SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended July 31, 1998
Commission File No. 0-10315
E-COMMERCE WEST CORP.
(exact name of registrant as specified in its charter)
(formerly Royal Casino Group Inc.)
Utah 95-4091368
(State of Incorporation) (I.R.S. Employee
I.D.No.)
152 Sherman St.
Deadwood, SD 57732
(605) 578-1299 Fax (605) 578-1298
Address and telephone of principal executive offices
Securities registered pursuant to Section 12(g) of the
Act:
Common Stock, $0.001 Par
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports) and (2) has been subject to such filing
requirements for the past 90 days:
[x] Yes [ ] No
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13, or
15(d) of the Securities and Exchange Act of 1934 subsequent to
the distribution of securities under a plan confirmed by a court.
[x] Yes [ ] No
The aggregate market value of registrant's voting stock held by
non-affiliates as of the close of business on July 31, 1998 was
$1,834,122
8,642,102 shares of registrant's $0.001 par value
common stock were outstanding and issued as
of July 31, 1998
Documents incorporated by reference: None
TABLE OF CONTENTS
PART I
PAGE
NUMBER
ITEM 1. BUSINESS
2
ITEM 2.PROPERTIES
6
ITEM 3. LEGAL PROCEEDINGS
6
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS 7
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON
STOCK AND RELATED STOCKHOLDER MATTERS
8
ITEM 6. SELECTED FINANCIAL DATA
9
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
11
ITEM 8. FINANCIAL STATEMENTS
16
NOTES TO FINANCIAL STATEMENTS
24
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURES
34
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
35
ITEM 11. EXECUTIVE COMPENSATION
35
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
38
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
38
SUBSEQUENT EVENTS
45
PART IV
ITEM 11. EXHIBITS, FINANCIAL STATEMENT SCHEDULES,
AND REPORTS ON FORM 8-K
47
SIGNATURE PAGE
49
PART I
Item 1. Business
General Development of Business
The Company, which is a Utah Corporation, was originally
formed on March 21, 1981. Since incorporation the Company has
undergone several name, ownership, directional and management
changes together with a reorganization. In January, 1994 the
Company changed its name to Royal Casino Group Inc. Due to
prevailing economic conditions pertaining to the gaming industry
coupled with the long-term negative industry outlook, the
Company elected to scale back its gaming operations and enter
the E-Commerce business. In July, 1998 the Company amended its
Articles of Incorporation to change its name to E-Commerce West
Corp.
The Company does not have any current revenue streams from
operations. However, revenues are anticipated to commence with
the launch of the Company's first Internet retail Web site which
is scheduled to occur during the Company's 1998/1999 second
fiscal quarter.
E-Commerce West Corp. is a publicly traded company whose
stock trades on the NASDAQ Over-The-Counter ("OTC") Bulletin
Board under the symbol "ECOM". The Company currently maintains
its principal office at 152 Sherman St, Deadwood, SD 57732.
The Company's mailing address is P.O. Box 545 Deadwood, SD
57732, it's telephone number is (605) 578-1299 and the fax
number is (605) 578-1298
Narrative Description of Business
Prior
The Company operated in the gaming industry as Royal
Casino Group since 1994 and changed its name to E-Commerce West
Corp. in July, 1998 to reflect a shift in its primary business
focus away from gaming to e Commerce.
The Company, through Atlantic-Pacific Corp., a
wholly-owned subsidiary, owned and operated Goldiggers Hotel &
Casino in Deadwood, South Dakota. The property, which consisted
of slots, table games, a bar, restaurant, hotel rooms and a 13
vehicle transportation system, closed in January, 1998 and was
subsequently liquidated,
The Company has two private, active, wholly-owned
subsidiaries, GoldiggersWest.com and Royal Casino Group; and two
dormant subsidiaries, Atlantic-Pacific Corp., and Goldiggers
Southern Nevada, Inc. Three corporations are incorporated in
South Dakota and one in Nevada.
Current
The Company is in the process of developing its niche Web
retail stores and intends to attempt to acquire existing
privately held niche Web sites, taking advantage of our status
as a public company. E-Commerce West intends to own, operate
and acquire as many niche-based Web sites as is economically
feasible. Although it is more difficult to brand several select
sites rather than one large one, the Company believes that the
advantages will accrue through cross-promotion and multiple
rewards-based marketing, in addition to the economies of scale
that can be achieved through centralization of key operating
elements.
There are several components to the Internet - from navigation
aggregators (Yahoo, Excite) to commerce enablers (Cybercash,
Doubleclick), from services (Mindspring, PSInet), to software
(Netscape, RealNetworks), from security (Cyberguard, Verisign),
to high-speed solutions (Broadband Technologies), to content
providers (CNET, Mecklermedia). Profitability has been elusive
in this area, as has been acceptability to refined technologies
known as the 'better mousetrap syndrome'. Electronic commerce
retailers (Amazon, CDNow & Virtual Vineyards) are what the
Company believes are the stable future of electronic commerce
for the very simple reason that people will choose the easiest
and cheapest way to buy and sell goods and services. This is
why the Company has chosen to occupy this particular electronic
commerce arena described above.
Planned Wyatt, Missouri Riverboat Casino & Entertainment
Center
E-Commerce West believes it has a significant asset
remaining in gaming. To preserve that asset, the Company formed
a new wholly-owned subsidiary to which it transferred all of its
gaming assets including the name Royal Casino Group. Royal
Casino Group has invested a considerable amount of time and
money over the last 3 1/2 years in the planning and development of
a riverboat casino entertainment center on the Mississippi River
near Wyatt, Missouri. Royal Casino Group has an exclusive 25
year agreement with the city, 50 acres of land under its control
and its pending application with the Army Corps of Engineers for
a docking permit. The Company has received a tentative
commitment for debt and equity financing subject to customary
terms and conditions. Over 15,000 vehicles daily pass in view of
the location. A market of 2 million people reside within 100
miles of the site. The closest competition is a riverboat
casino located 50 miles away which opened in 1993 and generated
gross revenues of $84 million in 1997. "The Royal Missourian"
is projected to have gross revenues of $40 million with an
EBITDA of $10 million on a total investment of $20 million. The
Company is exploring several options from development to
joint-venturing with another gaming entity to a sale of
substantially all the assets of the transaction. Should the
Company elect to sell its interest and at a price satisfactory
to the Company then the proceeds of the sale will be applied to
E-Commerce West's e Commerce business endeavors. The Company has
no interest in participating in Internet gaming.
Research & Evaluation of the Internet to Determine
Corporate Direction
A recent University of Michigan study cited that 70% of
people going online look for product and service information.
This illustrates a strong disposition for commerce. Since then,
pent-up consumer demand for electronic commerce has been
demonstrated in numerous surveys. Consumer studies have been
done on the way people react to banner advertising, how they
look at banners as relevant information events and the way the
ads drive them to increasing transactional behavior.
Since the second quarter of 1997, portal sites have been
repositioned by the web commerce companies who were seeking to
use the portal sites as distribution points. This altered the
business model for the search category and that started to
expose tens of millions of web users to the ability to shop for
everything from automobiles to books to CDs to stocks and
mutual funds. A whole range of products and services became
available. Over the course of the last couple of years, what
started out as fledgling company stores and specialty retailers,
has evolved into to category killers and upstart new brands
which are giving traditional retail brands significant
competition for retail business on the Internet.
New technologies demand that we learn more about who the
customers are that are actually using these services. This is
important because site studies indicate that 5% of customers are
driving 55% of the transactions and that 5% of the customers are
driving 70% of the 'click-throughs' on ads.
The Company realized it couldn't just take a classic
business model, use an approach to doing business with a product
or service design from another category, put it on the Internet
and expect it to succeed. The Company found its a combination
of direct disciplines. Necessary components are an
understanding of branding principals; how to deal with customer
communication; whether or not to take control of inventory; what
the service or product is that provides the 'value add' to the
customer; where margin is found within our business combined
with what kind of customers we're going to - a whole variety of
elements that will equal our success.
The Internet has people using the medium to get
information which leads to a purchase. With the whole dynamic
accelerating into the new millennium, companies that master the
technique of leveraging the use of technology to deliver
products or services will prosper.
Future
As of September 1, 1998 there were approximately 79
million Americans and Canadians, 12 million Europeans, 3 million
Asians and 3 million Australians using the Internet. When the
majority become comfortable with the security and privacy issues
and recognize the convenience shopping on the Internet provides,
the Company expects revenues will increase dramatically. Once
this occurs online retailers positioned to respond to the demand
will be successful, although no time line can presently be
estimated.
The future of 'e-tail' on the Internet will be comprised
of so called "category killers" such as Amazon.com, CDNow, and
niche companies such as Virtual Vinyards or Garden.com. Just as
television has evolved from the 'Big 3' networks to hundreds of
smaller niche channels offering a vast array of programming
choices and 'broadcasting' has become 'narrowcasting', the
Company believes history will repeat itself in this new medium,
the Internet. The Company expects that success will be achieved
in thousands of Web sites world-wide offering select goods and
services targeted to a specific, and eager audience although
there can be no assurance of the Company's individual success.
The Company believes the best has yet to come. The fact
that business models can be so compelling is the reason so many
have rushed to the Internet recently in order to build their
business and capture the market today. This equates to
profitability and shows that as a platform for delivery of
product and services the Internet is incredibly viable,
particularly for a high-end audience which is well educated,
technologically savvy and deep pocketed.
E-Commerce West is a forward thinking, long-term focused
Company. Possessing management expertise and proven marketing
skills, the Company will also be technologically advanced to
cope with the demands of being competitive in electronic
commerce.
Employees
The Company currently employs three full time employees
prior to the launch of the Company's initial Internet Web site.
Once deployed, it is anticipated the Company will initially
employ an additional twelve persons.
Item 2. Properties
The Company leases approximately 640 square feet for its
corporate headquarters in Deadwood, South Dakota for $400 per
month on a lease through April, 1999.
Additionally, the Company's wholly-owned subsidiary,
Atlantic-Pacific, Corp. leased three buildings on Main Street
that housed Goldiggers on a five year lease with four five year
options. The Company has negotiated a complete release in
perpetuity of all its past and future obligations pursuant to
this lease.
Item 3. Legal Proceedings
The Company is not involved in any existing law suits, nor
is the Company aware of any pending legal proceedings.
Subsequent to the closing of Goldiggers and as anticipated
by the Company and reported in the Company's January, 1998 Form
10-Q, several vendors elected to assert their claims in small
claims court. The Company's wholly-owned subsidiary,
Atlantic-Pacific Corp., which owned and operated Goldiggers
Hotel & Gaming Est., has four small claims judgments entered
from former trade suppliers totaling less than $4,000.
On February 9, 1998 the owner of the building which housed
Goldiggers filed suit against C. Don Tyner and Reunion Corp.
plus Jon Elliott, Atlantic-Pacific Corp. and Royal Casino Group
Inc. seeking among other things, back rent and property taxes.
The Company's attorneys deposed the property owner who admitted
that he never had a contractual written nor oral agreement with
any of Jon Elliott, Atlantic-Pacific Corp. and Royal Casino
Group Inc. and that actually Atlantic-Pacific, the Company's
wholly-owned subsidiary, was a sub-lessee of his tenant, Reunion
Corp. Subsequently, on April 7, 1998 the property owner
dismissed all actions against Jon Elliott, Atlantic-Pacific
Corp. and Royal Casino Group Inc. with prejudice and without any
costs to the defendants.
As previously reported, in July, 1997 the Company settled
its lawsuit with Stephen Grogan. In August, 1996 Stephen Grogan,
a former Officer and Director of the Company sued Royal Casino
Group, E-Commerce West Inc.'s predecessor company, and Jon
Elliott, its President seeking $1 million. The Company sued
Stephen Grogan and in the course of such suit discovered formal
documentation from the South Dakota Commission on Gaming
recommending that Stephen Grogan not be given a gaming license.
Solely to avoid the continuous distraction and costs associated
with litigation, the Company, without admitting any wrongdoing,
chose to settle Grogan's suit for less than $75,000, and
withdraw their suit. On October 10, 1997 the Company entered
into an Amendment to the Settlement Agreement previously entered
into on July 30, 1997 with Stephen Grogan calling for an
alternate payment schedule. On October 29, 1997 the Company
filed suit against Stephen Grogan in Lawrence County, South
Dakota alleging a breech of the Settlement Agreement and seeking
a declaratory judgment for the remaining portion of the
settlement. In response, Stephen Grogan filed a counterclaim and
third party complaint against the Company and its President, Jon
Elliott, alleging that it was the Company, not Stephen Grogan,
who breached the Agreement and seeking a determination of duties
to be performed by both sides under the agreement. The Company
believes the counterclaim and third party complaint is without
merit. On December 18, 1997 Stephen Grogan filed for personal
bankruptcy seeking Chapter 7 liquidation proceedings. However,
two days prior to his filing for bankruptcy, Mr. Grogan's
attorney contacted the Company's transfer agent requesting that
50,000 common shares of Royal Casino Group stock issued to
Stephen Grogan be transferred "immediately" out of Mr. Grogan's
name and into his father's name and one other individual. The
Company rejected the attempted transfer as explicitly counter to
provisions contained in the Settlement Agreement. As a result of
Mr. Grogan filing for Bankruptcy, the Company's action against
Mr. Grogan has been stayed. On April 22, 1998 Mr. Grogan was
discharged in Chapter 7. Although the bankruptcy trustee has
acquired Mr. Grogan's assets, which include the aforementioned
settlement agreement, and liabilities per the Company's lawsuit
against Mr. Grogan, it is deemed unlikely by the Company that
the matters will be pursued due to the time and cost involved to
bring the actions to resolution.
Conditions of the July, 1997 Settlement Agreement between
Stephen Grogan and the Company called for both sides to dismiss,
without prejudice, their lawsuits against each other. Mr.
Grogan's suit against the Company filed in Colorado was
dismissed however, when the Company attempted to dismiss their
lawsuit filed in South Dakota against Mr. Grogan in November,
1997, Mr. Grogan filed a motion pro se with the Court seeking to
stop the Court from allowing the Company to dismiss its suit
against Mr. Grogan. The Court agreed to defer dismissal 90 days.
The Company believes the filing in the US Bankruptcy Court for
Chapter 7 by Mr. Grogan effectively ends this action.
Item 4 Submission of Matters to a Vote of Security Holders
On July 17, 1998 security holders representing 51.5% of
the total issued and outstanding number of shares and permitted
to vote, executed a "Written Consent of Shareholders". By
resolution adopted by the consent, all proceedings of the Board
of Directors and all actions taken by the directors and officers
of the Corporation since the last shareholder meeting were
ratified and approved in all respects. Additionally, the
officers and directors of the Corporation are indemnified and
held harmless from and against any and all liability for
monetary damages resulting from actions taken, or to be taken,
while acting on behalf of the Corporation within their
respective scope of authority.
