President Casinos Inc – ‘10-Q’ for 5/31/01

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Quarterly Report   —   Form 10-Q
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Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        President Casino's Form 10-Q                          33    155K 
 2: EX-10.1     Material Contract                                      9     40K 

10-Q   —   President Casino’s Form 10-Q
Document Table of Contents

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==============================================================================  

UNITED STATES   
SECURITIES AND EXCHANGE COMMISSION  
Washington, D.C. 20549    

FORM 10-Q   

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES   
EXCHANGE ACT OF 1934  

For the quarterly period ended May 31, 2001   

OR  

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES  
EXCHANGE ACT OF 1934  

COMMISSION FILE NUMBER: 0-20840   

PRESIDENT CASINOS, INC.   
------------------------------------------------------  
(Exact name of registrant as specified in its charter)  

   Delaware                             51-0341200
-------------------------------               ----------------      
(State or other jurisdiction of               (I.R.S. Employer      
   incorporation or                      Identification No.)
organization)                                     

802 North First Street, St. Louis, Missouri 63102   
----------------------------------------------------  
Address of principal executive offices-Zip Code   

314-622-3000  
----------------------------------------------------  
Registrant's telephone number, including area code  

Indicate by check mark whether the registrant (1) has filed all reports     
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of  
1934 during the preceding 12 months (or for such shorter period that the        
registrant was required to file such reports) and (2) has been subject to such  
filing requirements for the past 90 days.  Yes [X]  No [ ]                      

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: Common Stock, $.06 par value,  
5,033,003 shares outstanding as of July 13, 2001.                               

==============================================================================  

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PRESIDENT CASINOS, INC. 
INDEX TO FORM 10-Q  

                                                                    Page No.
Part I.  Financial Information                                                  

Item 1.  Financial Statements                                               

Condensed Consolidated Balance Sheets (Unaudited)                       
 as of May 31 and February 29, 2001..................................1

Condensed Consolidated Statements of Operations (Unaudited)             
 for the Three Months Ended May 31, 2001 and 2000....................2

Condensed Consolidated Statements of Cash Flows (Unaudited)             
 for the Three Months Ended May 31, 2001 and 2000....................3

Notes to Condensed Consolidated Financial Statements (Unaudited)......4 

Item 2.  Management's Discussion and Analysis of                            
      Financial Condition and Results of Operations.................13

Item 3.  Quantitative and Qualitative Disclosures About Market Risk....28   

Part II.   Other Information                                                    

Item 1.  Legal Proceedings.............................................28   

Item 2.  Changes in Securities.........................................28   

Item 3.  Defaults Upon Senior Securities...............................28   

Item 4.  Submission of Matters to a Vote of Security Holders...........29   

Item 5.  Other Information.............................................29   

Item 6.  Exhibits and Reports on Form 8-K..............................29   

Signature................................................................30     

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Part I.  Financial Information                                                  
Item 1.  Financial Statements                                                   
         
                                                                [Download Table]
                                                                           
                                                                            
                           PRESIDENT CASINOS, INC.                          
                   CONDENSED CONSOLIDATED BALANCE SHEETS                    
                                 (UNAUDITED)                                
                   (in thousands, except per share data)                    

                                                          May 31,   Feb. 28,
                                                           2001       2001  
                                                         --------   --------
                                                                            
 ASSETS                                                                     
 Current assets:                                                            
  Cash and cash equivalents......................       $  8,308   $  8,559 
  Restricted cash................................          3,995      4,404 
  Restricted short-term investments..............            775      5,938 
  Accounts receivable, net of allowance for                                 
    doubtful accounts of $207 and $236...........            961      1,116 
  Installment sale receivable....................          1,710        --  
  Other current assets...........................          3,834      4,016 
                                                        ---------  ---------
      Total current assets.......................         19,583     24,033 
                                                        ---------  ---------
 Property and equipment, net of accumulated                                 
  depreciation of $45,537 and $43,638............        101,883    111,242 
                                                        ---------  ---------
 Other assets:                                                              
  Installment sale receivable....................          6,965        --  
  Deferred financing fees........................            201        469 
                                                        ---------  ---------
       Total other assets........................          7,166        469 
                                                        ---------  ---------
                                                        $128,632   $135,744 
                                                        =========  =========
LIABILITIES AND STOCKHOLDERS' DEFICIT                                       
Current liabilities:                                                        
  Short-term debt................................       $  1,132   $  1,834 
  Current maturities of long-term debt and                                  
    capital lease obligation.....................        107,805    108,232 
  Accrued loan fee...............................          7,000      7,000 
  Accounts payable...............................          4,750      5,978 
  Accrued payroll and benefits...................          4,587      5,377 
  Other accrued expenses.........................         11,469     13,236 
                                                        ---------  ---------
      Total current liabilities..................        136,743    141,657 

Long-term liabilities............................            --         --  
                                                        ---------  ---------
      Total liabilities..........................        136,743    141,657 
                                                        ---------  ---------
Minority interest................................         14,162     13,874 
Commitments and contingencies....................            --         --  
Stockholders' deficit:                                                      
  Preferred Stock, $.01 par value per share;                                
    10,000 shares authorized; none issued                                   
    and outstanding..............................            --         --  
  Common Stock, $0.06 par value per share;                                  
    100,000 shares authorized; 5,033 shares                                 
    issued and outstanding.......................            302        302 
  Additional paid-in capital.....................        101,729    101,729 
  Accumulated deficit............................       (124,304)  (121,818)
                                                        ---------  ---------
      Total stockholders' deficit................        (22,273)   (19,787)
                                                        ---------  ---------
                                                        $128,632   $135,744 
                                                        =========  =========

See Notes to Condensed Consolidated Financial Statements.                   
                                                                        
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                                                                [Download Table]
                            PRESIDENT CASINOS, INC.                          
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS               
                                 (UNAUDITED)                                 
                    (in thousands, except per share data)                    

                                                   Three Months Ended May 31,
                                                         2001        2000    
                                                        ------      ------   
                                                                             
OPERATING REVENUES:                                                          
  Gaming.........................................      $ 31,622    $ 45,435  
  Food and beverage..............................         3,725       5,329  
  Hotel..........................................         1,464       1,907  
  Retail and other...............................         1,684       1,783  
  Less promotional allowances....................        (5,394)     (7,648) 
                                                       ---------   --------- 
    Net operating revenues.......................        33,101      46,806  
                                                       ---------   --------- 
OPERATING COSTS AND EXPENSES:                                                
  Gaming and gaming cruise.......................        18,057      24,407  
  Food and beverage..............................         2,551       3,712  
  Hotel..........................................           562         787  
  Retail and other...............................           597         670  
  Selling, general and administrative............         7,861      11,258  
  Depreciation and amortization..................         2,101       3,582  
  Development costs..............................            39          68  
                                                       ---------   --------- 
    Total operating costs and expenses...........        31,768      44,484  
                                                       ---------   --------- 
OPERATING INCOME.................................         1,333       2,322  
                                                       ---------   --------- 
OTHER INCOME (EXPENSE):                                                      
  Interest income................................           272          98  
  Interest expense...............................        (3,813)     (5,285) 
  Gain on disposal of property and equipment.....            10           6  
                                                       ---------   --------- 
    Total other income (expense).................        (3,531)     (5,181) 
                                                       ---------   --------- 
LOSS BEFORE MINORITY INTEREST....................        (2,198)     (2,859) 
Minority interest................................           288         370  
                                                       ---------   --------- 
NET LOSS.........................................      $ (2,486)   $ (3,229) 
                                                       =========   ========= 

Basic and diluted net loss per share.............       $ (0.49)    $ (0.64) 
                                                       =========   ========= 
Weighted average common and dilutive                                         
 potential shares outstanding....................         5,033       5,033  
                                                       =========   ========= 

See Notes to Condensed Consolidated Financial Statements.                    

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PRESIDENT CASINOS, INC.   
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS     
(UNAUDITED)       
(in thousands)      

                                                                [Download Table]

                                                    Three Months Ended May 31,
                                                         2001        2000     
                                                        ------      ------    

                                                                              
Net cash provided by (used in)                                                
  operating activities............................    $ (3,877)   $  3,474    
                                                      ---------   ---------   

Cash flows from investing activities:                                         
  Expenditures for property and equipment.........      (1,342)     (2,811)   
  Change in restricted cash.......................         409        (206)   
  Maturity of restricted short-term investments...       5,413         --     
  Proceeds from installment sale receivable.......         400         --     
  Purchase of short-term investments..............        (250)        (14)   
  Payment of minority interest....................         --          (25)   
  Proceeds from the sale or property and                                      
     equipment....................................          12           2    
                                                      ---------   ---------   
      Net cash provided by (used in)                                          
        investing activities......................       4,642      (3,054)   
                                                      ---------   ---------   
Cash flows from financing activities:                                         
  Repayment of notes payable......................      (1,015)     (1,687)   
  Payments on capital lease obligations...........          (1)         (1)   
                                                      ---------   ---------   
      Net cash used in financing activities.......      (1,016)     (1,688)   
                                                      ---------   ---------   
Net decrease in cash and cash equivalents.........        (251)     (1,268)   
Cash and cash equivalents at beginning of period..       8,559      12,408    
                                                      ---------   ---------   
Cash and cash equivalents at end of period........    $  8,308    $ 11,140    
                                                      =========   =========   

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:                             
Cash paid for interest............................    $  6,139    $  1,031    
                                                      =========   =========   
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:                               
  Assets acquired in exchange for debt............    $      2    $    923    
                                                      =========   =========   

See Notes to Condensed Consolidated Financial Statements.                     

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PRESIDENT CASINOS, INC.   
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands, except share data and unless otherwise stated)   

1.  BASIS OF PRESENTATION                                                       

The consolidated financial statements include the accounts and operations of
President Casinos, Inc., its wholly-owned subsidiaries, a 95%-owned limited     
partnership and a limited liability company in which the Company has a Class A  
ownership interest in and in which an entity wholly-owned by the Chairman of    
the Board of the Company owns Class B Units and has preferred rights to         
certain cash flows (collectively, the "Company" or "PCI").  All material        
intercompany balances and transactions have been eliminated.                    

