedules, we listed over 250 disputed and undisputed pre-petition claims against our bankruptcy estate reflecting claims of approximately $149 million. Thereafter, the Bankruptcy Court set the deadline for filing proofs of claim and interests with the Bankruptcy Court as January 23, 2003, and subsequently set a supplemental bar date of March 17, 2003 for certain creditors and interested parties who did not receive notice of the prior bar date. Accordingly, with the exception of a general 30-day bar date for claims arising from the rejection of executory contracts and unexpired leases, the deadlines for filing proofs of claim against us has passed. The claims register prepared and maintained by the Bankruptcy Court reflects that, as of November 18, 2003, 126 proofs of claim have been filed in the Chapter 11 Case in an aggregate amount in excess of $160 million. We also may face additional claims in the future, including, without limitation, claims arising from our rejection of executory contracts and/or unexpired leases. Under the Bankruptcy Code, we may assume or reject executory contracts or unexpired leases subject to the approval of the Bankruptcy Court and our satisfaction of certain other requirements. In the event we choose to reject any executory contracts or unexpired leases, parties affected by these rejections may file claims with the Bankruptcy Court as provided by the Bankruptcy Code and/or orders of the Bankruptcy Court. Unless otherwise agreed, the assumption of an executory contract or unexpired lease will require us to cure all prior defaults under such executory contract or unexpired lease, including all pre-petition liabilities, some of which may be significant. In addition, we expect that liabilities that will be subject to compromise through the Chapter 11 process will arise in the future as a result of the rejection of executory contracts or unexpired leases and from the determination by the Bankruptcy Court (or agreement by parties in interest) of allowed claims for items that we now claim as contingent or disputed. Conversely, we would expect that the assumption of executory contracts or unexpired leases may 2 convert some liabilities shown on our financial statements as subject to compromise to post-petition liabilities. Due to the uncertain nature of many of the potential claims, we are unable to project the magnitude of such claims with any degree of certainty. On December 13, 2002, we filed a motion for court approval of the rejection of the management agreement with Hyatt Gaming (the "Hyatt Management Agreement"). On April 10, 2003, the Company executed a settlement agreement with Hyatt Gaming (the "Hyatt Settlement and Release Agreement"), which provided for the rejection of the Hyatt Management Agreement, the transition of management of the Casino to the Company, the fixing of the amount and priority of Hyatt Gaming's claims in the Chapter 11 Case (including the claims based on the Second Mortage Note and the rejection of the Hyatt Management Agreement), and the treatment of Hyatt Gaming's claims under a plan of reorganization. Pursuant to the Hyatt Settlement and Release Agreement, Hyatt Gaming holds an allowed unsecured claim in the Chapter 11 Case in the aggregate amount of $18,413,243.68 (the amount of $18,318,368.49 set forth in the Hyatt Settlement and Release Agreement plus an additional $94,875.19 in incentive management fees from the Petition Date through May 13, 2003); provided, however, that in the event that the value of the Company's assets exceed the value of the liens senior to the Second Mortgage Note (including the liens of the Black Hawk BID, PCL, the FF&E Lender and the First Mortgage Noteholders), Hyatt Gaming's claim based on the Second Mortgage Note will be secured to such extent. On April 25, 2003, the Bankruptcy Court entered an order approving the Hyatt Settlement and Release Agreement. On May 14, 2003, we assumed management of the Casino and the Casino name was changed to the Mountain High Casino. The treatment of Hyatt Gaming's allowed claim (including certain changes to such treatment that Hyatt Gaming asserts are in violation of the Hyatt Settlement Agreement and to which Hyatt Gaming has not consented) is reflected in the Plan of Reorganization (as defined below). Hyatt Gaming has indicated that, in addition to its pre-petition claims against the Company, it may assert an administrative claim in the Chapter 11 Case for damages arising from alleged breaches of the terms of the Hyatt Settlement and Release Agreement. On or about February 19, 2003, we entered into a stipulation with David R. Belding, our furniture, fixture and equipment lender (the "FF&E Lender") pursuant to which all issues between the Company and the FF&E Lender concerning the amount and priority of the FF&E Lender's claim and the treatment of such claim under a plan of reorganization were resolved. On February 19, 2003, the Company filed its Motion to Approve Stipulation Regarding (1) Allowance and Payment of Secured Claim of David R. Belding; and (2) Mutual Release of Claims Relating to Disputes Over Funds in Wells Fargo Bank Account (the "FF&E Stipulation"). Thereafter, objections to the FF&E Stipulation were filed by the First Mortgage Noteholders and PCL (as defined below), and SunTrust and the Unsecured Creditors Committee filed joinders to the objection filed by the First Mortgage Noteholders (PCL later withdrew its objection to the FF&E Stipulation). The objections asserted, among other things, that the initiation of an adversary proceeding may be required to obtain the relief sought in the FF&E Stipulation. The Company, the FF&E Lender, and the objecting parties agreed to proceed with the issues raised in connection with the FF&E Stipulation and the objections thereto by way of an adversary proceeding and such matter was converted to an adversary proceeding. Thereafter, the parties reached an agreement whereby the adversary proceeding on the FF&E Stipulation was held in abeyance and the issues relating to the FF&E Stipulation were resolved or reserved for a later date. On June 24, 2003, the Company filed an Amended Stipulation Regarding (1) Allowance and Payment of Secured Claim of David R. Belding; and (2) Mutual Release of Claims Relating to Disputes Over Funds in Wells Fargo Bank Account (the "FF&E Settlement Agreement"), which was approved by the Bankruptcy Court by order entered June 30, 2003. The FF&E Settlement Agreement provides, among other things, that the FF&E Lender will receive payments of up to $500,000 per month during the Chapter 11 Case and will be paid certain amounts on the effective date of a plan of reorgnaization. After the approval of the FF&E Settlement Agreement, the Company and the FF&E Lender agreed to more favorable treatment to the Company, including a reduction in the required effective date payment to the FF&E Lender and a one-year extension on the repayment of the amounts due to the FF&E Lender, which treatment is reflected in the Plan of Reorganization (as defined below). 3 PCL Construction Services, Inc. ("PCL") was the general contractor in the construction of the Casino. Pursuant to its contract with the Company, PCL was obligated to prepare construction schedules for completion of the Casino within the time limits of the contract, to revise the schedules to the extent required, to provide for timely completion of the contract, and to otherwise perform and act in the capacity of general contractor. On May 29, 2002, we filed a complaint in Gilpin County District Court, Colorado, seeking damages from PCL for (1) fraudulent misrepresentation, (2) fraudulent concealment, (3) negligent misrepresentation, (4) constructive fraud, and (5) breach of contract (the "Casino Action"). On June 19, 2002, PCL filed an answer and filed its own complaint against the Debtor and 20 other defendants (including numerous subcontractors) also in Gilpin County District Court, Colorado (the "PCL Action"). On August 22, 2002, the Debtor filed an answer to the complaint in the PCL Action. Prior to the Petition Date, the Casino Action and the PCL Action were consolidated into one case. The claims of PCL and its subcontractors against the Debtor aggregated approximately $10,000,000 and the Debtor's claims against PCL were in the approximate amount of $5,000,000. The claims on the part of both PCL and the Debtor were contingent and unliquidated, however, PCL's claims included claims for the foreclosure of mechanic's liens on the Casino property and PCL asserted that the mechanic's liens were first priority liens on the Casino property, superior in priority to the deed of trust of SunTrust, as trustee for the First Mortgage Noteholders. Following extensive settlement discussions, on May 15, 2003, we entered into a Settlement and Release Agreement with PCL, on behalf of itself and the PCL Subcontractors (the "PCL Settlement Agreement"). Pursuant to the PCL Settlement Agreement, we agreed to pay PCL a total of $4,500,000, with a $2,300,000 down payment, a $1,400,000 payment on the earlier of January 15, 2004 or ten (10) days after the effective date of the Plan of Reorganization (defined below), $400,000 on October 15, 2004 and $400,000 on April 15, 2005. The Bankruptcy Court approved the PCL Settlement Agreement on July 7, 2003. The required $2,300,000 down payment was paid to PCL on July 28, 2003 and the $1,400,000 payment was made on or about January 15, 2004. As provided by the Bankruptcy Code, we had an initial period of 120 days from the Petition Date to file a plan of reorganization and an initial period of 180 days from the Petition Date to solicit and obtain acceptances to such plan. During 2003, we petitioned the Bankruptcy Court and were granted extensions of time with respect to our exclusive right to file a plan and solicit and obtain acceptances thereto. On August 6, 2003, we filed a plan of reorganization and accompanying disclosure statement with the Bankruptcy Court. On November 20, 2003, we filed an amended plan of reorganization (the "Plan of Reorganization") and accompanying amended disclosure statement (the "Disclosure Statement") with the Bankruptcy Court. An objection to the Disclosure Statement was filed by First Place LLC. By stipulations between the First Mortgage Noteholders, Sun Trust and the Unsecured Creditors Committee and orders thereon, the hearing on approval of the Disclosure Statement has been continued on several occasions and is currently scheduled for May 4, 2004. By those same stipulations and orders, the current objection deadline relative to the Disclosure Statement has been extended to April 26, 2004 for the First Mortgage Noteholders, Sun Trust, Hyatt Gaming and the Unsecured Creditors Committee. At the hearing on the Disclosure Statement, the Bankruptcy Court will also consider granting an extension of exclusivity period for us to solicit and obtain acceptances to the Plan of Reorganization. If the Plan of Reorganization is confirmed by the Bankruptcy Court, substantially all pre-petition liabilities will be subject to restructuring. Any plan of reorganization is voted upon by creditors and equity holders and is subject to the approval of the Bankruptcy Court. A plan of reorganization must be confirmed by the Bankruptcy Court upon certain findings being made by the Bankruptcy Court as required by the Bankruptcy Code. The Bankruptcy Court may confirm a plan or reorganization notwithstanding the non-acceptance of the plan by an impaired class of creditors or equity security holders if certain requirements of the Bankruptcy Code are met. There can be no assurance that the Plan of Reorganization will be confirmed by the Bankruptcy Court, or that any such plan will be consummated. During the Chapter 11 Case, we continue to operate our business in the ordinary course without interruption and without material impact on our employees, customers and suppliers. As of December 31, 2003, we 4 had approximately $8,283,104 million in cash available. Based upon such cash availability, we do not require, and do not expect to obtain, debtor-in-possession financing in our Chapter 11 Case. At this time it is not possible to predict the effect of the Chapter 11 Case on our business, various creditors and equity security holders or when we will be able to conclude our Chapter 11 Case. Our future results are dependent upon, among other things, the confirmation and implementation of a plan of reorganization. The Financial Statements contained herein have been prepared on a going concern basis, which assumes continuity of operations and realization of assets and satisfaction of liabilities in the ordinary course of business, and in accordance with Statement of Position 90-7 ("SOP 90-7"), "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code." Our ability to continue as a going concern, as described above, is predicated upon, among other things, the confirmation of a reorganization plan and the ability to generate cash flow from operations sufficient to satisfy our future obligations under a plan. COMPANY BACKGROUND During 1997 and 1998, Windsor Woodmont, LLC purchased 48 separate parcels of land in Black Hawk, Colorado, to assemble a 106 acre tract of land with approximately 119,000 gross gaming-zoned square feet. Windsor Woodmont, LLC is a Colorado limited liability company that was formed for the purpose of assembling and developing the land on which the Casino is built. In March 2000, Windsor Woodmont LLC contributed the real property owned by it in Black Hawk and assigned all its rights under certain agreements entered into in connection with the Casino to the Company. The Company then issued the $100 million principal amount First Mortgage Notes. The proceeds were used to finance the development and construction of the Casino. DESCRIPTION OF CASINO GENERAL. The Casino is an upscale gaming facility providing patrons with a broad selection of gaming activities, dining and entertainment. The Casino is built on the largest single parcel of real estate ever assembled for casino development in Black Hawk. It is the largest casino in Black Hawk, with approximately 425,000 square feet, 57,000 of which is used for gaming. The Casino features the largest number of gaming machines in Black Hawk with 996 state of the art slot machines and 24 table games. The interior decor resembles the Rocky Mountain surroundings by using rocks, wood, and landscapes natural to Colorado as part of the interior design. RESTAURANTS. The Casino features a full array of dining options. Restaurants available include: the Steakhouse at Mountain High Casino, a steak and seafood restaurant, the Mountain High Buffet, a high quality action-station buffet and a food court featuring: Wolfgang Puck's Express restaurant and the Mountain High Grill. Krispy Kreme donuts that are delivered fresh daily and a Starbucks Coffee Bar is located on the Sun Fire Deck, an indoor/outdoor plaza area. PARKING. The Casino includes an approximately 300,000 square foot parking garage, with the capacity to park approximately 800 vehicles in covered parking spaces, 650 adjacent valet spaces, and is able to accommodate buses and motor coaches. This represents one of the largest on-site parking facilities in Black Hawk. The Casino also features Black Hawk's largest porte cochere leading directly into the Casino. ENTERTAINMENT. Our non-gaming amenities are located throughout the gaming floor. The focal point is the Winner's Circle Lounge, a 5,000 square foot area surrounded by four, seven-story tall two-sided fireplaces. The center of the circular bar features a stage for showcasing live entertainment. The area also has four retractable large-screen televisions for special sports or other broadcast venues. The Casino includes a Margarita Bar on the gaming floor and televisions in the food court to entertain guests. The Casino also contains the Vista Gallery, a stationary exhibit gallery on the second floor overlooking the gaming floor. BUSINESS STRATEGY Our business strategy is to complete our restructuring under the Chapter 11 Case as expeditiously as possible. During the course of the Chapter 11 Case, we intend to initiate a broad strategic and operational restructuring, improve our business discipline and reduce our cost structure, all with the goal of developing positive 5 cash flow from operations. Key elements to our restructuring will be to reduce our expenses, continue to improve in our slot product, focus our marketing efforts to high worth casino player segments and a complete re-positioning of the property resulting in a prominent position in Black Hawk by offering patrons a quality entertainment experience through superior customer service in an up-scale, friendly and exciting environment. We are dedicated to providing a high level of customer satisfaction and loyalty by offering a spacious, single-floor Las Vegas style casino featuring both gaming and non-gaming entertainment using a upscale and distinctive design. We recognize that consistent quality and a comfortable atmosphere can differentiate the Casino and offer us a competitive advantage. We believe the distinctive design of the Casino combined with a complete new re-positioning and its comprehensive amenities attracts a wider cross section of Denver metropolitan area residents. MARKETING STRATEGY We believe that the Casino has an excellent location and offers sufficient and convenient parking. In addition, the Casino has an opportunity to expand the Black Hawk market by way of numbers of patrons and to reach higher-spending patrons by offering a higher level of quality and service than currently exists in Black Hawk. Additionally, the size of the Casino will allow us to better absorb peak period demand. Our marketing strategy emphasizes the following elements: TARGETED CUSTOMER BASE. We target potential customers with above-average household income levels in the Denver metropolitan area who tend to have disposable income for gaming and entertainment purposes as well as other recreational gaming customers. We exploit this customer base through our Winner's Advantage Club, preferred player recognition program. The Winner's Advantage Club allows members to receive valuable rewards and exciting promotional offers in conjunction with their casino play. Rewards include: complementary meals, cash back, special mail offers, invitations to special events and parties, and tickets to sporting events. EFFECTIVE DIRECT MARKETING. We attract customers to the Casino by marketing in the Colorado market through the use of radio and print advertisements, billboards, our Winners Advantage Club, on-going promotions, gaming tournaments, sweepstakes and most importantly an increased focus on direct mail marketing. The marketing emphasizes the Casino's gaming, quality dining facilities, varied entertainment activities and on-site parking. We also utilize the Casino's web site located at www.mtnhighcasino.com to enhance its marketing programs. CUSTOMER SERVICE. The Casino has a management team committed to superior service, quality and innovation. We promote repeat business by designing and implementing marketing and promotional programs that encourage patron loyalty. These programs are designed to attract new customers to the Casino and maintain high recognition of our brand name. Colorado hosts approximately 23 million visitors annually. We believe that future development of a hotel and casino patronage from such visitors will have a beneficial impact on the Casino. ADDITIONAL MARKETING STRATEGIES. Other marketing strategies include: database management/direct mail marketing, innovative slot and table game merchandising and quantifiable drive-in marketing programs. We believe that when provided with upscale amenities, customers will stay in the Casino longer and spend more than existing Black Hawk customers currently spend. We believe that effective use of database marketing is among the most efficient means to communicate with active and potential customers. EMPLOYEES As of March 31, 2004, Windsor Woodmont employed 473 full-time, paid employees including cashiers, dealers, food and beverage service personnel, facilities maintenance staff, security, accounting and marketing personnel. No labor unions represent any employee group. COMPETITION The information contained in this discussion of competition has been derived from publicly available data, except where otherwise stated. While we regard these sources as reliable, no assurances can be made regarding the accuracy of such information. 6 The casino industry in Black Hawk is highly competitive. We believe the primary competitive factors in Black Hawk are location, availability and convenience of parking, type and layout as well as the number of slot machines and gaming tables, types and pricing of restaurants and other amenities, name recognition, customer service, experienced management and overall atmosphere. Certain of our current and future competitors have or may have more gaming experience than us and/or greater financial resources. Of the 22 gaming facilities operating in Black Hawk, six have over 700 gaming positions. We consider these larger gaming facilities to be our main competitors. These larger gaming facilities have on-site or nearby parking and have brand names established in the local market, such as the Isle of Capri, The Lodge at Black Hawk, Colorado Central Station, the Riviera Black Hawk, and the Mardi Gras Casino. The Riviera Black Hawk, which opened in early February 2000, features approximately 985 gaming machines, and the Mardi Gras Casino, which opened in early March 2000, features approximately 700 gaming machines. Colorado Central Station, opened in December 1993 and has traditionally been one of the most successful casinos in Colorado, is located near the Casino and has approximately 750 gaming machines and approximately 700 valet parking spaces. The Isle of Capri, which opened in December 1998, is located near the Casino and features approximately 1,070 gaming machines and 1,100 parking spaces. Smaller competitors in the Black Hawk market include the Gilpin Hotel Casino, Canyon Casino, Fitzgerald's and Bullwhackers. Casinos offering hotel accommodations for overnight stay may have a competitive advantage over the Casino. Currently two casinos offer hotel accommodations, with the total number of hotel rooms in Black Hawk being 287. The Lodge at Black Hawk provides 50 and the Isle of Capri provides 237 rooms. In addition, Fortune Valley Hotel & Casino located in Central City, has 118 hotel rooms. On April 22, 2003, Isle of Capri Black Hawk, L.L.C. acquired CCSC/Blackhawk, Inc., which owns and operates the Colorado Central Station casino in Black Hawk, Colorado, and Colorado Grande Enterprises, Inc., which owns and operates the Colorado Grande casino in Cripple Creek, Colorado. On November 5, 2003, Nevada Gold & Casino's, Inc., in a joint venture with Isle of Capri, announced an expansion project, which has begun, at the Colorado Central Station Casino adding casino space and hotel rooms with completion of the project by the end of 2005. This expansion could attract gaming patrons and customers who are currently patrons of the Casino. If this happens, it could have a material adverse effect upon the Casino. We also face increased competition from casinos in Central City. Historically, Black Hawk has enjoyed an advantage over Central City because the majority of customers have to drive by and through Black Hawk to reach Central City. On November 2, 1999, the voters in Central City granted authority to the Business Improvement District for the sale of approximately $45.2 million in bonds which would be allocated towards the planning, design and construction of a nine mile roadway directly connecting Central City with Interstate 70. These bonds were sold on June 18, 2003 and on October 3, 2003 construction began on a new four-lane road from I-70 at the Hidden Valley exit directly into downtown Central City. This roadway allows drivers to reach Central City without driving through Clear Creek Canyon and Black Hawk. While Black Hawk is only one mile away from Central City, the new roadway may attract patrons and customers of the Casino to casinos located in Central City. This may have a material adverse effect upon the Casino. The Casino also competes, to a limited extent, with the casinos located in Cripple Creek, because both Black Hawk and Cripple Creek compete for patrons from Denver. Cripple Creek is located approximately 110 miles to the south of Black Hawk and 45 miles west of Colorado Springs. Currently, limited stakes gaming in Colorado is constitutionally authorized in Central City, Black Hawk, Cripple Creek and two Native American reservations in southwest Colorado. However, gaming could be approved in other Colorado communities in the future. On November 4, 2003, Colorado voters rejected an amendment to the Colorado constitution that would have allowed video lottery terminals in five racetracks located along the front range in Colorado. The legalization of gaming closer to Denver would likely have a material adverse impact on our future operating results. The Casino will also indirectly face competition from other forms of gaming, including the Colorado state-run lottery, the Power Ball multi-state lottery, charitable bingo, horse and dog racing, as well as other forms of entertainment. For additional information concerning competition see "Factors that May Affect Our Future Results - We Face Competition From Other Gaming Operations That Could Have a Material 7 Adverse Effect on our Future Operations" and "Additional Legalization of Gaming in Colorado or the Imposition of a Tax on Gaming Revenues Could Adversely Effect our Business." OPERATING RESTRICTIONS An amendment to the Colorado State Constitution permits limited gaming in the cities of Central City, Black Hawk and Cripple Creek, Colorado. The amendment defines "limited gaming" as the use of slot machines and the card games of blackjack and poker, each with a maximum single bet of $5.00. The amendment restricts limited gaming to the commercial districts of Black Hawk, Central City and Cripple Creek, as such commercial districts were defined in city ordinances on specific dates. Limited gaming is governed by the amendment and the regulations of the Colorado Gaming Commission and Colorado Revised Statutes Section 12-47.1-101, et seq., ("hereinafter referred to as the Colorado Limited Gaming Act"). In the case of the City of Black Hawk, limited gaming is restricted by the amendment to the commercial district of Black Hawk as it existed on May 4, 1978. The amendment also restricts gaming to structures that conform to the architectural styles and designs that were common to the areas prior to World War I and that conform to applicable city ordinances. Under the amendment, no more than 35% of the square footage of any building and no more than 50% of any one floor of such building may be used for gaming. Gaming operations may be conducted 365 days a year but are prohibited between the hours of 2:00 a.m. and 8:00 a.m. Pursuant to the Colorado Limited Gaming Act, no limits are imposed on total patron losses and casinos are not allowed to extend credit to the patrons. Persons under the age of 21 are prohibited from participating in gaming or lingering in gaming areas. Colorado law requires licensees to maintain detailed books and records that accurately account for all monies and business transactions. Books and records must be furnished upon demand to the Colorado Gaming Commission or the Division of Gaming. Detailed and extensive playing procedures, standards, requirements and rules of play are established for poker, blackjack and slot machines. Licensees must adopt comprehensive internal control procedures governing their gaming operations. Such procedures must be approved in advance by the Division of Gaming and, in certain cases, the Colorado Gaming Commission, and include the areas of accounting, surveillance, security, cashier operations, key control and fill and drop procedures, among others. No gaming may be conducted in Colorado unless all appropriate licenses are approved by and obtained from the Colorado Gaming Commission. Violations of Colorado gaming laws or regulations may be criminal offenses and the person or entity violating such laws and regulations may be subject to criminal penalties and/or administrative fines, and may have its gaming license suspended or revoked. REGULATORY STRUCTURE COLORADO REGULATORY AGENCIES. The Colorado Division of Gaming (the "Division of Gaming"), a division of the Colorado Department of Revenue, is responsible for the regulation and enforcement of limited gaming in Colorado. The Division of Gaming licenses, implements, regulates and supervises the conduct of limited gaming under Colorado Constitution Article XVIII, Section 9, the Colorado Limited Gaming Act. The Division of Gaming has broad authority to sanction, fine, suspend and revoke a gaming license for violations of the Colorado Limited Gaming Act and the rules and regulations promulgated by the Limited Gaming Control Commission (the "Colorado Gaming Commission"). Violations of several provisions of the Colorado Gaming Regulations also can result in criminal penalties. The Colorado Limited Gaming Act created the Colorado Gaming Commission to promulgate the rules and regulations governing the licensing, conducting and operating of limited gaming and to ensure compliance with such gaming rules and regulations. GAMING LICENSES. All applicants for Colorado gaming licenses must complete comprehensive applications and forms, pay required fees and provide all information required by the Colorado Gaming Commission and the Division of Gaming. The Division of Gaming requires an extensive background investigation of each applicant and persons or entities associated with the applicant. The Division of Gaming may enter into agreements with the Colorado Bureau of Investigation and state and local law enforcement agencies for the conduct of investigation, identification, or registration of applicants, criminal records checks and investigation of violations of the Colorado Limited Gaming Act. The investigation may cover the background, personal history, financial associations, past associations with casino owners and operators, character, record and reputation of the applicant and its associated persons. The applicant pays the full cost of the background investigation. There is no limit on the cost or duration 8 of the background investigation and the length or delay in the approval process may have a material, adverse impact on the ability of the applicant and the associated gaming establishment to timely obtain its gaming license. Applicants who do not provide all requested information during a background investigation may be denied a gaming license. In addition, all persons loaning monies, goods or real or personal property to a licensee or applicant, or entering into any agreement with a licensee or applicant, must provide any information requested by the Division of Gaming or the Colorado Gaming Commission; and in the discretion of the Division of Gaming or the Colorado Gaming Commission, these persons must supply all information relevant to a determination of any such person's suitability for licensure and must submit to a full background investigation if ordered by the Colorado Gaming Commission. Failure to promptly provide all information requested or to submit to a suitability or background investigation may result in: - the denial of a gaming license application; - the suspension or revocation of an existing license; - termination of any lease, note arrangement or agreement between the applicant or licensee and the person requested to provide the information; and - other sanctions such as the imposition of fines. Applicants and licensees may be required by the Colorado Gaming Commission to pay the costs of background, suitability or other investigations associated with the applicant or licensee. Investigations for suitability, background or any other reason may delay the license application or the performance under any agreement with a licensee. All agreements, contracts, leases and arrangements in violation of the Colorado Limited Gaming Act or the rules are void and unenforceable. If the Colorado Gaming Commission determines that a person or entity is unsuitable to own interests in the gaming licensee, then the applicant and/or licensee could be sanctioned, which may include the loss by the casino of approvals or licenses. In addition, the Colorado regulations prohibit a licensee or affiliated company thereof from paying dividends, interest or other remuneration to any unsuitable person, or recognizing the exercise of any voting rights by any unsuitable person. Further, the Casino may repurchase the shares of anyone found unsuitable at the lesser of cost or fair market value with indebtedness subordinated to the First Mortgage Notes and the Second Mortgage Notes held by Hyatt Gaming. In addition to its authority to deny an application for a license based on suitability, the Colorado Gaming Commission has jurisdiction to disapprove a change in corporate position of the licensee and may have such authority with respect to any entity or person which is required to be found suitable by the Colorado Gaming Commission. The Colorado Gaming Commission has the power to require the licensee to suspend or dismiss managers, officers, directors and other key employees, or sever relationships with other persons who refuse to file appropriate applications or to whom the authorities find unsuitable to act in such capacity; and may have such power with respect to any entity which is required to be found suitable. Specifically, it should be noted that there are limited exceptions applicable to licensees that are publicly traded entities and, generally speaking, no person, including persons who may acquire an interest in a licensee in a foreclosure, may sell, lease, purchase, convey or acquire any interest in a retail gaming or operator license or business without the prior approval of the Colorado Gaming Commission after investigation by the Division of Gaming. Persons found unsuitable by the Colorado Gaming Commission may be required to terminate immediately any interest in, association or agreement with, or relationship to a licensee. A finding of unsuitability with respect to any officer, director, employee, associate, lender or beneficial owner of a licensee or applicant also may jeopardize the licensee's license or the applicant's application. The grant of a license may be conditioned upon the termination of any relationship with unsuitable persons. Licensees have a continuing duty to report to the Colorado Gaming Commission and the Division of Gaming information concerning persons, including identifying those who have a 5% or greater ownership interest, financial or equity interest in the licensee, or who have the ability to control or exercise a significant influence over the licensee, or who loan money to the licensee. Therefore, the requisite information regarding the holders of the 9 notes and warrants will have to be periodically reported to the Colorado Gaming Commission and the Division of Gaming. Any person licensed by the Colorado Gaming Commission and any associated person of a licensee must report criminal convictions and criminal charges to the Colorado Gaming Commission. Under Colorado law, it is a criminal violation for any person to have a legal, beneficial, voting or equitable interest, or right to receive profits, in more than three retail gaming licenses in Colorado. The Colorado Gaming Commission has defined when a person is considered to have an interest in a licensee for purposes of this multiple-license prohibition. No manufacturer or distributor of slot machines or associated equipment, may, without notification being provided to the Division within ten days, knowingly have an interest in any casino operator, allow any of its officers or any other person with a substantial interest in such business to have such an interest, employ any person if that person is employed by a casino operator, or allow any casino operator or person with a substantial interest in a operator to have an interest in the manufacture's or distributor's business. A "substantial interest" means the lesser of (i) as large an interest in an entity as any other person or (ii) any financial or equity interest equal to or greater than 5%. SUPPORT OR KEY EMPLOYEE LICENSE. Gaming employees must hold either a support or key employee license issued by the Division of Gaming. Every retail gaming licensee must have a key employee in charge of all limited stakes gaming activities when limited stakes gaming is being conducted. All persons employed by the Casino and involved, directly or indirectly, in gaming operations in Colorado are required to obtain a gaming license. All licenses must be renewed annually except for key and support employees which must be renewed every two years. CONVEYANCE. With limited exceptions applicable to licensees that are publicly traded entities, no person may sell, lease, purchase, convey or acquire any interest in a retail gaming or operator license or business without the prior approval of the Colorado Gaming Commission. Also, no person may own gaming equipment without being licensed. Such prohibition could impair the ability of the holders of the First Mortgage Notes to liquidate our assets upon any foreclosure of the liens securing the First Mortgage Notes. There cannot be a change in our control without the Colorado Gaming Commission's prior approval. Also, there can be no change in our capital stock without the Colorado Gaming Commission's prior approval. All agreements, contracts, leases or arrangements in violation of applicable Colorado law or regulations are void and unenforceable. The Colorado Gaming Commission or the Director of the Division of Gaming may require changes in gaming contracts (which are any agreements with a licensee, such as the indenture governing the First Mortgage Notes) or termination of a gaming contract. PUBLICLY TRADED CORPORATIONS. In addition to the other requirements of the gaming laws, the Colorado Gaming Commission has enacted a special rule, Rule 4.5, which establishes reporting procedures and approval requirements for transfers of interest and other involvement with publicly traded corporations directly or indirectly involved in gaming in Colorado. We are deemed to be a "publicly traded corporation" under Rule 4.5 and we are required to file periodic reports under the Securities Exchange Act of 1934, as amended (the "Exchange Act"). While we are deemed "publicly traded" for purposes of Rule 4.5, the following provisions apply. Under Rule 4.5, licensees to whom Rule 4.5 applies must include in their articles of organization or similar charter documents certain specified provisions that: - restrict the rights of the licensee to issue voting interests or securities except in accordance with the Colorado gaming laws; - limit the rights of persons to transfer voting interests or securities of a licensee except in accordance with the Colorado gaming laws; and - provide that holders of voting interests or securities of a licensee found unsuitable by the Colorado Gaming Commission may be required to sell their interests or securities back to the issuer at the lesser 10 of, in general terms, the holder's investment or the market price as of the date of the finding of unsuitability. Alternatively, and with authorization by the Colorado Gaming Commission, the holder may, in limited circumstances, transfer the voting interests or securities to a suitable person as determined by the Colorado Gaming Commission. Until the voting interests or securities are held by suitable persons: - the issuer may not pay dividends or interest on them; - the interests or securities may not be voted or entitled to any vote and they may not be included in the voting of securities of the issuer; and - the issuer may not pay any remuneration in any form to the holder of the securities or interests. Our Amended and Restated Articles of Incorporation contain these provisions: Under Rule 4.5 persons who acquire direct or indirect beneficial ownership of: (i) 5% or more of any class of voting securities of a publicly traded corporation involved in gaming in Colorado; or (ii) 5% or more of the beneficial interest in a gaming licensee directly or indirectly through any class of voting securities of any holding company or intermediary company of a licensee must notify the Colorado gaming authorities within 10 days of such acquisition, are required to submit all requested information and are subject to a finding of suitability. All persons who fall under these requirements are referred to in this discussion as "qualifying persons." Licensees must notify any qualifying persons of these requirements. A qualifying person whose interests equal 10% or more must apply to the Colorado Gaming Commission for a finding of suitability within 45 days after acquiring these securities. Licensees must also notify any qualifying persons of these requirements. Whether or not notified, qualifying persons are responsible for complying with these requirements. A qualifying person who is an institutional investor under Rule 4.5 and whose interests equal 15% or more must apply to the Colorado Gaming Commission for a finding of suitability within 45 days after acquiring the interests. A qualifying person who is an institutional investor and whose interests equal 10% or more, but less than 15%, may not be required to apply for suitability, provided the person fulfills certain reporting requirements. Rule 4.5 requires persons found unsuitable by the Colorado Gaming Commission to be removed from any position as an officer, director, shareholder or employee of a licensee, or from a holding or intermediary company of a licensee. Unsuitable persons also are prohibited from any beneficial ownership of the voting securities of any of those entities. Licensees, or affiliated entities of licensees, are subject to loss of license or other disciplinary action for paying dividends to persons found unsuitable by the Colorado Gaming Commission, or for recognizing voting rights of, or paying a salary or any remuneration for services to, unsuitable persons. Licensees or their affiliated entities also face disciplinary action for failing to pursue efforts to require unsuitable persons to relinquish their interests. The Colorado Gaming Commission may determine that anyone with a material relationship to a licensee, or affiliated company, must apply for a finding of suitability. TAXES. The Amendment to the Colorado State Constitution further provides that, in addition to any other applicable license fees, up to a maximum of 40% of the adjusted gross proceeds of gaming operations may be payable by a licensee for the privilege of conducting limited gaming in the State of Colorado. Adjusted gross proceeds of gaming operations is generally defined as the total amounts wagered, less all payments to players. With respect to games of poker and other table games, adjusted gross proceeds of gaming operations means those sums wagered in a hand retained by the licensee as compensation, which must be consistent with the minimum and maximum amounts established by the Colorado Gaming Commission. Currently the gaming tax on adjusted gross proceeds of gaming operations is .25% on adjusted gross gaming proceeds of up to and including $2 million, 2% over $2 million up to and including $4 million, 4% over $4 million up to and including $5 million, 11% over $5 million up to and including $10 million, 16% over $10 million up to and including $15 million, and 20% over $15 million. The gaming tax is paid monthly with licensees required to file returns by the 15th of the following month. Gaming taxes are established as of July 1st for the following 12 months. ANNUAL DEVICE FEES. The municipalities of Central City, Black Hawk and Cripple Creek assess and collect their own device fees. The current annual device fee in Black Hawk is $750 per device. A credit is extended 11 for the first fifty (50) gaming devices. As of April 2, 2004, we had a total of 1,020 gaming devices and pay the annual device fee for 970 gaming devices. There is no statutory limit on state or city device fees, which may be increased at the discretion of the State or the applicable city. Local device fees may be prorated according to device usage; Black Hawk currently prorates device fees such that any device used at any time during a calendar month is subject to the device fee for such calendar month. In addition, a business improvement fee of approximately $90 per device and a transportation impact fee of approximately $106 per device also may apply, depending upon the location of the licensed premises. In the past, the Colorado Gaming Commission has assessed an annual state device fee, however the Colorado Gaming Commission has eliminated its annual device fee for gaming machines. We cannot be certain the Colorado Gaming Commission will not, in the future, decide to assess this fee. Should the state impose an annual device fee, it may have a significant effect on business. ADDITIONAL TAXES AND FEES. Black Hawk also imposes taxes and fees on other aspects of the business of gaming licensees, such as parking, alcoholic beverage licenses and other municipal taxes and fees. Black Hawk may impose increases or additional fees at its discretion which may have a significant effect upon our operations. ALCOHOL. The sale of alcoholic beverages in gaming establishments is subject to strict licensing, control and regulation by state and local authorities. Alcoholic beverage licenses are revocable and non-transferable. State and local licensing authorities have full power to deny, limit, condition, suspend or revoke any such licenses. Persons or entities which directly or indirectly own 10% or more of a licensee will be required to complete applications and submit certain personal and financial information and be subject to investigation. Violation of the state alcoholic beverage laws may constitute a criminal offense and violators may be subject to criminal prosecution, incarceration and fines. There are various classes of retail liquor licenses under the Colorado State Liquor Code. A retail gaming tavern license or restaurant liquor license may be issued to persons who are licensed as a limited gaming establishment under Colorado law. A retail gaming tavern licensee may sell malt, vinous or spirituous liquors only by individual drinks for consumption on the premises, and must also make available sandwiches or light snacks or contract with concessionaires to provide food services within the same building as the licensed premises. A restaurant liquor license requires the service of meals and that at least 25% of the total of food and beverage sales come from the sale of food. In no event may any person hold, or have an interest in, more than three retail gaming tavern licenses. Also, a person may not have an interest in more than one class of liquor license. An application for an alcoholic beverage license in Colorado requires notice, posting and a public hearing before and approval by the local liquor licensing authority. In Black Hawk, the licensing authority is the Black Hawk Board of Aldermen. The Colorado Department of Revenue, through its Liquor Enforcement Division, also must approve the application. The Casino has been approved by both the local licensing authority and the State Division of Liquor Enforcement. MATERIAL AGREEMENTS HYATT SETTLEMENT AND RELEASE AGREEMENT. On December 13, 2002, we filed a motion for court approval of the rejection of the Hyatt Management Agreement. On April 10, 2003, the Company executed the Hyatt Settlement and Release Agreement with Hyatt Gaming, which provided for the rejection of the Hyatt Management Agreement, the transition of management of the Casino to the Company, the fixing of the amount and priority of Hyatt Gaming's claims in the Chapter 11 Case (including the claims based on the Second Mortage Note and the rejection of the Hyatt Management Agreement), and the treatment of Hyatt Gaming's claims under a plan of reorganization. Pursuant to the Hyatt Settlement and Release Agreement, Hyatt Gaming holds an allowed unsecured claim in the Chapter 11 Case in the aggregate amount of $18,413,243.68 (the amount of $18,318,368.49 set forth in the Hyatt Settlement and Release Agreement plus an additional $94,875.19 in incentive management fees from the Petition Date through May 13, 2003); provided, however, that in the event that the value of the Company's assets exceed the value of the liens senior to the Second Mortgage Note (including the liens of the Black Hawk BID, PCL, the FF&E Lender and the First Mortgage Noteholders), Hyatt Gaming's claim based on the Second Mortgage Note will be secured to such extent. On April 25, 2003, the Bankruptcy Court entered an order approving the Hyatt Settlement and Release Agreement. On May 14, 2003, we assumed management of the Casino and the Casino name was changed to the Mountain High Casino. The treatment of Hyatt Gaming's allowed claim (including certain 12 changes to such treatment that Hyatt Gaming asserts are in violation of the Hyatt Settlement Agreement and to which Hyatt Gaming has not consented) is reflected in the Plan of Reorganization (as defined below). Hyatt Gaming has indicated that, in addition to its pre-petition claims against the Company, it may assert an administrative claim in the Chapter 11 Case for damages arising from alleged breaches of the terms of the Hyatt Settlement and Release Agreement. A copy of the Hyatt Settlement and Release Agreement is attached hereto as Exhibit 10.31. FF&E SETTLEMENT AGREEMENT On or about February 19, 2003, we entered into the FF&E Stipulation with the FF&E Lender pursuant to which all issues between the Company and the FF&E Lender concerning the amount and priority of the FF&E Lender's claim and the treatment of such claim under a plan of reorganization were resolved. On June 24, 2003, the Company filed an Amended Stipulation Regarding (1) Allowance and Payment of Secured Claim of David R. Belding; and (2) Mutual Release of Claims Relating to Disputes Over Funds in Wells Fargo Bank Account (the "FF&E Settlement Agreement"), which was approved by the Bankruptcy Court by order entered June 30, 2003. The FF&E Settlement Agreement provides, among other things, that the FF&E Lender will receive payments of up to $500,000 per month during the Chapter 11 Case and will be paid certain amounts on the effective date of a plan of reorganization. After the approval of the FF&E Settlement Agreement by the Bankruptcy Court, the Company and the FF&E Lender agreed to more favorable treatment to the Company, including a reduction in the required effective date payment to the FF&E Lender and a one-year extension on the repayment of the amounts due to the FF&E Lender, which treatment is reflected in the Plan of Reorganization. FACTORS THAT MAY AFFECT OUR FUTURE RESULTS You should carefully consider the following risks, together with all other information included in this Annual Report. The realization of any of the risks described below could have a material adverse effect on our business, results of operations and future prospects. IMPORTANT FACTORS RELATED TO FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS. This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Exchange Act. In addition, we may from time to time make written or oral forward-looking statements. Written forward-looking statements may appear in documents filed with the Securities and Exchange Commission (the "Commission"), in press releases and in reports to shareholders. The forward-looking statements included in this Annual Report are based on current expectations that involve a number of risks and uncertainties. These forward-looking statements are based on the following assumptions: the Plan of Reorganization or a plan substantially similar thereto submitted by us will be approved by the Bankruptcy Court, market conditions affecting the Casino will not change materially or adversely, that we will retain key management personnel, that our forecasts will accurately anticipate market demand and that there will be no further material adverse change in our operations or business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond our control. Although management believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance that the results contemplated in forward-looking information will be realized. