<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal quarter ended: Commission file number:
OCTOBER 31, 1997 0-14939
CROWN GROUP, INC.
(Exact name of registrant as specified in its charter)
TEXAS 63-0851141
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
4040 N. MACARTHUR BLVD., SUITE 100, IRVING, TEXAS
(Address of principal executive offices)
75038-6424
(Zip Code)
(972) 717-3423
(Registrant's telephone number, including area code)
CROWN CASINO CORPORATION
(Former name if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding at
Title of Each Class December 15, 1997
------------------- -----------------
Common stock, par value $.01 per share 9,800,285
<PAGE> 2
PART I
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS Crown Group, Inc.
<TABLE>
<CAPTION>
October 31, 1997 April 30,
(Unaudited) 1997
------------ ------------
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 19,128,079 $ 21,117,960
Receivables 764,246 345,780
Loans held for sale 6,204,821
Prepaids and other assets 239,617 37,674
Land held for sale 15,150,000
------------ ------------
Total current assets 26,336,763 36,651,414
------------ ------------
Property and equipment:
Furniture, fixtures and equipment 2,469,700 1,811,581
Less accumulated depreciation (218,703) (226,404)
------------ ------------
2,250,997 1,585,177
------------ ------------
Note receivable from CMN 1,306,000
Investment in CMN and related assets 5,583,011
------------ ------------
$ 35,476,771 $ 38,236,591
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 61,654 $ 41,284
Accrued liabilities 298,704 422,609
Income taxes payable 780,000 335,000
Deferred income taxes 1,325,000
------------ ------------
Total current liabilities 1,140,358 2,123,893
------------ ------------
Deferred income taxes, less current portion 410,000 400,000
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $.01 per share, 1,000,000 shares
authorized; none issued or outstanding
Common stock, par value $.01 per share, 50,000,000 shares authorized
9,826,768 issued and outstanding (10,394,585 at April 30, 1997) 98,268 103,946
Additional paid-in capital 37,076,418 38,496,803
Accumulated deficit (3,248,273) (2,888,051)
------------ ------------
Total stockholders' equity 33,926,413 35,712,698
------------ ------------
$ 35,476,771 $ 38,236,591
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 3
CONSOLIDATED STATEMENTS OF OPERATIONS Crown Group, Inc.
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
October 31,
1997 1996
------------ ------------
<S> <C> <C>
Revenues:
Interest income $ 415,299 $ 353,604
Fees and rentals from CMN 126,334
Other income 14,000 500,000
------------ ------------
555,633 853,604
------------ ------------
Costs and expenses:
General and administrative 1,017,167 928,535
Depreciation and amortization 127,191 46,939
Gaming development 20,269
------------ ------------
1,144,358 995,743
------------ ------------
Other income (expense):
Equity in earnings of CMN 167,806
Interest expense (1,614) (24,656)
Gain (loss) on sale of securities 23,674 (526,370)
------------ ------------
189,866 (551,026)
------------ ------------
Loss before income taxes (398,859) (693,165)
Benefit for income taxes (348,030) (225,000)
------------ ------------
Net loss $ (50,829) $ (468,165)
============ ============
Loss per share $ (.01) $ (.04)
============ ============
Weighted average common and common
equivalent shares outstanding 9,870,063 11,006,604
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
CONSOLIDATED STATEMENTS OF OPERATIONS Crown Group, Inc.
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
October 31,
1997 1996
------------ ------------
<S> <C> <C>
Revenues:
Interest income $ 794,347 $ 954,699
Fees and rentals from CMN 216,301
Other income 39,195 500,000
------------ ------------
1,049,843 1,454,699
------------ ------------
Costs and expenses:
General and administrative 2,127,454 1,530,453
Depreciation and amortization 219,555 91,474
Gaming development 38,825
------------ ------------
2,347,009 1,660,752
------------ ------------
Other income (expense):
Equity in earnings of CMN 407,685
Interest expense (1,614) (49,767)
Gain (loss) on sale of securities 23,674 (526,370)
Gain on sale of SCGC 14,934,543
------------ ------------
429,745 14,358,406
------------ ------------
Income (loss) before income taxes (867,421) 14,152,353
Provision (benefit) for income taxes (507,199) 1,000,000
------------ ------------
Net income (loss) $ (360,222) $ 13,152,353
============ ============
Earnings (loss) per share $ (.04) $ 1.15
============ ============
Weighted average common and common
equivalent shares outstanding 10,055,465 11,475,228
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
CONSOLIDATED STATEMENTS OF CASH FLOWS Crown Group, Inc.