The Company owns and operates dockside gaming casinos through its           
subsidiaries.  The Company conducts dockside gaming operations in Biloxi,       
Mississippi through its wholly-owned subsidiary The President Riverboat         
Casino-Mississippi, Inc. ("President Mississippi") and in St. Louis, Missouri   
north of the Gateway Arch through its wholly-owned subsidiary, President        
Riverboat Casino-Missouri, Inc. ("President Missouri").  In addition, the       
Company owns and manages certain hotel and ancillary facilities associated      
with its gaming operations.  The President Broadwater Hotel, LLC, a limited     
liability company ("PBLLC"), in which the Company has a Class A ownership       
interest, owns approximately 260 acres, which includes a 111-slip marina which  
contains the mooring site of "President Casino-Broadwater", two hotels with     
approximately 500 rooms and an adjacent 18-hole golf course (collectively, the  
"Broadwater Property").  The Company also operates two non-gaming dinner        
cruise, excursion and sightseeing vessels in St. Louis near the base of the     
Arch, which vessels are currently under a contract for sale.  See "Note 3.      
Property and Equipment."                                                        

On October 10, 2000, the Company sold the assets of its Davenport casino and
hotel operations.  The Davenport casino operations were managed by the          
Company's wholly-owned subsidiary, President Riverboat Casino-Iowa, Inc. ("PRC  
Iowa"), which is the general partner of the 95% Company-owned operating         
partnership, The Connelly Group, L.P. ("TCG").  The Blackhawk Hotel in          
Davenport was owned by a wholly-owned subsidiary of the Company.  The           
operating results of the Davenport casino and hotel operations have been        
included in the consolidated operating results until the date of such sale.     

The accompanying financial statements have been prepared assuming that the  
Company will continue as a going concern.  The Company continues to experience  
difficulty generating sufficient cash flow to meet its obligations and sustain  
its operations.  During fiscal year 2000, as a result of the Company's          
relatively high degree of leverage and the need for significant capital         
expenditures at its St. Louis property, management determined that, pending a   
restructuring of its indebtedness, it would not be in the best interest of the  
Company to make the regularly scheduled interest payments on its $75,000 13%    
Senior Exchange Notes (the "Senior Exchange Notes") and $25,000 12% Secured     
Notes (the "Secured Notes").  Accordingly, the Company was unable to pay the    
regularly scheduled interest payments of $6,375 that were each due and payable  
March 15, and September 15, 2000.  Under the Indentures pursuant to which the   

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Senior Exchange Notes and the Secured Notes were issued, an Event of Default    
occurred on April 15, 2000, and is continuing as of the date hereof.            
Additionally, the Company was unable to pay the $25,000 principal payment due   
September 15, 2000 on the Senior Exchange Notes.  The holders of at least 25%   
of the Senior Exchange Notes and the Secured Notes have been notified of the    
defaults and have instructed the Indenture Trustee to accelerate the Senior     
Exchange Notes and the Secured Notes and declare the unpaid principal and       
interest to be due and payable.                                                 

On October 10, 2000, the Company sold the assets of its Davenport operations
for aggregate consideration of $58,200 in cash.  On November 22, 2000, the      
Company entered into an agreement with a majority of the holders of the Senior  
Exchange Notes and a majority of the holders of the Secured Notes.  The         
agreement provides for a proposed restructuring of the Company's debt           
obligations under the notes and the application of certain of the proceeds      
received by the Company from the sale of the assets of the Company's            
Davenport, Iowa operations.  Approximately $43,000 of the proceeds from the     
sale were deposited with a trustee.  Of this amount, $12,750 was used to pay    
missed interest payments due March 15, 2000 and September 15, 2000 on the       
Senior Exchange Notes and the Secured Notes; $25,000 was used to partially      
redeem the Senior Exchange Notes and the Secured Notes; and $5,250 was used to  
pay interest due March 15, 2001 on the Senior Exchange Notes and the Secured    
Notes.                                                                          

As part of the proposed restructuring, the maturity of the Senior Exchange  
Notes and the Secured Notes were to be extended from September 15, 2001 to      
September 15, 2003, if the Company met certain interest coverage ratios for     
the first half of calendar 2001.  In lieu of the partial redemption of the      
Senior Exchange Notes scheduled for September 15, 2000, the restructured        
Senior Exchange Notes were to provide for a sinking fund payment of $15,000     
due August 31, 2001.  The sinking fund payment was to be subject to extension   
or termination based upon satisfaction of certain financial-based performance   
tests by the Company's St. Louis operations for the quarter ending in July      
2001, and each quarter thereafter on a rolling basis.  In addition to the       
foregoing, as part of the proposed restructuring "President Casino-             
Broadwater," the vessel on which the Company's Biloxi gaming operations are     
conducted, was to be pledged to secure the Senior Exchange Notes and the        
Company would issue to the holders of the Senior Exchange Notes and the         
Secured Notes warrants to purchase up to 10% of the fully diluted common stock  
of the Company at an exercise price of $2.625 per share.                        

The proposed restructuring contemplated that the Company would meet certain 
interest coverage ratios as a condition to the extension of the further         
maturity of the Notes.  To date, the Company's results of operations have not   
been at a level sufficient to meet all of the anticipated criteria and the      
proposed restructuring has not been implemented.  The Noteholders have not      
insisted upon the implementation of the proposed restructuring.  The Company    
has informed the Noteholders that the Company intends to continue with the      
sale of certain  properties as a primary source of retiring debt obligations.   
The Company has entered into an agreement to sell certain non-gaming cruising   
operations in St. Louis, Missouri for $1,650.  In addition, the Company has     
entered into an installment sale agreement for the M/V "Surfside Princess"      
(formerly, the "New Yorker") See "Note 3.  Property and Equipment."  The        

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Company is continuing its efforts to identify other assets available for sale.  
The Company is unable to predict whether the heretofore given notice to         
accelerate the Senior Exchange Notes and the Secured Notes will result in any   
further action by the Noteholders.                                              

In addition to the foregoing, President Broadwater Hotel, LLC ("PBLLC"), a  
limited liability company in which the Company has a Class A ownership          
interest, is in default under a $30,000 promissory note and associated $7,000   
loan fee incurred in connection with the July 1997 purchase by PBLLC of the     
real estate and improvements utilized in the Company's operations in Biloxi,    
Mississippi.  On April 19, 2001, PBLLC filed a voluntary petition for           
reorganization under Chapter 11 of the Bankruptcy Code in the United States     
Bankruptcy Court for the Southern Division in Biloxi, Mississippi.  PBLLC       
continues its possession and use of its assets as a debtor in possession and    
has entered into an agreement with its lender which has been approved by the    
bankruptcy court allowing PBLLC use of its cash collateral.  The bankruptcy is  
proceeding and the Company anticipates that the subsidiary will ultimately      
emerge from bankruptcy with restructured debt obligations.  The Company is      
unable to offer any assurance that this will occur or that the restructured     
debt, if it is restructured, will be paid in accordance with its revised        
terms.                                                                          

Due to cross default provisions associated with other debt agreements, the  
Company is also in default under its $2,500 M/V "President Casino-Mississippi"  
note.  This debt is currently due and classified in current liabilities.  See   
"Note 4.  Short-Term Debt and Notes Payable."                                   

Management believes that unless the holders of the Company's various debt   
obligations take further action with respect to the Company's defaults, the     
Company's liquidity and capital resources will be sufficient to maintain its    
normal operations at current levels and does not anticipate any adverse impact  
on its operations, customers or employees.  However, costs incurred and to be   
incurred in connection with restructuring the Company's debt obligations have   
been and will continue to be substantial and, in any event, there can be no     
assurance that the Company will be able to restructure successfully its         
indebtedness or that its liquidity and capital resources will be sufficient to  
maintain its normal operations during the restructuring period.                 

As of May 31, 2001, the Company had $8,308 of unrestricted cash and cash    
equivalents.  Of this amount, the Company requires approximately $5,500 of      
cash to fund daily operations.  The Company is heavily dependant on cash        
generated from operations to continue to operate as planned in its existing     
jurisdictions and to make capital expenditures.  The Company anticipates that   
its existing available cash and cash equivalents and its anticipated cash       
generated from operations will be sufficient to fund its ongoing operating      
properties but not meet all its obligations for borrowed money.  To the extent  
cash generated from operations is less than anticipated, the Company may be     
required to curtail certain planned expenditures.                               

Management is pursuing various strategic financing alternatives in order to 
fund its obligations and the Company's continuing operations.  The Company is   
working with recognized financial advisors in the gaming industry to pursue     
these alternatives, including the restructuring and refinancing of outstanding  

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debt obligations and/or the sale of all or a portion of its assets.  The        
Company's ability to continue as a going concern is dependent on its ability    
to restructure successfully, refinance its debts and/or sell/charter assets on  
a timely basis under acceptable terms and conditions and the ability of the     
Company to generate sufficient cash to fund future operations.  There can be    
no assurance in this regard.                                                    

In the opinion of management, the accompanying unaudited condensed          
consolidated financial statements contain all adjustments, consisting only of   
normal recurring entries unless otherwise disclosed, necessary to present       
fairly the Company's financial information for the interim periods presented    
and have been prepared in accordance with accounting principles generally       
accepted in the United States of America.  The interim results reflected in     
the condensed consolidated financial statements are not necessarily indicative  
of results for the full year or other periods.                                  

The financial statements contained herein should be read in conjunction with
the audited consolidated financial statements and accompanying notes to the     
consolidated financial statements included in the Company's Annual Report on    
Form 10-K for the period ending February 28, 2001.  Accordingly, footnote       
disclosure which would substantially duplicate the disclosure in the audited    
consolidated financial statements has been omitted in the accompanying          
unaudited condensed consolidated financial statements.                          

Certain amounts for fiscal 2001 have been reclassified, including those     
amounts required to be restated by Emerging Issues Task Force Consensuses 00-   
22 and 00-25, to conform with fiscal 2002 financial statement presentation.     