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In addition, as disclosed elsewhere under other risk factors, our business and operations are subject to substantial risks, which increase the uncertainty inherent in such forward-looking statements. In light of the significant uncertainties inherent in the forward-looking information included herein, the inclusion of such information should not be regarded as a representation by us or any other person that our objectives or plans will be achieved. The Private Securities Litigation Reform Act of 1995 contains a safe harbor for forward-looking statements on which we rely in making such disclosures. In connection with this safe harbor we are hereby identifying important factors that could cause actual results to differ materially from those contained in any forward-looking statements made by or on our behalf. Any such statement is qualified by reference to the cautionary statements included in this Annual Report. CERTAIN BANKRUPTCY CONSIDERATIONS 13 WE FACE SIGNIFICANT CHALLENGES IN CONNECTION WITH OUR BANKRUPTCY REORGANIZATION. On November 7, 2002, we filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court. Since the Petition Date, we have been operating the Casino as debtor-in-possession pursuant to the Bankruptcy Code. There can be no assurance that we will be successful in reorganizing under the Chapter 11 Case. If we are not successful in reorganizing under the Chapter 11 Case, we could face liquidation. WE HAVE FILED A PLAN OF REORGANIZATION WITH THE BANKRUPTCY COURT WHICH REQUIRES APPROVAL TO EMERGE FROM CHAPTER 11. On November 20, 2003 we filed the Plan of Reorganization with the Bankruptcy Court. The Plan of Reorganization is subject to Bankruptcy Court approval, as well as the acceptance by our creditors and equity holders. The Plan of Reorganization may not receive the requisite acceptance by creditors and equity holders or the Bankruptcy Court may not confirm the proposed plan. Moreover, even if the Plan of Reorganization receives the requisite acceptance by creditors and equity holders and is ultimately approved by the Bankruptcy Court, the Plan of Reorganization may not be viable. In addition, due to the nature of the reorganization process, actions may be taken by creditors or other parties in interest that may have the effect of preventing or unduly delaying confirmation of the Plan of Reorganization. Accordingly, there can be no assurance as to whether or when the Plan of Reorganization may be approved by the creditors or equity holders or confirmed by the Bankruptcy Court in the Chapter 11 Case. WE MAY NOT RECEIVE THE APPROVALS NECESSARY TO CONFIRM THE PLAN. Section 1129 of the Bankruptcy Code, which sets forth the requirements for confirmation of the Plan of Reorganization, requires, among other things, a finding by a Bankruptcy Court that: - the confirmation of a plan is not likely to be followed by the need for further reorganization; - all claims and interests have been classified in compliance with the provisions of section 1122 of the Bankruptcy Code; and - each holder of a claim or equity interest within each impaired class has voted to accept the plan or has received or retained under the plan, cash or property of a value, as of the date the plan becomes effective, that is not less than the value such holders would receive or retain if the debtor were liquidated under Chapter 7 of the Bankruptcy Code. We can give no assurance that the Bankruptcy Court will conclude that these tests and the other requirements of section 1129 of the Bankruptcy Code have been met with respect to the Plan of Reorganization. We can also give no assurance that further modifications to the Plan of Reorganization would not be required for confirmation, or that such modifications would not require us to recirculate the Plan of Reorganization to solicit approval of the modified Plan of Reorganization. Any requirement to resolicit approvals would delay implementation of the Plan of Reorganization, which we believe would adversely affect our investors. We believe that the Plan of Reorganization meets all of the requirements for confirmation thereof, including, in particular, that if the Plan of Reorganization is confirmed it will not be followed by the need for further financial reorganization of the Company and that our creditors and investors whose interests are considered impaired will receive value under the Plan of Reorganization that is greater than the value they would receive if we were liquidated under chapter 7 of the Bankruptcy Code. However, we can give no assurance that the Bankruptcy Court will reach the same conclusions. In addition, the confirmation and effectiveness of the Plan of Reorganization is also subject to certain conditions. We can give no assurances that these conditions will be satisfied or waived or that any necessary consent will be obtained. Failure of confirmation of the Plan of Reorganization by the Bankruptcy Court would likely result in a sale of some or all of our business operations, a conversion of the Chapter 11 Case to a case under Chapter 7 of the Bankruptcy Code or the proposal of a different plan of reorganization. 14 OUR FINANCIAL STATEMENTS ASSUME WE WILL CONTINUE AS A "GOING CONCERN." Based on current and anticipated levels of operations and assuming confirmation of the Plan of Reorganization, we believe that we will continue as a "going concern." Accordingly, our financial statements included herein have been prepared assuming we will continue as a "going concern." The continuation of the Company as a "going concern" is contingent upon, among other things, (i) the approval of the Plan of Reorganization by parties required by the Bankruptcy Code and be confirmed by the Bankruptcy Court, and (ii) our ability to generate sufficient cash flows from operations to meet future obligations. These matters create substantial doubt about our ability to continue as a "going concern." If the "going concern" basis was not appropriate for the Company's financial statements, then significant adjustments would be necessary in the carrying value of assets and liabilities, the revenues and expenses reported, and the balance sheet classifications used. The amounts reported in the financial statements included elsewhere in this Annual Report do not reflect all of the adjustments to the carrying value of assets or the amount and classification of liabilities that ultimately may be necessary as the result of the adoption of a plan of reorganization. Adjustments necessitated by the Plan of Reorganization could materially change the amounts reported in the financial statements included herein. WE ARE SUBJECT TO RESTRICTIONS ON THE CONDUCT OF OUR BUSINESS. We currently operate the Casino as a debtor-in-possession pursuant to the Bankruptcy Code. Under applicable bankruptcy law, during the pendency of the Chapter 11 Case, we are required to obtain the approval of the Bankruptcy Court for any transaction outside the ordinary course of business. In connection with any such approval, creditors and other parties in interest may raise objections to such approval and may appear and be heard at any hearing with respect to any such approval. The Bankruptcy Court may also have the authority to oversee and exert control over our ordinary course of operations. As a result of these restrictions, our ability to respond to changing business and economic conditions may be significantly restricted, and we may be prevented from engaging in transactions that might otherwise be considered beneficial. THE CHAPTER 11 CASE MAY HAVE A MATERIAL ADVERSE EFFECT ON RELATIONSHIPS WITH SUPPLIERS OR VENDORS. While we have not experienced any significant disruption in our relationships with our suppliers or vendors, we may have difficulty maintaining existing or creating new relationships with suppliers or vendors as a result of the Chapter 11 Case. Suppliers and vendors could stop providing supplies or services or provide such supplies or services only on "cash on delivery," "cash on order," or other terms that could have an adverse impact on our short-term cash flows. THE ADEQUACY OF OUR CAPITAL RESOURCES IS LIMITED AND WE HAVE LIMITED ACCESS TO ADDITIONAL FINANCING. In addition to the cash requirements necessary to fund ongoing operations, we currently are incurring and anticipate that we will continue to incur significant professional fees and other restructuring costs in connection with the Chapter 11 Case and the restructuring of our operations. However, as a result of the uncertainty surrounding our current circumstances, it is difficult to predict our actual liquidity needs at this time. Although, based on current and anticipated levels of operations, and efforts to increase the number of gaming patrons and customers to the Casino, we believe that our cash flow from operations will be adequate to meet our anticipated cash requirements during the pendency of the Chapter 11 Case, ultimately such amounts may not be sufficient to fund operations until such time as a plan of reorganization is confirmed by the Bankruptcy Court. In the event that cash flows are insufficient to meet future cash requirements, we may be required to reduce planned capital expenditures or seek additional financing. We can provide no assurance that reductions in planned capital expenditures would be sufficient to cover shortfalls or that additional financing would be available or, if available, offered on acceptable terms. As a result of the Chapter 11 Case and the circumstances leading to the filing thereof, our access to additional financing is, and for the foreseeable future will likely continue to be limited. As the foregoing indicates, our long-term liquidity requirements and the adequacy of our capital resources are difficult to predict at this time, and ultimately cannot be determined until a plan of reorganization is confirmed by the Bankruptcy Court in the Chapter 11 Case. THE REORGANIZATION WILL REQUIRE SUBSTANTIAL EFFORT BY MANAGEMENT. Our senior management has been and will continue to be required to expend a substantial amount of time and effort in connection with the reorganization process. By expending time focusing upon the reorganization effort, management is unable to focus 100% on our operations which could have a disruptive effect upon operation of our business. 15 IF THE REORGANIZATION PLAN IS APPROVED BY CREDITORS AND EQUITY HOLDERS AND SUBSEQUENTLY CONFIRMED BY THE BANKRUPTCY COURT, WE WILL STILL REQUIRE A SIGNIFICANT AMOUNT OF CASH TO SERVICE OUR DEBT AND CONTINUE OPERATIONS. In the Chapter 11 Case there have been 126 proofs of claim filed, representing in excess of $160 million in claims against us. Our inability to generate adequate cash prior to and after the approval of the Plan of Reorganization may impact our ability to repay our restructured debt obligations. Our ability to make payments on our restructured debt obligations will depend on our ability to generate cash and secure financing if needed in the future. Our ability to generate cash will depend upon, among other things: - future operating performance; - demand for gaming and entertainment; - general state of the economy; - competition, particularly in Black Hawk; and - regulatory and other factors affecting our operations and business. Many of these factors are beyond our control. If we are unable to successfully restructure our debt and generate sufficient cash flow through operations, we may be forced to reduce, delay or cancel planned capital expenditures, or obtain additional equity capital if available, or even liquidate. FACTORS RELATED TO OUR OPERATIONS WE MAY NOT BE ABLE TO MAINTAIN OUR GAMING LICENSE REQUIRED BY THE COLORADO GAMING COMMISSION TO OPERATE THE CASINO. The Colorado Gaming Commission approved the issuance of the appropriate and necessary gaming licenses for operation of the Casino to us and Hyatt Gaming on September 20, 2001. The licenses were physically issued to us and Hyatt Gaming immediately prior to opening of our Casino on December 20, 2001. The operation of a Casino gaming facility in Colorado requires a Colorado Limited Gaming License. A Colorado gaming license is a non-transferable, revocable privilege in which the licensee acquires no vested interest. The Colorado Gaming Commission could choose not to renew that license if it has concerns about our management, operations, business practices or associations. Our failure to maintain all required licenses to conduct limited gaming on our premises would have a material, adverse effect upon our operations. Additionally, any violation of gaming laws or regulations, could result in the assessment of substantial fines against us and the persons involved. The suspension, revocation or non-renewal of any of our licenses or the levy on us of substantial fines could have a material adverse effect on our business. WE MAY BE UNABLE TO MAINTAIN OUR LIQUOR LICENSE. In addition to a gaming license, regulatory approval is necessary to maintain our liquor licenses from the City of Black Hawk and the State of Colorado. Although we do not anticipate any problem in maintaining our liquor license, our inability to obtain any required permit or approval could prevent us from operating the Casino. UNDER COLORADO GAMING LAWS, NOTE HOLDERS MAY BE REQUIRED TO SUBMIT TO A BACKGROUND INVESTIGATION REGARDING THEIR SUITABILITY AS A NOTE HOLDER OR WARRANT HOLDER WHICH COULD DELAY ANY APPLICATIONS FOR LICENSES, PERMITS OR OTHER AUTHORIZATIONS. The current policy of the Colorado Gaming Commission and the Division of Gaming does not require note holders to submit to a background investigation for a suitability determination. The Colorado Gaming Commission and the Division of Gaming could change that policy at any time and require note holders to undergo a background investigation. In addition, note holders who are also holders of our common stock, whether by the exercise of a detachable warrant or by any other means, will at least be required to submit a limited owner application, which will be reviewed by the Colorado Gaming Commission and the Division of Gaming. The current policy of the Colorado Gaming Commission and the Division of Gaming does not require shareholders who are institutional investors to submit to a full background investigation regarding their suitability. The Colorado Gaming Commission and the 16 Division of Gaming could change that policy at any time and require institutional investors to undergo background investigations. Holders of our common stock are required to submit owner applications, which are reviewed by the Colorado Gaming Commission and the Division of Gaming. Despite current policy, the Colorado Gaming Commission and the Division of Gaming have the authority to require any person who is one of our shareholders and any of our executive employees or agents having the power to exercise a significant influence over decisions concerning any part of the operation of the Casino to undergo a full background investigation, regardless of whether the shareholder is an institutional investor and regardless of the number of shares held, which could further delay the gaming application process. WE COULD INCUR LOSSES WHICH WOULD NOT BE COVERED BY INSURANCE. Although we have obtained all insurance customary and appropriate for our business, we cannot assure you that this insurance will be adequate to cover all perils to which our business or our assets might be subjected. Any losses we incur that are in excess of our coverages or are not covered by insurance consequently increase our operating costs. WE FACE COMPETITION FROM OTHER GAMING OPERATIONS AND OTHER FORMS OF GAMING THAT COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR FUTURE OPERATIONS. As described under "Competition," we operate in a very competitive environment. Certain of our current and future competitors have or may have more gaming experience than we do. Casinos offering hotel accommodations for overnight stay may have a competitive advantage over the Casino. The number of hotel rooms currently in Black Hawk is approximately 287, with the Lodge at Black Hawk providing 50 and the Isle of Capri providing 237. In addition, Fortune Valley Hotel and Casino, located in Central City, has 118 hotel rooms. Isle of Capri recently announced plans to expand the Colorado Central Station Casino, adding casino space and hotel rooms with the completion of the project scheduled for the end of 2005. This expansion could attract gaming patrons and customers who are currently patrons of the Casino. If this happens, it could material adverse effect upon the Casino. Currently, limited stakes gaming in Colorado is constitutionally authorized in Central City, Black Hawk, Cripple Creek and two Native American reservations in southwest Colorado. However, gaming could be approved in other Colorado communities in the future. The legalization of gaming closer to Denver would likely have a material adverse impact on our future operating results. The Casino will also indirectly face competition from other forms of gaming, including the Colorado state-run lottery, multi-state lottery, online computer gaming, charitable bingo and horse and dog racing, as well as other forms of entertainment. See "Additional Legalization of Gaming in Colorado or the Imposition of a Tax on Gaming Revenues Could Adversely Effect our Business." CONSTRUCTION OF NEW ROADWAY FROM CENTRAL CITY OF INTERSTATE 70, Historically, Black Hawk has enjoyed an advantage over Central City because the majority of customers have to drive by and through Black Hawk to reach Central City. However, on October 3, 2003, Central City began construction of a new four-lane road from Interstate 70 at hidden valley directly into downtown Central City. Upon completion, this roadway will allow drivers to reach Central City without driving through Clear Creek Canyon and Black Hawk. The new roadway may attract patrons and customers of the Casino to casinos located in Central City, which may have a material adverse effect upon us. WE HAVE NO EXPERIENCE IN THE OPERATION OF A CASINO. From December 21, 2001 until May 14, 2003, Hyatt Gaming managed the Casino. On May 14, 2003, we assumed management of the Casino. Prior to this date, we had no experience in the operation of a casino. While we have several employees including Timothy G. Rose, the president of Windsor Woodmont and our recently hired general manager Sean Sullivan of the Casino, both who have significant experience in the operations of casinos, Windsor Woodmont, as an entity, has no experience in the operations of a casino. If we are unable to continue to efficiently manage the operations of the Casino it will have a material adverse effect upon us. 17 DEPENDENCE UPON REPEAT CORE CUSTOMERS. Management of the Company believes that approximately 90% of our business is from repeat core customers. There can be no assurance that these customers will continue to come to the Casino or game at current levels in the future. The loss of a significant number of these repeat core customers, or a significant reduction in their gaming activities at the Casino, would have a material adverse effect upon the Company. WE MAY FACE DIFFICULTIES IN ATTRACTING AND RETAINING QUALIFIED EMPLOYEES FOR THE CASINO. The operation of the Casino requires qualified executives, managers and skilled employees with gaming industry experience and qualifications to obtain the requisite licenses. Currently, there is a shortage of skilled labor in the gaming industry. We believe this shortage will make it increasingly difficult and expensive for the manager of the Casino to attract and retain qualified employees. Increasing competition in Black Hawk and competing markets may lead to higher costs in order to retain and attract qualified employees. We may incur higher labor costs in order for the Casino management to attract qualified employees from existing gaming facilities. While we believe that we will be able to attract and retain qualified employees, we may have difficulty attracting a satisfactory number, and we may incur higher costs than expected as a result. THE RISK OF THEFT COULD ADVERSELY AFFECT CASINO OPERATIONS. The nature of the Casino's operation entrusts management and other persons working in the Casino in various positions to handle large amounts of cash, casino chips and tokens. Although our internal controls and security and surveillance policies and procedures are designed to limit our exposure to theft and the associated risk of loss, we cannot assure you that such theft does not occur or that we will discover any such theft promptly, if at all. We cannot assure you we will have adequate insurance coverage, in the event of any such theft. Any theft by our employees or otherwise could have an adverse affect on the results of operations. ADVERSE WEATHER, ROAD CONDITIONS AND INFRASTRUCTURE LIMITATIONS AFFECT OUR ABILITY TO ATTRACT CUSTOMERS. BECAUSE THE HIGHEST LEVEL OF CUSTOMER VISITS OCCUR IN THE SUMMER, A POOR SUMMER SEASON COULD ADVERSELY AFFECT OUR BUSINESS. The location of the Casino in the Rocky Mountains creates a risk that it will be subject to inclement weather, particularly snow. Severe weather conditions could cause significant physical damage to the Casino or result in reduced hours of operation or access to the Casino. Black Hawk is served by winding mountain roads that require cautious driving, particularly in bad weather, and are subject to driving restrictions and closure. Congestion on the roads leading to Black Hawk is common during the peak summer season, holidays and other times and may discourage potential customers from traveling to the Casino, particularly if road construction is in process. The highest level of customer visits occur during the summer months, because of the more favorable weather conditions. A poor summer season, due to any reason, including events outside our control, would adversely affect our business. LOCAL ECONOMIC AND COMPETITIVE CONDITIONS, AS WELL AS OTHER CONDITIONS AND CIRCUMSTANCES BEYOND OUR CONTROL COULD ADVERSELY AFFECT OUR BUSINESS. We are entirely dependent upon the Casino for all of our cash flow. Therefore, we are subject to greater risks than a geographically diversified gaming company. These greater risks include those caused by any of the risks described in this section, including: - local economic and competitive conditions; - inaccessibility due to road construction or closure on primary access routes; - changes in local and state governmental laws and regulations; - natural and other disasters; - a decline in the number of residents near or visitors to Black Hawk; or - a decrease in gaming activities in Black Hawk. 18 Any of the factors outlined above could adversely affect our ability to reorganize in our Chapter 11 Case and to generate sufficient cash flow to continue to operate the Casino and meet our obligations under a reorganization plan. A recession or economic slowdown could cause a reduction in visitation to the Casino, which would adversely affect our operating results. WE FACE RISKS THAT A MINING CLAIM MAY ADVERSELY AFFECT OUR PROPERTY RIGHTS. Black Hawk is located in an area that was actively mined for many years. Conflicts between mining claims that have certain statutory priorities and surface rights derived from the town can affect the use or ownership of property located in Black Hawk. These conflicts are the result of mining claims which pre-date the township patent granted on April 11, 1873. Although the government agencies responsible for analyzing such claims have been reluctant to adversely affect ownership rights that have been treated as settled, occasional claims based on asserted mining rights have been made adverse to the interests of casino developments and other property in Black Hawk. These mining claims may be raised in respect of the land we own in Black Hawk. If raised, these claims or similar challenges to title could distract our management and could force us to make payments to settle the claims. We have obtained title insurance which we believe will protect us against such claims. IN THE EVENT OF FORECLOSURE, NOTE HOLDERS MAY BE UNABLE TO COLLECT THE FULL VALUE OF THE FIRST MORTGAGE NOTES. The First Mortgage Notes are secured by a first priority lien on substantially all of our assets other than: - certain furniture, fixtures and equipment; - the assets of our future unrestricted subsidiaries; and - assets subject to certain permitted liens, as well as by a second priority lien on the loan proceeds from the issuance of the Second Mortgage Notes. The right of the trustee under the indenture governing the First Mortgage Notes to foreclosure on and/or dispose of its collateral is significantly impaired by applicable bankruptcy law in the Chapter 11 Case. Absent approval of the Bankruptcy Court, the trustee under the indenture governing the First Mortgage Notes is prohibited from proceeding to foreclose and/or dispose of its collateral. In addition, under Colorado gaming laws, the trustee under the indenture governing the First Mortgage Notes could be precluded from or otherwise limited or delayed in exercising powers of attorney or selling collateral, including slot machines, at a foreclosure sale since only persons licensed by the Colorado gaming authorities may have slot machines in their possession. In addition, the trustee may encounter difficulty in selling collateral due to various legal restrictions, including requirements that the purchaser or the operator of the gaming facility be licensed by state authorities or that prior approval of a sale or disposition of collateral be obtained. Since potential purchasers who wish to operate the Casino must satisfy such requirements, the number of potential purchasers in a sale of the Casino could be less than in the sale of other types of facilities. Additionally, these requirements may delay the sale of, and may adversely affect the price paid for, the collateral. In addition to gaming law restrictions, the ability of the trustee to repossess and dispose of collateral will be subject to the procedural and other restrictions of state real estate law and commercial law and our existing contractual relationships. SOME PERSONS WHO PROVIDE SERVICES OR MATERIALS IN CONNECTION WITH THE CASINO MAY HAVE A LIEN ON THE PROJECT WITH PRIORITY OVER THE LIENS GRANTED TO SECURE THE FIRST MORTGAGE NOTES. Colorado law provides architects, engineers, contractors, subcontractors, suppliers and others with a mechanic's lien on the real property being improved by their services or materials in order to secure their right to be paid. Following compliance with applicable Colorado law, such parties may foreclose on their mechanic's liens if they are not paid in full. Any actions taken to foreclose upon mechanics liens have been stayed pending resolution of the Chapter 11 Case. The priority of all mechanic's liens arising out of a construction project relates back to the date on which the construction of the project commenced. Parties who provide services or materials in connection with the Casino, including 19 parties providing services or materials prior to the Petition Date of the Chapter 11 Case may have a lien on the project, senior in priority to the unsecured creditors. ADDITIONAL LEGALIZATION OF GAMING IN COLORADO OR THE IMPOSITION OF A TAX ON GAMING REVENUES COULD ADVERSELY EFFECT OUR BUSINESS. Additional legalization of gaming in or near any area from which the Casino is expected to draw customers would adversely affect the Casino's business. Colorado law requires statewide voter approval for any expansion of limited gaming into additional locations and depending on the authorization approved by the statewide vote, may also require voter approval from the locality in question. Several attempts have been made by various parties in recent years to expand gaming in Colorado, including an amendment in November 2003 to include Video Lottery Terminals in dog tracks located along the front range of Colroado. However, to date none of this legislation has been passed. However, there can be no assurance that such legislation will not be implemented in Colorado. If such legislation is approved by the Colorado legislature or Colorado voters, it could likely have a material adverse impact on our future operating results. Additionally, from time to time, certain federal legislators have proposed the imposition of a federal tax on gaming revenues. Any such tax could adversely affect on our financial condition or results of operations. THERE IS CURRENTLY NO ESTABLISHED MARKET FOR OUR SECURITIES. The First Mortgage Notes are our only securities which have been registered under the Securities Act. We do not intend to apply for a listing of the First Mortgage Notes on a securities exchange or on any automated dealer quotation system. There is currently no established market for the First Mortgage Notes and we cannot assure you as to the liquidity of any market that may develop for the notes, your ability to sell the notes or the price at which you would be able to sell the notes. If such markets were to exist, the First Mortgage Notes could trade at prices that may be lower than their principal amount or purchase price depending on many factors, including our Chapter 11 Case, the prevailing interest rates and markets for similar securities. Further, there is no established trading market for our common stock, and we cannot assure you that one will ever develop. The liquidity of, and trading market for, the First Mortgage Notes also may be adversely affected by changes in the overall market for high yield securities and by further adverse changes in our financial performance or prospects or in the prospects for companies in our industry. As a result, we cannot assure you that an active trading market will develop for the First Mortgage Notes. ENVIRONMENTAL PROBLEMS ARE POSSIBLE AND CAN BE COSTLY. The Casino is located in a 400 square mile area that has been designated by the United States Environmental Protection Agency as the Clear Creek/Central City National Priorities List Superfund Site under the Comprehensive Environmental Response, Compensation and Liability Act, as a result of hazardous substance contamination caused by historical mining activity in Black Hawk. This is a broad national priorities list site, within which the EPA has identified several priority areas of contamination from historical mining activities, including draining mines and mine dumps, for active investigation and/or remediation. To date, the EPA has not identified the Casino site as being within a priority area nor has it identified contamination on or from the Casino site to require remediation. We have been informed that the Superfund Division of the Colorado Department of Public Health and the Environment ("Superfund Division"), working with the EPA, has sampled surface water in or near North Clear Creek near where a portion of the project site called Silver Gulch discharges surface water into North Clear Creek. Based on the results of those samples, the EPA and the Superfund Division have expressed preliminary concern that soil and rock associated with historic mining operations in Silver Gulch may be a source of contamination to North Clear Creek. Even minor contamination could form a basis for the EPA Superfund Division to require owners and operators of properties which have been the source of contamination to investigate and remediate contamination on or from their property or to reimburse costs incurred by the government in connection with such remediation. The Casino site could be among the properties suspected of being a source of contamination. If investigation or remediation of the Casino site were required, the costs associated with investigation and remediation could have a material adverse effect upon our business. Windsor Woodmont, LLC conducted a phase I and modified phase II environmental assessment of the site of the Casino. The environmental assessment has identified the remnants of historic mining activities on the site, including a tunnel, prospect pits, mining waste rock piles, a mine mill, mill tailings and plugged mine working 20 entrances. The environmental assessment also indicated that metal analyses of samples of certain soil and rock associated with historic mining activities were above concentrations allowed by Black Hawk Ordinance No. 93-3 for property proposed for excavation or development and that the soils had the potential for acid rock drainage. As a result of the elevated concentrations of metals in the soil and rock analyses, Windsor Woodmont, LLC prepared plans regarding the handling, consolidation and permanent disposal of contaminated soils and rock and submitted those plans to the City of Black Hawk. Those plans call for any contaminated soil and rock piles in areas of the property other than Silver Gulch to be excavated and consolidated in Silver Gulch with contaminated soil and rock piles historically located there. The mining related soil and rock which we have excavated and consolidated in Silver Gulch has been covered with a protective soil cap, and water flows onto the Gulch have been managed to attempt to eliminate or significantly reduce contact of water with the historic mining material already located in Silver Gulch and the consolidated material. The soil cap was covered with the general construction and excavation debris from the construction operations necessary to create the site for the Casino. Water quality in Silver Gulch has significantly improved since the installation of the protective soil cap. We cannot assure you that we will not be subject to claims or requirements for contribution or remediation by private parties, the EPA or the Superfund Division relating to previous mining activities conducted at the Casino site, to the disposal of excavated soil and rock from the Casino site which has been consolidated at Silver Gulch, to other contaminated soil and rock that might be discovered during excavation or construction at the Casino site or to surface water or groundwater contamination potentially connected with historic mining materials currently located on, or disposed on, the Casino site. Moreover, governmental trustees acting under the Comprehensive Environmental Response, Compensation and Liability Act could make claims for damages to natural resources as a result of past mining activity at the Casino site as well as existing conditions or construction activities. Further, conditions that are imposed in connection with regulatory approvals or permits could cause construction costs to increase due to costs of handling this excavated material. THE RATE OF TAXATION ON GAMING PROFITS MAY INCREASE IN THE FUTURE. The Colorado Constitution permits a gaming tax of up to 40% on adjusted gross gaming proceeds. Effective July 1, 1999, the Colorado Gaming Commission has set a gaming tax rate of .25% on adjusted gross gaming proceeds up to and including $2 million, 2% over $2 million up to and including $4 million, 4% over $4 million up to and including $5 million, 11% over $5 million up to and including $10 million, 16% over $10 million up to and including $15 million, and 20% over $15 million. These fees are set to pay the costs of ongoing regulation by the Division of Gaming. Black Hawk has imposed an annual device fee of $750 per gaming device and it revises the same from time to time. The Colorado Gaming Commission has eliminated its annual device fee for gaming machines. The Colorado Gaming Commission may revise the gaming tax or re-impose the state device fee at any time and has been conducting annual reviews to reconsider and reevaluate the gaming taxes on or about July 1st of each year. We cannot assure you that the tax rates applicable to the Casino will not be increased in the future. ITEM 2. PROPERTY BLACK HAWK, COLORADO. We own the Mountain High Casino, a casino located in Black Hawk, Colorado. The land we own upon which the Casino is situated is comprised of approximately 106 acres of land located at the intersection of Richman Street and Highway 119 in Black Hawk. The tract of land upon which the actual Casino is located is comprised of an approximately 5.7 acre parcel, on which our new Casino was constructed in 2001. The Casino includes 425,000 square feet of space, including 57,000 square feet is currently used for gaming, parking for approximately 1,450 vehicles, three restaurants including: the Steakhouse at the Mountain High Casino, a steak and seafood restaurant, the Kitchens of the World Action Buffet, a high quality action-station buffet, a Wolf Gang Puck's Express restaurant and a food court featuring various quick service food offerings. In addition, the Casino includes an indoor/outdoor plaza area featuring Starbucks Coffee and a gift shop. 21 ITEM 3. LEGAL PROCEEDINGS We are involved in certain legal proceedings, claims and litigation, including those described below. Further, we may become involved in other such proceedings in the future. The results of legal proceedings cannot be predicted with certainty. Except as otherwise indicated below, management does not believe that we have potential liability related to any current legal proceedings and claims that would have material adverse effect on our financial condition, liquidity or results of operations. As of the result of the Chapter 11 Case, except where noted, legal proceedings are stayed. For a complete description of our Chapter 11 Case, see "Proceedings under Chapter 11 of the Bankruptcy Code." First Place LLC filed a lawsuit against the Company generally asserting that it has an ownership interest in a small sliver of property upon which the Company has built and is operating the Mountain High casino. The property which First Place contends it has an ownership in consists of approximately 6,000 square feet. The Company timely referred the issue to its title insurance company, First American Title. The Company has a $33.5 million owner's title insurance policy with First American. First American has advised the Company that the claim will be covered by the Company's title insurance and the title insurance company has been and is vigorously defending the claim. After a trial in June, 2002, the trial court determined that First Place does have an ownership interest in a strip of property containing approximately 3,000 square feet which the Company believed it owned. Certain post trial motions had been granted and were pending final determination by the Court at the time of the Chapter 11 filing. On August 7, 2003, the Bankruptcy Court entered an order lifting the automatic stay, thus allowing this case to proceed to conclusion in the state courts. On September 12, 2003, the state trial court liquidated the First Place claim, based upon application of the "relative hardship" doctrine, in the amount of $73,500 and decreed that upon payment of that amount the Company would own the 3,000 square feet. First Place has appealed this case to the Colorado Court of Appeals and it is anticipated the appeal will be concluded in late 2004 or early 2005. We do not anticipate that there will be any financial exposure to the Company with respect to this claim, and fully expects that this claim will be resolved by and at the expense of First American Title. PCL Construction Services, Inc. acted as the general contractor for the Company in the construction of the Black Hawk Casino by Hyatt project. The Substantial Completion Date for the project was originally to have been October 29, 2001 and was subsequently amended by Change Order to November 15, 2001. In fact, construction of the casino was not at a point where the casino could open for business until December 20, 2001 and certain components of the project were not completed until early 2002. In early 2002, PCL and its subcontractors claimed to be owed an aggregate of approximately $7,200,000 on the project, recorded mechanic's liens and filed mechanic's lien foreclosure and breach of contract litigation against the Company. The Company filed litigation against PCL for PCL's misrepresentations and contractual breaches concerning completion of the project. This litigation was not at issue with all parties as of the date of the Chapter 11 filing and has been stayed. The Company and PCL engaged in extensive settlement discussions starting in January, 2003 and entered into a settlement agreement in May 2003. The Bankruptcy Court approved the agreement on July 7, 2003. Under the agreement, the Company agreed to pay PCL and its subcontractors a total of $4.5 million, $2.3 million of which was paid July 28, 2003, $1.4 million of which was paid in January 2004, $400,000 to be paid in October 2004, and $400,000 to be paid in April 2005. Paul Steelman was the project architect for the Black Hawk Casino by Hyatt project. Paul Steelman claims that it is owed an additional approximately $200,000 for architectural work performed at the project. The Company believes that it does not owe Paul Steelman the $200,000 and further believes that Paul Steelman owes the Company approximately $2,000,000 for Paul Steelman's failure to properly prepare and complete architectural plans and specifications for the project in a timely fashion. Prior to the Chapter 11 filing, the Company and Steelman had entered into a Dispute Resolution Agreement providing for mediation, to be followed by binding arbitration, if necessary. The Company and Steelman filed a stipulated motion lifting the stay from this dispute and allowing its determination by Dispute Resolution Agreement, and an order approving the motion was entered in May 2003. Mediation between the Company and Steelman did not result in a resolution of these claims and a binding arbitration of the claims is scheduled for September 2004. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 22 No matters were submitted by us to a vote of our security holders through the solicitation of proxies or otherwise, during the fourth quarter of the fiscal year covered by this Annual Report. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS MARKET INFORMATION. Our common stock has not been registered under the Securities Act and there is no public trading market for our common stock. HOLDERS. As of April 2, 2004 there were 51 holders of record of our common stock. DIVIDENDS. No dividends have been declared or paid on our common stock and we do not intend to pay a dividend on shares of our common stock in the future. In addition, the payment of cash dividends on our common stock is subject to any preferences which may be applicable to our Series A and Series B preferred stock and our ability to declare dividends on our common stock is restricted by the terms of our Series B preferred stock. In addition, the Hyatt Settlement and Release Agreement limits our ability to pay dividends. The indenture governing our First Mortgage Notes also limits our ability to pay dividends. Consequently, no cash dividends are expected to be paid on our common stock in the foreseeable future. Further, there can be no assurance that our proposed operations will generate the funds needed to declare a cash dividend or that we will have legally available funds to pay dividends. In addition, we may fund part of our operations in the future from indebtedness, the terms of which may prohibit or restrict the payment of cash dividends. If a holder of common stock is disqualified by the regulatory authorities from owning such shares, such holder will not be permitted to receive any dividends with respect to such stock. See Item 1, "Description of Business -- Regulatory Structure - Gaming Licenses." VOLUNTARY STOCK OPTION EXCHANGE. On January 29, 2003, the Company entered into voluntary stock option exchange agreements (the "Option Exchange Agreements") to exchange outstanding options to purchase shares of our the Common Stock granted under the 2000 Stock Incentive Plan held by eligible employees or eligible directors for new options under the same option plans. The Option Exchange Agreements required an optionee to cancel and terminate their old stock options previously granted to the optionee with the result that the same number of new options with a exercise price to be the fair market value of the Common Stock on a new grant date exactly six months and one day after the date of the Option Exchange Agreements. Stock options to acquire a total of 95,000 shares of the Company's Common Stock with exercise prices ranging from $16.50 to $20.00 were exchanged under the Option Exchange Agreements. The Exchange Program was designed to comply with FASB Interpretation No. 44, "Accounting for Certain Transactions involving Stock Compensation," for fixed plan accounting. As of the date of this Annual Report, the new stock options had not been granted under the Option Exchange Agreements. ITEM 6. SELECTED FINANCIAL DATA The following selected historical financial information has been derived from the financial statements of the Company and should be read in conjunction with the financial statements and notes thereto, and Management's Discussion and Analysis of Plan of Operation included elsewhere in this Form 10-K. 23