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
October 31,
1997 1996
------------ ------------
<S> <C> <C>
Operating activities:
Net income (loss) $ (360,222) $ 13,152,353
Adjustments to reconcile net income (loss)
to net cash used by operating activities:
Depreciation and amortization 219,555 91,474
Deferred income taxes (1,315,000) (2,700,000)
Equity in earnings of CMN (407,685)
Gain on sale of SCGC (14,934,543)
(Gain) loss on sale of securities (23,674) 526,370
Changes in assets and liabilities:
Receivables (318,466) 103,597
Loans originated or acquired (6,204,821)
Prepaids and other assets (61,057) (223,615)
Accounts payable and accrued liabilities (218,535) (757,477)
Income taxes payable 445,000 3,700,000
------------ ------------
Net cash used by operating activities (8,244,905) (1,041,841)
------------ ------------
Investing activities:
Purchase of assets (755,950) (169,564)
Deferred transaction costs (161,900)
Sale of land 15,250,000
Purchase of securities (339,207) (4,023,118)
Sale of securities 221,995 4,090,615
Issuance of note receivable (100,000)
Collection of notes receivable 404,250 10,000,000
Purchase of CMN and related assets (7,000,001)
------------ ------------
Net cash provided by investing activities 7,681,087 9,736,033
------------ ------------
Financing activities:
Purchase of common stock (1,426,063) (3,080,485)
Payments of capital lease obligations (38,830)
------------ ------------
Net cash used by financing activities (1,426,063) (3,119,315)
------------ ------------
Increase (decrease) in cash and cash equivalents (1,989,881) 5,574,877
Cash and cash equivalents at: Beginning of period 21,117,960 668,853
------------ ------------
End of period $ 19,128,079 $ 6,243,730
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Crown Group, Inc.
FOR THE SIX MONTHS ENDED OCTOBER 31, 1997
(UNAUDITED)
NOTE A - HISTORY AND DESCRIPTION OF BUSINESS
Crown Group, Inc., formerly Crown Casino Corporation, ("Crown" or the "Company")
is a holding company which presently owns 79% of Concorde Acceptance Corporation
("Concorde"), a sub-prime mortgage lender, and 49% of Casino Magic Neuquen S.A.
("CMN"), a casino operator in the Province of Neuquen, Argentina. Crown also
owns 100% of Gaming Entertainment Management Services, Inc. ("GEMS") which owned
an 18.6 acre tract of land in the gaming district of Las Vegas, Nevada. In
September 1997 GEMS sold the Las Vegas land for $15.25 million. The Company is
presently focusing on (i) the acquisition or development of other casino gaming
properties in Argentina, (ii) the development and expansion of Concorde's
mortgage based lending business, and (iii) the potential acquisition or
development of other businesses unrelated to casino gaming or mortgage based
lending.
From June 1993, with the acquisition of 100% of St. Charles Gaming Company, Inc.
("SCGC"), until November 1996, the Company's primary business focus was that of
owning, operating and developing casino gaming properties. SCGC owns and
operates a riverboat gaming casino located in Calcasieu Parish, Louisiana, which
had been in the development stage until opening in July 1995. In June 1995 the
Company sold a 50% interest in SCGC to Louisiana Riverboat Gaming Partnership
("LRGP") and in May 1996 sold its remaining 50% interest in SCGC to Casino
America, Inc. ("Casino America") (see Note D).
In November 1996 the Company decided to cease pursuing gaming opportunities in
the United States and began pursuing business opportunities in fields unrelated
to casino gaming. As a result in June 1997 the Company, along with certain newly
hired management personnel, formed Concorde. Concorde is in the business of
originating, purchasing, servicing and selling sub-prime mortgage loans which
are secured primarily by first or second liens on residential properties. These
loans are expected to be sold in privately negotiated transactions as well as to
institutional investors in the secondary market through securitization programs.
Also in June 1997 the Company acquired a 49% interest in CMN and related assets
from Casino Magic Corp. ("Casino Magic"). CMN operates casinos in the cities of
Neuquen and San Martin de los Andes in the Province of Neuquen, Argentina under
an exclusive concession contract (see Note C).