Further it was resolved to redirect and redefine the
Corporation's business objectives to encompass the development
of current and future business opportunities within the area of
e Commerce. Correspondingly, the consent also approved an
Amendment to the Corporation's Articles of Incorporation
changing the name of the Corporation to "E-Commerce West Corp.".
Further, to consolidate those assets and liabilities
directly related to the Corporation's gaming operations it was
resolved that E-Commerce West subsequently incorporate a
wholly-owned subsidiary in the state of South Dakota to be named
"Royal Casino Group" to which it would transfer any and all
assets and liabilities including the name and logo of "Royal
Casino Group" and all contracts entered into by the Corporation
in connection with its gaming activities.
Finally, the officers of the Corporation were authorized
and directed to perform any and all acts, incur all expenses and
prepare, execute and file all such documents and reports as were
necessary, desirable or convenient to effectuate all forgoing
resolutions contained within the consent.
PART II
Item 5. Market for the Registrant's Common
Stock and Related Security-Holder Matters
(a) Market Information. E-Commerce West's common stock
is traded on the NASDAQ Bulletin Board under the symbol "ECOM".
The following table sets forth the high and low bid prices
per share of the Company's Common Stock for the quarters
indicated. These prices represent inter-dealer prices, without
adjustment for retail mark-up, markdown or commissions, and may
not necessarily represent actual transactions.
High Low
1997 Third Quarter. . . . . $0.57 $0.31
1997 Fourth Quarter . . . . $0.33 $0.11
1998 First Quarter. . . . . $0.13 $0.08
1998 Second Quarter . . . . $0.42 $0.08
(b) Holders. The approximate number of holders of record
of the Company's Common Stock as of July 31, 1998 was 2,568
(c) The Company has not paid a cash dividend on its Common
Stock and does not anticipate that it will do so in the
foreseeable future.
(d) On January 19, 1998 the Board of Directors passed a
motion extending the exercise date for the Company's Class "B"
Warrants to July 26, 1998. On July 14, 1998 the Board of
Directors passed a motion extending the exercise date for the
Company's Class "B" Warrants six months to January 26, 1999,
with all other terms and conditions applicable to the warrants
remaining in effect.
Item 6. Selected Financial Data
The selected financial data set forth below should be read
in conjunction with the financial statements and related notes.
Balance sheet information is presented as of the end of the
period shown.
The following table summarizes certain audited financial
data and is qualified in its entirety by the more detailed
financial statements included elsewhere herein. For the year
ended July 31, 1998, the Company had gross revenues of $ 0 and
incurred a net loss of $2,390,602
July 31, 1998
(Audited)
Total Assets ...............................$ 205,708
Total Liabilities...........................$ 430,443
Shareholders' Equity .......................$ (224,635)
Shares Outstanding
Common Stock ................................ 8,642,102
Series A Preferred Stock .................... 1,100,000
Net Tangible Book Value
Per Share of Common
Stock . . . . . . . . . . . . .$ (0.04)
(1) There are presently outstanding 1,611,842 "B" Warrants which
entitle the holder to purchase one share of Common Stock at a
purchase price of $20 until January 26, 1999. There are
presently outstanding 550,000 "C" Warrants which entitle the
holder to purchase one share of Common Stock at a purchase price
of $4 until December 31, 2000. This calculation assumes that
none of the aforementioned "B" and "C" Warrants have been
exercised.
Income Taxes:
The Company is current with all its Federal and State
Income Tax filings. The Company does not owe any Federal or
State Income Taxes, and has a net operating loss carryforward of
approximately $5,372,703 expiring beginning 2010. However,
Atlantic-Pacific Corp., the Company's subsidiary corporation
which owned and operated Goldigger's Hotel and Gaming, submitted
an Offer in Compromise to the Internal Revenue Service in April,
1998 concerning approximately $100,000 in unpaid payroll taxes.
The Company has been advised that its offer is under review.
Stockholders' Equity
Common Stock:
The Company has 150,000,000 shares authorized, 8,642,102
shares issued and outstanding. There are presently outstanding
1,611,842 "B" Warrants which entitle the holder to purchase one
share of Common Stock at a purchase price of $20 until January
26, 1999. The "B" Warrants are callable by the Company at a
purchase price of $0.20 per Warrant. Additionally, as part of
the Company's acquisition of Goldiggers, Casino Magic Corp.
holds 500,000 "C" Warrants which entitle the holder to purchase
one share of Common Stock at a purchase price of $4. until
December, 2000. These Warrants are callable by the Company at a
purchase price of $1. per Warrant. As part of the Company's
acquisition of the Triple J Casino in Henderson, Nevada, since
discontinued, the Company issued 50,000 of the aforementioned
$4. "C" Warrants to the seller.
Preferred Stock:
The Company has 100,000,000 shares authorized of which
1,100,000 Class A Preferred are issued and outstanding.
Stockholders' Equity
Stock Options:
Under the terms of its nonqualified employee stock option
plan the Company is authorized to establish a plan for up to two
hundred and fifty thousand (250,000) shares of Common Stock
pursuant to a resolution of the Board of Directors and by
Amendment of its Certificate of Incorporation and/or Bylaws.
Pursuant to this plan the Company has issued one hundred and
seventy thousand (170,000)options to an
officer/director/stockholder. The options may be exercised at a
purchase price of $1.25 per share. The options expire on
December 31, 2003. Additionally, the Company created options,
with an expiration date of December 31, 2003, equating to three
million shares of common stock to an Employee Stock Option Plan.
The Board granted 900,000 options to Jon Elliott, the Company's
President and CEO. The 600,000 options granted to Larry Close,
the Company's former Vice President, were returned to the Plan
when Mr. Close elected not to exercise them within ninety days
of leaving the Company per the rules of the Plan. These options
carry an exercise price of $0.60 per share. Additionally, the
Board on the same date authorized the establishment of 500,000
options, each to be exchanged on a one for one common stock
basis, to be offered at the discretion of the President to
investors. These options would be priced at the time granted,
at a price above the then current price of the Company's common
shares. Further, that each option shall be for a period
established by the President at the time they are granted. The
common stock issued pursuant to all of the aforementioned
options are restricted under the Securities and Exchange
Commission Rule 144.
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following discussion provides information on results
of operations, liquidity, capital resources, and the impact of
inflation on the Company. The financial statements and notes
thereto also contain information that is pertinent to this
analysis.
General Financial Condition
The Company has depleted most of its cash resources and
does not possess the collateral to borrow from its lenders. The
Company is currently seeking financing to sustain operations.
Current cash on hand is not sufficient to meet ongoing operating
expenses however the Company is optimistic that financing will
be available, although there can be no assurances that financing
in the amount and on terms acceptable to the Company will be
available within the time frame required.
Results of Operations:
Goldiggers Hotel & Gaming Est.
Throughout the first half of the Company's recently
completed fiscal year the Company continued to fund the
deficiencies of Goldiggers plus the ongoing costs of operation
of the Company and the costs incurred in seeking other gaming
opportunities. Although the implementation of the Company's
cost cutting measures resulted in a reduction in year-over-year
operating reductions in excess of $875,000, Goldiggers continued
to lose money due to the decline in gaming revenues in the
Deadwood market coupled with increased competition. The Company
determined it had cut costs to the maximum while still
delivering high quality customer service. Management determined
revenues could not be increased. Consequently to preserve the
Company's capital the decision was made to close Goldiggers on
January 5, 1998 and liquidate the assets in an orderly fashion
to pay down the trade debt. The balance of the fiscal year was
devoted to activities related to the closing of Goldiggers
including regulatory issues and audits with the South Dakota
Commission on Gaming, the South Dakota Department of Revenue,
Workman's Compensation and the Nevada Gaming Commission. When
Goldiggers closed it owed trade debt of approximately $197,000;
back rent and property taxes of approximately $215,000; lines of
credit and bank debt of approximately $195,000 and a short term
note of approximately $32,000 totaling approximately $640,000.
Since the closing the Company conducted an orderly sale of
Goldiggers assets, the proceeds of which were being used to pay
Goldiggers debts. As of the date of this filing the outstanding
debt has been reduced to approximately $16,000. In addition, at
the time of Goldiggers' closing Royal Casino Group was owed
approximately $415,000. As of the date of this filing that
figure has been reduced to $79,500. As substantially all
Goldiggers assets have been sold it is unlikely that any further
pay down of the debt to Royal Casino Group will occur.
In the third quarter the Company caused an auction of
Goldiggers' furniture, fixtures and equipment; sold Deadwood
Stage, the Company's transportation system, sold the Company's
real estate and systematically disposed of other Goldiggers'
assets. The proceeds repaid the company's bank in full,
including all interest through to the date of repayment, plus
repaid the short term note in full. On April 15, 1998
Goldiggers sent a letter to the majority of Goldiggers' trade
creditors offering a settlement in full of 20% of the amount
owed. The vast majority of creditors accepted prior to the
deadline of April 30, 1998. Further, in February the Company
negotiated a full release in perpetuity of back rent and
property taxes on the premises previously occupied by
Goldiggers. In the fourth quarter the slot machines were sold.
The Company incurred a loss of $459,886 on the disposal of these
assets
As Goldiggers had been a drain on the Company's cash
resources, the closure of the property requires no further
demand on the parent Company's funds and therefore should
produce positive long term results for the Company.
Planned Wyatt, Missouri Riverboat Casino
The Company won a Request for Proposal to develop a
riverboat casino in Wyatt, Missouri. On November 9, 1995 the
Company signed a definitive 25 year Docking and Franchise
agreement with the City of Wyatt, Missouri granting Royal Casino
Group the exclusive right to develop and manage a Riverboat
Casino Entertainment Center on the Mississippi River. The
agreement contains five additional five year renewal periods at
Royal's option. Wyatt is located where the states of Missouri,
Illinois & Kentucky meet and is just 20 miles from Tennessee.
The closest operating riverboat casino is Players located
approximately 40 miles away in Metropolis, IL with revenues in
excess of $84M in 1997. Royal's plans, subject to receiving the
required regulatory approvals, call for the development of a
Riverboat Casino Entertainment Complex including a Visitor's
Center, a 150 seat buffet restaurant, lounge, substantial
parking area, ticketing booth plus a Missouri Arts & Craft shop.
Land has been accumulated to allow for the additional
development, once successful, of a hotel, RV park, playgrounds,
tennis courts and a performance theater.
Land Lease with Option to Purchase
On March 23, 1996 the Company and a local landowner
entered into a three year lease with an unlimited number of five
year renewal options (at base plus customary CPI adjustments)
plus an option to purchase 50 acres of land directly on the
Mississippi River near Wyatt, Missouri. The term and annual
lease payments of $50,000 commence upon the earlier of the
Company beginning construction on the land or the selection of
its gaming application for review by the Missouri Gaming
Commission. The Company has an option for three years to
purchase the land for $300,000 with 50% of the rent paid
credited towards the purchase price. Ten percent of the rental
sum due for the initial three year term will be payable in the
Company's restricted common stock priced at the average ask
price of the Companys shares for the preceding 15 trading days
prior to the payment due date. As a condition of the
transaction, the City of Wyatt will annex the property into the
city with the lessor paying the costs associated with this
procedure.
Army Corps of Engineers
On June 19, 1998 the Corps issued a 30-day Public Notice
requesting comments from both the public and private sector
concerning the decision to grant a Section 401 water quality
certification permit. The notice expired on July 20, 1998 with
two responses. One was not an issue as it expressed concerns
related to potential navigational hazards on the river and since
the riverboat will be permanently dockside this was a non issue.
The other correspondence was from the Missouri Department of
Natural Resources containing comments concerning the issuance of
a Water Certification Permit. All of the points raised were
acceptable to the Company. [See; Subsequent Events]
Additionally, Missouri statutes require the land used for
a riverboat casino development to be located within the city
limits of that community. In July, 1997 the City Council of
Wyatt voted to annex the 50 acres of land which the Company
controls into the City of Wyatt. This proposed annexation has
been cumbersome due to the complexities and variables associated
with this procedure. The Company believes this annexation should
be completed during the first quarter of 1999 although no
assurances to this effect can be given as unexpected
circumstances may further delay this procedure.
Once the Company has received its docking permit from the
Army Corps of Engineers and the annexation of the land has been
completed, Royal Casino Group will be equipped to submit its
application for licensing to the Missouri Gaming Commission.
Royal will have a complete package comprised of an exclusive
25-year definitive agreement with the City of Wyatt; sufficient
land to adequately develop the Riverboat Casino Entertainment
Center; governmental and regulatory docking approval on its
site; preliminary architectural drawings; an available, suitable
riverboat together with demonstrable financing capabilities.
Licensing is solely at the discretion of the Missouri Gaming
Commission and there can be no assurances that Royal, should the
Company apply, will be selected for review and if selected will
gain approval.
Discontinued Oklahoma Racetrack Casino Project
For several months the Company had been working towards
the acquisition of Blue Ribbon Downs, an active horse racing
facility located on Interstate 40 in Sallisaw, Oklahoma. In
January, 1998 the Company made a proposal, which was accepted in
principle, to acquire all of the stock in the racetracks parent
company. The offer was contingent upon the passage by
referendum of an initiative which would add a new measure to the
State of Oklahomas constitution approving casino gaming. The
aforementioned ballot measure was defeated in a special state
election on February 10, 1998. Pursuant to the terms of the
Company's offer to acquire all the outstanding shares of the
parent company of the racetrack, since the results of the
election ensured there would be no casino gaming for the
foreseeable future, the Company's offer was withdrawn.
Discontinued Aruba Casino Project
In August, 1997 the Company commenced negotiations to
acquire the Aruban corporation that operates the Palm Casino in
the Aruba Palm Beach Hotel on the Caribbean resort island of
Aruba. Although the Company was comfortable with the terms and
conditions of the acquisition, the Company was unable to raise
the necessary funds to acquire and operate the casino prior to
the need by the property's operator to enter into an agreement
with another gaming company.
Gaming Opportunities
The Company has been approached by three groups seeking
gaming management. There can be no assurances as to the level
of interest by either the Company or any of the three entities
as all parties are in the early stages of due diligence. As the
Company's primary business focus is e Commerce, the Company has
no interest in investing in gaming situations and would only
consider a gaming opportunity if it was deemed by Management
very rewarding to the Company.
Royal Casino Group had an active interest in an initiative
in Trinidad, Colorado which would have allowed a local
referendum to permit gaming. The Company had a representative
in the community negotiating with realtors which, the Company
believed, would give it a significant competitive advantage over
the competition should gaming be approved. However, the measure
was defeated in the November 4, 1997 election.
Revenues
At the time of this filing the Company does not have any
revenues as the Company's sole source of revenues was from
Goldiggers which closed in January, 1998. The Company does
anticipate revenues within the current fiscal year to be derived
form its Internet niche Web sites although there can be no
assurances as to the amount of revenues or if the revenues will
be sufficient to satisfy ongoing corporate operating expense.
Direct Expenses
The Company's direct expenses throughout the year have
been made from cash on hand plus loans from time to time from
its President/CEO. Current finances are strained by an
insufficient cash supply. The Company is optimistic that the
financing the Company requires to sustain operations will be
attainable on terms and conditions acceptable to the company
although there can be no assurances that such financing will be
available.