The following table sets forth certain summarized operating data for the periods indicated.

1. EBITDA consists of earnings (loss) before interest, income taxes, depreciation and amortization. EBITDA is presented solely as a supplemental disclosure because management believes that it is a widely used measure of operating performance in the gaming industry. EBITDA and EBITDA Margin are not determined in accordance with generally accepted accounting principles. EBITDA should not be construed as an alternative to operating income, as an indicator of the Company's operating performance, as an alternative to cash flows from operating activities, or as a measure of liquidity. The Company's definition of EBITDA may not be identical to other companies'. The above table reconciles EBITDA to operating income included in the financial statements presented in Item 1, Part 1. 2. EBITDA margin is EBITDA as a percentage of net operating revenues. As a result of the major operational improvements implemented by the Company after assuming management of the casino from Hyatt Gaming, the EBITDA margin for the period June 1, 2003 through December 31, 2003 was 19.8% compared to 8.25% for the period January 1, 2003 through May 31, 2003. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW On November 7, 2002, we filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code. Under Chapter 11, we are operating our business as a debtor-in-possession. Under the Bankruptcy Code, 24 actions to collect pre-petition indebtedness or enforce pre-petition contractual obligations, as well as most other pending actions against us or property of our estate, are stayed. On April 10, 2003, we entered into the Hyatt Settlement and Release Agreement with Hyatt Gaming whereby Hyatt Gaming holds certain allowed pre-petition unsecured claims in the Chapter 11 Case and the Hyatt Management Agreement was deemed rejected. On May 14, 2003, we assumed management of the Casino and the Casino's name was changed to the Mountain High Casino. Since the Company assumed management of the Casino on May 14, 2003, the new management team has implemented numerous cost saving and what management believes to be revenue enhancing programs including: - converted hundreds of slot machines to new programs of the City of Black Hawk market's most popular games - lowered the slot hold % on our slot machines mix to bring it in line with the City of Black Hawk market average - reconfigured the slot floor layout to improve flow and visibility - created a VIP Players lounge on the casino floor - shifted focus of marketing programs to higher volume players - added additional table games (poker and black jack) to accommodate increased number of players - eliminated subsidized bus programs - instituted in-town city shuttle service directly to the Casino for the first time - secured lodging for VIP players through arrangement with the Gold Dust Lodge (renamed the Mountain High Casino Inn) located approximately two miles from the Casino - instituted demand-based scheduling resulting in significant labor efficiencies - consolidated or eliminated various management positions that has improved communication, and along with other labor saving initiatives, has allowed the Casino to reduce employee counts and related expenses - created a guest-driven culture for management and front-line employees The following discussion should be read in conjunction with, and is qualified in its entirety by, the financial statements of Windsor Woodmont Black Hawk Resort Corp., including the respective notes thereto and other financial information included elsewhere in this Annual Report. FOR THE YEAR ENDED DECEMBER 31, 2003 COMPARED TO THE YEAR ENDED DECEMBER 31, 2002 Total operating revenues for the year ended December 31, 2003 was $59,284,608 ($55,567,444 net of promotional allowances). This included $52,351,744 in casino revenue, $5,980,324 in food and beverage revenue, and $952,540 of other revenue. This compares to total revenues for the year ended December 31, 2002 of $70,003,031 ($65,863,813 net of promotional allowances) and represented a decrease of 15.31% of total revenues (15.63% net of promotional allowances). This included $61,288,720 in casino revenue, $7,639,860 in food and beverage revenue, and $1,074,451 of other revenue. The reduced total operating revenues was primarily the result of reduced customer visits because of a general downturn in the Black Hawk gaming market. Casino operating expenses for the year ended December 31, 2003 totaled $30,522,177, including $9,555,363 in state and local gaming taxes and device fees. This compares to casino operating expenses for the year ended December 31, 2002 totaling $36,818,164, including $10,503,097 in state and local gaming taxes and device fees. This represents a decrease of 17.1% in casino expenses. The decrease is primarily due to reduced payroll and benefit costs, reduced gaming taxes, reduced rental expense associated with slot games operated under fee participation agreements, and reduced marketing costs. The gaming taxes were reduced due to reduced gaming revenue. Other casino operating expenses consist principally of salaries, wages and benefits, marketing costs, and other operating expenses of the casino. Food and beverage expenses for the year ended December 31, 2003 totaled $5,393,684, including $3,326,281 in cost of goods sold. This compares to food and beverage expenses for the year ended December 31, 2002 totaling $7,281,030, including $4,438,672 in cost of goods sold, representing a decrease of 25.92% in food and beverage expenses. The decrease is primarily due to reduced employees working within the Company's food and 25 beverage area, which results in reduced payroll and benefit costs and reduced revenue associated with food and beverage which results in reduced cost of goods sold. Other food and beverage expenses consist principally of salaries, wages and benefits, and other operating expenses of the food and beverage operations. Other operating expenses for the year ended December 31, 2003 totaled $1,035,430 versus $1,928,632 for the year ended December 31, 2002, and consist of salaries, wages and benefits, contract entertainment expense, and other operating expenses. This represents a decrease of approximately 46.31% and is primarily due to reduced payroll and benefit costs and reduced expenditures related to contract entertainment. General and administrative expenses for the year ended December 31, 2003 totaled $9,584,307 versus $10,184,926 for the year ended December 31, 2002, and consist of salaries, wages and benefits, utilities, insurance, property taxes, contract services, maintenance and repairs, cleaning supplies, and other operating expenses. The net reduction represents a decrease of approximately 5.90% and is due to decreases in payroll and benefit costs and in contract services costs, partially offset by increases in utilities and property taxes. Depreciation and amortization expense for the year ended December 31, 2003 totaled $8,356,921 versus $8,405,412 for the year ended December 31, 2002. These expenses relate to property and equipment in service and vary with the addition or replacement of new items of property and equipment. Interest expense for the year ended December 31, 2003 totaled $2,419,914, including $237,295 in amortization of debt issuance costs. This compares to interest expense for the year ended December 31, 2002, which totaled $16,774,290, including $1,666,263 in amortization of debt issuance costs and represents a decrease of 85.57%. The reduction in interest expense is a result of interest not being accrued on the First and Second Mortgage Notes payable during the course of our bankruptcy proceedings, and the write-off at December 31, 2002 of unamortized debt discount and deferred financing costs related to the First and Second Mortgage Notes. Reorganization items for the year ended December 31, 2003 totaled $8,716,907. This includes costs incurred for legal, financial advisor services received in connection with our debt restructuring efforts, travel related expenses and other costs directly related to our debt restructuring efforts. It also includes the $5,000,000 damage claim incurred with the rejection of the Hyatt contract. This compares to reorganization items for the year ended December 31, 2002, which totaled $4,762,599 and represents and increase of approximately 83.03%. Future operating results will be subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are beyond our control. While we believe that our casino will be able to attract a sufficient number of patrons and achieve the level of activity and revenues necessary to permit us to meet our payment obligations, we cannot assure you that we will achieve these results. FOR THE YEAR ENDED DECEMBER 31, 2002 COMPARED TO THE YEAR ENDED DECEMBER 31, 2001 Our operating loss is derived from the operation of the Casino during the year ended December 31, 2002. Our other expense, net, consists of interest expense on our outstanding indebtedness, interest income on our restricted cash and income from the change in valuation of warrants. Operating revenues and operating expenses for the year ended December 31, 2002 are not comparable to the operating revenues and operating expenses for the year ended December 31, 2001 due to the fact the Casino opened on December 20, 2001, and accordingly included only 11 days of operating results, compared to a full year of operating results for the year ended December 31, 2002. Interest income for the year ended December 31, 2002 compared to the year ended December 31, 2001 decreased as a function of (a) the amount of funds invested was reduced to fund construction costs and (b) a reduction in the interest rate on invested funds during 2002 compared to 2001. Interest charges for the year ended December 31, 2002 totaled approximately $16.8 million compared to approximately $16.7 million on December 31, 2001. During 2001, $10.9 million of the interest was capitalized and $5.8 million was expensed. In 2002, no interest charges were capitalized. On November 7, 2002, the Petition Date, 26 we stopped accruing interest expense on the First Mortgage Notes and on the Second Mortgage Notes, as they are considered under-secured and thus not entitled to interest during the Chapter 11 Case. Start-up costs are expensed as incurred. The decrease in start-up costs for the year ended December 31, 2002 compared to the year ended December 31, 2001 is attributable to start-up costs ending in connection with the opening of the Casino on December 20, 2001. Depreciation and amortization expenses for the year ended December 31, 2002 was approximately $8.4 million compared to $246,000 in the year ended December 31, 2001. This increase is a function of the property being in service and subject to depreciation for the entire year 2002, versus only being in service and subject to depreciation in 2001 for the 11 day period beginning on December 20, 2001. Reorganization related expenses of $4,762,559 were incurred during the year ended December 31, 2002. These include costs incurred for legal and financial advisor services received in connection with our debt restructuring efforts, travel related expenses and other costs directly related to our debt restructuring efforts. Such costs also include the write-off of unamortized debt discount and deferred financing costs related to the First Mortgage Notes and the Second Mortgage Notes in the amount of $897,794 and $3,440,651, respectively in accordance with accounting policies for entities in reorganization under the Bankruptcy Code. LIQUIDITY AND CAPITAL RESOURCES Following is a schedule of Total Contractual Cash Obligations and Other Commercial Commitments as of December 31, 2003.