In October 1997, upon receiving shareholder approval, the Company changed its
name from Crown Casino Corporation to Crown Group, Inc. to more accurately
reflect the diversified nature of the Company's business.
NOTE B - BASIS OF PRESENTATION
General
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the six month period ended October 31, 1997
are not necessarily indicative of the results that may be expected for the year
ended April 30, 1998. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the year ended April 30, 1997.
Loans Held for Sale
Loans held for sale are carried at the lower of aggregate cost or market value.
Market value is determined by current investor yield requirements.
6
<PAGE> 7
Origination Fees and Costs
The Company earns various fees and incurs certain costs in connection with the
origination of loans. Such loan origination fees, net of direct loan costs, are
deferred until such time as the related loan is sold, whereupon such net fees
are recognized as a component in the calculation of the gain on sale of loans.
Investment in CMN
The Company accounts for its 49% interest in CMN using the equity method of
accounting. The Company's investment in CMN is translated into U.S. Dollars from
Argentine Pesos based upon the exchange rate in effect on the balance sheet
date. CMN's net operating results are translated into U.S. Dollars based upon
the average exchange rate during the period.
Amortization of CMN Related Assets
As discussed in Note C the Company acquired interests in certain agreements and
other assets in connection with its purchase of 49% of CMN. The management and
royalty agreements are being amortized over 9 1/2 years which represents the
remaining term of the concession contract. The slot equipment and lease are
being amortized over five years. Accumulated amortization of such agreements and
equipment amounted to $129,425 as of October 31, 1997.
Income Taxes
The provision for income taxes differs from the amount by applying the statutory
federal income tax rate primarily as a result of available foreign tax credits
on the Company's portion of earnings generated by CMN.
Reclassifications
Certain prior year amounts in the accompanying financial statements have been
reclassified to conform to the fiscal 1998 presentation.
NOTE C - ACQUISITION OF 49% OF CMN
On June 2, 1997 the Company acquired 49% of the capital stock of CMN, as well as
interests in certain other assets and contracts related to CMN, from Casino
Magic for a purchase price of $7 million. CMN operates casinos in the cities of
Neuquen and San Martin de los Andes in the Province of Neuquen, Argentina under
an exclusive concession contract that expires in 2007, but can be extended by
CMN for an additional five years under certain circumstances. The interests in
certain other assets and contracts included (i) a demand promissory note in the
amount of $4,226,743 issued by CMN, (ii) a 16.4% interest in a certain
management agreement relating to CMN, and (iii) a 49% interest in (a) slot
machines and a related lease agreement, and (b) a certain royalty agreement
relating to CMN.
Pursuant to the various CMN agreements, the Company receives its respective
share of fees and rental payments due under such agreements.
The Company has allocated the purchase price as follows (in thousands):
<TABLE>
<S> <C>
Purchase price:
Cash $ 7,000
Transaction costs 15
-------
$ 7,015
=======
Purchase price allocation:
Note receivable $ 4,226
Management and royalty agreements 504
Slot equipment and lease 1,290
Stock of CMN 995
-------
$ 7,015
=======
</TABLE>
7
<PAGE> 8
In October 1997, each of the Company and Casino Magic converted approximately
$2.5 million of principal due on certain notes receivable from CMN into shares
of CMN capital stock such that each party retained the same ownership percentage
of CMN as previously held. At October 31, 1997 CMN had assets, liabilities and
stockholders' equity of approximately $12.3 million, $4.5 million, and $7.8
million, respectively. For the six months ended October 31, 1997 CMN's
summarized unaudited results of operations were as follows (in thousands):
<TABLE>
<S> <C>
Revenues $ 8,821
Costs and expenses 7,434
Provision for income taxes 413
-------
Net income $ 974
=======
</TABLE>
The following unaudited condensed pro forma results of operations of the Company
for the six months ended October 31, 1997 and 1996 were prepared as if the
acquisition of 49% of CMN and related assets had occurred on May 1, 1997 and May
1, 1996, respectively (in thousands, except per share amounts). The adjustments
to the historical financial statements principally consist of (i) recognizing
the Company's pro-rata share of CMN earnings and contractual fees, (ii)
recording interest income on the note receivable from CMN, (iii) eliminating
interest income on the $7 million used to acquire 49% of CMN and related assets,
and (iv) amortizing the CMN related agreements and equipment.