2.  Installment Sale Receivable                                                 

On March 29, 2001, the Company executed an installment sale agreement for   
the M/V "Surfside Princess," formerly, M/V "New Yorker."  Under the terms of    
the agreement, the Company will receive $9,000 principal installment payments   
over a period of thirty months commencing on March 29, 2001, which includes a   
final principal balloon payment of $4,388 due October 2003.  The note bears an  
annual interest rate of 10.5%.                                                  

3.  Property and Equipment                                                      

On March 29, 2001, the Company executed an installment sale agreement for   
the M/V "Surfside Princess."  See "Note 2.  Installment Sale Receivable."  The  
Company recognized an impairment of long lived assets of $8,509 during the      
second and fourth quarters of fiscal 2001, based on ongoing negotiations with   
various third parties and estimates of costs to consummate the transaction.     

On April 30, 2001, the Company executed an agreement to sell the assets of  
Gateway Riverboat Cruises, the Company's non-gaming cruise operations which     
provide dinner cruise, excursion and sightseeing on two riverboats on the       
Mississippi River.  The agreement is subject to certain lease and license       
approvals and it is anticipated to close before August 2001.  As of May 31,     
2001, the Company has received cash proceeds of $525 of the $1,650 purchase     
price.  The Company estimates a gain of approximately $800 will be recognized   
on the sale of these assets.                                                    

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4.  Short-Term Debt and Current Portion of Long-Term Debt                       

Short-term is summarized as follows:                                        

                                                                        [Download Table]
                                                                              
                                                                              
                                                       May 31,       Feb. 28, 
                                                        2001           2001   
                                                       ------         ------  
                                                                              
  Construction notes payable......................   $  1,118        $  1,817 
  Equipment note payable..........................         14              17 
                                                     ---------       ---------
       Short-term debt............................   $  1,132        $  1,834 
                                                     =========       =========
                                                                      

Construction Notes Payable                                                  

In conjunction with the relocation of the "Admiral" (see "Note 7. Relocation
of the 'Admiral'"), the Company negotiated extended payment terms with two      
vendors providing certain services related to the new site development.  Under  
the terms of the agreements, the Company makes monthly payments against         
progress billings and any unpaid outstanding principal balances bear interest   
rates of 10.5% to 11.0%.                                                        

Current and non-current portions of long-term notes payable are summarized  
as follows:                                                                     

                                                                        [Download Table]
                                                                              
                                                                               
                                                        May 31,        Feb.28, 
                                                         2001           2001   
                                                        ------         ------  
                                                                               
   Senior Exchange Notes, 13%, net of discount                                 
     of $55 and $123...............................   $ 56,195        $ 56,127 
   Secured Notes, 12%, net of a deferred gain                                  
     on modification of terms of $142 and $322.....     18,891          19,072 
   Broadwater Hotel note payable, variable                                     
     interest rate, 12.75% and 14.0%...............     30,000          30,000 
   M/V "President Casino-Mississippi" note payable,                            
    variable interest rate, 8.92% and 10.0%........      2,500           2,600 
   Equipment note payable, 11.0%...................        219             432 
                                                      ---------       ---------
      Total notes payable..........................    107,805         108,231 
                                                      ---------       ---------
    Less: Current maturities.......................   (107,805)       (108,231)
                                                      ---------       ---------
                                                      $    --         $    --  
                                                      =========       =========
                                                                         
Senior Exchange Notes and Secured Notes                                     

The Senior Exchange Notes rank equal in right of payment to all present and 
future senior debt, as defined in the indenture governing the Senior Exchange   
Notes (the "Note Indenture"), of the Company and its subsidiaries and were      
payable as follows:  25% of the outstanding principal amount on each of         
September 15, 1999 and September 15, 2000 and the remainder of the outstanding  
principal amount on September 15, 2001.  In addition, the Senior Exchange       
Notes are unconditionally guaranteed, jointly and severally on a senior basis,  
by all of the Company's then existing wholly-owned subsidiaries (the            

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"Guarantors"), and, under certain circumstances, the Company's future           
subsidiaries, although the subsidiary guarantee from TCG was limited in         
amount.  As security for the obligations of the Company and the Guarantors      
under the Senior Exchange Notes, the Company and the Guarantors have pledged    
their equity interests in each Guarantor and all of their rights in certain     
management agreements with, certain indebtedness from, and certain investments  
in, certain gaming ventures.  The Note Indenture contains certain restrictive   
covenants which, among other things, limit the Company's Guarantors' ability    
to pay dividends, incur additional indebtedness (exclusive of $15,000 of        
senior debt), issue preferred stock, create liens on certain assets, merge or   
consolidate with another company and sell or otherwise dispose of all or        
substantially all of its properties or assets.  On November 22, 2000, the       
Company and its principal subsidiaries executed an agreement with a majority    
of the holders of its Senior Exchange Notes and Secured Notes.                  
On December 3, 1998, the Company repurchased $25,000 of its Senior Exchange 
Notes.  The repurchased notes were used to satisfy the $25,000 principal        
payment due September 15, 1999 on the Company's $100,000 Senior Exchange        
Notes.  The repurchase was funded by the issuance of $25,000 of new 12% notes   
due September 15, 2001 (the "Secured Notes").  The Secured Notes have no        
mandatory redemption obligation and are secured by mortgages on the "Admiral"   
and the M/V "Surfside Princess," as well as subsidiary guarantees.              

See "Note 1.  Basis of Presentation" regarding default of the Senior        
Exchange Notes and Secured Notes.                                               

Broadwater Hotel Note                                                       

In conjunction with the purchase of the Broadwater Property, PBLLC borrowed 
the sum of $30,000 from a third party (the "Indebtedness").  Except as set      
forth in the promissory note and related security documents, PBLLC's            
obligations under the Indebtedness are nonrecourse and are secured by the       
Broadwater Property, its improvements and leases thereon.  The Indebtedness     
bears interest at a stipulated variable rate per annum equal to the greater of  
(i) 8.75% or (ii) 4.0% plus the LIBOR 30-day rate.                              

PBLLC is obligated under the Indebtedness to make monthly payments of       
interest accruing under the Indebtedness, and was obligated to repay the        
Indebtedness in full on July 22, 2000.  In addition, PBLLC was obligated to     
pay to the lender a loan fee in the amount of $7,000 which was fully earned     
and non-refundable when the Indebtedness was due.  Neither the Indebtedness     
nor the loan fee payments were made on the due date and the Indebtedness is in  
default.  In accordance with the Indenture, effective on the default date,      
penalty interest of 4.0% is being accrued in addition to interest at the        
stipulated rate on the $30,000 principal.  Additionally, PBLLC has accrued,     
but has not paid, interest on the unpaid loan fee at the stipulated rate since  
the date of default.  PBLLC continued to make the monthly interest payments     
accruing on the $30,000 principal through April 19, 2001, when the Company      
announced that PBLLC had filed for reorganization under Chapter 11 of the U.S.  
Bankruptcy Code in the United States Bankruptcy Court for the Southern          
District of Mississippi.  See "Note 1.  Basis of Presentation" regarding the    
Chapter 11 petition filed by PBLLC.                                             

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M/V "President Casino-Mississippi" Note                                     

The 8.92% term note payable is collateralized by the vessel M/V "President  
Casino-Mississippi" and various equipment and is personally guaranteed by Mr.   
Connelly.  This note also contains certain covenants which, among other         
things, require the Company to maintain a minimum tangible net worth of         
$40,000.  The Company received a waiver of the net worth covenant through the   
period ended September 30, 2000, at which time the Company's net worth          
requirement returned to $40,000.  The aforementioned default on the Company's   
Senior Exchange Notes and Secured Notes also constituted a default under this   
note.  The Company has continued to make the quarterly principal and interest   
payments on this note.  No action has been taken by the lender to accelerate    
the note and declare the unpaid principal due and payable.                      

Equipment Note Payable                                                      

The Company purchased 850 slot machines in March 2000 and financed a portion
of the purchase with a $850 note.  The terms of the agreement are for monthly   
combined principal and interest payments of $74 through August 2001.  The note  
bears interest at a rate of 11.0%.  As of May 31, 2001, the gaming equipment    
had a net book value of $848.                                                   
The various agreements governing the notes described above generally limit  
borrowings by the Company's affiliates without the respective lenders' prior    
consent.                                                                        

5.  Commitments And Contingent Liabilities                                      

The Company is from time to time a party to litigation, which may or may not
be covered by insurance, arising in the ordinary course of its business.  The   
Company does not believe that the outcome of any such litigation will have a    
material adverse effect on the Company's financial condition or results of      
operations, or which would have any material adverse impact upon the gaming     
licenses of the Company's subsidiaries.                                         

6.  Segment Information                                                         

The Company evaluates performance based on operations EBITDA.  Operations   
EBITDA is earnings before interest, taxes, depreciation and amortization of     
each of the reportable segments.  Corporate and development expenses,           
gain/loss on sale of assets and impairment of long-lived assets are not         
allocated to the reportable segments and are therefore excluded from            
operations EBITDA.                                                              

The Company has no inter-segment sales and accounts for transfers of        
property and inventory at its net book value at the time of such transfer.      

The Company's reportable segments are based on its three geographic gaming  
operations and its leasing operation.  The Biloxi Properties consists of the    
Biloxi casino and the Broadwater Property and the St. Louis Properties          
consists of the St. Louis casino and Gateway Riverboat Cruises.  The Davenport  
Properties consisted of the Davenport casino and the Blackhawk Hotel, the       
assets of which were sold, and operations ceased, on October 10, 2000.          

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The Company's reportable segments, other than the leasing operation, are    
similar in operations, but have distinct and separate regional markets.         