(1) Our First Mortgage Notes and Second Mortgage Notes have been classified as current because we are in default of the First Mortgage Notes and Second Mortgage Notes due to non-payment of interest. (2) Represents amounts paid to Blackhawk Development Corp. for hotel rooms. Under the Bankruptcy Code, actions to collect pre-petition indebtedness or enforce pre-petition contractual obligations, as well as most other pending actions against the Company or property of its estate are stayed. Therefore the commitments shown in the above table may not reflect actual cash outlays in the future periods. We generate cash flows from operating activities, as reflected on the Statements of Cash Flows. We believe that these cash flows reflect the impact of our management of the Casino and the success of our marketing programs and cost containment. During the fiscal year ended December 31, 2003, net cash flows provided by operating activities was $2,780,639, as compared to net cash flow used in operating activities of $1,817,559 during the fiscal year ended December 31, 2002. Cash flows used in investing activities during the fiscal year ended December 31, 2003 was $1,620,029 as compared cash flows provided by investing activities of $3,637,252. The $1,620,029 cash used in investing activities for the year ended December 31, 2003 is comprised principally of fixed asset additions of $1.6 million, payments of construction accounts payable of $2.3 million, less a use of restricted cash of $2.4 million. For 2002, cash provided by investing activities of $3,637,252 is comprised principally of proceeds from investments of $6.4 million plus use of restricted cash of $2.7 million less purchases of property and equipment of $3.3 million and payments of construction accounts payable of $2 million. 27 Cash flows used in financing activities was $898,464 during the fiscal year ended December 31, 2003, as compared to $3,465,873 during the fiscal year ended December 31, 2002. The decrease was primarily the result of reduced payments of notes payable. For the fiscal year ended December 31, 2003, use of cash was solely for the payment of notes payable. For the fiscal year ended December 31, 2002, the $3,465,873 use of cash was for payment of notes payable of $3.4 million and deferred offering costs of $130,000. We use the cash flows generated by operations to fund operations. Our cash and cash equivalents totaled $8,283,104 at December 31, 2003, compared to $8,020,958 at December 31, 2002. After confirmation of a plan of reorganization, we believe that cash flow from operations and our existing cash balances will be sufficient to satisfy our working capital needs, capital expenditures and other liquidity requirements for our existing operations over the next 12 months. However, in the event that cash flow from operations and our existing cash balances are insufficient to meet our capital needs, there can be no assurance that any financing will be available, or that, if available, any such financing will be on favorable terms. In addition, we cannot assure you that our reasonably foreseeable liquidity needs are or will be accurate or that new business developments or other unforeseen events will not occur, resulting in the need to raise additional funds. We expect that the adequacy of our operating cash flow will depend, among other things, upon our ability to reorganize, the general state of the economy, both local and national, our ability to manage the Casino, the continued development of the Black Hawk market as a gaming destination, the intensity of the competition, the efficiency of operations, depth of customer demand, and the effectiveness of our marketing and promotional efforts. RECENTLY ISSUED ACCOUNTING STANDARDS The Company has reviewed all recently issued accounting pronouncements and does not believe that any of the pronouncements will have a material impact on its financial statements. CRITICAL ACCOUNTING POLICIES In accordance with recent Securities and Exchange Commission guidance, those material accounting policies that the Company believes are the most critical to an investor's understanding of the Company's financial results and condition and/or require complex management judgment have been expanded and are discussed below. Information regarding the Company's other accounting policies is included in Note 1 to the Company's financial statements. Financial Reporting by Entities in Reorganization Under the Bankruptcy Code - Because we are operating as a debtor-in-possession under Chapter 11 of the United States Bankruptcy Code, we follow the guidance of Statement of Position 90-7, "Financial Reporting by Entities in Reorganization Under the Bankruptcy Code" (SOP 90-7). Under SOP 90-7, the balance sheet of an entity in Chapter 11 distinguishes prepetition liabilities subject to compromise from those that are not and postpetition liabilities. Prepetition liabilities, including claims that become known after a petition is filed, are reported on the basis of the expected amount of the allowed claims in accordance with FASB Statement No. 5, "Accounting for Contingencies", as opposed to the amounts for which those allowed claims may be settled. In the statement of operations, revenues, expenses, realized gains and losses, and provisions for losses resulting from the reorganization and restructuring of the business are reported separately as reorganization items. Interest expense is reported only to the extent that it will be paid during the proceeding or that it is probable that it will be an allowed priority, secured or unsecured claim. The "fresh start" provisions of SOP 90-7 are applicable for entities whose plans have been confirmed by the court and have thereby emerged from Chapter 11. Accordingly, if we are successful in emerging out of Chapter 11, those provisions will be followed by the Company. The most significant of those provisions are as follows: - The reorganization value of the entity will be allocated to the entity's assets in conformity with the procedures specified by FASB Statement No. 141, Business Combinations. If any portion of the reorganization value cannot be attributed to specific tangible assets or identified intangible assets of 28 the emerging entity, such amounts will be reported as goodwill in accordance with paragraph 6 of FASB Statement No. 142, Goodwill and Other Intangible Assets. - Each liability existing at the plan confirmation date, other than deferred taxes, will be stated at present values of amounts to be paid determined at appropriate current interest rates. - Deferred taxes will be reported in conformity with generally accepted accounting principles. Benefits realized from preconfirmation net operating loss carryforwards will first reduce reorganization value in excess of amounts allocable to identifiable assets and other intangibles until exhausted and thereafter be reported as a direct addition to paid-in capital. - Changes in accounting principles that will be required in the financial statements of the emerging entity within the twelve months following the adoption of fresh-start reporting will be adopted at the time fresh-start reporting is adopted. Revenue Recognition - Casino revenue is the net win from gaming activities, which is the difference between gaming wins and losses. The incremental amount of unpaid progressive jackpots is recorded as a liability and a reduction of casino revenue in the period during which the progressive jackpot increases. Promotional allowances reduce revenues in determining net operating revenue. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK At April 2, 2004, we did not have any derivative instruments that increased our exposure to market risks for interest rates, foreign currency rates, commodity prices or other market price risks. We do not use derivatives for speculative purposes. Currently, our exposure to market risks results primarily from changes in interest rates. We do not use swaps or other interest rate protection agreements to hedge this risk. ITEM 8. FINANCIAL STATEMENTS The response to this item is submitted as a separate section of this Annual Report beginning on page F-1. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE On May 20, 2002, we dismissed Arthur Andersen, LLP ("Andersen"), as our independent public accountants. Our Audit Committee participated in and approved the decision to dismiss Andersen. The reports by Andersen on our financial statements during the preceding two years contained no adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope, or accounting principles. During the preceding two fiscal years and through May 20, 2002, there were no disagreements between the Company and Andersen on any matter of accounting principles or practices, financial statement disclosure, or audit scope or procedure, which, if not resolved to Andersen's satisfaction, would have caused Andersen to make reference to the subject matter of the disagreements in connection with Andersen's report on the Company's financial statements. During the preceding two fiscal years and through May 20, 2002, there were no reportable events required to be disclosed pursuant to Item 304(a)(1)(v). On May 13, 2002, we announced that the Company's Board of Directors voted to approve the engagement of Deloitte & Touche LLP as the Company's independent auditor for the year ending December 31, 2002, subject to customary client acceptance procedures. On August 13, 2002, Deloitte & Touche LLP notified the Company that Deloitte & Touche LLP declined to accept this engagement. Deloitte & Touche LLP has not reviewed, audited or rendered any report on any financial statements of the Company as of any date or for any period. On January 14, 2003 we employed Grant Thornton LLP as our new independent accountants, which employment was approved by the Bankruptcy Court on February 6, 2003. During the preceding two fiscal years and through December 31, 2002, the Company had not consulted with Grant Thornton LLP regarding the matters described in, and required to be disclosed pursuant to Item 304(a)(2)(i) or Item 304(a)(2)(ii) of Regulation S-K. 29 ITEM 9A. CONTROLS AND PROCEDURES An evaluation was conducted under the supervision and with the participation of the Corporation's management, including Jerry L. Dauderman, the Company's Chief Executive Officer and Michael L. Armstrong, the Corporation's Chief Financial Officer, of the effectiveness of the design and operation of the Company's disclosure controls and procedures as of December 31, 2003. Based on that evaluation, Mr. Dauderman and Mr. Armstrong concluded that the Company's disclosure controls and procedures were effective as of such date to ensure that information required to be disclosed in the reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such officers also confirm that there was no change in the Company's internal control over financial reporting during the year ended December 31, 2003 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT This item has been omitted from this Annual Report and is incorporated by reference to Windsor Woodmont Black Hawk Resort Corporation's definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this report. ITEM 11. EXECUTIVE COMPENSATION This item has been omitted from this Annual Report and is incorporated by reference to Windsor Woodmont Black Hawk Resort Corporation's definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this report. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT This item has been omitted from this Annual Report and is incorporated by reference to Windsor Woodmont Black Hawk Resort Corporation's definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this report. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS This item has been omitted from this Annual Report and is incorporated by reference to Windsor Woodmont Black Hawk Resort Corporation's definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this report. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES This item has been omitted from this Annual Report and is incorporated by reference to Windsor Woodmont Black Hawk Resort Corporation's definitive proxy statement to be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this report. PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) 1. Financial Statements The following financial statements of the Company are included in Part II, Item 8: Report of Independent Certified Public Accountants - Grant Thornton LLP 30 Report of Independent Public Accountants - Arthur Andersen LLP Balance Sheets as of December 31, 2003 and 2002 Statements of Operations for the years ended December 31, 2003, 2002 and 2001 Statements of Comprehensive Loss for the years ended December 31, 2003, 2002 and 2001 Statements of Redeemable Preferred Stock and Stockholders' Equity (Deficit) for the years ended December 31, 2003, 2002 and 2001 Statements of Cash Flows for the years ended December 31, 2003, 2002 and 2001 Notes to Financial Statements 2. Financial Statement Schedules. Financial Statement Schedule II is included in Part II, Item 8. All other schedules are omitted because they are not applicable, not required or because the required information is included in the financial statements or the notes thereto. 3. Exhibits. A list of the exhibits included as part of this Form 10-K is set forth in the Exhibit Index that immediately precedes such exhibits, which is incorporated herein by reference. (b) Reports on Form 8-K for the Quarter ended December 31, 2003 None. 31 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. WINDSOR WOODMONT BLACK HAWK RESORT CORP. (Registrant) Date: April 14, 2004 By: /s/ Jerry L. Dauderman ---------------------------------------------- Jerry L. Dauderman, Chairman of the Board and Chief Executive Officer (principal executive officer) In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: April 14, 2004 /s/ Timothy G. Rose ------------------------------------------------- Timothy G. Rose, Chief Operating Officer, President and Director Date: April 14, 2004 /s/ Irving C. Deal ------------------------------------------------- Irving C. Deal, Director Date: April 14, 2004 /s/ Michael L. Armstrong ------------------------------------------------- Michael L. Armstrong, Executive Vice President, Chief Financial Officer, Treasurer and Secretary (principal financial officer) Date: April 14, 2004 /s/ Garry Saunders ------------------------------------------------- Garry Saunders, Director 32 INDEX TO FINANCIAL STATEMENTS