<TABLE>
<CAPTION>
Six Months Ended
October 31,
1997 1996
------- -------
<S> <C> <C>
Revenue $ 1,092 $ 1,698
Net income (loss) (280) 13,533
Income (loss) per share $ (.03) $ 1.18
</TABLE>
The unaudited condensed pro forma results of operations are not necessarily
indicative of future results or the results that would have occurred had the
acquisition of 49% of CMN and related assets taken place on the dates indicated.
NOTE D - SALE OF SCGC INTEREST
On May 3, 1996 the Company sold its remaining 50% interest in SCGC to Casino
America for (i) 1,850,000 shares of Casino America common stock, which the
Company valued at $6.50 per share, (ii) the exchange of the $20 million LRGP
Note for LRGP Note A and LRGP Note B, each in the principal amount of $10
million and bearing interest at 11.5% per annum, and (iii) an additional
non-detachable five-year warrant to purchase up to another 416,667 shares of
Casino America common stock at an exercise price of $12 per share. In connection
with this transaction, in May 1996, the Company recorded a gain before income
taxes of approximately $14.9 million.
Other than a guarantee of certain leases, for which the Company has been
indemnified by LRGP, the Company is not liable for any obligations of SCGC.
NOTE E - WAREHOUSE LINE OF CREDIT
In December 1997 the Company entered into a $20 million warehouse line of credit
with a bank. Borrowings under the warehouse line may be used for the origination
or purchase of mortgage loans. The warehouse line matures in December 1998 and
borrowings under such facility bear interest principally at the U.S. Federal
Funds rate plus 2.25%. The warehouse line is secured by certain mortgage loans.
8
<PAGE> 9
NOTE F - STOCK REPURCHASE PROGRAM
In March 1996 the Company's Board of Directors approved a program, as amended,
to repurchase up to 2,000,000 shares of the Company's common stock from time to
time in the open market. At October 31, 1997 the Company had repurchased
1,848,791 shares pursuant to this program. The timing and amount of future share
repurchases, if any, will depend on various factors including market conditions,
available alternative investments and the Company's financial position.
NOTE G - COMMITMENTS AND CONTINGENCIES
The Company has entered into severance agreements with its three executive
officers which provide for payments to the executives in the event of their
termination after a change in control, as defined, of the Company. The
agreements provide, among other things, for a compensation payment equal to 2.99
times the annual compensation paid to the executive, as well as accelerated
vesting of options under the Company's incentive stock option plan, in the event
of such executive's termination in connection with a change in control.
NOTE H - SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flow disclosures are as follows for the six months ended
October 31, 1997 and 1996:
<TABLE>
<CAPTION>
Six Months Ended
October 31,
1997 1996
----------- -----------
<S> <C> <C>
Conversion of a portion of CMN note to equity $ 2,516,493
Stock received for sale of second 50% interest in SCGC $12,025,000
Income taxes paid 300,000
Interest paid 1,614 49,767
</TABLE>
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company's
consolidated financial statements appearing elsewhere in this report.
OVERVIEW
Crown Group, Inc., formerly Crown Casino Corporation, ("Crown" or the "Company")
is a holding company which presently owns 79% of Concorde Acceptance Corporation
("Concorde"), a sub-prime mortgage lender, and 49% of Casino Magic Neuquen S.A.
("CMN"), a casino operator in the Province of Neuquen, Argentina. Crown also
owns 100% of Gaming Entertainment Management Services, Inc. ("GEMS") which owned
an 18.6 acre tract of land in the gaming district of Las Vegas, Nevada. In
September 1997 GEMS sold the Las Vegas land for $15.25 million. The Company is
presently focusing on (i) the acquisition or development of other casino gaming
properties in Argentina, (ii) the development and expansion of Concorde's
mortgage based lending business, and (iii) the potential acquisition or
development of other businesses unrelated to casino gaming or mortgage based
lending.
From June 1993, with the acquisition of 100% of St. Charles Gaming Company, Inc.