                                                                        [Download Table]
                                                                         
                                                                         
                                               Three Months Ended May 31,
                                                   2001        2000      
                                                  ------      ------     
                                                                         
   OPERATING REVENUES:                                                   
    St. Louis Properties...................      $ 20,095    $ 16,437    
    Biloxi Properties......................        13,006      13,683    
    Davenport Properties...................           --       16,686    
                                                 ---------   ---------   
        Net operating revenues.............      $ 33,101    $ 46,806    
                                                 =========   =========   
                                                                        
                                                                        [Download Table]
                                                                         
                                                                         
                                               Three Months Ended May 31,
                                                   2001        2000      
                                                  ------      ------     
                                                                         
    EBITDA (before corporate, development                                
      and impairment expenses and gain/loss                              
      on sale of property and equipment):                                
    St. Louis Properties...................      $  2,954    $  1,874    
    Biloxi Properties......................         1,515       2,500    
    Davenport Properties...................           --        3,177    
                                                 ---------   ---------   
      Gaming and ancillary operations......         4,469       7,551    
    Leasing Operation......................          (105)       (333)   
                                                 ---------   ---------   
        Operations EBITDA..................         4,364       7,283    

    OTHER COSTS AND EXPENSES:                                            
    Corporate expense......................           891       1,245    
    Development expense....................            39          68    
    Depreciation and amortization..........         2,101       3,582    
    Gain on sale of assets.................           (10)         (5)   
    Interest expense, net..................         2,541       5,187    
                                                 ---------   ---------   
      Total other costs and expenses.......         6,562      10,077    
                                                 ---------   ---------   
    LOSS BEFORE MINORITY INTEREST..........        (2,198)     (2,859)   
    Minority interest......................           288         370    
                                                 ---------   ---------   
    NET LOSS...............................      $ (2,486)   $ (3,229)   
                                                 =========   =========   
                                                                        
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                                                                        [Download Table]
                                                                      
                                                                      
                                                   May 31,    Feb. 28,
                                                    2001        2001  
                                                   ------      ------ 
                                                                      
      Property and Equipment:                                         
        St. Louis Properties..................   $ 42,174    $ 43,014 
        Biloxi Properties.....................     53,325      53,259 
                                                 ---------   ---------
           Gaming and ancillary operations....     95,499      96,273 
        Leasing Operations....................      2,914      11,514 
                                                 ---------   ---------
          Operations Assets...................     98,413     107,787 
        Corporate Assets......................         31          34 
        Development Assets....................      3,439       3,421 
                                                 ---------   ---------
            Net Property and Equipment........   $101,883    $111,242 
                                                 =========   =========
                                                                        
                                                                        [Download Table]
                                                                         
                                                                         
                                               Three Months Ended May 31,
                                                    2001        2000     
                                                   ------      ------    
                                                                         
      Additions to Property and Equipment:                               
        St. Louis Properties..................   $    614    $  2,788    
        Biloxi Properties.....................        711         321    
        Davenport Properties..................        --          329    
                                                 ---------   ---------   
          Gaming and ancillary operations.....      1,325       3,438    
        Corporate Assets......................          1           2    
        Development Assets....................         18         294    
                                                 ---------   ---------   
                                                 $  1,344    $  3,734    
                                                 =========   =========   
                                                                        
Included in additions to property and equipment is $2 and $923 of assets    
acquired in exchange for debt, respectively.                                    

7. Relocation of the "Admiral"                                                  

During July 1998, the Company and the City of St. Louis reached an agreement
for the relocation of the "Admiral," approximately 1,000 feet north from its    
former location on the Mississippi River.  The casino was closed at midnight    
December 3, 2000 to prepare for the move and reopened on December 7, 2000.      
The aggregate cost to relocate the "Admiral" and construct ancillary            
facilities was approximately $8,744.  Under the terms of an agreement, the      
City funded $3,000 of the relocation costs, $2,400 of which was financed        
through bank debt.  The Company will pay for the remaining costs.  Under the    
terms of the agreement, the Company placed $500 in escrow to be used to fund a  
portion of these costs.  It is anticipated that the City will repay the debt    
from annual allocations of $600 from the City's annual home dock city public    
safety fund that is funded by admission taxes from the "Admiral."  The Company  
has guaranteed repayment of the bank debt if the City fails to pay the          
obligation.  As of May 31, 2001, the Company-guaranteed balance was $2,029.     

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Item 2.  Management's Discussion and Analysis of Financial Condition and        
Results of Operations.                                                          

The following discussion should be read in conjunction with the consolidated
financial statements of the Company included elsewhere in this report.          

The Company continues to experience difficulty generating sufficient cash   
flow to meet its obligations and sustain its operations. During fiscal 2000,    
as a result of the Company's relatively high degree of leverage and the need    
for significant capital expenditures at its St. Louis property, management      
determined that, pending a restructuring of its indebtedness, it would not be   
in the best interest of the Company to make the regularly scheduled interest    
payments on its $75.0 million 13% Senior Exchange Notes (the "Senior Exchange   
Notes") and $25.0 million 12% Secured Notes (the "Secured Notes").              
Accordingly, the Company was unable to pay the regularly scheduled interest     
payments of $6.4 million that were each due and payable March 15, and           
September 15, 2000.  Under the Indentures pursuant to which the Senior          
Exchange Notes and the Secured Notes were issued, an Event of Default occurred  
on April 15, 2000, and is continuing as of the date hereof.  Additionally, the  
Company was unable to pay the $25.0 million principal payment due September     
15, 2000 on the Senior Exchange Notes.  The holders of at least 25% of the      
Senior Exchange Notes and the Secured Notes have been notified of the defaults  
and have instructed the Indenture Trustee to accelerate the Senior Exchange     
Notes and the Secured Notes and declare the unpaid principal and interest to    
be due and payable.                                                             

On October 10, 2000, the Company sold the assets of its Davenport operations
for aggregate consideration of $58.2 million in cash.  On November 22, 2000,    
the Company entered into an agreement with a majority of the holders of the     
Senior Exchange Notes and a majority of the holders of the Secured Notes.  The  
agreement provides for a proposed restructuring of the Company's debt           
obligations under the notes and the application of certain of the proceeds      
received by the Company from the sale of the assets of the Company's            
Davenport, Iowa operations.  Approximately $43.0 million of the proceeds from   
the sale were deposited with a trustee.  Of this amount, $12.8 million was      
used to pay missed interest payments due March 15, 2000 and September 15, 2000  
on the Senior Exchange Notes and the Secured Notes; $25.0 million was used to   
partially redeem the Senior Exchange Notes and the Secured Notes; and $5.2      
million was used to pay interest due March 15, 2001 on the Senior Exchange      
Notes and the Secured Notes.  In addition, the Company made combined principal  
and interest payments of $1.9 million and $2.0 million to pay off TCG's line    
of credit and the indebtedness on the Company's Biloxi casino vessel,           
respectively.                                                                   

As part of the proposed restructuring, the maturity of the Senior Exchange  
Notes and the Secured Notes were to be extended from September 15, 2001 to      
September 15, 2003, if the Company met certain interest coverage ratios for     
the first half of calendar 2001.  In lieu of the partial redemption of the      
Senior Exchange Notes scheduled for September 15, 2000, the restructured        
Senior Exchange Notes were to provide for a sinking fund payment of $15.0       
million due August 31, 2001.  The sinking fund payment was to be subject to     
extension or termination based upon satisfaction of certain financial-based     
performance tests by the Company's St. Louis operations for the quarter ending  

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in July 2001, and each quarter thereafter on a rolling basis.  In addition to   
the foregoing, as part of the proposed restructuring "President Casino-         
Broadwater," the vessel on which the Company's Biloxi gaming operations are     
conducted, was to be pledged to secure the Senior Exchange Notes and the        
Company would issue to the holders of the Senior Exchange Notes and the         
Secured Notes warrants to purchase up to 10% of the fully diluted common stock  
of the Company at an exercise price of $2.625 per share.                        

The proposed restructuring contemplated that the Company would meet certain 
interest coverage ratios as a condition to the extension of the further         
maturity of the Notes.  To date, the Company's results of operations have not   
been at a level sufficient to meet all of the anticipated criteria and the      
proposed restructuring has not been implemented.  The Noteholders have not      
insisted upon the implementation of the proposed restructuring.  The Company    
has informed the Noteholders that the Company intends to continue with the      
sale of certain properties as a primary source of retiring debt obligations.    
The Company has entered into an agreement to sell certain non-gaming cruising   
operations in St. Louis, Missouri for $1.7 million.  In addition, the Company   
has entered into an installment sale for the M/V "Surfside Princess."  The      
Company is continuing its efforts to identify other assets for sale.  The       
Company is unable to predict whether the heretofore given notice to accelerate  
the Senior Exchange Notes and Secured Notes will result in any further action   
by the Noteholders.                                                             

In addition to the foregoing, President Broadwater Hotel, LLC ("PBLLC"), a  
limited liability company in which the Company has a Class A ownership          
interest, is in default under a $30.0 million promissory note and associated    
$7.0 million loan fee incurred in connection with the July 1997 purchase by     
PBLLC of the real estate and improvements utilized in the Company's operations  
in Biloxi, Mississippi.  On April 19, 2001, PBLLC filed a voluntary petition    
for reorganization under Chapter 11 of the Bankruptcy Code in the United        
States Bankruptcy Court for the Southern Division in Biloxi, Mississippi.       
PBLLC continues its possession and use of its assets as a debtor in possession  
and has entered into an agreement with its lender which has been approved by    
the bankruptcy court allowing PBLLC use of its cash collateral.  PBLLC intends  
to propose a plan of reorganization which will permit PBLLC to restructure its  
debt obligations in a manner which will permit it to continue as a going        
concern.  There can be no assurance that PBLLC will be able to restructure its  
debt obligations and emerge from bankruptcy or continue as a going concern.     

Due to cross default provisions associated with other debt agreements, the  
Company is also currently in default under its $2.5 million M/V "President      
Casino-Mississippi" note.  See Liquidity and Capital Resources.                 

Management believes that unless the holders of the Company's various debt   
obligations take further action with respect to the Company's defaults, the     
Company's liquidity and capital resources will be sufficient to maintain its    
normal operations at current levels and does not anticipate any adverse impact  
on its operations, customers or employees.  However, costs incurred and to be   
incurred in connection with restructuring the Company's debt obligations have   
been and will continue to be substantial and, in any event, there can be no     
assurance that the Company will be able to restructure successfully its         

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indebtedness or that its liquidity and capital resources will be sufficient to  
maintain its normal operations during the restructuring period.                 