Consulting Fees
The Company retained Fordham Consultants of Denver,
Colorado as an expert witness during the course of its
previously mentioned litigation with Stephan Grogan for $2,188.
As previously mentioned, the Company retained the following as
consultants at various times during the recently ended fiscal
year:, Arthur Lovett, Ron Island, Dan French, Deb Berg, Gaming
Venture Corp., Mainstream Consultants, and WWWServices. [See
Subsequent Events]
In this fiscal year, the Company expensed $73,238 in
consulting fees vs. $160,544 in the previous fiscal year. Of
this amount $71,050 was paid in S-8 stock with the balance of
$2,187 paid in cash. In the fourth quarter $14,625 was paid in
S-8 stock and zero was expensed in cash.
Equipment Rental, Overhead, Rent, Support Services
The Company rents approximately 640 square feet of office
space for its corporate headquarters for $400 per month on a
lease through April, 1998. The Company's general and
administration expenses have been paid from cash reserves.
Support services have been compensated by cash from the
Company's cash on hand and/or through the issuance of shares of
the Company's common stock.
The Company's lease for its corporate headquarters' office
space expired in April. The Company entered into a new one year
lease utilizing approximately half the space previously occupied
at a reduced rental of $400 per month.
Impact Of Inflation Upon The Company
Inflation has not impacted, nor would it be expected to
have an impact upon the Company.
Repayment of Outstanding Debt
From September 16, 1997 through October 9, 1997 the
Company sold its shares of Gaming Venture USA, Inc. in open
market transactions resulting in proceeds of $ 38,004.11 and a
profit of $8,004.11. The proceeds were used to repay the
$30,000 loaned to Royal Casino Group in July, 1997 by Gaming
Venture Corp. USA.
The $30,000 loan due September 8, 1997 was extended by the
lender and repaid in full including all interest due on March
20, 1998.
The Company has spent the last two fiscal quarters working
towards the repayment of Atlantic-Pacific's corporate debt
incurred through Goldiggers. When Goldiggers closed on January
5, 1998 outstanding debt was approximately $640,000 not
including monies advanced and owed to Royal Casino Group. As of
the date of this filing the remaining amount owed is
approximately $14,000.
Item 8 Financial Statements and Supplementary Data.
E-COMMERCE WEST CORP.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED
JULY 31, 1998 AND 1997
E-COMMERCE WEST CORP. AND SUBSIDIARIES
CONTENTS
July 31, 1998
Page
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 18
FINANCIAL STATEMENTS
Consolidated Balance Sheets 19
Consolidated Statements of Operations 20
Consolidated Statements of Shareholders' Equity (Deficit) 21
Consolidated Statements of Cash Flows 22 - 23
Notes to Consolidated Financial Statements 24 - 33
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Shareholders
E-Commerce West Corp. and subsidiaries
We have audited the accompanying consolidated balance sheets of
E-Commerce West Corp. (a Utah corporation) and subsidiaries as
of July 31, 1998 and 1997, and the related consolidated
statements of operations, shareholders' equity (deficit), and
cash flows for the years then ended. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the consolidated
financial position of E-Commerce West Corp. and subsidiaries as
of July 31, 1998 and 1997, and the consolidated results of their
operations and cash flows for the years then ended in conformity
with generally accepted accounting principles.
The accompanying financial statements for the year ended July
31, 1998 have been prepared assuming that the Company will
continue as a going concern. As discussed in Note 2 to the
financial statements, the Company's recurring losses from
operations and limited capital resources raise substantial doubt
about its ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 2.
The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
Los Angeles, California
November 8, 1998
E-COMMERCE WEST CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
July 31,
ASSETS
1998 1997
Current assets
Cash and cash equivalents $ 71,615 $ 564
Accounts receivable 2,930 -
Note receivable officer 9,000 18,000
Notes receivable 51,000 -
Prepaid expenses and other assets 38,290 13,250
Total current assets 172,835 31,814
Property and equipment, net 32,873 30,109
Other assets - 95,000
Net assets of discontinued operations - 2,114,418
Total assets $ 205,708 $ 2,271,341
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities
Notes payable $ - $ 125,025
Accounts payable 153,803 105,103
Accrued liabilities 140,248 162,575
Net liabilities of discontinued operations 136,392 -
Total current liabilities 430,443 392,703
Commitments and contingencies
Shareholders' equity (deficit)
Preferred stock, $.001 par value, 100,000,000 shares
authorized
Series A Convertible preferred stock
1,100,000 shares issued and outstanding 1,100 1,100
Series B Convertible preferred stock
no shares issued and outstanding - -
Common stock, $.001 par value
150,000,000 shares authorized
8,642,102 and 5,163,765 shares issued and
outstanding 8,642 5,164
Additional paid-in capital 5,856,840 5,573,089
Accumulated deficit (6,091,217) (3,700,715)
Total shareholders' equity (deficit) (224,635) 1,878,638
Total liabilities and shareholders' equity
(deficit) $ 205,708 $ 2,271,341
E-COMMERCE WEST CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended July 31,
1998 1997 1996
Selling, general, and administrative
expenses $ 592,993 $ 871,729 $ 279,444
Loss from operations (592,993) (871,729) (279,444)
Other income (expense)
Interest income 2,013 411 -
Interest expense (14,421) (6,435) (6,561)
Other income - - 3,310
Other expense - (77,760) -
Gain on sale of assets 7,312 - -
Loss on abandoned projects (93,377) (296,172) -
Total other income (expense) (98,473) (367,956) (3,251)
Loss from continuing operations before
provision for income taxes (691,466) (1,239,685) (282,695)
Provision for income taxes 100 100 100
Net loss from continuing
operations (691,566) (1,239,785) (282,795)
Discontinued operations
Loss from operations (304,867) (608,534) (400,795)
Loss on disposition of operations (1,394,169) - -
Net loss from discontinued
operations (1,699,036) (608,534) (400,795)
Net loss $ (2,390,602)$ (1,848,219)$ (683,590)
Basic loss per share
From continuing operations $ (0.12) $ (0.27) $ (0.09)
From discontinued operations (0.28) (0.13) (0.13)
Total basic loss per share $ (0.40) $ (0.40) $ (0.22)
Weighted-average common shares
outstanding 6,052,413 4,671,182 3,090,362
E-COMMERCE WEST CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
For the Years Ended July 31,
Preferred Stock Additional
Series A Series B Common Stock
Paid-in Accumulated
Shares Amount Shares Amount Shares Amount
Capital Deficit Total
Balance, July 31,
1995 - $ - - $ - 2,380,163 $ 2,380 $ 1,030,926 $ (1,168,707)$
(135,401)
Issuance of preferred stock
for
acquisition 1,000,000 1,000 2,439,000 2,440,000
Issuance of common stock
for services rendered and
debt conversion 854,895 855 530,040 - 530,895
Exercise of
warrants 1,079,901 1,080 1,078,821 - 1,079,901
Sale of common stock 20,000 20 9,980 - 10,000
Net loss (683,590) (683,590)
Balance, July 31,
1996 1,000,000 1,000 - - 4,334,959 4,335 5,088,767 (1,852
,297) 3,241,805
Issuance of preferred
stock 100,000 100 49,900 50,000
Issuance of common stock
for services rendered and
compensation 778,806 779 384,472 385,251
Sale of common stock 50,000 50 49,950 50,000
Net loss (1,848,419) (1,848,419)
Balance, July 31,
1997 1,100,000 1,100 - - 5,163,765 5,164 5,573,089 (3,700
,715) 1,878,638
Issuance of restricted
common stock for services
rendered and
compensation 3,170,832 3,171 133,162 136,333
Issuance of common stock
for services rendered
and compensation 507,505 507 150,589 151,096
Common shares returned by
an officer and canceled (200,000) (200) (200)
Net loss (2,390,602) (2,390,602)
Balance, July 31,
1998 1,100,000 $ 1,100 - $ - 8,642,102 $ 8,642 $ 5,856,840 $ (
6,091,217)$ (224,635)
E-COMMERCE WEST CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended July 31,
1998 1997 1996
Cash flows from operating activities
Net loss from continuing
operations $ (691,566) $ (1,239,785)$ (282,795)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation and amortization 5,416 7,107 57
Issuance of stock for services rendered
and compensation 287,229 385,251 410,000
Provision for loss on doubtful accounts 46,314 - -
(Increase) decrease in
Accounts receivable (44,109) 5,000 (5,000)
Prepaid expenses and other assets 162,040 (96,250) (30,000)
Increase (decrease) in
Accounts payable 48,700 35,143 49,792
Accrued liabilities (22,427) 129,620 (41,682)
Net cash provided by (used in)
continuing operating activities (208,403) (773,914) 100,372
Net cash used in discontinued operating
activities (1,590,972) (546,637) (395,259)
Net cash used in operating
activities (1,799,375) (1,320,551) (294,887)
Cash flows from investing activities
Acquisitions of property and
equipment (8,180) (17,643) (19,630)
Net cash used in continuing investing
activities (8,180) (17,643) (19,630)
Net cash provided by discontinued
investing activities 2,247,576 - -
Net cash provided by (used in) investing
activities 2,239,396 (17,643) (19,630)
Cash flows from financing activities
Issuance of preferred stock - 50,000 -
Borrowings under notes payable - 81,393 3,015
Payments on notes payable (125,025) - -
Issuance of common stock - 50,000 1,089,901
Net cash provided by (used in)
continuing financing activities (125,025) 181,393 1,092,916
Net cash provided by (used in)
discontinued financing activities (243,945) 243,945 135,000
Net cash provided by (used in) financing
activities (368,970) 425,338 1,227,916
E-COMMERCE WEST CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
For the Years Ended July 31,
1998 1997 1996
Net increase (decrease) in cash and cash
equivalents $ 71,051 $ (912,856) $ 913,399
Cash and cash equivalents, beginning of year 564 913,420 21
Cash and cash equivalents, end of year $ 71,615 $ 564 $ 913,420
Supplemental schedule of non-cash investing and financing
activities
1998 1997 1996
Option acquired by issuance of
common stock $ - $ 75,000 $ -
Net assets acquired by issuance of
preferred stock $ - $ - $ 2,385,000
Common stock issued for services rendered
and debt conversion $ - $ - $ 531,000
Equipment acquired under capital lease $ - $ 46,450 $ -
E-COMMERCE WEST CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1998
NOTE 1 - NATURE OF BUSINESS AND BASIS OF PRESENTATION
The Company, which is a Utah corporation, was originally formed
on March 21, 1981. Since incorporation the Company has undergone
several name, ownership, incorporation and management changes
together with a reorganization. In January 1994 the Company
changed its name to Royal Casino Group, Inc. Due to prevailing
economic conditions pertaining to the gaming industry coupled
with the long-term negative industry outlook, the Company
elected to scale back its gaming operations and enter the
eCommerce business. In July 1998 the Company amended its
Articles of Incorporation to change its name to E-Commerce West
Corp.
The Company's only active subsidiary, Atlantic-Pacific
Corporation, operated a limited stakes gaming establishment and
hotel in Deadwood, South Dakota under the name of Goldiggers
Hotel and Gaming Establishment ("Goldiggers"). Goldiggers was
acquired by the Company on June 13, 1996 (see Note 5.) The
financial statements as of July 31, 1996 reflect activity from
June 13, 1996 to July 31, 1996.
NOTE 2 - REALIZATION OF ASSETS
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles which
assume that the Company will continue as a going concern.
However, during the year ended July 31, 1998, the company
incurred a net loss of $2,390,602. Recovery of the Company's
assets is dependent upon future events, the outcome of which is
indeterminable. In addition, the Company's attainment of
profitable operations is dependent upon obtaining adequate
financing to support its expansion activities and achieving a
level of revenues adequate to support the Company's cost
structure. In view of these matters, realization of a major
portion of the assets in the accompanying balance sheet is
dependent upon the Company's ability to meet its financing
requirements.
Management has taken the following steps to revise its operating
and financial requirements which it believes are sufficient to
provide the Company with the ability to continue in existence:
The Company has reduced operating expenses and has no debt
other than payroll taxes and professional fees.
The Company is entering the eCommerce arena by launching
selected niche Internet web sites. The Internet is a medium
that is expected to experience substantial growth into the next
millennium.
The Company is optimistic that financing is available for the
Companys future plans due to the succession of financing the
financial community has placed in other eCommerce related
enterprises, including start-ups.
E-COMMERCE WEST CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1998
NOTE 3 - DISPOSAL OF OPERATIONS
As of January 31, 1998, the Company and its board of directors
shut down its gaming establishment and hotel in Deadwood, South
Dakota. As a result, the gaming establishment and hotel
operations are accounted for as discontinued operations and,
accordingly, its operations are reported in this manner for all
periods presented. For 1998, all assets and liabilities of
discontinued operations are presented as net liabilities of
discontinued operations and for 1997, all assets and liabilities
of discontinued operations are presented as net assets of
discontinued operations in the consolidated balance sheets.
Included in loss from discontinued operations are the gaming
establishment and hotel total revenues of $678,529, $1,785,133
and $395,895 and the net loss from operations of $260,598,
$611,942, and $397,675 for the years ended July 31, 1998, 1997,
and 1996, respectively. Given the Companys losses and
discontinued operations' historical losses, there is no tax
effect on the disposition of the operations.
The following is a summary of net assets from discontinued
operations:
1998 1997
Current assets $ - $ 431,855
Property, plant, and equipment - 2,247,576
Other assets - 19,116
Current liabilities (136,392) (539,455)
Long-term liabilities - (44,674)
Net assets (liabilities) from discontinued
operations $ (136,392) $ 2,114,418
NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of
E-Commerce West Corp. and its wholly-owned subsidiaries,
Atlantic-Pacific Corporation, Goldiggers Southern Nevada, Inc.,
Royal Casino Group, Inc. and GoldiggersWest.Com Corp. All
material intercompany balances and transactions have been
eliminated in the consolidation.
E-COMMERCE WEST CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1998
NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the financial statements, and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and Cash Equivalents
For purposes of the statements of cash flows, the Company
considers all highly liquid investments purchased with original
maturities of three months or less to be cash equivalents.
Property and Equipment
Property and equipment are stated at cost. Depreciation and
amortization are provided using the straight-line method over
the estimated useful lives as follows:
Purchased software 3 years
Furniture and equipment 5 to 7 years
Leasehold improvements 10 years
Maintenance and minor replacements are charged to expenses as
incurred. Expenditures which materially extend the useful lives
of capital assets are capitalized.
Income Taxes
Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases. Deferred tax assets
and liabilities are measured using enacted tax rates expected to
apply to taxable income in the year in which those temporary
differences are expected to be recovered or settled. Reserves
for deferred tax assets are recorded when ultimate recovery of
such assets is deemed uncertain.
Recently Issued Accounting Pronouncements
Statement of Financial Accounting Standards ("SFAS") No. 130,
"Reporting Comprehensive Income," is effective for financial
statements with fiscal years beginning after December 15, 1997.