("SCGC"), until November 1996, the Company's primary business focus was that of
owning, operating and developing casino gaming properties. SCGC owns and
operates a riverboat gaming casino located in Calcasieu Parish, Louisiana, which
had been in the development stage until opening in July 1995. In June 1995 the
Company sold a 50% interest in SCGC to Louisiana Riverboat Gaming Partnership
("LRGP") and in May 1996 sold its remaining 50% interest in SCGC to Casino
America, Inc.
In November 1996 the Company decided to cease pursuing gaming opportunities in
the United States and began pursuing business opportunities in fields unrelated
to casino gaming. As a result in June 1997 the Company, along with certain newly
hired management personnel, formed Concorde. Concorde is in the business of
originating, purchasing, servicing and selling sub-prime mortgage loans which
are secured primarily by first or second liens on residential properties. These
loans are expected to be sold in privately negotiated transactions as well as to
institutional investors in the secondary market through securitization programs.
Also in June 1997 the Company acquired a 49% interest in CMN and related assets
from Casino Magic Corp. for a purchase price of $7 million. CMN operates casinos
in the cities of Neuquen and San Martin de los Andes in the Province of Neuquen,
Argentina under an exclusive concession contract.
RESULTS OF OPERATIONS
Three months ended October 31, 1997 compared to the three months ended October
31, 1996
Interest income for the three months ended October 31, 1997 increased $61,695
compared to the same period in the prior fiscal year. The increase was
principally the result of an increase in the amount of mortgage loans
outstanding during the current fiscal period and the prepayment of LRGP Note A
in the amount $10 million in August 1996 that had been earning interest at 11.5%
per annum.
General and administrative expenses for the three months ended October 31, 1997
increased $88,632 compared to the same period in the prior fiscal year. The
increase was principally the result of approximately $380,000 of expenses
associated with operating Concorde's mortgage based lending business, partially
offset by decreases in consulting and travel expenses. Depreciation and
amortization for the three months ended October 31, 1997 increased $80,252
compared to the same period in the prior fiscal year. The increase was the
result of amortizing certain CMN related assets and agreements. Gaming
development costs for the three months ended October 31, 1997 decreased $20,269
compared to the same period in the prior fiscal year as a result of the
Company's decision to cease pursuing gaming opportunities in the United States.
Six months ended October 31, 1997 compared to the six months ended October 31,
1996
Interest income for the six months ended October 31, 1997 decreased $160,352
compared to the same period in the prior fiscal year. The decrease was
principally the result of earning 11.5% per annum on the $20 million of notes
due from LRGP during most of the prior fiscal period, as compared to earning
from 5.3% to approximately 17.0% on monies invested in certain money market
funds, residential mortgage notes and certain other notes held during the
current fiscal period. Other income in the prior fiscal period pertains to a fee
earned by the Company in assisting another company complete an acquisition.
General and administrative expenses for the six months ended October 31, 1997
increased $597,001 compared to the same period
10
<PAGE> 11
in the prior fiscal year. The increase was principally the result of (i)
approximately $453,000 of expenses associated with the operation of Concorde's
mortgage based lending business and (ii) approximately $520,000 of costs
associated with defending and settling certain lawsuits, partially offset by
(iii) decreases in compensation, consulting and travel expenses. Depreciation
and amortization for the six months ended October 31, 1997 increased $128,081
compared to the same period in the prior fiscal year. The increase was the
result of amortizing certain CMN related assets and agreements. Gaming
development costs for the six months ended October 31, 1997 decreased $38,825
compared to the same period in the prior fiscal year as a result of the
Company's decision to cease pursuing gaming opportunities in the United States.
LIQUIDITY AND CAPITAL RESOURCES
As of December 8, 1997 the Company's sources of liquidity included (i)
approximately $15 million cash on hand, (ii) approximately $11 million of
mortgage and other notes receivable, (iii) a $20 million warehouse line of
credit with a bank, and (iv) the issuance of debt and/or equity.
While the Company is focusing on (i) the acquisition or development of other
casino gaming properties in Argentina, (ii) the development and expansion of
Concorde's mortgage based lending business, and (iii) the potential acquisition
or development of other businesses unrelated to casino gaming or mortgage based
lending, the Company has made no definitive plans for the utilization of the
Company's capital resources. Presently management believes that the Company's
capital resources are sufficient to satisfy its identified capital needs for the
next twelve months.