Management is pursuing various strategic financing alternatives in order to 
fund its obligations and the Company's continuing operations.  The Company is   
working with recognized financial advisors in the gaming industry to pursue     
these alternatives, including the restructuring and refinancing of outstanding  
debt obligations and/or the sale of all or a portion of its assets.  The        
Company's ability to continue as a going concern is dependent on its ability    
to restructure successfully, refinance its debts and/or sell/charter assets on  
a timely basis under acceptable terms and conditions and the ability of the     
Company to generate sufficient cash to fund future operations.  There can be    
no assurance in this regard.                                                    

Overview                                                                        

The Company's operating results are affected by a number of factors,        
including competitive pressures, changes in regulations governing the           
Company's activities, the results of pursuing various development               
opportunities and general weather conditions.  Consequently, the Company's      
operating results may fluctuate from period to period and the results for any   
period may not be indicative of results for future periods.  The Company's      
operations are not significantly affected by seasonality.                       

--Competition                                                               

Intensified competition for patrons continues to occur at each of the       
Company's properties.                                                           

Since gaming began in Biloxi in August 1992, there has been steadily        
increasing competition along the Mississippi Gulf Coast, in nearby New Orleans  
and elsewhere in Louisiana and Mississippi.  Several large hotel/casino         
complexes have been built in recent years with the largest single resort in     
the area opening in March 1999.  There are currently twelve casinos operating   
on the Mississippi Gulf Coast.  See "Potential Growth Opportunities" regarding  
a master plan for a destination resort the Company is developing in Biloxi,     
Mississippi.                                                                    

Within a 45-mile radius of the Quad Cities, the Company's Davenport casino  
operations competed with three other casino operations.  Expansion and          
increased marketing by these competitors and changes in the Illinois gaming     
laws resulted in a decrease in market share and an increase in promotional and  
marketing costs for the Company's Davenport operation.  The assets of the       
Davenport operations were sold on October 10, 2000.                             

Competition is intense in the St. Louis market area.  There are presently   
four other casino companies operating five casinos in the market area.  Many    
of these competitors have significantly greater name recognition and financial  
and marketing resources than the Company.  Two of these are Illinois casino     
companies operating single casino vessels on the Mississippi River, one across  
the Mississippi River from the "Admiral" and the second 20 miles upriver.       
There are two Missouri casino companies, each of which operates casino vessels  
approximately 20 miles west of St. Louis on the Missouri River.  One company    

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operates one casino in the City of St. Charles, Missouri and the other company  
operates two casinos in Maryland Heights, Missouri.                             

Applications were submitted to the Missouri Gaming Commission for approval  
of potential new licenses at four different locations within the St. Louis      
Metropolitan area along the Mississippi River, three of which were within 20    
miles of the "Admiral."  In July 2000, the Gaming Commission announced its      
decision to award an additional license to the applicant proposing a site at    
the greatest distance from the "Admiral" of the proposed locations.  The        
Commission's decision is being challenged by one of the applicants whose        
proposal was not selected and other entities.  Management believes that the     
opening of one or more additional casinos in the St. Louis market would have a  
negative impact on the revenues and the results of operations of the Company.   

--Regulatory Matters                                                        

Differences in gaming regulations in the St. Louis market between Illinois  
and Missouri operators have given both competitive advantages and               
disadvantages to the various operators.  Missouri regulations formerly did not  
require vessels to actually cruise.  However, simulated cruising requirements   
were imposed which restricted entry to a vessel to a 45-minute period every     
two hours.  Those competitors having two adjacent casino vessels could          
alternate hourly boarding times and provide virtually continuous boarding for   
their guests.  Thus, they had a distinct competitive advantage over the         
Company, which has a single casino vessel in Missouri.  Illinois casino         
vessels were formerly required to cruise, thereby limiting ingress and egress   
to their casinos.  On June 25, 1999, legislation was enacted eliminating the    
Illinois cruising requirements.  This change immediately gave the Illinois      
operators an advantage over the Missouri operators as Illinois patrons could    
enter and exit the vessel at any time.  However, this advantage was negated on  
August 16, 1999, when the Missouri Gaming Commission allowed "continuous        
boarding" by establishing a program eliminating the boarding restrictions for   
the "Admiral" and other casinos in eastern Missouri.  This change to            
"continuous boarding" also enabled the "Admiral" to compete more effectively    
with the Missouri operators who have two adjacent casino vessels.  The program  
was subsequently extended to all casinos in the State of Missouri.              

Other Missouri regulations limit the loss per cruise per passenger by       
limiting the amount of chips or tokens a guest may purchase during each two-    
hour gaming session to $500.  Companies that operate adjacent casinos enable    
guests who reach the 2-hour loss limit to move to the adjacent casino and       
continue to play.  The lack of a statutory loss limit on Illinois casinos       
allows them to attract higher stake players; additionally, their guests are     
not burdened with the administrative requirements related to the loss limits.   
Any easing of the loss limits in Missouri would be expected to have a positive  
impact on the Company's St. Louis operations.                                   

--Weather Conditions                                                        

The Company's operating results are susceptible to the effects of floods,   
hurricanes and adverse weather conditions.  Historically, the Company has       
temporarily suspended operations on various occasions as a result of such       

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adversities.  Under less severe conditions, high river levels cause reduced     
parking and a general public perception of diminished access to the casino      
resulting in decreased revenues.  Management believes the move of the           
"Admiral" substantially diminishes the possibility of this condition.           

--Potential Growth Opportunities                                            

Biloxi, Mississippi                                                         

In July 1997, the Company, through a newly created subsidiary, President    
Broadwater Hotel, LLC ("PBLLC"), purchased for $40.5 million certain real       
estate and improvements located on the Gulf Coast in Biloxi, Mississippi from   
an entity which was wholly-owned by John E. Connelly, Chairman, Chief           
Executive Officer and principal stockholder of the Company.  The property       
comprises approximately 260 acres and includes two hotels, a 111-slip marina    
and the adjacent 18-hole Sun Golf Course (collectively, the "Broadwater         
Property").  The marina is the site of the Company's casino operations in       
Biloxi and was formerly leased by the Company under a long-term lease           
agreement.  The Company invested $5.0 million in PBLLC.                         

PBLLC financed the purchase of the Broadwater Property with $30.0 million of
financing from a third party lender, evidenced by a non-recourse promissory     
note (the "Indebtedness") and issued a $10.0 million membership interest to     
the seller.  Except as set forth in the promissory note and related security    
documents, PBLLC's obligations under the Indebtedness are nonrecourse and are   
secured by the Broadwater Property, its improvements and leases thereon.  The   
Indebtedness bears interest at a variable rate per annum equal to the greater   
of (i) 8.75%, or (ii) 4% plus the LIBOR 30-day rate.  The membership interest   
grows at the same rate.  The accrued balance of the membership account and      
unpaid growth as of May 31, 2001 was $14.1 million and is included on the       
balance sheet in minority interest.  Cash payments relating to this membership  
interest have totaled $0.2 million since its inception.                         

PBLLC is obligated to make monthly payments of interest accruing under the  
Indebtedness, and was obligated to repay the Indebtedness in full on July 22,   
2000.  In addition, PBLLC was obligated to pay to the lender a loan fee in the  
amount of $7.0 million which became fully earned and nonrefundable when the     
Indebtedness was due.  See Liquidity and Capital Resources for a discussion of  
the repayment of this obligation.                                               

The Company has developed a master plan for the Broadwater Property.        
Management believes that this site is ideal for the development of              
"Destination Broadwater," a full-scale luxury destination resort offering an    
array of entertainment attractions in addition to gaming.  The plans for the    
resort feature a village which will include a cluster of casinos, hotels,       
restaurants, theaters and other entertainment attractions.  Management          
believes that with its beachfront location and contiguous golf course, the      
property is the best site for such a development in the Gulf Coast market.      

In January 1999, the Company received the permit from the Mississippi       
Department of Marine Resources (the "DMR") for development of the full-scale    
destination resort.  This is the first of three permit approvals required of    

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the Joint Permit Application submitted in August 1998 to the DMR, the U.S.      
Army Corps of Engineers and the Mississippi Department of Environment Quality.  
The two remaining permit approvals are still pending and awaiting the           
completion of the Environmental Impact Statement ("EIS").  The Company has      
received the Draft EIS, the notice of which was posted in the Federal Register  
in June 2000 for public comment.  The comment period has been closed and the    
Final EIS is currently pending.  Pending the resolution of the public and       
agency comments, the Company is currently preparing its response to those       
comments.                                                                       

In March 1999, to facilitate its proposed master plan development, the      
Company entered into contracts with the State of Mississippi and the owners of  
Deer Island to purchase the property for $15.0 million and convey title to the  
island to the State of Mississippi.  Deer Island encompasses approximately 500  
acres and is located just offshore of Biloxi.  It is primarily wilderness       
which the state would preserve for use by the people of Mississippi.  The       
purchase and conveyance of the title were contingent on the occurrence of       
various events, including the issuance to the Company of all required federal,  
state and local permits and the issuance by the State of Mississippi of the     
tidelands and fast lands leases and casino licenses necessary for development   
of Destination Broadwater.  The Company is examining alternative environmental  
mitigation plans and has not currently renewed its Deer Island purchase         
option.                                                                         

In connection with the Company's proposed Destination Broadwater development
plan, to date, the Company has not identified any specific financing            
alternatives or sources as the necessary regulatory approvals have not been     
obtained.  There can be no assurance that the Company will be able to obtain    
the regulatory approvals or the requisite financing.  Should the Company fail   
to raise the required capital, such failure would materially and adversely      
impact the Company's business plan.                                             

St. Louis, Missouri                                                         

Slot Upgrade   Machines and Loss Limit Card Tracking System                 

During the summer of 1998, all Missouri casinos in the St. Louis market,    
except the "Admiral," migrated from a manual/paper system of regulating the     
Missouri $500 loss limit to an electronic system.  This paperless loss          
tracking system is more accommodating to guests and allows for the use of bill  
validators on slot machines, a convenience that the "manual/paper" system does  
not accommodate.                                                                

The slot machines offered by the "Admiral" until the end of August 2000     
lacked bill validators.  As a result, the Company could not provide guests the  
convenience of bill validators nor adapt to the paperless loss tracking         
system, putting the "Admiral" at a significant competitive disadvantage with    
the other casinos in the market.                                                

Effective August 28, 2000, Missouri began to allow credits generated through
use of the bill validators to go directly to the slot "credit meter" for use    
by the guest.  Previously in Missouri, a guest using a bill validator received  

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tokens in the tray and fed these tokens into the machine.  The regulatory       
change provided a significant added convenience to slot players.                