SFAS No. 130 establishes standards for reporting and display of
comprehensive income and its components in a full set of
general-purpose financial statements. The Company does not
expect adoption of SFAS No. 130 to have a material effect, if
any, on its financial position or results of operations.
E-COMMERCE WEST CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1998
NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recently Issued Accounting Pronouncements (Continued)
SFAS No. 131, "Disclosure about Segments of an Enterprise and
Related Information," is effective for financial statements with
fiscal years beginning after December 15, 1997. This statement
establishes standards for the way that public entities report
selected information about operating segments, products, and
services, geographic areas, and major customers in interim and
annual financial reports. The Company does not expect adoption
of SFAS No. 131 to have a material effect, if any, on its
financial position or results of operations.
SFAS No. 132, "Employers' Disclosures about Pensions and Other
Post-Retirement Benefits," was issued in February 1998. This
statement is not applicable to the Company.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities," is effective for financial statements with fiscal
years beginning after June 15, 1999. SFAS No. 130 establishes
accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other
contracts, and for hedging activities. The Company does not
expect adoption of SFAS No. 133 to have a material effect, if
any, on its financial position or results of operations.
SFAS No. 134, Accounting for Mortgage-Backed Securities
Retained after the Securitization of Mortgage Loans Held for
Sale by a Mortgage Banking Enterprise, was issued in October
1998. This statement is not applicable to the Company.
Earnings per Share
The Company reports earnings per share in accordance with SFAS
No. 128, "Earnings per Share." Basic earnings per share is
computed by dividing income available to common stockholders by
the weighted-average number of common shares available. Diluted
earnings per share is computed similar to basic earnings per
share except that the denominator is increased to include the
number of additional common shares that would have been
outstanding if the potential common shares had been issued and
if the additional common shares were dilutive. Diluted earnings
per share are not presented for 1998, 1997 and 1996 because
common stock equivalents are anti-dilutive.
Reclassifications
Certain reclassifications have been made to conform prior period
amounts to the current year presentation.
E-COMMERCE WEST CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1998
NOTE 5 - ACQUISITION OF ATLANTIC-PACIFIC CORPORATION
On June 13, 1996, the Company completed a transaction to buy all
of the outstanding common stock of Atlantic-Pacific Corporation,
a South Dakota gaming corporation, from Casino Magic
Corporation. In exchange, the Company delivered to Casino Magic
Corporation 1,000,000 shares of the Company's Series A
convertible preferred stock, a Series C warrant to acquire
500,000 shares of the Company's common stock at an exercise
price of $4.00 per share (see Note 9), and $1,000 in cash. This
transaction was recorded using the purchase method of accounting.
NOTE 6 - PROPERTY AND EQUIPMENT
Property and equipment at July 31 consisted of the following:
1998 1997
Purchased software $ 8,000 $ -
Furniture and equipment 37,396 37,216
45,396 37,216
Less accumulated depreciation and
amortization 12,523 7,107
Total $ 32,873 $ 30,109
NOTE 7 - ACCRUED LIABILITIES
Accrued liabilities at July 31 consisted of the following:
1998 1997
Accrued payroll, benefits, and taxes $ 100,014 $ 44,415
Accrued legal settlement 40,000 70,000
Income taxes payable 100 -
Other 134 48,160
Total $ 140,248 $ 162,575
E-COMMERCE WEST CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1998
NOTE 8 - INCOME TAXES
The current provision for income taxes is the minimum tax due to
the state of South Dakota. The components of the Company's net
deferred taxes as of July 31, 1998 and 1997 are as follows:
1998 1997
Deferred tax assets
Net operating loss carryforward $ 1,692,395 $ 1,020,901
Outside services paid with restricted stock 54,840 -
Officer compensation in restricted stock 81,911 39,128
Total deferred tax assets 1,829,146 1,060,029
Deferred tax liabilities
Property and equipment (2,427) (39,482)
Unrealized securities gain - (425)
Total deferred tax liabilities (2,427) (39,907)
Valuation allowance 1,826,719 1,020,122
Net deferred taxes $ - $ -
The Company has established a valuation allowance based on a
number of factors which impact the likelihood the deferred tax
assets will be recovered, including the Company's history of
operating losses. Based upon a weighting of all available
evidence, management believes that there is no basis to project
significant United States-sourced taxable income. Therefore, it
is more likely than not that the deferred tax assets will not be
realized, and a full valuation allowance has been established.
The net change in the valuation allowance for the years ended
July 31, 1998 and 1997 was an increase of $806,597 and $627,995,
respectively.
As of July 31, 1998, the Company had a federal net operating
loss carryforward of $5,372,703. This carryforward, if unused,
begins to expire in 2010.
The overall effective tax rate differs from the federal
statutory tax rate of 34% due to operating losses not providing
benefit for income tax purposes.
E-COMMERCE WEST CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1998
NOTE 9 - SHAREHOLDERS' EQUITY
Preferred Stock
The Company has 100,000,000 authorized shares of preferred
stock. 1,100,000 shares were designated as Series A Convertible
preferred stock ("Series A Convertible") at July 31, 1998 and
1997. 1,000,000 shares were designated as Series B Convertible
preferred stock ("Series B Convertible") at July 31, 1998 and
1997.
The Series A Convertible is redeemable only by the Company, is
non-dividend bearing, and is convertible at the option of the
holder into shares of common stock over a three-year period as
defined. Upon liquidation of the Company, holders of Series A
Convertible shall be entitled to receive $3 in cash from the
assets of the Company for each share held. Effective August 1,
1996, the Company amended its articles of incorporation to
change the par value of its Series A Convertible from no par to
$0.001 par value per share. The accompanying financial
statements have been restated to reflect the new par value for
all periods presented. The Company had 1,100,000 shares of the
Series A Convertible issued and outstanding at July 31, 1998 and
1997.
The Series B Convertible is redeemable only by the Company and
is non-dividend bearing. The Company had no shares issued and
outstanding of the Series B Convertible at July 31, 1998 and
1997, respectively.
Common Stock
The Company has 150,000,000 shares authorized and 8,642,102 and
5,163,765 shares issued and outstanding at July 31, 1998 and
1997, respectively. Effective August 1, 1996, the Company
amended its articles of incorporation to change the par value of
its common stock from no par to $0.001 par value per share. The
accompanying financial statements have been restated to reflect
the new par value for all periods presented.
During the year ended July 31, 1998, the Company issued
3,145,832 shares of its restricted common stock to the President
of the Company for compensation at $0.04 per share, and issued
25,000 shares of its restricted common stock for services
rendered at $0.42 per share.
During the year ended July 31, 1998, the Company issued 25,000
shares of its common stock to an employee for compensation at
$0.44 per share, and issued 482,505 shares of its common stock
for services rendered at prices ranging from $0.10 to $0.44 per
share.
Warrants
During the year ended July 31, 1996, 1,079,901 Series A warrants
were exercised. These warrants entitled the holder to purchase
one share of common stock at a purchase price of $1.
Approximately 592,000 unexercised Series A warrants expired July
26, 1996. There were no A warrants issued and outstanding at
July 31, 1998 and 1997.
E-COMMERCE WEST CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1998
NOTE 9 - SHAREHOLDERS' EQUITY (Continued)
The Company had 1,628,612 Series B warrants issued and
outstanding at July 31, 1998 and 1997. These warrants entitle
the holder to purchase one share of common stock at a purchase
price of $20 and are callable by the Company for $0.20 per
warrant. The Company has extended the expiration date of the
Series B warrants from July 26, 1996 to January 26, 1999.
During the year ended July 31, 1997, the Company issued 50,000
additional Series C warrants. These warrants entitle the holder
to purchase one share of common stock at a purchase price of $4.
The Series C warrants are callable by the Company for $1 per
warrant and expire on December 31, 2000.
Options
Under the terms of its nonqualified employee stock option plan,
the Company is authorized to establish a plan for up to 250,000
shares of common stock. Pursuant to this plan, the Company has
issued 170,000 options to an officer/director/shareholder. The
options may be exercised at a purchase price of $1.25 per share.
During the year ended July 31, 1997, the expiration date was
extended from January 31, 1999 to December 31, 2003.
During the year ended July 31, 1997, the terms of the Company's
nonqualified stock option plan were modified to authorize the
Company to issue 3,000,000 options at a price that is above the
market price on the grant date. Pursuant to the plan, at July
31, 1998, the Company had issued 1,518,000 options to its
officers/directors/shareholders and to a consultant. The
options may be exercised at a purchase price from $0.60 to $0.88
per share and expire on December 31, 2003.
During the year ended July 31, 1997, the Company was also
authorized to issue 500,000 options to investors as an
inducement. The options will be issued at a price above the
then current market price and shall be for a period established
at the time they are granted. At July 31, 1998, none of these
options had been issued.
The following table summarizes certain information relative to
stock options:
Weighted Avg.
Option Exercise
Shares Price Price
Balance, July 31, 1995 170,000 $ 1.25 $ 1.25
Balance, July 31, 1996 170,000 $ 1.25 1.25
Granted 1,518,000 $ 0.60 - 0.88 $ 0.60
Balance, July 31, 1997 1,688,000 $ 0.60 - 1.25 $ 0.69
Granted - $ - $ -
Balance, July 31, 1998 1,688,000 $ 0.60 - 1.25 $ 0.69
E-COMMERCE WEST CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1998
NOTE 9 - SHAREHOLDERS' EQUITY (Continued)
Options (Continued)
The weighted-average life of the options outstanding and
exercisable at July 31, 1998 is 53 months. Options available
for future grant at July 31, 1998 were 2,062,000.
The Company has adopted the disclosure-only provisions of SFAS
No. 123, "Accounting for Stock-Based Compensation."
Accordingly, no compensation cost other than that required to be
recognized by APB 25 for the difference between the fair value
of the Company's common stock at the grant date and the exercise
price of the options has been recognized. Had compensation cost
for the Company's stock option plan been determined based on the
fair value at the grant date for awards in 1998 consistent with
the provisions of SFAS No. 123, the Company's net loss and loss
per share would have been increased to the pro forma amounts
indicated below:
For the Years Ended
July 31,
1998 1997
Net loss as reported $ (2,390,502) $ (1,848,419)
Net loss, pro forma $ (2,390,502) $ (2,118,419)
Basic loss per share as reported $ (0.40) $ (0.40)
Basic loss per share, pro forma $ (0.40) $ (0.45)
The fair value of each option grant is estimated on the date of
the grant using the Black-Scholes option-pricing model with the
following weighted-average assumptions used for grants in 1997:
Risk free interest rate 5.9%
Expected life 1.5 years
Expected volatility 65%
Expected dividends $0
NOTE 10 - COMMITMENTS AND CONTINGENCIES
Leases
On November 9, 1995, the Company signed a definitive 25-year
docking and franchise agreement with the city of Wyatt, Missouri
granting the Company the exclusive right to development and
manage a riverboat casino entertainment center on the
Mississippi River. On March 23, 1996, the Company entered into
a three-year lease plus renewal options for land on the
Mississippi River near Wyatt, Missouri. Payments under the
lease will be required only if the Company begins construction
or if the Missouri Gaming Commission selects the Company for
gaming license review. In the event that one of these
conditions is met, the Company will be required to pay lease
payments of $50,000 annually.
E-COMMERCE WEST CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
July 31, 1998
NOTE 10 - COMMITMENTS AND CONTINGENCIES (Continued)
Litigation
The Company is involved in certain legal proceedings and claims
which arise in the normal course of business. Management does
not believe that the outcome of these matters will have a
material adverse effect on the Company's consolidated financial
position or results of operations.
NOTE 11 - RELATED PARTIES
The Company has a note receivable outstanding for $9,000 from an
officer/director/shareholder of the Company as of July 31, 1998
and notes receivable outstanding for $18,000 from two
officers/directors/shareholders of the Company as of July 31,
1997. The notes earn interest at 9% and had initial maturity
dates of April 9, 1997 which were extended to January 9, 1998.
These notes are currently due.
At July 31, 1998 and 1997, an officer/director/shareholder had
advanced funds totaling $0 and $2,900, respectively, to the
Company for its operational overhead and expenses.
Item 9. Changes in and Discussions with Accountants on
Accounting and Financial Disclosure.
Dismissal of Auditors
At a Board of Directors meeting on August 8, 1997 the
Board dismissed Arthur Andersen LLP as the Company's auditors.
A Form 8-K stating that event was filed on August 12, 1997, a
copy of which is included as an exhibit to this report. [See:
Exhibits]
Appointment of Auditors
At a Board of Directors meeting on October 20, 1997 the
Board selected Singer, Lewak, Greenbaum & Goldstein, LLP, a
regional accounting firm based in Los Angeles, California, as
its auditors. A Form 8-K stating this event and that there were
no disagreements with the previous auditors was filed on October
24, 1997 a copy of which is included as an exhibit to this
report. [See: Exhibits]
PART III
Item 10. Directors and Executive Officers
of the Registrant
The names of the directors and executive officers of the
Company and certain information about them is set forth below:
Directors and Executive Officers
The Directors and Executive Officers of the Company, their
positions and ages are as follows:
Name Age Position
Jon F. Elliott 51 President, Chief
Executive
Officer &
Chairman of the
Board
Jon F. Elliott, President & Chief Executive Officer - As
President of the Company Mr. Elliott will oversee all corporate
matters pertaining to the development and operation of the
Company. In addition to having a background in gaming,
television production and broadcasting, Mr. Elliott has 17 years
of management, marketing and franchise skills.
Mr. Elliott's employment history is as follows:
1993 to Present - Founder, President, Chief Executive Officer
and Chairman of the Board, E-Commerce West. President,
Secretary and a Director of the Company's wholly-owned
subsidiaries.
Appointments and Resignations to the Board of Directors
On March 30, 1998 Larry Close, the Company's Vice
President of Gaming, Secretary and a Director and an Officer,
Director and Secretary of the Company's subsidiary companies
resigned from all the aforementioned positions. Mr. Close
stated in his resignation letter to the Company's President and
Chief Executive Officer that his resignation was in order to
pursue other employment opportunities. The parting was on an
amicable basis as the Company acknowledged Mr. Close's
contributions to the Company due to his 25 years of experience
in the gaming industry and wished him the very best in the
future. This move was expected by the Company as Mr. Close had
not received his salary since June, 1997 due to the Company's
application of funds to sustain operations rather than paying
executive salaries, and Mr. Close's move back to Reno from
Deadwood in September, 1997. As of the date of the filing of
this report Mr. Close's seat on the board has not been filled.
[See Exhibits]
Item 11. Executive Compensation
Pursuant to Management Agreements approved and
signed by the Board of Directors, Jon Elliott and Larry Close,
the Company's two senior executive officers were to receive
annual salaries of $140,000 and $115,000 respectively in the
Company's fiscal year August 1, 1997 to July 31, 1998. Larry C.