In March 1996 the Company's Board of Directors approved a program, as amended,
to repurchase up to 2,000,000 shares of the Company's common stock from time to
time in the open market. As of October 31, 1997 the Company had repurchased
1,848,791 shares pursuant to this program. The timing and amount of future share
repurchases, if any, will depend on various factors including market conditions,
available alternative investments and the Company's financial position.
FORWARD-LOOKING INFORMATION
The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for certain forward-looking statements. Certain information included in this
Quarterly Report on Form 10-Q contains, and other materials filed or to be filed
by the Company with the Securities and Exchange Commission (as well as
information included in oral statements or other written statements made or to
be made by the Company or its management) contain or will contain
forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933,
as amended. Such forward-looking statements address, among other things, the
Company's current focus on (i) the acquisition or development of other casino
gaming properties in Argentina, (ii) the development and expansion of Concorde's
mortgage based lending business, and (iii) the potential acquisition or
development of other businesses unrelated to casino gaming or mortgage based
lending. Such forward-looking statements are based upon management's current
plans or expectations and are subject to a number of uncertainties and risks
that could significantly affect current plans, anticipated actions and the
Company's future financial condition and results. As a consequence, actual
results may differ materially from those expressed in any forward-looking
statements made by or on behalf of the Company as a result of various factors.
Uncertainties and risks related to such forward-looking statements include, but
are not limited to, the risk that the Company may not (i) acquire or develop
other casino gaming properties in Argentina, (ii) expand Concorde's mortgage
based lending business, or (iii) acquire or develop other businesses unrelated
to casino gaming or mortgage based lending, or if so acquired or developed,
operate such businesses profitably. Any forward-looking statements are made
pursuant to the Private Securities Litigation Reform Act of 1995 and, as such,
speak only as of the date made.
11
<PAGE> 12
PART II
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Crown Group, Inc.
The Company's 1997 annual meeting of shareholders was held on October 1, 1997.
The record date for such meeting was August 15, 1997 on which date there were a
total of 9,935,785 shares of common stock outstanding and entitled to vote. At
such meeting the following proposals were approved by the Company's
shareholders:
1. Election of Directors.
<TABLE>
<CAPTION>
Votes Votes Votes
For Against Abstained
---------- -------- ----------
<S> <C> <C> <C>
Edward R. McMurphy 9,073,576 104,734 50,342
T.J. Falgout, III 9,072,276 103,234 50,342
David J. Douglas 9,075,276 103,034 50,342
J. David Simmons 9,075,476 102,834 50,342
Gerald L. Adams 9,075,276 103,034 50,342
Robert J. Kehl 9,072,276 106,034 50,342
Gerard M. Jacobs 8,895,223 283,087 50,342
</TABLE>
2. Proposal to change the name of the Company from Crown Casino
Corporation to Crown Group, Inc.
<TABLE>
<S> <C>
Votes for 9,177,150
Votes against 37,567
Votes abstained 13,935
</TABLE>
3. Proposal to adopt the Company's 1997 Stock Option Plan.
<TABLE>
<S> <C>
Votes for 4,843,676
Votes against 665,414
Votes abstained 112,668
Broker non-votes 3,606,894
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
27 Financial data schedule (1).
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed in the second fiscal
quarter of the current year.
- -----------------------
(1) Filed herewith.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CROWN GROUP, INC.
By: \s\ Mark D. Slusser
------------------------------------
Mark D. Slusser
Chief Financial Officer, Vice
President Finance and Secretary
(Principal Financial and Accounting
Officer)
Dated: December 15, 1997
13
<PAGE> 14
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-1998
<PERIOD-END> OCT-31-1997
<CASH> 19,128,079
<SECURITIES> 140,886
<RECEIVABLES> 8,275,067
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 26,336,763
<PP&E> 2,469,700
<DEPRECIATION> (218,703)
<TOTAL-ASSETS> 35,476,771
<CURRENT-LIABILITIES> 1,140,358
<BONDS> 0
0
0
<COMMON> 98,268
<OTHER-SE> 33,828,145
<TOTAL-LIABILITY-AND-EQUITY> 35,476,771
<SALES> 0
<TOTAL-REVENUES> 1,049,843
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,347,009
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,614
<INCOME-PRETAX> (867,421)
<INCOME-TAX> (507,199)
<INCOME-CONTINUING> (360,222)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (360,222)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