In March 2000, the Company purchased 850 slot machines that are equipped    
with bill validators and are fitted to operate with an electronic  loss limit   
system.  Effective August 28, 2000, approximately 700 of these machines were    
installed on the "Admiral," all of which are currently operational with the     
electronic loss limit system.  Management believes the Company is better        
positioned to compete in the St. Louis market with these additions.             

Relocation of the "Admiral"                                                 

During July 1998, the Company and the City of St. Louis reached an agreement
for the relocation of the "Admiral" approximately 1,000 feet north from its     
then current location on the Mississippi River, to the Laclede's Landing        
District.  The casino was closed at midnight December 3, 2000 to prepare for    
the move and reopened December 7, 2000.  The new location provides for an       
improved operation with better ingress and egress, provides better parking and  
is less susceptible to flooding.  The Company has experienced increased         
revenues as a result of this move, which in turn, results in increased rent     
and tax revenues for the City of St. Louis.  The City funded the first $3.0     
million in costs to relocate and improve the "Admiral."  Of the $3.0 million    
City-funded relocation costs, $2.4 million was financed through bank debt.      
The Company will pay for the remaining approximately $5.7 million costs         
associated with the relocation.  It is anticipated that the City will repay     
the debt from gaming taxes it receives based upon gaming revenues of the        
"Admiral."  The Company has guaranteed repayment of the bank debt if the City   
fails to pay it.  As of May 31, 2001, the Company-guaranteed balance was        
approximately $2.0 million.                                                     

The benefits of relocating the "Admiral" include:                           

o  Traffic ingress to and egress from the casino, at its former location,   
   was difficult. Significant improvements in exit and entrance ramps to the
   Laclede's Landing area from the main highway and road improvements within
 the Laclede's Landing area have been completed.  Four roads to and from
the main highway provide improved ingress to and egress from the new  
location.                                                             

o  Parking in the former location was limited and not controlled by the     
   Company.  All parking facilities, including the valet parking areas, were
  operated by third parties.  Guests had to either use the parking garages
   in the proximity of the casino and walk considerable distances or park on
the levee.  The new location provides the potential for significantly 
 improved parking facilities with parking lots conveniently located, and
the potential to expand and control the parking.                      

o  Flooding and high water on the Mississippi River has negatively impacted 
the financial results of the "Admiral" operations every year since it 
has opened.  The impact first occurs as the river rises and reduces or
 totally eliminates parking on the levee, which formerly was the closest
 parking to the casino.  Periodically the river level has reached levels

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 that have made the construction of costly scaffolding necessary to keep
 access to the casino open.  The new location is four feet higher and is
much less susceptible to flooding.  Historically, if the "Admiral" had
been at its new location since it opened for gaming in 1994, it is    
   unlikely that the casino would have been forced to close due to flooding.

o  Laclede's Landing is a historic area located north of the Gateway Arch on
   the Mississippi River and is an entertainment destination.  The "Admiral"
  was formerly located south of the Laclede's Landing.  The casino was not
 visible from the downtown area, major highways or the Laclede's Landing
entertainment area due to a flood wall and other infrastructure.  The 
   relocated "Admiral" is centrally positioned in the entertainment district
and readily visible to those coming to the Laclede's Landing area.    

o  There has been significant commercial development in recent years in the 
 Laclede's Landing area.  The number of conventions and entertainment at
  the nearby convention center and TWA Dome continues to be a catalyst for
 business in the area.  Management believes that the relocated "Admiral"
  will serve as a catalyst for further commercial and entertainment growth
in the Laclede's Landing area.                                        

The results of the move, the slot upgrade and the change of the Missouri    
gaming regulation allowing credits to go directly to the meter have resulted    
in increased operating results.  Beginning in January 2001, the first full      
month of operations after the move of the "Admiral," and through May 2001,      
gaming revenues have increased 15%, 11%, 25%, 21% and 29%, respectively,        
compared to the same month of the prior year.  In addition, EBITDA before       
impairment of long-lived assets and gain/loss on disposal of property and       
equipment has increased a combined 68% compared to the same five-month period.  

Results of Operations                                                           

Three-Month Period Ended May 31, 2001 Compared to the                           
Three-Month Period Ended May 31, 2000                                           

The results of operations for the three-month periods ended May 31, 2001
and 2000 include the gaming results for the Company's operations in Biloxi,     
Mississippi and St. Louis, Missouri and of much lesser significance, the non-   
gaming operations in Biloxi (the Broadwater Property) and St. Louis (Gateway    
Riverboat Cruises).  The three-month period ending May 31, 2000 also includes   
the results of gaming operations in Davenport, Iowa and to a much lesser        
significance the non-gaming operations in Davenport (the Blackhawk Hotel)       
through the date of sale.  The assets of the Davenport operations were sold on  
October 10, 2000.                                                               

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The following table highlights the results of the Company's operations.     

                                Three Months Ended May 31,
                              2001        2000
                              ------      ------
                               (in millions)

St. Louis Operations                                        
Operating revenues               $  20.1     $  16.4    
Operating income                     1.5         0.8    

Biloxi Operations                                           
Operating revenues               $  13.0     $  13.7    
Operating income                     0.9         1.7    

Davenport Operations                                        
Operating revenues               $    --     $  16.7    
Operating income                      --         2.1    

Corporate Leasing Operations                                
Operating loss                   $  (0.1)    $  (1.0)   

Corporate Administrative                                    
and Development                                         
Operating loss                   $  (0.9)    $  (1.3)   

The following table highlights certain supplemental measures of the         
Company's financial performance.                                                

                              Three Months Ended May 31,
                              2001        2000
                              ------      ------
                             (dollars in millions)

St. Louis Operations                                        
EBITDA *                         $   3.0     $   1.9    
EBITDA margin                       14.9%       11.6%   

Biloxi Operations                                           
EBITDA *                         $   1.4     $   2.5    
EBITDA margin                       10.5%       18.2%   

Davenport Operations                                        
EBITDA *                         $    --     $   3.2    
EBITDA margin                         --        19.2%   

Corporate Leasing Operations                                
EBITDA *                         $  (0.1)    $  (0.3)   

Corporate Administrative                                    
and Development                                         
EBITDA *                         $  (0.9)    $  (1.3)   

*  "EBITDA" consists of earnings from operations before interest, income
 taxes, depreciation and amortization and gain (loss) on disposal of
property and equipment.  For the purposes of this presentation,   
 EBITDA margin is calculated as EBITDA divided by operating revenue.

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EBITDA and EBITDA margin are not determined in accordance with    
generally accepted accounting principles.  Since not all companies
calculate these measures in the same manner, the Company's EBITDA 
     measures may not be comparable to similarly titled measures reported by
other companies.                                                  

     EBITDA should not be construed as an alternative to operating income as
an indicator of the Company's operating performance, or as an     
   alternative to cash flows from operational activities as a measure of
   liquidity.  The Company has presented EBITDA solely as a supplemental
disclosure to facilitate a more complete analysis of the Company's
financial performance.  The Company believes that this disclosure 
  enhances the understanding of the financial performance of a company
with substantial interest, depreciation and amortization.         

Operating revenues.  The Company generated consolidated operating revenues  
of $33.1 million for the three-month period ended May 31, 2001 compared to      
$46.8 million for the three-month period ended May 31, 2000.  The St. Louis     
operations experienced an increase in revenue of $3.7 million and the Biloxi    
operations experienced a decrease in revenue of $0.7 million.  Excluding the    
Davenport operations, revenues increased $3.0 million, or 10.0%.                

Gaming revenues in the Company's St. Louis operations increased $3.9 million
for the three-month period ended May 31, 2001, compared to the comparable       
prior year period.  The St. Louis operations have experienced an increase in    
market share of 11.8% from the same period in the prior year.  Management       
believes this increase is primarily attributable to the relocation of the       
"Admiral," an improved slot product taking advantage of the August 2000 change  
in the Missouri gaming regulations improving the ease of playing multiple coin  
slot machines and increased staffing levels focusing on providing a heightened  
level of quality guest service.  Gaming revenues at the Company's Biloxi        
operations decreased $0.4 million for the three-month period ended May 31,      
2001 compared to the three-month period ended May 31, 2000.  In Biloxi,         
changes in marketing campaigns of competitors have negatively impacted gaming   
revenues and market share.                                                      

The Company's revenues from food and beverage, hotel, retail and other were 
$6.9 million for the three-month period ended May 31, 2001, compared to $9.0    
million for the three-month period ended May 31, 2000.  Davenport operations    
contributed $2.6 million for the three-month period ended May 31, 2000.         
Excluding the Davenport operations, revenues from food and beverage, hotel,     
retail and other increased $0.5 million, or 7.8%.  The increase was primarily   
attributable to: (i) an increase of food and beverage, retail and other         
revenue of $0.3 million as a result of an increase in buffet prices and the     
increase in the number of guests in St. Louis and, and (ii) an increase in      
food and beverage revenue of $0.2 million in Biloxi as a result of an increase  
in food and beverage promotions.                                                

Promotional allowances were $5.4 million for the three-month period ended   
May 31, 2001, compared to $7.6 million for the three-month period ended May     
31, 2000.  Excluding the Davenport operations, promotional allowances           
increased $1.0 million, or 22.7%.  Promotional allowances in St. Louis and      
Biloxi each increased approximately $0.5 million.  In St. Louis, the increase   
is primarily the result of (i) an increase in the cash-back and couponing       
component of the Company's players' programs as a result of increased slot      
revenue and (ii) an increase in the amount of valet parking and resulting       
promotional comps at the new location.  In Biloxi, promotional allowances       

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increased primarily as a result of response to the competitive pressures in     
the market.                                                                     

Operating costs and expenses.  The Company's consolidated gaming and gaming 
cruise operating costs and expenses were $18.1 million for the three-month      
period ended May 31, 2001, compared to $24.4 million for the three-month        
period ended May 31, 2000.  Excluding the Davenport operations, gaming costs    
increased $2.0 million, or 12.4%.  The increase in gaming costs was primarily   
attributable to a $1.9 million increase in gaming and gaming cruise costs in    
St. Louis as a result of (i) a $1.0 million increase in gaming and admissions   
taxes which was attributable to increased gaming revenues, (ii) a $0.5 million  
increase in payroll and benefit costs, (iii) a $0.2 million increase in slot    
machine lease expense, and (iv) a $0.1 million increase due to slot machine     
conversion costs.  Excluding the Davenport operations, as a percentage of       
gaming revenues, gaming and gaming cruise costs decreased to 57.1% in the       
three-month period ended May 31, 2001 from 57.3% during the three-month period  
ended May 31, 2000.                                                             

The Company's consolidated food and beverage expenses were $2.6 million for 
the three-month period ended May 31, 2001, compared to $3.7 million for the     
three-month period ended May 31, 2000.  Excluding the Davenport operations,     
food and beverage expenses were $2.4 million for the three-month period ending  
May 31, 2000.  St. Louis and Biloxi operations each increased $0.1 million      
over the prior year.                                                            

The Company's consolidated hotel, retail and other expenses were $1.2       
million for the three-month period ended May 31, 2001, compared to $1.5         
million for the three-month period ended May 31, 2000.  Excluding the           
Davenport operations, hotel, retail and other expenses were $1.2 million for    
the three-month period ending May 31, 2000.                                     