Close the Company's Vice President of Gaming left the Company at
the end of September, 1997 and thus was to receive a pro rata
portion of his annual salary of $115,000. Officers' salary
expense for the year was $196,667 however, in an effort to
preserve the Company's cash, both Officers drew no cash for the
entire year. $125,833 was paid to one officer in restricted
stock; two $9,000 loans plus 9% annual interest to two officers
were offset against the salaries; and, $2,500 in office
equipment was applied against one officer's salary. At the
close of the fiscal year Jon Elliott was due $24,841 while Larry
Close was owed $23,174. Mr. Elliott is to receive $165,000 per
the terms of his employment contract for the upcoming fiscal
year. As of the date of this filing Mr. Elliott is owed $61,764
in deferred compensation.
At a Board Meeting on May 5, 1998 and specifically to
strengthen the Company's balance sheet by reducing the Company's
outstanding debt to better position the Company to attract
financing, Jon Elliott the Company's President & CEO, agreed to
exchange the money owed to him per his employment agreement for
restricted common shares. Mr. Elliott has not received any
salary nor any remuneration from the Company from June 1, 1997
through July 31, 1998. His salary has been accrued. Through
April 30, 1998 the Company owed Mr. Elliott $125,833.29. On May
5, 1998 the common shares of the Company had a bid price of
$0.08. Due to the fact the shares are restricted shares
pursuant to Rule 144 of the Securities & Exchange Commission,
and primarily due to the volatility and drastic drop in the
price of the Company's common shares; from $0.53 at the end of
the Company's fiscal year on July 31, 1997, to $0.31 at the end
of the current years first fiscal quarter on October 31, 1997,
to $0.13 at the end of the current year's second fiscal quarter
on January 30, 1998 to $0.10 at the end of the current fiscal
quarter on April 30, 1998, the stock issued to Mr. Elliott was
issued at a discount to the then current bid price. Therefore
3,145,832 shares calculated at $0.04 per share were issued to
Mr. Elliott.
Directors will be paid $200 for each meeting and are
reimbursed for their out-of-pocket expenses when attending
meetings on behalf of the Company. Executive Officers will not
be paid any additional consideration for attending Board
Meetings. The Directors have deferred all compensation for
attending Board Meetings to date.
Stock Options
The Company has issued a total of 170,000 options to
purchase Common Stock from its initial stock option plan. These
options are non-qualified stock options. The Company is
authorized to issue up to 250,000 shares of Common Stock from
this initial stock option plan at an exercise price of $1.25 per
option pursuant to resolution of the Board of Directors and by
Amendment of its Certificate of Incorporation and/or Bylaws.
At a July 15, 1997 Board Meeting the Board added options
with an expiration date of December 31, 2003 equating to three
million shares of common stock to its Employee Stock Option
Plan. In addition the expiration date of the existing options
were extended to December 31, 2003. Further, the president was
empowered to issue the options at his discretion and the option
price would be above the then current offer price of the
Company's common shares at the time of the granting of the
options.
The following table sets forth the options issued by the
Company on January 7, 1989:
Number of Shares Weighted Average
Expiration
Name Subject to Option Exercise Price
Dates
Jon F. Elliott 170,000 $1.25 Dec.
31, 2003
These options are exercisable at any time up to December
31, 2003, at $1.25 per share unless an individual leaves his
employment or formal association with the Company for any
reason, in which case, the options expire unless exercised
within 90 days from the date the individual resigns, is
terminated or otherwise ceases to be with the Company
The following table sets forth the options issued by the
Company on July 15, 1997:
Number of Shares Weighted Average Expiration
Name Subject to Option Exercise Price
Dates
Jon F. Elliott 900,000 $0.60 Dec.
31, 2003
The Board of Directors on July 15, 1997 authorized the
establishment of 500,000 options, each to be exchanged on a one
for one common stock basis, to be offered at the discretion of
the President to investors. These options would be priced at
the time granted at a price above the then current price of the
Companys shares. Further, that each option shall be for a
period established by the President at the time they are
granted. The common stock issued pursuant to all of the
aforementioned options are restricted under the Securities and
Exchange Commission Rule 144.
Larry C. Close, the Corporation's former Vice President,
did not exercise the 600,000 options issued to him at $0.60 on
July 15, 1997 within the ninety day period from his departure
from the Company as required by the Plan. Thus the options
expired and were automatically returned into the Company's stock
option plan.
Employment Agreements
The Company's chief executive officer voluntarily
restructured his employment agreement. Jon Elliott, the
Company's President & CEO reduced the relocation fee from
$15,000 down to $5,000, eliminated all bonuses due on the
Company's net profit and reduced his gross revenues bonus
allocation by one percent across the board.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The following table sets forth certain information
regarding the Company's Common Stock as of July 31, 1998, not
giving effect to any stock options or Warrants outstanding as of
such date, owned or recorded beneficially by each person owning
more than 5% of such Common Stock and by all officers and
directors as a group.
COMMON STOCK
Name of Number
Beneficial Owner of Shares % of Total
Outstanding
Jon F. Elliott
P.O. Box 623
Deadwood, SD 4,124,734 47.7
CEO/ President and Director
- -----------------------------------------------------------------
- --------
All Officers & Directors
as a Group 4,124,734 47.7
Item 13. Certain Relationships and Related Transactions
The Company believes that in the past all transactions
with officers, directors and affiliates have been on terms no
less favorable to the Company than would have customarily been
obtained from non-affiliated parties, and that future
transactions, if any, with officers, directors and affiliates
will likewise be subject to such standard and to approval by a
majority of the directors who have no economic interest in the
transaction.
Corporate Activities
Class "A" & Class "B" Warrants
At a Board of Directors meeting on January 19, 1998, the
Board extended the exercise date for the Companys Class "B"
Warrants to July 26, 1998 with all other terms and conditions
remaining in effect.
At a Board of Directors meeting on July 14, 1998 the Board
extended the exercise date for the companys Class "B" Warrants
until January 26, 1999 with all terms and conditions remaining
in effect.
Amendment to Articles of Incorporation
Subject to the Corporation's request on July 20, 1996 the
Company received a Certificate from the Utah Division of
Corporations and Commercial Code dated July 28, 1998 amending
its Articles of Incorporation to change the name of the
Corporation to "E-Commerce West Corp." from "Royal Casino Group
Inc." [See: Exhibits]
Stock Issuances & Retirement of Shares
From its active S-8 registrations, # 33-34786 and #
333-32415, the Company instructed its transfer agent in August,
1997 to issue 6,000 common shares to Ron Island for consulting
services; in November, 1997 to issue 4,217 common shares in the
name of OTR Inc. for outside services performed for the Company;
and, in April, 1998 to issue 5,000 common shares to Dan French
for consulting services related to engineering for the Companys
planned riverboat casino development near Wyatt, Missouri.
Further, the Company instructed its transfer agent to issue the
following in August, 1998: David Addison 26,470 common shares
for legal services performed for the Company; Deb Berg 25,000
common shares as an employee bonus; McGinn, Smith & Co. 50,000
common shares as an investment banking fee; and, Dalton &
Mathias, the Companys outside accounting firm, 44,845 common
shares as a portion of their compensation for consulting
services performed for the company; In October, 1998 to issue
Gaming Venture Corp. 10,938 common shares as the balance of
consulting fees for services performed for the Company;
Mainstream Consultants 17,000 common shares as a consulting fee
for services performed for the Company; and, David Addison 9,097
common shares for legal fees performed for the Company. In
December, 1997 to issue 68,116 common shares to Dalton & Mathais
as a portion of their compensation for consulting services
performed for the company and 7,692 common shares in the name of
Arthur Lovett for his efforts as an outside consultant assisting
the Company with its EDGAR compliance filings. In February, 1998
to issue Deb Berg 58,400 common shares for consulting services
performed for the Company. In April, 1998 to issue David
Addison 23,100 common shares for legal services performed for
the Company. In June, 1998 to issue Dan French 12,890 common
shares for consulting services related to engineering for the
Companys planned riverboat casino development near Wyatt,
Missouri. In July, 1998 to issue Dalton & Mathias 88,740 common
shares as a portion of their compensation for consulting
services performed for the company; WWWServices 20,000 common
shares for Internet consulting services performed for the
Company; Leonard Milstein 5,000 common shares as partial payment
for legal services performed for the Company; and, Deb Berg
25,000 common shares for consulting services performed for the
Company.
The Company's President/CEO, Jon Elliott, has not received
any cash compensation in the 17 months from June, 1997 through
the date of the filing of this report and has continued to
devote his full time to the Company. In lieu of cash salary per
the terms of his Employment Agreement and to preserve the
Company's cash he exchanged the $125,833.29 owed through April
30, 1998 for 3,145,832 restricted common shares which were
issued on May 5, 1998. This transaction strengthened the
Company's balance sheet by reducing its debt.
The Company issued 25,000 restricted common shares to the
Company's corporate counsel, Richard Schneider, as a bonus on
July 31, 1998.
Larry Close, the Company's former Vice President of Gaming
and a director who resigned on March 30, 1998, returned 200,000
common shares which were issued to him in his capacity as an
officer and director of the Company on July 24, 1998. These
shares were retired into the Company's treasury. Mr. Close
still retains 100,000 common shares.
Regulatory Matters
South Dakota Commission on Gaming
To operate a gaming facility in Deadwood, South Dakota
each gaming company together with its officers, directors and 5%
shareholders must be found suitable, after thorough background
checks, to hold a South Dakota Gaming License. The licenses are
renewable each year. Due to the closing of Goldiggers in
January, 1998 and the Company's new corporate direction into
Internet commerce, the Company chose not to renew its gaming
license in July, 1998.
On September 17, 1997 the South Dakota Commission on
Gaming filed a complaint against Royal Casino Group alleging a
violation of the minimum bankroll requirements in Goldiggers.
The complaint stated that Goldiggers had $61,000 cash on hand
when the regulations called for $63,000. In correspondence to
the Commission from the Company's attorney and further in a
meeting between the Company's attorney and the Company's
President with the Executive Secretary, the Director of
Enforcement and the Senior Auditor of the South Dakota
Commission on Gaming, it was pointed out to the Commission that
the agent conducting the audit overlooked certain moneys on hand
which brought the actual total to over $78,000, 25% more than
the required minimum. The Executive Secretary promptly
dismissed the complaint on October 2, 1997.
As is customary with the permanent closing of a casino,
the South Dakota Commission on Gaming conducted an audit of all
Goldiggers gaming records from the date the property was
acquired in June, 1996 through to the date of closing, January
5, 1998. The audit began in January, 1998. The Company was
notified in June, 1998 that the Commission had completed its
audit with the result being a refund to the Company in excess of
$4,000.
The Company adhered to the South Dakota Commission on
Gaming's request and completed and filed on time by March 15,
1998, a complete set of financial information containing
departmentalized gaming revenues for the calendar year ended
December 31, 1997 plus the first five days of January, 1998 on
forms provided by the Commission.
In December, 1997 the South Dakota Commission on Gaming
filed a complaint against the Company stating that the Company
had failed to provide the Commission with a copy of its Form
10-K plus two Form 8-K's within the required 10 day period after
such documents are filed with the Securities & Exchange
Commission. In addition, the complaint alleged that Royal
Casino Group is two months delinquent in the payment of real
estate taxes on the property occupied by Goldiggers. The
Commission was made aware that the real estate taxes that were
the subject of this complaint had been paid. On February 18,
1998 the Company entered into a Stipulation and Assurance of
Voluntary Compliance with the South Dakota Commission on Gaming
concerning these two complaints. The Company stated that they
had provided the Commission with the securities filings and
agreed to a $500 fine with the entire amount suspended on the
condition that the Company have no like or similar violations
for the life of its license. The Stipulation also stated that
because the real estate taxes had been paid, the Commission
dismissed the complaint.
Chip & Token Redemption
Per the rules and regulations of the South Dakota
Commission on Gaming, the Company is compelled to redeem all
outstanding tokens and chips presented by patrons at face value
and to advertise that fact for a continuous four month period.
Therefore, the Company placed newspaper advertisements twice a
week in four area newspapers from January 22, 1998 through May
15, 1998 announcing that persons in possession of Goldiggers
gaming chips and tokens may redeem them for face value through
May 15, 1998. The total amount redeemed for the four month
period was $1,216.
Complaint
On April 13, 1998 the Executive Secretary of the South
Dakota Commission on Gaming ("SDCG") filed a two-count complaint
alleging that on April 13, 1998 there were four small claims
judgments against Royal Casino Group and/or Goldiggers Hotel &
Gaming totaling approximately $7,500 & further on April 13, 1998
there existed an IRS tax lien entered against Royal Casino Group
and/or Goldiggers in the amount of approximately $15,740.
Further, that the Commission had scheduled a hearing on these
matters with the stated purpose to consider a revocation of the
gaming licenses of Royal Casino Group and Goldiggers. The
Company believed this to be very grave action proposed to be
taken by the SDCG with potentially severe repercussions to the
Company. A gaming license in any recognized jurisdiction comes
only after extensive and invasive background and suitability
checks have been performed on the Company, its Officers,
Directors and significant shareholders to the satisfaction of
the appropriate gaming commission. As such a gaming license is
considered a privilege. Royal Casino Group together with its
Officers and Directors had undergone a thorough investigation by
the SDCG prior to receiving its gaming license. On April 20,
1998 and in a subsequent letter re-capping the conversation on
April 21, 1998, the President & CEO of Royal Casino Group and
the President of Atlantic-Pacific Corp., Royal's wholly-owned
subsidiary that owned and operated Goldiggers, informed the
SDCG's Executive Secretary, Larry Eliason, that:
1) on March 24, 1998 the SDCG was informed in writing by the
Company's legal counsel that an IRS lien had been filed and the
reasons for the filing. Further, on March 31, 1998 the SDGC was
notified in writing by the Company's legal counsel that the tax
lien was paid in full. This notification was given to the SDCG
two weeks before the date the complaint was filed.
2) of the judgments listed, only one in the amount of $751.57
had yet to be satisfied and that was due to the fact that the
Company was unable to contact the creditor despite several
attempts via telephone and letters.
3) there were two pending small claims actions totaling over
$6,600 that had been resolved before they became judgments.
4) that the Company's legal counsel had sent the SDCG over 25
separate letters in the two month period from the end of
January, 1998 until the end of March, 1998 keeping the
commission appraised of every small claims action and all other
legal issues concerning the closing of Goldiggers. In fact, the
original letter advised the SDCG that due to the closing of
Goldiggers, the Company expected to be deluged with small claims
actions as creditors move to protect their interests and that
this action is standard in these circumstances.
5) that the Company had been advised by professionals to seek
bankruptcy protection for its subsidiary, but that the Company
had chosen to use its best efforts to seek an orderly
liquidation of Goldiggers' assets to satisfy its creditors.
Further, that the company had been successful to date in its
efforts and that it believed it had staved off bankruptcy.
6) that because there was only one outstanding judgment
totaling the small amount of $751.57 the Executive Secretary,
Larry Eliason, was asked to reconsider the need to have a public
hearing to take the severe measures of revoking the Companies'
gaming licenses.