F-1 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Board of Directors and Stockholders of Windsor Woodmont Black Hawk Resort Corp.: We have audited the accompanying balance sheets of Windsor Woodmont Black Hawk Resort Corp. (Debtor-in-Possession) (a Colorado corporation) (The "Company") as of December 31, 2003 and 2002 and the related statements of operations, comprehensive loss, redeemable preferred stock and stockholders' equity (deficit) and cash flows for the years then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. The financial statements of Windsor Woodmont Black Hawk Resort Corp. for the year ended December 31, 2001 were audited by other auditors who have ceased operations. Those auditors expressed an unqualified opinion on those financial statements in their report dated March 15, 2002, except for note 4, as to which the date is March 22, 2002. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the 2003 and 2002 financial statements referred to above present fairly, in all material respects, the financial position of Windsor Woodmont Black Hawk Resort Corp. (Debtor-in-Possession) as of December 31, 2003 and 2002, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. As discussed in Note 1, the Company filed for reorganization under Chapter 11 of the United States Bankruptcy Code. The accompanying financial statements do not purport to reflect or provide for the consequences of the bankruptcy proceedings. In particular, such financial statements do not purport to show (a) as to assets, their realizable value on a liquidation basis or their availability to satisfy liabilities; (b) as to prepetition liabilities, the amounts that may be allowed for claims or contingencies, or the status and priority thereof; (c) as to stockholder accounts, the effect of any changes that may be made in the capitalization of the Company; or (d) as to operations, the effect of any changes that may be made in its business. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2, as a result of the bankruptcy filing, realization of assets and satisfaction of liabilities, without substantial adjustments and/or changes in ownership, are subject to uncertainty and raise substantial doubt about the Company's ability to continue as a going concern. Management's plan concerning these matters is also discussed in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /S/ GRANT THORNTON LLP Denver, Colorado, February 27, 2004 F-2 The report that appears below is a copy of the report issued by the Company's previous independent auditor, Arthur Andersen, LLP, who has not reissued their report. That firm has discontinued performing auditing and accounting services. REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To the Board of Directors and Stockholders of Windsor Woodmont Black Hawk Resort Corp.: We have audited the accompanying consolidated balance sheets of Windsor Woodmont Black Hawk Resort Corp. (a Colorado corporation) as of December 31, 2001 and 2000, and the related consolidated statements of operations, comprehensive loss, changes in stockholders' deficit and cash flows for the years ended December 31, 2001, 2000 and 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Windsor Woodmont Black Hawk Resort Corp. as of December 31, 2001 and 2000, and the results of its operations and its cash flows for the years ended December 31, 2001, 2000 and 1999, in conformity with accounting principles generally accepted in the United States. ARTHUR ANDERSEN LLP /s/ ARTHUR ANDERSEN LLP ----------------------- March 15, 2002 (except as discussed in Note 4, as to which the date is March 22, 2002) Las Vegas, Nevada F-3 WINDSOR WOODMONT BLACK HAWK RESORT CORP. (DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002) BALANCE SHEETS