The Company's consolidated selling, general and administrative expenses were
$7.9 million for the three-month period ended May 31, 2001, compared to $11.3   
million for the three-month period ended May 31, 2000.  Excluding the           
Davenport operations, selling, general and administrative expenses were $7.7    
million for the three-month period ending May 31, 2000.  St. Louis selling,     
general and administrative expenses increased $0.5 million primarily as a       
result of (i) an increase of $0.2 million of payroll and payroll benefit        
expenses, (ii) a $0.1 million increase in variable dock rent as a result of     
increased gaming revenues, (iii) an increase in advertising expense of $0.1     
million resulting from promotions relating to the new location of the           
"Admiral," and (iv) an increase of $0.1 million in parking expense resulting    
from an increase in number of patrons.  Biloxi experienced an increase in       
selling, general and administrative expenses of $0.2 million, primarily due to  
an increase in legal fees associated with the bankruptcy petition of PBLLC.     
These increases were partially offset by decreases in corporate selling,        
general and administrative expenses of $0.5 million as a result of (i) a        
decrease of $0.4 million in corporate overhead and (ii) a decrease in           
corporate leasing selling, general and administrative expense of $0.2 million   
as a result of the installment sale agreement on the "Surfside Princess,"       
executed on March 29, 2001.                                                     

Depreciation and amortization expenses were $2.1 million for the three-month
period ended May 31, 2001, compared to $3.6 million for the three-month period  
ended May 31, 2000, a decrease of $1.5 million.  The Davenport operations and   

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the leasing operations ceased depreciating assets as of June 30, 2000 and       
August 31, 2000, respectively, based on management's decision to sell the       
assets.  Depreciation expense for the three-month period ended May 31, 2000     
was $1.1 million and $0.8 million, respectively, for the Davenport and leasing  
operations.  These decreases were partially offset by an increase of $0.4       
million at the Company's St. Louis operations as a result of the asset          
additions related to the relocation of the "Admiral."                           

Operating income.  As a result of the foregoing items, the Company had      
operating income of $1.3 million for the three-month period ended May 31,       
2001, compared to operating income of $2.3 million for the three-month period   
ended May 31, 2000.                                                             

Interest expense, net.  The Company incurred net interest expense of $3.5   
million for the three-month period ended May 31, 2001, compared to $5.2         
million during the three-month period ended May 31, 2000, a decrease of $1.7    
million or 32.3%.  The decrease is the result of (i) $1.2 million decrease      
resulting from the $25.0 million principal payment on the Senior Exchange       
Notes and the Secured Notes, (ii) $0.2 million reduction in interest related    
to the PBLLC note, resulting from a decrease in the falling variable interest   
rate, partially offset by interest accruing on the $7.0 million loan fee and    
the implementation of the default interest rate on the original loan, and       
(iii) $0.2 million and $0.1 million decreases as a result of paying the         
principal balances on the "President Casino-Broadwater" note and TCG's line of  
credit, respectively, in October 2000.                                          

Minority interest expense.  The Company incurred $0.3 million minority      
interest expense for the three-month period ended May 31, 2001, compared to a   
$0.4 million expense for the three-month period ended May 31, 2000.  The        
decrease is the result of selling the assets of the Company's 95% owned         
partnership in Davenport.                                                       

Net loss.  The Company incurred a net loss of $2.5 million for the three-   
month period ended May 31, 2001, compared to a net loss of $3.2 million for     
the three-month period ended May 31, 2000.                                      

Liquidity and Capital Resources                                                 

The Company meets its working capital requirements from a combination of    
internally generated sources including cash from operations and the sale or     
charter of assets.                                                              

The Company believes that it has adequate sources of liquidity to meet its  
normal operating requirements.  However, during fiscal 2000, as a result of     
the Company's high degree of leverage and the need for significant capital      
expenditures at its St. Louis property, management determined that, pending a   
restructuring of its indebtedness or otherwise dealing with its lenders, it     
would not be in the best interest of the Company to make the regularly          
scheduled interest payments on its Senior Exchange Notes and Secured Notes.     
Accordingly, the Company was unable to pay the regularly scheduled interest     
payments of $6.4 million that were each due and payable March 15, 2000 and      
September 15, 2000.  Under the Indentures pursuant to which the Senior          
Exchange Notes and Secured Notes were issued, an Event of Default occurred on   
April 15, 2000, and is continuing as of the date hereof.  Additionally the      
Company was unable to pay the $25.0 million principal payment due September     
15, 2000 on the Senior Exchange Notes.  The holders of at least 25% of the      
Senior Exchange Notes and Secured Notes were notified and instructed the        

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Indenture Trustee to accelerate the Senior Exchange Notes and Secured Notes     
and declare the unpaid principal and interest to be due and payable.            

By suspending the interest payments on the Senior Exchange Notes and Secured
Notes until such time as either a restructuring plan has been negotiated and    
implemented or the Company pursues a voluntary liquidation of assets approved   
by its lenders, the Company believes that its liquidity and capital resources   
will be sufficient to maintain all of its normal operations at current levels   
during the period and does not anticipate any adverse impact on its             
operations, customers or employees.  However, costs incurred and to be          
incurred in connection with any restructuring or voluntary liquidation plan     
have been and will continue to be substantial and, in any event, there can be   
no assurance that the Company will be able to restructure successfully its      
indebtedness and that lenders will allow the Company to liquidate assets        
voluntarily or that its liquidity and capital resources will be sufficient to   
maintain its normal operations during the period.                               

The Company requires approximately $5.5 million of cash to fund daily     
operations.  As of February 28, 2001, the Company had $2.8 million of non-      
restricted cash in excess of the $5.5 million.  The Company is heavily          
dependant on cash generated from operations to continue to operate as planned   
in its existing jurisdictions and to make capital expenditures.  Management     
believes that unless the debt holders take further action with respect to the   
Company's defaults, its existing available cash and cash equivalents and its    
anticipated cash generated from operations will be sufficient to fund all of    
its ongoing operating properties but not meet all its obligations for borrowed  
money.  To the extent cash generated from operations is less than anticipated,  
the Company may be required to curtail certain planned expenditures or seek     
other sources of financing.  The Company may be limited in its ability to       
raise cash through additional financing.                                        

The Company had $4.0 million in restricted cash as of May 31, 2001.  Of that
amount, $2.5 million relates to the Broadwater Property.  Revenues for the      
Broadwater Property are controlled pursuant to a cash collateral agreement.     
Such revenues include the operations of the hotels and golf course and $2.9     
million annually of proceeds from rental of the Biloxi casino's mooring site.   
Pursuant to the terms of the agreement, expenditures are limited to the         
operating expenses and capital improvements.  Additionally, TCG had $1.5        
million of restricted cash which is pending the outcome of litigation.          

The Company had $0.8 million in restricted short-term investments as of May 
31, 2001.  This consists of certificates of deposit which guarantee certain     
performance obligations of the Company.                                         

The Company used $3.9 million of cash in operating activities during the    
three-month period ending May 31, 2001, compared to generating $3.5 million     
during the three-month period ending May 31, 2000.  The March 15, 2001 payment  
of interest on the Senior Exchange Notes and Secured Notes contributed $5.4     
million to the use of cash for the three-month period ending May 31, 2001.      
There was no comparable payment made during the three-month period ending May   
31, 2000 due to the Company defaulting on the interest payment on March 15,     
2000.                                                                           

Investing activities of the Company generated $4.2 million of cash during   
the three-month period ending May 31, 2001, compared to the $3.1 million used   

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in investing activities during the three month period ending May 31, 2000.      
During the three-month period ending May 31, 2001, restricted short-term        
investments of $5.4 million matured.  These investments were restricted for     
the aforementioned March interest payment.  The Company expended $1.3 million   
on gaming equipment and capital improvements, of which approximately $0.6       
million and $0.7 million was expended in St. Louis and Biloxi, respectively.    

The indenture governing the Company's Senior Exchange Notes (the            
"Indenture"), restricts the ability of PCI, TCG and PCI's wholly-owned          
subsidiaries which are guarantors of the Senior Exchange Notes (collectively,   
the "Guarantors"), among other things, to dispose of or create liens on         
certain assets, to make certain investments and to pay dividends.  Under the    
Indenture, the Guarantors have the ability to seek to borrow additional funds   
of $15.0 million and may borrow additional funds for certain uses.  The         
Indenture also provides that the Guarantors must use cash proceeds from the     
sale of certain assets within 180 days to either (i) permanently reduce         
certain indebtedness or (ii) contract with an unrelated third party to make     
investments or capital expenditures or to acquire long-term tangible assets,    
in each case, in gaming and related businesses (provided any such investment    
is substantially complete in 270 days).  In the event such proceeds are not so  
utilized, the Company must make an offer to all holders of Senior Exchange      
Notes to repurchase at par value an aggregate principal amount of Senior        
Exchange Notes equal to the amount by which such proceeds exceeds $5.0          
million.  Certain provisions of the Indenture do not apply to the Company's     
consolidated entities which do not guarantee the Senior Exchange Notes.         