The Executive Secretary, Larry Eliason, in a letter to the
Company dated April 27, 1998 refused to do away with the hearing
despite being aware of the aforementioned facts. As the
Company's legal counsel was appearing before the SDCG concerning
an unrelated matter and in the SDCG's notice of the hearing the
SDCG had stated that this was to be an adversarial hearing, the
Company's counsel notified the Company that he had a conflict
and would not be able to appear on the Company's behalf at this
hearing. The Company wrote Larry Eliason on April 29, 1998
advising him that the Company's legal counsel, who had
represented the company since early 1996 and in all matters
between the Company and the SDCG, would be unable to represent
the Company at the hearing and since Mr. Eliason would not do
away with the need for the public hearing, the Company requested
a postponement of the hearing to allow the Company to be
represented by its long-standing counsel. The letter went on to
say if Mr. Eliason would not even agree to a postponement, the
retention of a new lawyer would most certainly require a
retainer, using monies the Company had dedicated to the
repayment of Goldiggers' creditors. After he personally
confirmed with the Company's legal counsel that he would be
unable to represent the Company and receiving an explanation of
the conflict, the Executive Secretary, Larry Eliason, wrote the
Company in a letter dated April 28, (sic) 1998 denying the
Company's request for a postponement of the public hearing.
Dismissal of Complaint
The Company was adamant about protecting its rights and
its gaming licenses and was therefore forced by Larry Eliason,
the SDCG's Executive Secretary, to retain a new legal counsel to
defend what was obviously, in the Company's oppinion, malicious
and selective enforcement on Mr. Eliason's part. The Company's
new lawyer required a retainer causing the Company to use funds
that otherwise would have gone to pay creditors. This new
lawyer informed the attorney for the SDCG that if they did not
dismiss the complaints with prejudice, he would embarrass the
SDCG by putting the Executive Secretary, Larry Eliason and the
Director of Enforcement, Stan Triplett on the witness stand and
demanding they testify as to how many gaming licenses have ever
been revoked and if any, how many had ever been revoked for a
small claims judgment. He knew the answer was none. Further, he
advised counsel he would put the Clerk of Courts on the stand
and ask her to research each and every small claims judgment
against every holder of a South Dakota Gaming License dating
back to 1990 and after every one ask Larry Eliason, the
Executive Secretary, why a complaint and a revocation hearing
was never taken against that license holder. It was clear from
the response that never had the SDCG filed a complaint seeking
license revocation against any holder of a gaming license for
having a small claims judgment. The Company asked the member of
the legislature together with the state senator for the area to
attend the Commission hearing on the Companys behalf which they
did. At the public hearing on May 8, 1998 the SDCG voluntarily
dismissed both complaints without a hearing and with prejudice.
Nevada Gaming Commission
In April, 1997 the Company submitted its application to
the Nevada Gaming Commission seeking licensing in connection
with its proposed acquisition of the Triple J Casino in
Henderson, Nevada. The Company provided $85,000 to the Nevada
gaming regulatory bodies to commence the background checks and
suitability into the Company and its Officers and Directors.
The Commission began its background checks in early July, 1997.
In late July, 1997 the Company determined not to proceed with
the acquisition of the Triple J Casino and so notified the
Nevada Gaming Commission seeking permission to withdraw its
application for licensing.
In January, 1998 the Nevada Gaming Control Board advised
the Company that pursuant to its request in July, 1997 to
withdraw its application for licensing in Nevada, its agent
would need to re-visit Royal Casino Group's offices in late
February, 1998 to review all financial reports and documents
generated by Goldiggers. In addition, the agent requested to
review related Royal Casino Group financial information and
correspondence plus corporate documentation relating to the
Company's Nevada subsidiary which had been created solely to
acquire the Triple J Casino. Subsequently, the Company was
informed by an agent of the Nevada Gaming Control Board that the
Company's request to withdraw was scheduled on the agenda of the
Nevada Gaming Control Board's meeting on June 3, 1998 and on the
Nevada Gaming Commission's agenda at its meeting on June 25,
1998. If both agencies granted the Company's request to
withdraw, then the Company would be entitled to a refund of the
unused portion of the $85,000 deposited by the Company with the
Nevada Gaming Control Board at the onset of their investigation
into the Company's application.
On June 3, 1998 the Company appeared with both corporate
counsel and Nevada gaming counsel before the Nevada Gaming
Control Board seeking permission to withdraw the Company's
application for a Nevada gaming license. The Nevada Gaming
Control Board voted unanimously to grant the Company's request
to withdraw their applications without prejudice. Subsequently,
on June 25, 1998 the Nevada Gaming Commission voted to allow the
Company to withdraw its application without prejudice. [See:
Subsequent Events]
South Dakota Department of Revenue
In January, 1998 the State of South Dakota Department of
Revenue began conducting an audit of the sales and use tax paid
by the Company's subsidiary that operated Goldiggers. They
selected three random months for review, two of which occurred
when the subsidiary was owned by Casino Magic. Based upon their
findings they expanded their audit to cover the period from
November, 1994 through December, 1997. The majority of this
time Goldiggers was owned and operated by Casino Magic.
Subsequently, the Company was informed that its subsidiary
company owed approximately $12,000 in unpaid sales tax, use tax
and interest.
The Company did not believe it owed the $12,000 assessed
by the Department of Revenue and began to research and gather
related information that the Company believed would drastically
reduce this amount. The Company was hampered in its efforts to
locate the support documents due to the closing of Goldiggers
and the relocation of the historical files, some of which at the
time were in the possession of the South Dakota Commission on
Gaming for the purpose of conducting their audit. Goldiggers was
owned and operated by Atlantic-Pacific Corp. which was owned by
Casino Magic Corp. from inception in 1991 through to its
acquisition by Royal Casino Group in June, 1996. Per the terms
of the acquisition, Casino Magic indemnified Royal Casino Group
from any prior obligations arising from actions such as an
outstanding sales or use tax obligation should one exist.
After presentation of appropriate documentation verifying
the payment of the majority of the taxes claimed as owed by the
Department of Revenue to the agent assigned the matter, the
South Dakota Department of Revenue reduced the amount it claimed
was owed by Goldiggers for sales and use tax plus interest for
the periods from November, 1994 through to and including
December, 1997 from $12,000 to approximately $5,000. The
Company believed, by continuing to research its records, that it
would be able to considerably reduce the aforementioned amount.
However, the agent resigned from the Department resulting in an
immediate assessment by the Department of $4,936 plus penalties
and interest. The Company sought to have a hearing to present
the additional proof of payment. The Department set a December,
1998 hearing date in Pierre, South Dakota. The Department
simultaneously offered to settle the matter for payment of the
principal amount only. Against the advice of the Companys
counsel, the Company advised the Company's counsel to advise the
Department that it would accept the settlement as the costs for
employees and corporate counsel to travel to Pierre together
with fees incurred would almost equal the settlement amount.
The settlement will be in full and in perpetuity. [See:
Subsequent Events]
Securities & Exchange Commission
In a letter to the Company dated February 27, 1998, the
Securities & Exchange Commission made comments based upon an
examination restricted solely to considerations of the Financial
Statements, Management's Discussion and Analysis and Selected
Financial Data incorporated in the Company's Form 10-K for the
year ended July, 31, 1997 and the Form 10-Q for the quarter
ended October 31, 1997. Commission staff made comments and
requested an amendment and answer within 10 business days from
the date of the letter. Although the company believes that it
can adequately address all the issues raised to the satisfaction
of the Commission, to do so involves time, research and
coordinated input from three of the Company's professionals.
The Company has incorporated all of the Commission's comments in
this Form 10-K.
Internal Revenue Service
A federal tax lien in the amount of $15,740.35 was filed
against the Company with the appropriate South Dakota regulatory
bodies on March 2, 1998 and was paid in full by the Company by
March 30, 1998. In a letter of explanation to the Company, the
revenue officer wrote that she had received information that
Goldiggers was closed and the assets were for sale. Therefore
she stated, she filed the lien to protect the governments
interest. A Certificate of release of Federal Tax Lien was
recorded by the appropriate South Dakota regulatory agencies on
April 15, 1998.
Workmans Compensation Audit
Post-closing of Goldiggers, Atlantic-Pacific Corp.
underwent a workman's compensation audit, which resulted in a
refund to Goldiggers in the amount of $14,043.
Subsequent Events
Option To Purchase Land Adjacent to the Triple J Casino in
Henderson, Nevada.
In anticipation of its planned acquisition of the Triple J
Casino in Henderson, Nevada, the Company obtained an eighteen
month option to purchase for $75,000 7.28 acres of land adjacent
to the 16 acres which comprised the Triple J. The option
allowed the Company to purchase the property for $1.5 million
with the $75,000, which was paid in restricted shares of the
Company's common stock, to be credited toward the purchase
price. Since the Company elected not to proceed with the
acquisition of the Triple J the Company had no further use for
the property and allowed its option to expire on September 30,
1998. The Company has written off the $75,000 down payment.
S-8 Registration
An S-8 registration statement was filed on July 28, 1998.
On August 21, 1998 E-Commerce West received its registration
number from the Securities & Exchange Commission making the
registration statement effective as of that date. The
Registration Number 333-59975 is for employees and consultants
and is for 750,000 common shares with the proposed maximum
offering price of $0.30 per share resulting in a proposed
maximum aggregate offering price of $225,000. A copy of this
registration statement is included as an exhibit with this
report.
Stock Issuances
During the Company's fiscal year from August, 1997 through
July, 1998, Jon Elliott, the company's Chief Executive Officer
and a Director sold a total of 56,000 common shares at an
average price of $0.39 on the open market of which 10,000 were
sold in the last fiscal quarter. All appropriate forms
concerning the aforementioned transactions were filed in a
timely fashion with the Securities & Exchange Commission.
After the end of the Company's fiscal year on July 31,
1998 the following shares were issued:
- - on September 9, 1998 20,000 restricted common shares were
issued to Keith & Kristi Schillinger for their participation in
E-Commerce West's Internet Web site from the treasury.
- - on October 26, 1998 25,000 restricted common shares were
issued as a bonus to Craig Mathias, the Company's outside
accountant from the treasury; 300,000 restricted common shares
were issued to Deb Berg from the treasury for her participation
in a variety of yet-to-be defined Internet Web sites. The
300,000 shares are provided to Ms. Berg with the understanding
that she will return 100,000 shares to the Company for each year
less than three that she provides services to the Company.
Issued to John Lowe for consulting services relative to the
Internet, 1,294 common shares from the Company's active S-8
registration # 33-34786 completing the issuance of the total
number of shares to be issued under the registration, plus 492
common shares from the Company's active S-8 registration #
333-32415.
Common Stock Trading Symbol Change
Reflecting the name change to E-Commerce West the trading
symbol for the common stock was changed from "WINZ" to "ECOM" on
August 7, 1998.
Sale of Slot Machines
The terms of the sale agreement of the slot machines
called for monthly payments commencing 60 days after the date of
the agreement and continuing for an extended period of time. As
the Company was in need of cash, the Company and the purchaser
agreed to an accelerated payment totaling $51,000 to complete
the transaction. The Company included a few separate bill
acceptors and its casino signage in the transaction.
Proposed Wyatt, Missouri Riverboat Casino
Subsequent to the Company notifying the Army Corps of
Engineers that the points proposed by the Missouri Department of
Natural Resources in their comment letter responding to the
Corps's Public Notice were acceptable, the Company's engineer
has been notified by the Corps that they will request the
Missouri Department of Natural Resources to issue a Water
Certification Permit. Once received by the Corps, they will
proceed to issue the Section 404 permit necessary prior to the
commencement of any construction related to the Company's
proposed Riverboat Casino Entertainment Center. However, the
Company can not project a time frame for the issuance of the
permit.
Nevada Gaming Commission
In April, 1997 Royal Casino Group applied to the Nevada
Gaming Commission for a gaming license pursuant to its proposed
acquisition of the Triple J Casino in Henderson, Nevada. In
July, 1997 Royal Casino Group gave the Nevada Gaming Commission
$85,000 to begin their investigation into the background of the
Company and its officers and directors. As previously reported,
Royal Casino Group determined not to proceed with the
acquisition and requested permission from the Nevada Gaming
Commission to withdraw its application later that same month in
July, 1997. As reported earlier in this document both the Nevada
Gaming Control Board and the Nevada Gaming Commission voted to
grant permission to allow Royal Casino Group to withdraw its
application in June, 1998. In October, 1998 the Company
received a refund of $38,000 of the $85,000 deposited with the
Nevada Gaming Commission.
Corporate Loans
Jon Elliott, the Company's President/CEO has not received
any cash compensation per the terms of his Employment Agreement
for the 17 month period from June, 1997 through October, 1998.
He owes the Company a total of $9,000 per loans of $3,000 on
August 5, 1998; $2,000 on August 28, 1998; and, $4,000 on
October 3, 1998. The loans have an interest rate of 5%, simple
interest, calculated annually.
PART IV
Item 14. Financial Statements, Schedules
Exhibits and Reports on Form 8-K
(1) Financial Statements
(a) The Financial Statements required pursuant to this Item
have been filed as part of this report under Part II, Item 8.
All other schedules have been omitted because the
information prescribed therein is not applicable, not required,
or is furnished in the financial statements or notes thereto.
(b) Three reports on Form 8-K were filed during the year ended
July 31, 1998; one on August 12, 1997, one on October 21, 1998
and the other on January 12, 1998. Subsequent to the end of the
fiscal year a Form 8-K was filed on August 11, 1997
(2) Exhibits
Exhibit No. Description Page
No.
1 S-8 Registration Statement dated
July 30, 1997, Registration # 333-32415.
2 Form 8-K which was filed on August 12,
1998 announcing the dismissal of Arthur
Andersen LLP as the Company's auditors;
the Company's request to the Nevada Gaming
Commission seeking permission to withdraw
its application for a gaming license; and,
the entering into a settlement agreement
on the only outstanding corporate litigation.
3 Form 8-K which was filed on October 21, 1998
announcing the engagement of Singer, Lewak
Greenbaum & Goldstein LLP as the Company's
independent accountants.
4 Form 8-K which was filed on January 12, 1998
announcing the closure of Goldiggers Hotel
and Gaming Est.
5 Form 8-K filed on August 3, 1998 announcing
the name change of the Corporation to E-Commerce
West Corp. from Royal Casino Group Inc. including
a Certificate of Amendment to the Companys
Articles of Incorporation attesting to that fact.
6 Copy of Larry C. Closes letter of resignation
as an officer, secretary and director of Royal
Casino Group and all its subsidiaries.
7 S-8 Registration Statement dated July 28, 1998,
Registration # 333-59975.
8 Consent of Singer Lewak Greenbaum & Goldstein
Exhibits other than those listed have been omitted because they
are nonexistent, inapplicable or because the information is
given in the financial statements of the Company.
Signatures
Pursuant to the requirements of Section 13 or 15 (d) of The
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized, this 10th day of November, 1998.