SEE NOTES TO FINANCIAL STATEMENTS F-4 WINDSOR WOODMONT BLACK HAWK RESORT CORP. (DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002) STATEMENTS OF OPERATIONS

SEE NOTES TO FINANCIAL STATEMENTS F-5 WINDSOR WOODMONT BLACK HAWK RESORT CORP. (DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002) STATEMENTS OF COMPREHENSIVE LOSS

SEE NOTES TO FINANCIAL STATEMENTS F-6 WINDSOR WOODMONT BLACK HAWK RESORT CORP. (DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002) STATEMENT OF REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)

SEE NOTES TO FINANCIAL STATEMENTS F-7 WINDSOR WOODMONT BLACK HAWK RESORT CORP. (DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002) STATEMENTS OF CASH FLOWS

SEE NOTES TO FINANCIAL STATEMENTS F-8 WINDSOR WOODMONT BLACK HAWK RESORT CORP. (DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002) NOTES TO FINANCIAL STATEMENTS 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION: Windsor Woodmont Black Hawk Resort Corp., a Colorado corporation (the "Company" or "Resort Corp.") was incorporated on January 9, 1998. Windsor Woodmont, LLC (the "LLC") was formed as a limited liability company, under the laws of the State of Colorado, on July 17, 1997. These companies were formed for the purpose of developing an integrated limited stakes gaming casino, entertainment and parking facility in Black Hawk, Colorado (the "Project"), which opened December 20, 2001. Prior to December 20, 2001, the Company and the LLC were development stage enterprises. The Company was a wholly owned shell company subsidiary of the LLC with no significant assets, liabilities or operating activity. In 2000, in connection with the issuance of the first mortgage notes and other financing transactions described in note 4, the LLC contributed all of its assets and liabilities to the Company in exchange for stock of the Company and the contribution has been accounted for as a recapitalization of entities under common control whereby the assets and liabilities are recorded at the historical cost basis of the LLC. The Company completed the development of the Project, and operated the Project under a management agreement with Hyatt Gaming Management, Inc. ("Hyatt Gaming") until assuming management of the project in May, 2003. The LLC's ownership in the Company was subsequently reduced through the refinancing of the LLC's debt by conversion into the Company's common stock and the issuance of additional common stock for cash. BANKRUPTCY PROCEEDINGS: On November 7, 2002 (the Petition Date), the Company (debtor) filed a voluntary petition for protection under Chapter 11 of the United States Bankruptcy Code in the Federal District of Delaware in order to facilitate the restructuring of the Company's debt, trade liabilities and other obligations. The Company is currently operating as a debtor-in-possession under the supervision of the United States District Court for the District of Colorado. The bankruptcy petition was filed in order to preserve cash and to give the Company the opportunity to restructure its obligations. On December 13, 2002, we filed a motion for court approval of the rejection of the Hyatt Management Agreement. The rejection of the Hyatt Management Agreement eliminates the payment of the Hyatt Management fee, thereby reducing operating costs and increasing net income. On April 10, 2003, we entered into a settlement agreement with Hyatt Gaming Management, Inc. where they will not contest the rejection of the Hyatt Management Agreement (the "Hyatt Settlement and Release Agreement"). On April 25, 2003, the Bankruptcy Court entered an order approving the Hyatt Settlement and Release Agreement. On May 14, 2003, we assumed management of the casino and the casino name was changed to the Mountain High Casino. Pursuant to the Hyatt Settlement and Release Agreement, Hyatt Gaming holds an allowed unsecured claim in the Chapter 11 Case in the aggregate amount of $18,413,244 (the amount of $18,318,369 set forth in the Hyatt Settlement and Release Agreement plus an additional $94,875 in incentive management fees from the Petition Date through May 13, 2003); provided, however, that in the event that the value of the Company's assets exceed the value of the liens senior to the Second Mortgage Note (including the liens of the Black Hawk B.I.D., PCL Construction Services, Inc., the FF&E Lender and the First Mortgage Noteholders), Hyatt Gaming's claim based on the Second Mortgage Note will be secured to such extent. The unsecured claim is recorded in the financial statements through a $5,000,000 contract rejection claim in notes payable, second mortgage notes of $9,870,233 in notes payable, and the balance of the unpaid claims is included in trade accounts payable and accrued expenses. The treatment of Hyatt Gaming's allowed claim (including certain changes to such treatment that Hyatt Gaming asserts are in violation of the Hyatt Settlement Agreement and to which Hyatt Gaming has not consented) is reflected in the Plan of Reorganization (as defined below). Hyatt Gaming has indicated that, in addition to its pre-petition claims against the Company, it may assert an administrative claim in the Chapter 11 Case for damages arising from alleged breaches of the terms of the Hyatt Settlement and Release Agreement. On or about February 19, 2003, we entered into a stipulation with David R. Belding, our furniture, fixture and equipment lender (the "FF&E Lender") pursuant to which all issues between the Company and the FF&E Lender F-9 WINDSOR WOODMONT BLACK HAWK RESORT CORP. (DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002) NOTES TO FINANCIAL STATEMENTS concerning the amount and priority of the FF&E Lender's claim and the treatment of such claim under a plan of reorganization were resolved. On February 19, 2003, the Company filed its Motion to Approve Stipulation Regarding (1) Allowance and Payment of Secured Claim of David R. Belding; and (2) Mutual Release of Claims Relating to Disputes Over Funds in Wells Fargo Bank Account (the "FF&E Stipulation"). Thereafter, objections to the FF&E Stipulation were filed by the First Mortgage Noteholders and PCL (as defined below), and SunTrust and the Unsecured Creditors Committee filed joinders to the objection filed by the First Mortgage Noteholders (PCL later withdrew its objection to the FF&E Stipulation). The objections asserted, among other things, that the initiation of an adversary proceeding may be required to obtain the relief sought in the FF&E Stipulation. The Company, the FF&E Lender, and the objecting parties agreed to proceed with the issues raised in connection with the FF&E Stipulation and the objections thereto by way of an adversary proceeding and such matter was converted to an adversary proceeding. Thereafter, the parties reached an agreement whereby the adversary proceeding on the FF&E Stipulation was held in abeyance and the issues relating to the FF&E Stipulation were resolved or reserved for a later date. On June 24, 2003, the Company filed an Amended Stipulation Regarding (1) Allowance and Payment of Secured Claim of David R. Belding; and (2) Mutual Release of Claims Relating to Disputes Over Funds in Wells Fargo Bank Account (the "FF&E Settlement Agreement"), which was approved by the Bankruptcy Court by order entered June 30, 2003. The FF&E Settlement Agreement provides, among other things, that the FF&E Lender will receive payments of up to $500,000 per month during the Chapter 11 Case and will be paid certain amounts on the effective date of a plan of reorganization. After the approval of the FF&E Settlement Agreement, the Company and the FF&E Lender agreed to more favorable treatment to the Company, including a reduction in the required effective date payment to the FF&E Lender and a one-year extension on the repayment of the amounts due to the FF&E Lender, which treatment is reflected in the Plan of Reorganization (as defined below). On August 6, 2003, we filed a Plan of Reorganization and a related disclosure statement with the Bankruptcy Court. See Note 12 - Plan of Reorganization. Because of the ongoing nature of the reorganization case, the outcome of which is not presently determinable, the financial statements contained herein are subject to material uncertainties and may not be indicative of the results of the Company's future operations or financial position. No assurance can be given that the Company will be successful in reorganizing its affairs within the Chapter 11 bankruptcy proceedings. The financial statements contained herein have been prepared in accordance with accounting principles generally accepted in the United States of America applicable to a going concern, and do not purport to reflect or to provide for all of the possible consequences of the ongoing Chapter 11 reorganization case. Specifically, the financial statements do not present the amount which will ultimately be paid to settle liabilities and contingencies which may be required in the Chapter 11 reorganization case or the effect of any changes which may be made in connection with the Company's capitalization or operations resulting from a plan of reorganization. As a result of the items discussed above, there is substantial doubt about the Company's ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon, but not limited to, formulation, approval, and confirmation of a plan of reorganization, adequate sources of capital, customer and employee retention, the ability to provide a high quality gaming experience and the ability to sustain positive results of operations and cash flows sufficient to continue to operate. The financial statements do not include any adjustments to the recorded amounts or classification of assets or liabilities or reflect any amounts that may ultimately be paid to settle liabilities and contingencies which may be required in the Chapter 11 reorganization or the effect of any changes which may be made in connection with the Company's capitalization or operations resulting from a plan of reorganization. ACCOUNTING UNDER BANKRUPTCY: The financial statements have been prepared in accordance with AICPA Statement of Position 90-7, "Financial Reporting by Entities in Reorganization under the Bankruptcy Code" (SOP 90-7). Pursuant to SOP 90-7, an objective of financial statements issued by an entity in Chapter 11 is to reflect its financial evolution during the proceeding. For that purpose, the financial statements for periods including and subsequent to filing the Chapter 11 petition should distinguish transactions and events that are directly associated with the reorganization from the ongoing operations of the business. F-10 WINDSOR WOODMONT BLACK HAWK RESORT CORP. (DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002) NOTES TO FINANCIAL STATEMENTS Expenses and other items not directly related to ongoing operations are reflected separately in the statement of operations as reorganization items (see note 5). The filing of the Chapter 11 case by the Debtor (i) automatically stayed actions by creditors and other parties in interest to recover any claim that arose prior to the commencement of the case, and (ii) served to accelerate, for purposes of allowance, all pre-petition liabilities of the Company, whether or not those liabilities were liquidated or contingent as of the Petition Date. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Cash and Cash Equivalents, Restricted The Company considers all highly liquid investments with a maturity at the time of purchase of six months or less to be cash equivalents. At December 31, 2002, amounts were held in several trust accounts by Wells Fargo Bank (as cash disbursement agent) and were restricted in use to the development of the Black Hawk Casino by Hyatt in Black Hawk, Colorado or for the 13% First Mortgage Notes interest payments. Included in December 31, 2002 restricted cash equivalents were two certificates of deposit in the amounts of $919,718 and $526,776 which were pledged as collateral on two irrevocable letters of credit in like amounts which constitute required collateral for public improvements under the Subdivision Agreement and site remediation collateral for a bench excavation permit. The letter of credit in the amount of $919,718 expired April 30, 2002, and the letter of credit in the amount of $526,776 expired September 1, 2002. The restrictions on these accounts were released in connection with a settlement agreement between the Company and PCL Construction Services, Inc. ("PCL"), and the funds were paid to PCL under the terms of the settlement agreement. There were no cash equivalents, restricted at December 31, 2003. Fair Value of Financial Instruments The Company calculates the fair value of financial instruments and includes this additional information in the notes to its financial statements when the fair value does not approximate the carrying value of those financial instruments. The Company's financial instruments include cash and cash equivalents and long-term debt. Fair value is determined using quoted market prices whenever available. When quoted market prices are not available, the Company uses alternative valuation techniques such as calculating the present value of estimated future cash flows utilizing risk-adjusted discount rates. The Company's carrying value of financial instruments approximates fair value at December 31, 2003 and 2002, except for its debt, the fair value of which cannot be reasonably estimated because the Company is in Chapter 11. Inventories Inventories consist of food and beverage, retail merchandise, and operating supplies and are stated at the lower of cost or market, cost being determined on a first-in, first-out basis. Property and equipment Property and equipment is recorded at cost. Depreciation and amortization of property and equipment began accumulating upon the commencement of gaming operations (December 20, 2001) and is computed using the straight-line method over the following estimated useful lives:

The Company reviews long-lived assets for possible impairment whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. If there is an indication of impairment, which is estimated as the difference between anticipated undiscounted future cash flows and carrying value, the carrying amount of the asset is F-11 WINDSOR WOODMONT BLACK HAWK RESORT CORP. (DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002) NOTES TO FINANCIAL STATEMENTS written down to its estimated fair value by a charge to operations. Fair value is estimated based on the present value of estimated future cash flows using a discount rate commensurate with the risk involved. Estimates of future cash flows are inherently subjective and are based on management's best assessment of expected future conditions. During 2001 FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" which is effective for fiscal years beginning after December 15, 2001. SFAS No. 144 supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". While SFAS No. 144 retains many of the provisions of SFAS No. 121, it provides guidance on estimating future cash flows to test recoverability, among other things. The adoption of SFAS No. 144 did not have a material impact on the Company's financial statements. Warrants Issued on Common Stock Warrants issued in connection with the Company's various financing transactions (see Note 4), exercisable for $.01 per share, contain a "put option" permitting the warrant holder to redeem the warrant for cash. The value of the warrants were initially provided by the Company's Placement Agent, U.S. Bancorp Libra. The warrants issued with the first mortgage notes and second mortgage notes were valued at $1.64 million and $160,000, respectively. The warrants issued with the Series B preferred stock have been valued at $1.37 million. The value of warrants issued to the Placement Agent was $383,000. Due to the cash based put option features of the warrants, the total warrant value has been recorded as a liability in the accompanying balance sheets and recorded at fair value each reporting period. As of December 31, 2003 and 2002, a liability for the estimated fair market value of the warrants of $ 0.71 million was recorded in the accompanying balance sheets and a corresponding change in valuation of warrants of $2.85 million was recorded in the accompanying statement of operations for the year ended December 31, 2002. Stock-Based Compensation In 2002 the Company adopted Statement of Financial Accounting Standards No. 148 (SFAS 148), "Accounting for Stock-based Compensation - Transition and Disclosure", which amends the disclosure requirements of Statement of Financial Accounting Standards No. 123 (SFAS 123), "Accounting for Stock-Based Compensation" to require prominent disclosure in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. SFAS 148 also provides alternative methods of transition for a voluntary change to fair value based methods of accounting which have not been adopted at this time. SFAS 123 encourages, but does not require, companies to record compensation cost for stock-based employee compensation plans at fair value. The Company has chosen to account for stock-based compensation for employees using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25 (APB 25), "Accounting for Stock Issued to Employees", and related Interpretations. Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market price of the Company's stock at the date of the grant over the amount an employee must pay to acquire that stock. The Company values stock-based compensation grants to non-employees at fair value. At December 31, 2003, the Company had two stock-based employee compensation plans, but awards had only been made under one of the plans. The Company accounts for the plans under the recognition and measurement principles of APB 25, and related Interpretations. No stock-based compensation cost is reflected in net loss, as all options granted under the plan had an exercise price equal to the market value of the underlying common stock on the date of the grant. The following table illustrates the effect on net loss if the Company had applied the fair value recognition provisions of SFAS 123, to stock-based employee compensation.

F-12 WINDSOR WOODMONT BLACK HAWK RESORT CORP. (DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002) NOTES TO FINANCIAL STATEMENTS Basic loss per share As reported $ (11.70) $ (19.95) $ (8.46) Employee stock-based compensation ( .06) ( .13) ( .28) -------------- -------------- -------------- Pro forma $ (11.76) $ (20.08) $ (8.74) ============== ============== ============== Diluted loss per share As reported $ (11.70) $ (19.95) $ (8.46) Employee stock-based compensation ( .06) ( .13) ( .28) -------------- -------------- -------------- Pro forma $ (11.76) $ (20.08) $ (8.74) ============== ============== ==============

As the Company's stock is not publicly traded, the fair value of each option was estimated on the grant date using the minimum value method (which excludes a volatility assumption), with the following assumptions (there were no grants during 2003):

Capitalized Interest The Company capitalized interest costs associated with the debt incurred in connection with the Project in accordance with Statements of Financial Accounting Standards No. 34 - "Capitalization of Interest Cost." Interest capitalization ceased once the Project was substantially complete on December 20, 2001. No interest was capitalized during 2003 and 2002. During the year ended December 31, 2001, $10,935,152 of interest costs was capitalized. Funds Held in Escrow Funds held in escrow at December 31, 2003 and 2002 represent cash held by the Black Hawk Business Improvement District under various bond agreements associated with the construction of the Project. Comprehensive Loss Comprehensive loss includes net loss and all other non-stockholder changes in equity, or other comprehensive loss. Elements of the Company's other comprehensive loss are reported in the accompanying statements of comprehensive loss and statements of redeemable preferred stock and stockholders' (deficit), and the cumulative balances of these elements consisted entirely of unrealized holding gains on securities. Operating Segments The Company is managed in one segment, which is the casino operation in Black Hawk, Colorado. Income Taxes The Company accounts for Income Taxes according to Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). SFAS 109 requires the recognition of deferred tax assets, net of an applicable valuation allowance, related to net operating loss carry-forwards and certain temporary differences. The standard requires recognition of a future tax benefit to the extent that the realization of such benefit is more likely than not. Otherwise, a valuation allowance is applied. Deferred Financing Costs Debt discount and issuance costs are capitalized and amortized using the effective interest rate method over the F-13 WINDSOR WOODMONT BLACK HAWK RESORT CORP. (DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002) NOTES TO FINANCIAL STATEMENTS term of the related debt. Unamortized debt discount and issuance costs related to the First Mortgage Notes and Second Mortgage Notes were written off at November 7, 2002 in connection with the bankruptcy filing, and the related valuation of these items at face value. The write-off of the unamortized balances was charged to reorganization items. Accumulated amortization, including costs written off in 2002, was $528,965 and $4,141,672 at December 31, 2003 and 2002, respectively. Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities, and related revenues and expenses. Actual results could differ from those estimates. Loss Per Share Basic loss per share is computed by dividing net loss applicable to common stock by the weighted average common shares outstanding during the period. Diluted loss per share is based on the weighted average number of common shares outstanding during the respective periods, plus the common equivalent shares, if dilutive, that would result from the exercise of stock options. Total common stock equivalents of 768,720, 863,720 and 846,720 for the years ended December 31, 2003, 2002 and 2001 were excluded from the diluted loss per share calculation because their effects would have been anti-dilutive. Start-up Costs Start-up costs have been expensed as incurred. Start-up costs consist of salaries, benefits, training, marketing, licensing and other costs incurred in connection with the opening of the Project. During the fiscal year December 31, 2001, the Company incurred start-up costs of approximately $4.5 million. Revenue Recognition Casino revenue is the net win from gaming activities, which is the difference between gaming wins and losses. Food and beverage operating revenues are recognized as services are performed. The incremental amount of unpaid progressive jackpot is recorded as a liability and a reduction of casino revenue in the period during which the progressive jackpot increases. Players Club In February 2001, the Emerging Issues Task Force ("EITF") of the Financial Accounting Standards Board issued a partial consensus on EITF 00-22, "Accounting for "Points" and Certain Other Time-Based or Volume-Based Sales Incentive Offers, and Offers for Free Products or Services to be Delivered in the Future." The consensus requires that vendors recognize the cash rebate or refund obligation associated with time or volume-based cash rebates as a reduction of revenue based on a systematic and rational allocation of the cost of honoring rebates or refunds earned and claimed to each of the underlying revenue transactions that result in progress by the customer toward earning the rebate or refund. The liability for such obligations should be based on the estimated amount of rebates or refunds to be ultimately earned, including an estimate of breakage if it can be reasonably estimated. Our players' club allows customers to earn certain complimentary products and/or cash based on the volume of the customers' gaming activity. The Company has recorded a liability for the estimated cost of the products and/or cash to be earned by customers. In accordance with EITF 00-22, the Company has recorded the charge for progress towards the complimentary services/cash rebates as a reduction of revenues, which totaled $3.2 million, $3.9 million and $.08 million for the years ended December 31, 2003, 2002 and 2001, respectively. Promotional Allowances F-14 WINDSOR WOODMONT BLACK HAWK RESORT CORP. (DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002) NOTES TO FINANCIAL STATEMENTS In the fourth quarter of 2000, the EITF reached a consensus on Issue 00-14, "Accounting for Certain Sales Incentives." EITF 00-14 requires that sales incentives be recorded as a reduction of revenue. The Company's policy relating to food and beverage and other non-casino revenues complies with EITF 00-14 and are reported as a reduction of revenues, which totaled $3.72 million, $4.14 million and $.13 million for the years ended December 31, 2003, 2002 and 2001, respectively. The estimated cost of providing such promotional allowances is included in casino expenses which totaled $1.96 million, $2.29 million, and $0.10 million for the years ended December 31, 2003, 2002, and 2001, respectively. Advertising The Company expenses advertising costs the first time the advertising takes place. Advertising expense, which is generally included in casino expenses, was $6.09 million, $7.61 million, and $0.13 million for the years ended December 31, 2003, 2002, and 2001, respectively. Recently Issued Accounting Standards Effective July 1, 2003 the Company adopted SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity". SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity, including mandatorily redeemable preferred stock. Adoption of SFAS No. 150 had no effect on the Company's financial statements. The Company has reviewed all recently issued accounting pronouncements, including FASB Interpretation No. 46(R), "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51" and SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities", and does not believe that any of the pronouncements will have a material impact on its financial statements. Reclassifications Certain amounts in the December 31, 2002 and 2001 financial statements have been reclassified to conform with the current year presentation. 2. GOING CONCERN CONSIDERATIONS The Company is currently operating under the jurisdiction of Chapter 11 of the United States Bankruptcy Code and the Court, and the continuation of the Company as a going concern is contingent upon, among other things, its ability to restructure successfully, including refinancing its debts, and the ability of the Company to generate sufficient cash to fund future operations. There can be no assurance in this regard. The Company intends to utilize the Chapter 11 process to reorganize its financial and operational affairs with the goal of preserving and enhancing the assets of the Company for the benefit of creditors and shareholders. The Company expects the business to operate as usual, our valued employees to be retained, and for our post-bankruptcy obligations to be satisfied. The Company's objective is to achieve the highest possible recoveries for all creditors and shareholders, consistent with the Company's ability to pay and to continue the operation of the Company's business. However, there can be no assurance that the Company will be able to attain these objectives or to achieve a successful reorganization. Further, there can be no assurance that the liabilities of the Company will not be found to exceed the fair value of its assets. This could result in claims being paid at less than 100% of their face value and the equity of the Company's shareholders being diluted or cancelled. Under the Code, the rights of, and ultimate payments to pre-Filing Date creditors and shareholders may be substantially altered from their contractual terms. At this time, it is not possible to predict the outcome of the Case, in F-15 WINDSOR WOODMONT BLACK HAWK RESORT CORP. (DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002) NOTES TO FINANCIAL STATEMENTS general, or the effect of the Case on the business of the Company or on the interests of creditors and shareholders. The Company anticipates that substantially all liabilities of the Company as of the Filing Date will be resolved under one or more plans of reorganization to be proposed and voted on in the Case in accordance with the provisions of the Code. Although the Company intends to file and seek confirmation of such a plan or plans, there can be no assurance as to when the Company will file such a plan or plans, or that such plan or plans will be confirmed by the Court and consummated. The accompanying financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. However, as a result of the filing of the Case, such realization of assets and liquidation of liabilities are subject to a significant number of uncertainties. 3. PROPERTY AND EQUIPMENT Property and equipment consists of the following:

4. NOTES PAYABLE Notes payable consisted of the following at December 31, 2003 and 2002:

As described in Note 2 above, all of the Company's long-term debt became immediately due and payable as a result of the commencement of the Case, accordingly, long-term debt balances have been reclassified to current maturities. The Company is only paying interest on the Black Hawk Business Improvement District Bonds and the FF&E Note because they are the only fully secured creditors under the Bankruptcy Plan. The other notes are not fully secured and, in accordance with SOP 90-7, no interest is paid or accrued on those notes. F-16 WINDSOR WOODMONT BLACK HAWK RESORT CORP. (DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002) NOTES TO FINANCIAL STATEMENTS Substantially all of the Company's assets are pledged as collateral for long-term debt. On October 15, 2002, the Company failed to make the interest payments initially due on September 15, 2002, that it had elected to defer until October 15, 2002 on the First Mortgage Notes and Second Mortgage Notes. The Company's failure to pay the interest constituted an "Event of Default" under the applicable agreements. On November 7, 2002, the Company filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. As a result of the failure to make required interest payments, and the filing of the bankruptcy petition, the Company was not in compliance with all of its debt covenants. 5. REORGANIZATION ITEMS Reorganization related items of $8,716,907 and $4,762,559 were incurred during the year ended December 31, 2003 and 2002, respectively. These include the following costs:

6. BENEFIT PLANS Prior to the rejection of the Hyatt Management Agreement, and the Company's assumption of the management of the casino on May 14, 2003, all casino employees were employees of Hyatt Gaming. Subsequent to May 14, 2003 the casino employees became employees of the Company, and in connection therewith, the Company adopted a 401(k) plan and health insurance plans for its employees. 401(k) Plan The Company maintains a defined contribution 401(k) plan which covers all employees who meet certain age and length of service requirements. Plan participants can elect to defer before-tax compensation through payroll deductions. These deferrals are regulated under Section 401(k) of the Internal Revenue Code. The Company matches 50% of eligible participants' deferrals which do not exceed 5% of their salaries (subject to limitations imposed by the Internal Revenue Code). The Company's matching contributions were $60,405 for the year ended December 31, 2003. Health Insurance Plan The Company maintains a qualified employee health insurance plan covering all employees who work an average of 32 hours or more per week on a regular basis. The plan, which is self-funded by the Company with respect to claims below a certain maximum amount, requires contributions from eligible employees and their dependants. The Company's contribution expense for the plan was approximately $484,000 for the year ended December 31, 2003. 7. REDEEMABLE PREFERRED STOCK As of December 31, 2003 and 2002, the Company has outstanding 29,000 shares of its preferred stock as "Series A" preferred stock and 30,000 shares of its preferred stock as "Series B" preferred stock. The holders of both the Series A and Series B preferred stock have no voting rights. The Series A preferred stock is non-convertible, accrues F-17 WINDSOR WOODMONT BLACK HAWK RESORT CORP. (DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002) NOTES TO FINANCIAL STATEMENTS cumulative, non-compounding dividends at the rate of 11% per annum and has a liquidation preference of $100 per share. Holders of the Series A preferred stock may require the Company to redeem their shares at a price per share equal to their liquidation preference plus accrued and unpaid dividends thereon at any time after the later of (1) one year after the First Mortgage notes are paid in full, whether at maturity or upon redemption or repurchase and (2) one year after the second mortgage notes issued to Hyatt Gaming are paid in full, whether at maturity or upon redemption or repurchase. The Series B preferred stock is non-convertible, accrues dividends on a cumulative basis, compounding quarterly at a rate of 7% per annum and has a liquidation preference of $100 per share. Holders of the Series B preferred stock may require the Company to redeem their shares at a price equal to their liquidation preference plus accrued and unpaid dividends thereon at March 15, 2015. In conjunction with the issuance of the Series B preferred stock, the Company also issued warrants for the purchase of 257,058 shares of the Company's common stock (see note 1 - warrants issued on common stock). The proceeds were allocated between the warrants and the Series B preferred stock on a relative fair value basis. The series B preferred stock discount resulting from the proceeds allocated to the warrants is being amortized over fifteen years (the period from issuance to the redemption date) using the effective interest method. 8. COMMITMENTS AND CONTINGENCIES Gaming Regulation Licensing The Company's ability to conduct gaming operations in the State of Colorado is subject to the licensability and qualifications of the Company and its common stockholders. The Company received the required gaming licenses on September 20, 2001. Additionally, upon receipt of a gaming license, such licensing and qualifications are reviewed periodically by the gaming authorities in Colorado and there are no guarantees such licenses will be renewed. In September 2003, the Company received the required gaming license renewals, which expire September 20, 2004, at which time we will apply for license renewals. Self-Funded Employee Health Care Insurance Program The Company's employee health care benefits is self-funded up to a maximum amount per claim. Claims in excess of this maximum amount are fully insured through a stop-loss insurance policy. Accruals are based on claims filed and estimates of claims incurred but not reported. At December 31, 2003, the Company's liabilities for unpaid and incurred but not reported claims totaled $0.3 million, and are included in accrued expenses in the accompanying balance sheets. While the total cost of claims incurred depends on future developments, in management's opinion, recorded reserves are adequate to cover the payment of future claims. Legal Proceedings We are involved in certain legal proceedings, claims and litigation, including those described below. Further, we may become involved in other such proceedings in the future. The results of legal proceedings cannot be predicted with certainty. Except as otherwise indicated below, management does not believe that we have potential liability related to any current legal proceedings and claims that would have material adverse effect on our financial condition, liquidity or results of operations. As of the result of the Chapter 11 Case, except where noted, legal proceedings are stayed. First Place LLC filed a lawsuit against the Company generally asserting that it has an ownership interest in a small sliver of property upon which the Company has built and is operating the Black Hawk Casino by Hyatt. The property which First Place contends it has an ownership in consists of approximately 6,000 square feet. The Company timely referred the issue to its title insurance company, First American Title. The Company has a $33.5 million owner's title insurance policy with First American. First American has advised the Company that the claim will be covered by the Company's title insurance and the title insurance company has been and is vigorously defending the claim. After a trial in June, 2002, the trial court determined that First Place does have an ownership interest in a strip of property containing approximately 3,000 square feet which the Company believed it owned. Certain post trial motions had been granted and were pending final determination by the Court at the time of the Chapter 11 filing. On August 7, 2003, the Bankruptcy Court entered an order lifting the automatic stay, thus allowing this case to proceed to conclusion in the state courts. On September 12, 2003, the state trial court liquidated the First Place claim, based upon application of the "relative hardship" doctrine, in the amount of $73,500 and decreed that upon payment of that amount the Company would own the F-18 WINDSOR WOODMONT BLACK HAWK RESORT CORP. (DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002) NOTES TO FINANCIAL STATEMENTS 3,000 square feet. First Place has appealed this case to the Colorado Court of Appeals and it is anticipated the appeal will be concluded in late 2004 or early 2005. We do not anticipate that there will be any financial exposure to the Company with respect to this claim, and fully expects that this claim will be resolved by and at the expense of First American Title. PCL Construction Services, Inc. acted as the general contractor for the Company in the construction of the Black Hawk Casino by Hyatt project. The Substantial Completion Date for the project was originally to have been October 29, 2001 and was subsequently amended by Change Order to November 15, 2001. In fact, construction of the casino was not at a point where the casino could open for business until December 20, 2001 and certain components of the project were not completed until early 2002. In early 2002, PCL and its subcontractors claimed to be owed an aggregate of approximately $7,200,000 on the project, recorded mechanic's liens and filed mechanic's lien foreclosure and breach of contract litigation against the Company. The Company filed litigation against PCL for PCL's misrepresentations and contractual breaches concerning completion of the project. This litigation was not at issue with all parties as of the date of the Chapter 11 filing and has been stayed. The Company and PCL engaged in extensive settlement discussions starting in January, 2003 and entered into a settlement agreement in May 2003. The Bankruptcy Court approved the agreement on July 7, 2003. Under the agreement, the Company agreed to pay PCL and its subcontractors a total of $4.5 million, $2.3 million of which was paid July 28, 2003, $1.4 million of which was paid in January 2004, $400,000 to be paid in October 2004, and $400,000 to be paid in April 2005. Paul Steelman was the project architect for the Black Hawk Casino by Hyatt project. Paul Steelman claims that it is owed an additional approximately $200,000 for architectural work performed at the project. The Company believes that it does not owe Paul Steelman the $200,000 and further believes that Paul Steelman owes the Company approximately $2,000,000 for Paul Steelman's failure to properly prepare and complete architectural plans and specifications for the project in a timely fashion. Prior to the Chapter 11 filing, the Company and Steelman had entered into a Dispute Resolution Agreement providing for mediation, to be followed by binding arbitration, if necessary. The Company and Steelman filed a stipulated motion lifting the stay from this dispute and allowing its determination by Dispute Resolution Agreement, and an order approving the motion was entered in May 2003. Mediation between the Company and Steelman did not result in a resolution of these claims and a binding arbitration of the claims is scheduled for September 2004. Lease Commitments Minimum rental obligations under all non-cancelable operating leases with terms of one year or more as of December 31, 2003 are as follows:

Rental expense for all operating leases for years ended December 31, 2003, 2002 and 2001 was $83,166, $70,230 and $264. 9. INCOME TAXES The benefit for income taxes attributable to net loss for the years ended December 31, 2003, 2002, and 2001 is as follows:

F-19 WINDSOR WOODMONT BLACK HAWK RESORT CORP. (DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002) NOTES TO FINANCIAL STATEMENTS The income tax benefit associated with the Company's net loss for the year ended December 31, 2003, 2002 and 2001 differs from the amount computed at the federal income tax statutory rate as a result of the following:

The components of the deferred taxes at December 31, 2003, 2002 and 2001 consisted of the following:

As discussed in Note 1, prior to the Private Placement, the operations of the Company were associated with the LLC, which was a nontaxable entity. Consistent with SFAS 109, deferred tax assets and a corresponding valuation allowance of $ 1.6 million were recorded at the date the LLC contributed all of its assets and liabilities to the Company. At December 31, 2003, the Company had a net operating loss of $ 52.26 million, that expires at various dates through 2022. The use of these losses may be limited in the event of a change in control of the Company. At December 31, 2003, the Company believes that it is not more likely than not that any of its deferred tax assets are realizable because of the absence of accurate future projected taxable income. Accordingly, all deferred tax assets are fully reserved as of December 31, 2003. 10. RELATED PARTY TRANSACTIONS We have a financial consulting arrangement with one of our former directors. During the year ended December 31, 2001 this director earned $208,000 for services related to the FF&E loan from Wells Fargo Bank and provided $40,000 in additional services. Trade accounts payable and accrued expenses include $208,000 payable to this director at December 31, 2003 and 2002. Our former Secretary and director provided legal and professional services to the Company. During the year ended December 31, 2002, he provided $26,794 in legal services. During the year ended December 31, 2001, he provided $63,496 in legal services. Trade accounts payable and accrued expenses include $3,912 payable to this director at December 31, 2003 and 2002, respectively. F-20 WINDSOR WOODMONT BLACK HAWK RESORT CORP. (DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002) NOTES TO FINANCIAL STATEMENTS 11. STOCK INCENTIVE PLAN On April 14, 2000, our board of directors approved the 2000 Stock Incentive Plan, which provides for the grant of options to purchase an aggregate of not more than 150,000 shares of our common stock. The purpose of the plan is to promote our long-term growth and profitability by providing key people with incentives to improve stockholder value and contribute to our growth and financial success and by enabling us to attract, retain and reward the best-available persons. The plan was approved by the shareholders in August, 2000. On March 25, 2002, our board of directors approved the 2002 Stock Incentive Plan, which provides for the grant of options to purchase an aggregate of not more than 45,000 shares of our common stock. The purpose of the plan is to promote our long-term growth and profitability by providing key people with incentives to improve stockholder value and contribute to our growth and financial success and by enabling us to attract, retain and reward the best-available persons. The plan was approved by the shareholders in April, 2002. The plans provide for the granting of both incentive stock options qualifying under Section 422 of the Internal Revenue Code of 1986 and nonqualified stock options, stock appreciation rights, restricted or unrestricted stock awards, phantom stock and performance awards. Awards of incentive stock options under the plan are limited to employees and must have an exercise price at least equal to the fair market value of our common stock at the date of grant, but nonqualified stock options may have an exercise price less than fair market value. The plans will be administered by the board of directors or by a committee appointed by the board of directors which determines the persons to be granted options under the plan, the number of shares subject to each option, the exercise price of each option and the option period. The Company has not yet granted any option or award under the 2002 Stock Incentive Plan. All options granted are exercisable at the grant date. A summary of stock option activity and weighted average exercise prices under the 2000 Stock Incentive Plan is as follows:

The weighted average fair value and remaining contract life of options granted was $16.50, $18.31 and $18.10 and 6.3 years, 7.8 years and 8.6 years, respectively, for the fiscal years ended December 31, 2003, 2002, and 2001. On January 29, 2003, the Company entered into voluntary stock option exchange agreements (the "Option Exchange Agreements") to exchange outstanding options to purchase shares of our the Common Stock granted under the F-21 WINDSOR WOODMONT BLACK HAWK RESORT CORP. (DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002) NOTES TO FINANCIAL STATEMENTS 2000 Stock Incentive Plan held by eligible employees or eligible directors for new options under the same option plans. The Option Exchange Agreements required an optionee to cancel and terminate their old stock options previously granted to the optionee with the result that the same number of new options with an exercise price to be the fair market value of the Common Stock on a new grant date exactly six months and one day after the date of the Option Exchange Agreements. Stock options to acquire a total of 95,000 shares of the Company's Common Stock with exercise prices ranging from $16.50 to $20.00 were exchanged under the Option Exchange Agreements. The Exchange Program was designed to comply with FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation," for fixed plan accounting. As of the date of this report, the new stock options had not been granted under the Option Exchange Agreement. 12. PLAN OF REORGANIZATION On August 6, 2003, we filed a Plan of Reorganization (the "Plan of Reorganization" or the "Plan") and a related disclosure statement (the "Disclosure Statement") with the Bankruptcy Court. On November 20, 2003, the Company filed its first amended Plan of Reorganization and its first amended Disclosure Statement. The Disclosure Statement is filed to provide information of a kind and in sufficient detail to enable a typical holder of claims or interests in a class impaired under the Plan to make an informed judgment about the Plan. To approve the form of disclosure statement, the Bankruptcy Court must determine that the Disclosure Statement contains "adequate information" to make an informed judgement in voting to accept or reject the Plan. Upon the Bankruptcy Court's findings that the Disclosure Statement contains "adequate information," we will be authorized to transmit the Plan and Disclosure Statement to holders of impaired claims in connection with the solicitation of votes under the Plan. Bankruptcy Court approval of the Disclosure Statement does not constitute a determination by the Bankruptcy Court as to the merits of the Plan or an indication that the Bankruptcy Court will confirm the Plan. If the Plan of Reorganization is confirmed by the Bankruptcy Court, substantially all pre-petition liabilities will be subject to restructuring. Any plan of reorganization is voted upon by creditors and equity holders and is subject to the approval of the Bankruptcy Court. A plan of reorganization must be confirmed by the Bankruptcy Court upon certain findings being made by the Bankruptcy Court as required by the Bankruptcy Code. The Bankruptcy Court may confirm a plan or reorganization notwithstanding the non-acceptance of the plan by an impaired class of creditors or equity security holders if certain requirements of the Bankruptcy Code are met. There can be no assurance that the Plan of Reorganization will be confirmed by the Bankruptcy Court, or that any such plan will be consummated. Until the Plan is confirmed by the Bankruptcy Court the recoveries of holders of pre-petition claims are subject to change. The Disclosure Statement includes detailed information about the Plan, financial performance projections over the 7-year Plan period, financial estimates regarding our reorganized business enterprise value including support for the "best interest" requirements for the Plan under the Bankruptcy Code; and events leading up to our Chapter 11 case. The Plan and the transactions contemplated thereunder are more fully described in the Disclosure Statement, a copy of which is available to the public at the office of the clerk of the Bankruptcy Court, U.S. Customs House, 721 19th Street, Denver, Colorado 80202-2508. During the Chapter 11 Case, we continue to operate our business in the ordinary course without interruption and without material impact on our employees, customers and suppliers. At this time it is not possible to predict the effect of the Chapter 11 Case on our business, various creditors and equity security holders or when we will be able to conclude our Chapter 11 Case. Our future results are dependent upon, among other things, the confirmation and implementation of a plan of reorganization. 13. SELECTED QUARTERLY FINANCIAL RESULTS (UNAUDITED)

F-22 WINDSOR WOODMONT BLACK HAWK RESORT CORP. (DEBTOR-IN-POSSESSION AS OF NOVEMBER 7, 2002) NOTES TO FINANCIAL STATEMENTS Income (loss) from before reorganization items and preferred stock dividends (1,523,114) (1,043,776) 339,393 (175,319) (2,402,816) Reorganization items (910,413) (6,441,806) (734,093) (630,595) (8,716,907) Net loss before preferred stock dividends (2,433,527) (7,485,582) (394,700) (805,914) (11,119,723) Preferred stock dividends 142,613 144,399 146,261 148,330 581,603 Net loss attributable to common stock (2,576,140) (7,629,981) (540,961) (954,244) (11,701,326) Loss per share Basic $ (2.58) $ (7.63) $ (0.54) $ (0.95) $ (11.70) Diluted $ (2.58) $ (7.63) $ (0.54) $ (0.95) $ (11.70)

F-23 EXHIBIT INDEX

10.2(1) Subordination, Non-Disturbance and Attornment Agreement dated as of March 14, 2000, by and among Windsor Woodmont Black Hawk Resort Corp., Hyatt Gaming Management, Inc. and SunTrust Bank, a trustee 10.3(1) Architect's Agreement dated as of January 31, 2000 by and between Windsor Woodmont, LLC and Paul Steelman, Ltd. 10.4(1) Construction Management Agreement dated February 1, 2000 by and between Windsor Woodmont, LLC and Building Sciences, Inc. 10.5(1) Construction Agreement dated as of January 11, 2000 by and between Windsor Woodmont, LLC and PCL Construction Services, Inc. 10.6(1) Excavation Agreement dated as of December 31, 1999, by and between Windsor Woodmont, LLC and D.H. Blattner & Sons, as amended 10.7(1) Subdivision Agreement dated December 29, 1997 by and between Windsor Woodmont, LLC and the City of Black Hawk, including the First Addendum, dated March 25, 1998, Second Addendum, dated May 27, 1998, and Third Addendum, dated March 29, 2000, thereto 10.8(1) Deed of Trust to Public Trustee, Security Agreement, Fixture Filing and Assignment of Rents, Leases and Leasehold Interest, dated as of March 14, 2000, by Windsor Woodmont Black Hawk Resort Corp. 10.9(1) Security Agreement, dated as of March 14, 2000, by and between Windsor Woodmont Black Hawk Resort Corp. and SunTrust Bank, as trustee 10.10(1) Pledge and Assignment Agreement, dated as of March 14, 2000, by and among Windsor Woodmont Black Hawk Resort Corp. in favor of SunTrust Bank, as trustee 10.11(1) Collateral Assignment, dated as of March 14, 2000, by and between Windsor Woodmont Black Hawk Resort Corp. in favor of SunTrust Bank, as trustee 10.12(1) Subordinated Loan Agreement, dated as of March 14, 2000, by and between Windsor Woodmont Black Hawk Resort Corp. and Hyatt Gaming Management, Inc. 10.13(1) Hyatt Gaming Deed of Trust to Public Trustee, Security Agreement, Fixture Filing and Assignment of Rents, Leases and Leasehold Interests,, dated as of March 14, 2000, by Windsor Woodmont Black Hawk Resort Corp. to the Public trustee of the County of Gilpin, Colorado, for the benefit of Hyatt Gaming Management, Inc. 10.14(1) Hyatt Gaming Security Agreement, dated as of March 14, 2000, by and between Windsor Woodmont Black Hawk Resort Corp. and Hyatt Gaming Management, Inc. 10.15(1) Hyatt Gaming Pledge and Assignment Agreement, dated as of March 14, 2000, by and among Windsor Woodmont Black Hawk Resort Corp. in favor of Hyatt Gaming Management, Inc. 10.16(1) Hyatt Gaming Collateral Assignment, dated as of March 14, 2000, by and between Windsor Woodmont Black Hawk Resort Corp. in favor of Hyatt Gaming Management, Inc.

10.17(1) General Assignment made as of March 14, 2000 by Windsor Woodmont, LLC in favor of Windsor Woodmont Black Hawk Resort Corp. 10.18(1) Intercreditor Subordination and Collateral Agreement, dated as of March 14, 2000, by and among SunTrust Bank, as trustee, Hyatt Gaming Management, Inc. and Windsor Woodmont Black Hawk Resort Corp. 10.19(1) Cash Collateral and Disbursement Agreement dated as of March 14, 2000 by and among SunTrust Bank, as trustee, Windsor Woodmont Black Hawk Resort Corp., Hyatt Gaming Management, Inc., Norwest Bank Minnesota, N.A., as disbursement agent, First American Heritage Title Company, as construction escrow agent, and RE TECH+, Inc., as independent construction consultant 10.20(1) Account Agreement, dated as of March 14, 2000, by and among Windsor Woodmont Black Hawk Resort Corp., SunTrust Bank, as trustee, and Norwest Bank Minnesota, N.A., as securities intermediary 10.21(1) Interim Interest Reserve Account Agreement, dated as of March 14, 2000, by and among Windsor Woodmont Black Hawk Resort Corp., SunTrust Bank, as trustee, and Norwest Bank Minnesota, N.A., as securities intermediary 10.22(1) Interest Reserve Account Agreement, dated as of March 14, 2000, by and between Windsor Woodmont Black Hawk Resort Corp. and SunTrust Bank, as trustee and securities intermediary 10.23(1) Hyatt Gaming Account Agreement, dated as of March 14, 2000, by and among Windsor Woodmont Black Hawk Resort Corp., Hyatt Gaming Management, Inc. and Norwest Bank Minnesota, N.A., as securities intermediary 10.24(1) Shareholders Agreement, dated as of March 14, 2000 10.25(1) Office Lease between Dallas Office Portfolio, L.P., as landlord, and Windsor Woodmont Black Hawk Resort Corp., as tenant 10.26(1) Site Improvement Agreement, dated March 29, 2000, by and between the City of Black Hawk, Colorado, and Windsor Woodmont Black Hawk Resort Corp. 10.27(1) Escrow Agreement, dated March 29, 2000, by and between the City of Black Hawk, Colorado, Windsor Woodmont Black Hawk Resort Corp. and Norwest Bank Minnesota, N.A. 10.28(1) Settlement Agreement, dated January 31, 2000, by and between Windsor Woodmont, LLC and D.H. Blattner & Sons, Inc. 10.29(1) Escrow Agreement, dated March 28, 2000, by and among D.H. Blattner & Sons, Inc. Windsor Woodmont Black Hawk Resort Corp. and Norwest Bank Minnesota, N.A. 10.30(1) Incentive Stock Option Plan 10.31 Hyatt Settlement and Release Agreement, dated April 10, 2003 by and between Windsor Woodmont Black Hawk Resort Corp. and Hyatt Gaming Management, Inc.

16.1(1) Letter from PricewaterhouseCoopers re: change in certifying accountant 31.1 Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification of Principal Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

------------------------ (1) Filed as an exhibit to Windsor Woodmont Black Hawk Resort Corp.'s Registration Statement on Form S-4 filed July 12, 2000, as amended (File No. 333-41292), and incorporated herein by reference.

WINDSOR WOODMONT BLACK HAWK RESORT CORP 10-K