In conjunction with the purchase of the Broadwater Property, PBLLC borrowed 
the sum of $30.0 million from a third party lender, evidenced by a non-         
recourse promissory note (the "Indebtedness").  Except as set forth in the      
promissory note and related security documents, PBLLC's obligations under the   
Indebtedness are nonrecourse and are secured by the Broadwater Property, its    
improvements and leases thereon.  The Indebtedness bears interest at a          
stipulated variable rate per annum equal to the greater of (i) 8.75% or (ii)    
4% plus the LIBOR 30-day rate.                                                  

PBLLC is obligated under the Indebtedness to make monthly payments of       
interest accruing under the Indebtedness, and was obligated to repay the        
Indebtedness in full on July 22, 2000.  In addition, PBLLC was obligated to     
pay to the lender a loan fee in the amount of $7.0 million which was fully      
earned and non-refundable when the Indebtedness became due.  Neither the        
Indebtedness nor the loan fee payments were made on the due date and both the   
Indebtedness and the loan fee are in default.  Effective on the default date,   
penalty interest at an annual rate of 4.0% is due in addition to interest at    
the stipulated rate on the $30.0 million principal balance.  Additionally, the  
PBLLC is accruing, but has not paid, interest on the unpaid loan fee at the     
stipulated rate since the date of default.  PBLLC continued to make the         
monthly interest payments accruing on the $30.0 million principal through       
April 19, 2001, when the Company announced that PBLLC had filed for             
reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United       
States Bankruptcy Court for the Southern District of Mississippi.  The          
bankruptcy is proceeding and the Company anticipates that the subsidiary will   
ultimately emerge from bankruptcy with restructured debt obligations.  The      

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Company is unable to offer any assurance that this will occur or that the       
restructured debt, if it is restructured, will be paid in accordance with its   
revised terms.                                                                  

The 8.92% term note payable is collateralized by the vessel M/V "President  
Casino-Mississippi" and various equipment and is personally guaranteed by Mr.   
Connelly.  This note also contains certain covenants which, among other         
things, require the Company to maintain a minimum tangible net worth of $40.0   
million.  The aforementioned default on the Company's Senior Exchange Notes     
and Secured Notes also constituted a default under this note.  The Company has  
continued to make the quarterly principal and interest payments related to      
this note.  No action has been taken by the lender to accelerate the note and   
declare the unpaid principal due and payable.                                   

In the event the Company identifies a potential growth opportunity, project 
financing will be required.  In connection with the Company's proposed          
"Destination Broadwater" development plan, to date, the Company has not         
identified any particular financing alternatives or sources as the necessary    
regulatory approvals have not been obtained.  There can be no assurance that    
the Company will be able to obtain the regulatory approvals or the requisite    
financing.  Should the Company fail to raise the required capital, such         
failure would materially and  adversely impact the Company's business plan.     

Forward Looking Statements                                                      

This Quarterly Report on Form 10-Q and certain information provided         
periodically in writing and orally by the Company's designated officers and     
agents contain certain statements which constitute "forward-looking             
statements" within the meaning of Section 27A of the Securities Act of 1933,    
as amended and Section 21E of the Securities Exchange Act of 1934, as amended.  
The terms "Company," "we," "our" and "us" refer to President Casinos, Inc.      
The words "expect," "believe," "goal," "plan," "intend," "estimate," and        
similar expressions and variations thereof are intended to specifically         
identify forward-looking statements.  Those statements appear in this           
Quarterly Report on Form 10-Q and the documents incorporated herein by          
reference, particularly "Management's Discussion and Analysis of Financial      
Condition and Results of Operations," and include statements regarding the      
intent, belief or current expectations of the Company, its directors or its     
officers with respect to, among other things: (i) our financial prospects;      
(ii) our financing plans and our ability to meet our obligations under our      
debt obligations and obtain satisfactory operating and working capital; (iii)   
our operating and restructuring strategy; and (iv) the effect of competition    
and regulatory developments on our current and expected future revenues.  You   
are cautioned that any such forward looking statements are not guarantees of    
future performance and involve risks and uncertainties, and that actual         
results may differ materially from those projected in the forward looking       
statements as a result of various factors. The factors that might cause such    
differences include, among others, the following: (i) continuation of future    
operating and net losses by the Company; (ii) the inability of the Company to   
restructure its debt obligations and facilitate PBLLC's successful emergence    
from bankruptcy; (iii) the inability of the Company to obtain sufficient cash   
from its operations and other resources to fund ongoing obligations and         

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continue as a going concern; (iv) developments or new initiatives by our        
competitors in the markets in which we compete; (v) our stock price; (vi)       
adverse governmental or regulatory changes or actions which could negatively    
impact our operations; and (vii) other factors including those identified in    
the Company's filings made from time-to-time with the Securities and Exchange   
Commission.  The Company undertakes no obligation to publicly update or revise  
forward looking statements to reflect events or circumstances after the date    
of this Quarterly Report on Form 10-Q or to reflect the occurrence of           
unanticipated events.                                                           

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.            

Although the majority of debt carries a fixed interest rate, the Company is 
exposed to interest rate risk in respect to the variable-rate debt maintained,  
which risk may be material.  The Company has not engaged in any hedging         
transactions with respect to such risks.                                        

Part II.  Other Information                                                     

Item 1.  Legal Proceedings                                                      

Information with respect to legal proceedings to which the Company is a     
party is disclosed in Note 5 of Notes to Condensed Consolidated Financial       
Statements included in Part I of this report and is incorporated herein by      
reference.                                                                      

Item 2.  Changes in Securities                                                  

Not applicable.                                                             

Item 3.  Defaults Upon Senior Securities                                        

The Company has 13.0% Senior Exchange Notes and 12.0% Secured Notes.  The   
Company did not pay the regularly scheduled interest payments of $6.4 million   
that were each due and payable March 15 and September 15, 2000.  Under the      
Indentures pursuant to which the Senior Exchange Notes and Secured Notes were   
issued, an Event of Default occurred on April 15, 2000, and is continuing as    
of the date hereof.  Additionally, the Company did not pay the $25.0 million    
principal payment due September 15, 2000 on the Senior Exchange Notes.  In      
November 2000, the Company paid (i) $12.8 million interest and (ii) $18.75      
million and $6.25 million principal on the Senior Exchange Notes and Secured    
Notes, respectively.  Total arrearage as of July 13, 2001, is $56.25 million    
of principal and $2.4 million of interest on the Senior Exchange Notes and      
$18.75 million of principal and $0.7 million of interest on the Secured Notes.  

Additionally, PBLLC did not pay the $30.0 million note and the associated   
$7.0 million loan fee due July 22, 2000, related to the Broadwater Property.    
PBLLC is obligated under the Indebtedness to make monthly payments of interest  
accruing under the Indebtedness at a variable rate per annum equal to the       
greater of (i) 8.75% or (ii) 4% plus the LIBOR 30-day rate. PBLLC continued to  
make the monthly interest payments related to the $30.0 million note through    
April 19, 2001, at which time the Company announced that PBLLC had filed for    
reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United       
States Bankruptcy Court for the Southern District of Mississippi.  In order to  

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be in compliance with accounting principles generally accepted in the United    
States of America, PBLLC continues to accrue interest under the terms of the    
Indebtedness.  Management believes that actual interest and penalties that      
will be determined by the bankruptcy judge may be an amount less than that      
being accrued.  Total accrued arrearage as of July 13, 2001, is $37.0 million   
of principal and $2.5 million of interest and fees.                             

Item 4.  Submission of Matters to a Vote of Security Holders                    

Not applicable.                                                             

Item 5.  Other Information                                                      

Not applicable.                                                             

Item 6.  Exhibits and Reports on Form 8-K                                       

(a)  Exhibits                                                   

          The exhibits filed as part of this report are listed on Index to
Exhibits accompanying this report.                    

(b)  Reports on Form 8-K                                        

           On April 20, 2001, the Company filed a Current Report on Form 8-K
       dated April 19, 2000, reporting under Item 5 that the Company
       had announced that its indirectly owned subsidiary, President
          Broadwater Hotel, LLC had filed for reorganization under Chapter
        11 of the U.S. Bankruptcy Code in the United States Bankruptcy
Court for the Southern District of Mississippi.       

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SIGNATURE     

Pursuant to the requirements of the Securities Exchange Act of 1934, the    
Registrant has duly caused this report to be signed on its behalf by the        
undersigned thereunto duly authorized.                                          

                                 President Casinos, Inc.
                                     -----------------------------
                      (Registrant)

Date: July 13, 2001                          /s/ Ralph J. Vaclavik              
                                     -----------------------------
                           Ralph J. Vaclavik
                                   Senior Vice President and
                                 Chief Financial Officer

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INDEX TO EXHIBITS   
-----------------   

EXHIBIT NO.                                                                     

10.1    Employment agreement dated February 1, 1999, by and between     
the Company and Ralph J. Vaclavik.                      

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-Q’ Filing		Date		First		Last			Other Filings
		9/15/03		7		15
		9/15/01		7		15
		8/31/01		7		15			10-Q
Filed on:		7/13/01		1		32
For Period End:		5/31/01		1		28
		4/30/01		9
		4/20/01		31					8-K
		4/19/01		8		30
		3/29/01		9		25
		3/15/01		7		27
		2/28/01		9		27			10-K405,  8-K,  8-K/A
		12/7/00		14		21
		12/3/00		14		21
		11/22/00		7		15
		10/10/00		6		22
		9/30/00		12
		9/15/00		6		30
		8/31/00		26					10-Q,  NT 10-Q
		8/28/00		20		21
		7/22/00		11		30
		6/30/00		26					10-Q
		5/31/00		2		28			10-Q
		4/19/00		31
		4/15/00		7		30
		3/15/00		7		27
		9/15/99		10		11
		8/16/99		18
		6/25/99		18
		2/1/99		33
		12/3/98		11
									List all Filings