E-COMMERCE WEST INC.
By /s/ Jon F. Elliott___
Jon F. Elliott
President and Chief Executive Officer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS that such person whose signature
appears below constitutes and appoints Jon F. Elliott,
his-attorney-in-fact, with power of substitution, for him in any
and all capacities, to sign this Annual Report on Form 10-K, and
any amendments thereto, each with exhibits thereto, and other
documents in connection therewith, with The Securities and
Exchange Commission, hereby ratifying and confirming all that
said attorney-in-fact, or his substitute may do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities and Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated.
Signature Title
Date
/s/ Jon F. Elliott President, November
, 1998
Jon F. Elliott Chief Executive Officer,
Chairman of the Board
Form 10-K 7/31/98 Exhibit 1
As filed with the Securities and Exchange Commission on July 30,
1997
Registration No. 333-32415
==============================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________
E-COMMERCE WEST INC.
(Exact name of registrant as specified in its charter)
Utah 95-4091368
(State or other jurisdiction of (IRS Employer
Identification No.)
Incorporation or organization)
152 Sherman St.
Deadwood, SD
57732
(Address of principal executive offices) (Zip
Code)
_______________________
Consulting/Compensation Plan
(Full title of plan)
_______________________
Jon F. Elliott
E-Commerce West Inc.
152 Sherman St.
Deadwood SD 57732
(Name and address of agent for service)
______________________________
(605) 578-1299
(Telephone number, including area code, of agent of
service)
______________________________
Copy to:
Roderick H. Powell III, Esq.
684 Higuera Street, Suite C
San Luis Obispo, CA 93401-3511
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Maximum Maximum
Securities To Amount To Offering Price Aggregate
Amount of
Be Registered Be Registered(1) Per share(3) Offering Price(3)
Registration fee
Common Stock
($0.01 par
value per 500,000(2) $0.60 $300,000 $
103.45
share)
(1) Pursuant to Rule 416, the number of shares registered shall
be adjusted to include any additional shares of Common Stock
that may become issuable as a result of stock splits, stock
dividends, or similar transactions in accordance with
anti-dilution provisions of stock options, and anti-dilutions
adjustments to the amount of shares of Common Stock issuable
pursuant to stock options exercised thereafter.
(2) Represents 500,000 to be issued pursuant to the informal
consulting/compensation plan of Registrant and includes
re-offers of such shares.
(3) Estimated solely for the purpose of calculating the
registration fee pursuant to Rule 457 (c) and (h), based upon
the average of the bid and asked price of Common Stock on June
27, 1997.
=================================================================
==
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan information.
Omitted as Permitted.
Item 2. Registrant information and Employee Plan Annual
Information.
Not applicable.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents filed with the Securities and
Exchange Commission (the "Commission") by E-COMMERCE WEST INC.
(the "Company") are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the
fiscal year ended July 31, 1996 filed pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as
amended ("Exchange Act").
(b) All other reports filed by the Company pursuant to
Section 13(a) or 15(d) of the Exchange Act since the end of the
Company's fiscal year ended July 31, 1996.
All reports or other documents subsequently filed by the Company
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold shall be
deemed to be incorporated by reference herein and to be a part
hereof from the respective dates of filing of such reports or
documents.
Although the Company's financial statements for the nine months
ended April 30, 1997 have not been audited by Arthur Andersen
LLP, they have informed the Company that if the current cash
flow and liquidity problems continue to exist at the time of
their audit of the financial statements for the year ended July
31, 1998, their report on those statements will include an
explanatory fourth paragraph because of substantial doubt about
the Company's ability to continue as a going concern.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers.
The Company's Bylaws provide for indemnification (to the
full extent permitted by law) of directors, officers, and other
agents of the Company against expenses, judgments, fines and
amounts paid in settle-ments actually and reasonably incurred in
connection with any proceeding arising by reason of the fact
that such person is or was an officer, director, or agent of the
Company.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits
1. Opinion and consent of Roderick H. Powell III, Esq.
2. Consent of Roderick H. Powell III, Esq.
(included in Exhibit 1)
3. Consent of Arthur Andersen. LLP
4. Power of Attorney (Page 6 of this Registration
Statement)
Item 9. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are
being made, a post effective amendment to this
registration
statement:
(i) to include any prospectus required by
Section
10(a)(3) of the Securities Act of 1933, as amended
(the
"Securities Act");
(ii) to reflect in the prospectus any facts or
events
arising after the effective date of this registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate,
represent a
fundamental change in the information set forth in the
registration statement; and
(iii) to include any material information with
respect
to the plan of distribution not previously disclosed
in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a) (1) (ii)
shall not apply to information required to be included in a
post-effective amendment by those paragraphs which are contained
in periodic reports filed by the registrant pursuant to Section
13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this registration statement.
(2) That, for the purpose of determining any
liability under
the Securities Act, each such port-effective
amendment shall
be deemed to be a new registration statement relating
to the
securities offered therein and the offering of such
securities at that time shall be deemed to be the
initial
bona-fide offering thereof.
(3) To remove from registration by means of a
post-effective
amendment any of the securities being registered
which remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that,
for the purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report
pursuant to Section 13(a) or Section15(d) of the Exchange Act
that is incorporated by reference in this registration statement
shall be deemed to be a new registration statement relating to
the Securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona-fide offering thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
provisions of Item 6 of this registration statement, or
otherwise, the registrant has been advised that in the opinion
of the Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to
believe that it meets all the requirements for filing on Form
S-8 and has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of Deadwood, State of South Dakota, on June 24, 1997
Royal Casino Group Inc.
By: /s/ Jon F. Elliott
Jon F. Elliott, Chairman, President,
Chief
Executive Officer & Chief Financial
Officer
POWER OF ATTORNEY
Each person in so signing also makes, constitutes and appoints
Jon F. Elliott and Roderick H. Powell III and either of them,
with full power of substitution and resubstitution, his true and
lawful attorneys-in-fact, for him in any and all capacities, to
sign any amendments (including post-effective amendments) to
this Registration Statement and to file the same, with exhibits
thereto, and other documents in connection therein, with the
Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Jon F. Elliott Chairman (President/Chief June
27, 1997
Jon F. Elliott Executive Officer/Chief Financial
Officer) and Director
/s/ Larry C. Close Vice President and Director June
27, 1997
Larry C. Close
INDEX TO EXHIBITS
EXHIBIT
PAGE
1 Opinion and Consent of Roderick H. Powell III, Esq. 8
2 Consent of Roderick H. Powell III, Esq.
8
(Included in Exhibit 1)
3 Consent of Arthur Andersen, LLP 9
4 Power of Attorney (page 6 of this Registration 6
Statement)
RODERICK H. POWELL III
Attorney at Law
684 Higuera Street, Suite C
San Luis Obispo, CA 93401-3511
(805) 541-5100 (805) 541-5149 FAX
July 17, 1997
Royal Casino Group Inc.
152 Sherman Street
Deadwood, South Dakota 57732
RE: Registration Statement on Form S-8
Gentlemen:
At your request, we have examined the Registration
Statement on Form S-8, together with exhibits thereto, to be
filed by you relating to the registration of 500,000 shares of
common stock, $0.001 par value per share (the "Common Stock"),
issuable in connection with Royal Casino Group Inc., a Utah
Corporation (the "Company") Consulting/Compensation plan
("Plan"). We are familiar with the proceedings taken, and to be
taken, by the Company in connection with the issuance of shares
of Common Stock under the Plan and authorization of such
issuance thereunder, and have examined such documents and such
questions of law and fact as we deem necessary in order to
express the opinion hereinafter stated.
Based on the foregoing, it is our opinion that the shares
of Common Stock of the Company to be issued pursuant to the Plan
have been duly authorized, and that such Common Stock, when
issued in accordance with the terms of the Plan, will be legally
and validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an
exhibit to the above referenced Registration Statement .
Very truly yours,
/s/ Roderick H. Powell III
RODERICK H. POWELL III
Exhibit 3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to
the incorporation by reference in this Registration Statement on
Form S-8 of our report dated October 25, 1996, included in Royal
Casino Group Inc.'s Form 10-K for the year ended July 31, 1996,
and to all references to our Firm included in this Registration
Statement.
ARTHUR ANDERSEN LLP
Minneapolis, Minnesota
July 15, 1997
FORM 10-K 7/31/98 EXHIBIT 2
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 30,
1997
ROYAL CASINO GROUP INC.
(Exact name of registrant as specified in its charter)
UTAH 0-10315 95-4091368
(State or other (Commission (I.R.S.
Employer
jurisdiction of File Number Identification #)
152 Sherman St., Deadwood, South Dakota 57732
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (605)
578-1299
Total number of sequentially numbered pages: 5
Exhibit index page number: 5
ITEM 4 CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT
(a) Previous independent accountants
(i) On August 8, 1997, Royal Casino Group Inc. dismissed
Arthur Andersen, L.L.P. as its independent accountants.
(ii) The report of Arthur Andersen, L.L.P. on the
financial statements for the past fiscal year ended July 31,
1996 contained no adverse opinion or disclaimer of opinion, and
was not qualified or modified as to uncertainty, audit scope or
accounting principle.
(iii) The Registrants Board of Directors participated in
and approved the decision to change independent accountants.
(iv) In connection with its audit for the period
indicated at (a)(ii) above, there have been no disagreements
with Arthur Andersen, L.L.P. on any matter of accounting
principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements if not resolved
to the satisfaction of Arthur Andersen L.L.P. would have caused
them to make reference thereto in their report on the financial
statements for such year.
(v) During the period there have been no reportable
events [as defined in Regulation S-k Item 304 (a) (1) (v)].
(vi) Arthur Andersen, L.L.P. has furnished the Registrant
with a letter addressed to the SEC stating that it agrees with
the above statements. A copy of this letter is included as an
exhibit to this Form 8-K Report.
(b) New independent accountants
(i) The Registrant has not engaged new independent
accountants as of August 8, 1997.
Item 5 OTHER EVENTS
(i) On August 1, 1997, the Company requested the Nevada
Gaming Commission to allow it to withdraw its application for a
gaming license relating to its proposed acquisition of the
Triple J Casino in Henderson, Nevada. The Company had entered
into an Agreement in Principle to acquire the Triple J in March,
1997 and submitted its gaming application to the Nevada gaming
regulators in April, 1997. The main attractions this property
held for the Company were its nonrestricted gaming license plus
municipal permits to build 550 hotel rooms. The building permit
was due to expire in May, 1998 and the Company determined it
would be unable to raise the approximately $55 million required
to acquire, remodel and develop the property on acceptable terms
and conditions within the time frame prior to the expiration of
the permit. Once the existing permit expired, the Company
believed that it would be very difficult to re-apply for a
permit to develop the hotel. After conferring with agents of
the Nevada Gaming Control Board and receiving their initial
comments with respect to Royal's proposed acquisition, the
Company decided to cease its pursuit of the Triple J.
(ii) The Company entered into a Settlement Agreement on
July 30, 1997 with Stephen Grogan concerning law suits that the
parties had filed against each other. Neither party admitted
wrong doing however, the Company entered into the agreement to
avoid the distraction and costs associated with continuing
litigation. The Company settled the actions for less that its
projected ongoing legal costs. The Company has no other
existing litigation proceedings nor any pending actions.
ITEM 7 FINANCIAL STATEMENTS & EXHIBITS
(c) Exhibits
(1) Letter regarding change in certifying
accountant.
SIGNATURES
Pursuant to the requirements of the securities and exchange act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Royal Casino Group Inc.
By: /s/ Jon F. Elliott
Jon F. Elliott,
President/CEO
Date: August 8, 1997
EXHIBIT 1
Arthur Andersen L.L.P.
45 South Seventh St.
Minneapolis, MN 55402
August 8, 1997
Securities and Exchange Commission
Mail Stop 9-5
450 Fifth Street Northwest
Washington, DC 20549
Ladies and Gentlemen:
We have read and agree with the comments in Item 4 of Form 8-K
of Royal Casino Group Inc. dated August 8, 1997.
Sincerely,
/s/ Arthur Andersen, L.L.P.
Arthur Andersen, L.L.P.
FORM 10-K 7/31/98 EXHIBIT 3
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October
20, 1997
ROYAL CASINO GROUP INC.
(Exact name of registrant as specified in its charter)
UTAH 0-10315 95-4091368
(State or other (Commission (I.R.S.
Employer
jurisdiction of File Number)
Identification #)
incorporation)
152 Sherman St., Deadwood, South Dakota 57732
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (605)
578-1299
Total number of sequentially numbered pages : 4
Exhibit index page number: 3
ITEM 4 CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT
(a) Previous independent accountants
(i) On August 8, 1997 Royal Casino Group Inc. dismissed
Arthur Andersen, L.L.P. as its independent accountants.
(ii) The report of Arthur Andersen, L.L.P. on the
financial statements for the past fiscal year ended July 31,
1996 contained no adverse opinion or disclaimer of opinion, and
were not qualified or modified as to uncertainty, audit scope or
accounting principle.
(iii) The Registrant's Board of Directors participated in
and
approved the decision to change independent accountants.
(iv) In connection with its audit for the period indicated
at (a)(ii) above, there have been no disagreements with Arthur
Andersen, L.L.P. on any matter of accounting principles or
practices,financial statement disclosure, or auditing scope or
procedure, which disagreements if not resolved to the
satisfaction of Arthur Andersen L.L.P. would have caused them to
make reference thereto in their report on the financial
statements for such year.
(v) During the period there have been no reportable
events [as defined in Regulation S-K Item 304(a)(1)(v)].
(vi) Arthur Andersen, L.L.P. has furnished the Registrant
with a letter addressed to the SEC stating that it agrees with
the above statements. A copy of this letter was included as an
exhibit to our Form 8-K Report of August 8, 1997.
(b) New Independent accountants
(i) The Registrant engaged Singer Lewak Greenbaum &
Goldstein
L.L.P. as its new independent accountants as of October
20, 1997.
During the two most recent periods and through October
20, 1997,
the Registrant has not consulted with Singer Lewak
Greenbaum &
Goldstein L.L.P. on items which (1) were or should have
been
subject to SAS50 or (2)concerned the subject matter of a
disagreement or reportable event with the former auditor
[as
described in Regulation S-K Item 304(a)(2)].
ITEM 5 OTHER EVENTS
None
ITEM 7 FINANCIAL STATEMENTS & EXHIBITS
(c) Exhibits
None
SIGNATURES
Pursuant to the requirements of the securities and exchange act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Royal Casino Group Inc.
By: /s/ Jon F. Elliott
Jon F. Elliott, President/CEO
Date: October 21, 1997
FORM 10-K 7/31/98 EXHIBIT 4
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 6,
1998
ROYAL CASINO GROUP INC.
(Exact name of registrant as specified in its charter)
UTAH 0-10315 95-4091368
(State or other (Commission (I.R.S. Employer
jurisdiction of in- File Number) Identification #)
corporation)
152 Sherman St., Deadwood, SD 57732
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(605)578-1299
Total number of sequentially numbered pages : 3
Exhibit index page number: none
ITEM 5. OTHER EVENTS
(i)
In order to curtail losses and preserve shareholder
capital,
the Registrant's wholly-owned subsidiary, Atlantic-Pacific
Corp.,
has discontinued operations at Goldiggers Hotel & Gaming
Establishment located in Deadwood, South Dakota as of
January 6,
1998.
The Company believes the downward trend in the
Deadwood gaming
market which coincided with the Company's arrival into the
market,
will continue and that revenues will continue to erode.
When the Company contemplated the acquisition of
Goldiggers
the operation had annual revenues in excess of $2.3M yet
operated
at a loss. The Company identified several areas where it
believed
savings could be attained thereby generating a profit.
The
Company acquired Goldiggers in June, 1996. Cost
containment
measures implemented by the Company cut operating expenses
$885,000 in the most recently completed fiscal year.
However,
significant losses existed due to the widely reported
severe
climatic conditions that prevailed in the region
throughout last
Winter and Spring resulting in an overall downturn in
Summer
tourism. For the year Goldiggers generated over $300,000
less in
revenues. Continuing downward, Goldiggers' revenues for
the first
fiscal quarter decreased $194,000 year over year yet the
Company
was able to improve direct operating department costs
$302,000
during the same period. Royal Casino Group continued to
provide
cash injections to support the losses and sustain
Goldiggers'
operations. The Company has determined that it has fully
implemented its planned cost reductions and savings
programs and
unfortunately believes the revenues will not return to the
1995 or
1996 levels required for the property to be profitable.
The
Company is the fourth publicly traded gaming company to
exit the
Deadwood market.
As Goldiggers has been a drain on the Company's cash
resources,
the closure of the property requires no further demand on
the
parent Company's funds and therefore should produce
positive long
term results for the Company as it pursues other gaming
opportunities. The Company continues to work on its
planned
riverboat casino entertainment development in Southeast
Missouri.
In addition, the Company continues to devote its energies
towards
two additional gaming opportunities which are in various
stages of
due diligence.
Royal Casino continues to own and operate the Deadwood
Stage, a
13-vehicle transportation system.
SIGNATURES
Pursuant to the requirements of the securities and exchange act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
Royal Casino Group Inc.
By:_ /s/ Jon F. Elliott_____
Jon F. Elliott, President/CEO
Date: January 9, 1998
FORM 10-K 7/31/98 EXHBIIT 5
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 31, 1998
ROYAL CASINO GROUP INC.
(Exact name of registrant as specified in its charter)
UTAH 0-10315 95-4091368
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification #)
incorporation)
152 Sherman St., Deadwood, South Dakota 57732
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (605)
578-1299
Total number of sequentially numbered pages: 4
Exhibit index page number: 4
ITEM 5 OTHER EVENTS
At a Board of Directors meeting on July 20, 1998 the
following events took place:
- the Board by resolution, acting upon a Written Consent
of Shareholders, voted and approved the name change of the
corporation to:
E-Commerce West Corp.
see Exhibit A, page 4, copy of "Certification of Articles
of Amendment Enacting Change of Name" issued by the State of
Utah, Department of Commerce.)
- a change in the primary corporate focus from gaming to
Internet commerce was also approved.
2
SIGNATURES
Pursuant to the requirements of the securities and exchange act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
E-COMMERCE WEST CORP.
formerly, ROYAL CASINO GROUP INC.
By: /s/ Jon F. Elliott
Jon F. Elliott
President/CEO
Date: August 3, 1998
3
EXHIBIT A
CERTIFICATION OF ARTICLES OF AMENDMENT
ENACTING CHANGE OF NAME
THE UTAH DIVISION OF CORPORATIONS AND COMMERCIAL CODE HEREBY
CERTIFIES THAT Articles of Amendment were submitted by
ROYAL CASINO GROUP INC.
FOR APPROVAL AND FILING BY THIS OFFICE ON July 21, 1998, and
that the corporation name is changed thereby to
E-COMMERCE WEST CORP.
AS APPEARS OF RECORD IN THE OFFICES OF THE DIVISION.
File Number: CO 091053
Dated this 28th
day
of July
,1998.
/s/ Lorena P.
Riffo
Lorena P. Riffo
Division Director of
Corporations and
Commercial Code
4
FORM 10-K 7/31/98 EXHIBIT 6
Larry C. Close 1917 Catherine Court
______________________ Gardnerville, NV 89410-6665
(702) 782-8669
March 30, 1998
Mr. Jon Elliott
President and Chief Executive Officer
ROYAL CASINO GROUP INC.
P.O. Box 545
Deadwood, SD 57732-0545
Dear Jon:
As we discussed on the telephone in order for me to pursue other
employment opportunities I respectfully resign my positions of
Vice President of Gaming, Secretary and Director of Royal Casino
Group Inc., and its subsidiaries effective this date.
It would not be in the best interests of the company for me to
retain these positions while actively seeking employment outside
the company. However, I am available to offer any help or
assistance to ensure a smooth transaction from these duties.
I am sending a copy of this letter to notify Commission on
Gaming Executive Secretary Larry B. Eliason as per South Dakota
Rules and Regulations for Limited Gaming, 20:18:06:05
Termination of employment of key or support license. A key or
support licensee who changes employment, is terminated, or
resigns employment must notify the executive secretary in
writing within seven days.
Sincerely,
/s/ Larry C. Close
Larry C. Close
FORM 10-K 7/31/98 EXHIBIT 7
As filed with the Securities and Exchange Commission on July 28,
1998
Registration No. 333-59975__
==============================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
________________
ROYAL CASINO GROUP INC.
(Exact name of registrant as specified in its charter)
Utah
95-4091368
(State or other jurisdiction of (IRS Employer
Identification No)
Incorporation or organization)
152 Sherman St
Deadwood, SD 57732
(Address of principal executive offices) (Zip Code)
_______________________
Consulting/Compensation Plan
(Full title of plan)
_______________________
Jon F. Elliott
Royal Casino Group Inc.
152 Sherman St.
Deadwood SD 57732
(Name and address of agent for service)
______________________________
(605) 578-1299
(Telephone number, including area code, of agent of service)
______________________________
Copy to:
Leonard R. Milstein, Esq.
684 Higuera Street, Suite C
San Luis Obispo, CA 93401-3511
(805) (805) 541-5100
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Maximum Maximum
Securities To Amount To Offering Price Aggregate
Amount of
Be Registered Be Registered(1) Per share(3) Offering
Price(3) Registration fee
Common Stock
($0.001 par value
per share) 750,000(2) $0.30 $225,000
$100.00
(1) Pursuant to Rule 416, the number of shares registered shall
be adjusted to include any additional shares of Common Stock
that may become issuable as a result of stock splits, stock
dividends, or similar transactions in accordance with
anti-dilution provisions of stock options, and anti-dilutions
adjustments to the amount of shares of Common Stock issuable
pursuant to stock options exercised thereafter.
(2) Represents 750,000 to be issued pursuant to the informal
consulting/compensation plan of Registrant and includes
re-offers of such shares.
(3) Estimated solely for the purpose of calculating the
registration fee pursuant to Rule 457 (c) and (h), based upon
the average of the bid and asked price of Common Stock on July
14, 1998.
==============================================================
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan information.
Omitted as Permitted.
Item 2. Registrant information and Employee Plan Annual
Information.
Not applicable.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents filed with the Securities and
Exchange Commission (the "Commission") by ROYAL CASINO GROUP
INC. (the "Company") are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K for the fiscal
year ended July 31, 1997 filed pursuant to Section 13(a)or
15(d)of the Securities Exchange Act of 1934, as amended
("Exchange Act").
(b) All other reports filed by the Company pursuant to Section
13(a) or 15(d) of the Exchange Act since the end of the
Company's fiscal year ended July 31, 1997.
All reports or other documents subsequently filed by the Company
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act prior to the filing of a post-effective amendment which
indicates that all securities offered hereby have been sold or
which deregisters all securities then remaining unsold shall be
deemed to be incorporated by reference herein and to be a part
hereof from the respective dates of filing of such reports or
documents.
Although the Company's financial statements for the nine months
ended April 30, 1997 have not been audited by Singer Lewak
Greenbaum & Goldstein LLP, they have informed the Company that
if the current cash flow and liquidity problems continue to
exist at the time of their audit of the financial statements for
the year ended July 31, 1998, their report on those statements
will include an explanatory fourth paragraph because of
substantial doubt about the Company's ability to continue as a
going concern.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers.
The Company's Bylaws provide for indemnification (to the
full extent permitted by law) of directors, officers, and other
agents of the Company against expenses, judgments, fines and
amounts paid in settlements actually and reasonably incurred in
connection with any proceeding arising by reason of the fact
that such person is or was an officer, director, or agent of the
Company.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits
1. Opinion and consent of Leonard R. Milstein, Esq.
2. Consent of Leonard R. Milstein, Esq.
(included in Exhibit 1)
3. Consent of SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
4. Power of Attorney (Page 6 of this Registration
Statement)
Item 9. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are
being made, a post effective amendment to this
registration
statement:
(i) to include any prospectus required by Section
10(a)(3)
of the Securities Act of 1933, as amended (the
"Securities
Act");
(ii) to reflect in the prospectus any facts or
events
arising after the effective date of this
registration
statement (or the most recent post-effective
amendment
thereof)which, individually or in the aggregate,
represent
a fundamental change in the information set forth
in the
registration statement; and
(iii) to include any material information with
respect
to the plan of distribution not previously
disclosed in
the registration statement or any material change
to such
information in the registration statement;
provided,
however, that paragraphs (a)(1)(i) and (a) (1)
(ii) shall
not apply to information required to be included
in a
post-effective amendment by those paragraphs which
are
contained in periodic reports filed by the
registrant
pursuant to Section 13 or Section 15(d) of the
Exchange
Act that are incorporated by reference in this
registration statement.
(2) That, for the purpose of determining any liability
under
the Securities Act, each such port-effective amendment
shall be deemed to be a new registration statement
relating to the securities offered therein and the
offering of such securities at that time shall be
deemed
to be the initial bona-fide offering thereof.
(3) To remove from registration by means of a
post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
the
purposes of determining any liability under the Securities Act,
each filing of the registrants annual report pursuant to
Section 13(a) or Section15(d) of the Exchange Act that is
incorporated by reference in this registration statement shall
be deemed to be a new registration statement relating to the
Securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona-fide
offering thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers
and controlling persons of the registrant pursuant to the
provisions of Item 6 of this registration statement, or
otherwise, the registrant has been advised that in the opinion
of the Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer
or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, the registrant certifies that it has reasonable grounds to
believe that it meets all the requirements for filing on Form
S-8 and has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of Deadwood, State of South Dakota, on July 14, 1998.
ROYAL CASINO GROUP INC.
By:______/s/ Jon F. Elliott_________
Jon F. Elliott, Chairman,
President/Chief
Executive Officer & Chief Financial
Officer
POWER OF ATTORNEY
Each person in so signing also makes, constitutes and appoints
Jon F. Elliott and Leonard R. Milstein and either of them, with
full power of substitution and resubstitution, his true and
lawful attorneys-in-fact, for him in any and all capacities, to
sign any amendments (including post-effective amendments) to
this Registration Statement and to file the same, with exhibits
thereto, and other documents in connection therein, with the
Securities and Exchange Commission.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
Signature Title
Date
__/s/ Jon F. Elliott Chairman (President/Chief July
14, 1998
Jon F. Elliott Executive Officer/Chief Financial
Officer) and Director
INDEX TO EXHIBITS
EXHIBIT
PAGE
1 Opinion and Consent of Leonard R. Milstein, Esq.
8
2 Consent of Leonard R. Milstein, Esq.
8
(Included in Exhibit 1)
3 Consent of SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
9
4 Power of Attorney (page 6 of this Registration
6
Statement)
LEONARD R. MILSTEIN
Attorney at Law
684 Higuera Street, Suite C
San Luis Obispo, CA 93401-3511
(805) 541-5100 (805) 541-5149 FAX
July 17, 1998
Royal Casino Group Inc.
152 Sherman Street
Deadwood, South Dakota 57732
RE: Registration Statement on Form S-8
Gentlemen:
At your request, we have examined the Registration
Statement on Form S-8, together with exhibits thereto, to be
filed by you relating to the registration of 750,000 shares of
common stock, $0.001 par value per share (the "Common Stock"),
issuable in connection with Royal Casino Group Inc., a Utah
Corporation (the "Company") Consulting/Compensation plan
("Plan"). We are familiar with the proceedings taken, and to be
taken, by the Company in connection with the issuance of shares
of Common Stock under the Plan and authorization of such
issuance thereunder, and have examined such documents and such
questions of law and fact as we deem necessary in order to
express the opinion hereinafter stated.
Based on the foregoing, it is our opinion that the shares
of Common Stock of the Company to be issued pursuant to the Plan
have been duly authorized, and that such Common Stock, when
issued in accordance with the terms of the Plan, will be legally
and validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an
exhibit to the above referenced Registration Statement .
Very truly yours,
/s/ Leonard R. Milstein
LEONARD R. MILSTEIN
Exhibit 3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We have issued our report dated November 1, 1997
accompanying the consolidated financial statements included in
the Annual Report of Royal Casino Group Inc. on Form 10-K for
the year ended July 31, 1997. We hereby consent to the
incorporation by reference of said report in this Registration
Statement of Royal Casino Group, Inc. on Form S-8 effective July
23, 1998.
SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
Los Angeles, CA
July 22, 1998
FORM 10-K 7/31/98 EXHIBIT 8
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated November 8, 1998, accompanying
the consolidated financial statements included in the Annual
Report of E-Commerce West Corp. (formerly known as Royal Casino
Group, Inc.) and subsidiaries on Form 10-K for the year ended
July 31, 1998. We hereby consent to the incorporation by
reference of said report in the three Registration Statements of
E-Commerce West Corp. on Forms S-8 (File no. 33-4786, effective
May 31, 1996; File No. 333-32415, effective August 5, 1997 and
File no. 333-59975, effective July 27, 1998).
SINGER LEWAK GREENBAUM & GOLDSTEIN LLP
Los Angeles, California
November 8, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains interim summary financial information extracted from the
consolidated Balance Sheets and Statement of Operations of E-Commerce West Corp.
for the year ended July 31, 1998, which statements have been compiled by
management.
</LEGEND>
<CIK> 0000352912
<NAME> E-COMMERCE WEST CORP.
<MULTIPLIER> 1
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-START> AUG-01-1997
<PERIOD-END> JUL-31-1998
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<CURRENT-ASSETS> 172,835
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0
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<OTHER-SE> 234,377
<TOTAL-LIABILITY-AND-EQUITY> 205,708
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<OTHER-EXPENSES> 583,668
<LOSS-PROVISION> 93,377
<INTEREST-EXPENSE> 14,421
<INCOME-PRETAX> (691,466)
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<NET-INCOME> (2,390,602)
<EPS-PRIMARY> (.40)
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