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As filed with the Securities and Exchange Commission on June 1, 1998
Registration No. ______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE
SECURITIES ACT OF 1933
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
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(Exact name of registrant as specified in its charter)
COLORADO
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(State or other jurisdiction of incorporation or organization)
84-1158484
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(I.R.S. Employer Identification No.)
17301 WEST COLFAX AVENUE, SUITE 170, GOLDEN, COLORADO 80401
TELEPHONE: (303) 216-0908
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(Name, address, including zip code, and telephone number,
including area code of agent for service)
Approximate date of commencement of proposed sale to the public: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [x]
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==========================================================================================================================
Proposed Maximum Proposed Maximum Amount of
Title of Each Class of Securities Amount to be Offering Price Aggregate Offering Registration
to be Registered Registered Per Unit Price Fee
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<S> <C> <C> <C> <C>
Common Stock(1) 105,958 $10.50(3) $1,112,559 $328
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Common Stock(2) 85,000 5.63(4) 478,550 141
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Totals 190,958(5) $1,591,109 $469
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</TABLE>
(1) Represents shares acquired upon exercise of Representatives' Warrants
which were issued in connection with the Registrant's initial public
offering on May 13, 1993 (Registration Statement No. 33-57342). The
Representatives' Warrants were exercised on May 12, 1998.
(2) Represents shares underlying options granted pursuant to the
Registrant's 1996 Incentive Stock Option Plan. The options were
granted on November 12, 1996.
(3) Based on the last sales price of the Registrant's Common Stock on the
Nasdaq National Market System on May 29, 1998 per Rule 457(c).
(4) Based on the exercise price of the options per Rule 457(h)(1).
(5) Any additional shares of Common Stock to be issued as a result of
stock dividends, stock splits, or similar transactions shall be
covered by this Registration Statement per Rule 416.
___________________________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 3
190,958 Shares of Common Stock
BLACK HAWK GAMING & DEVELOPMENT COMPANY, INC.
This Prospectus relates to the possible sale of up to 105,958 shares
of the Common Stock of Black Hawk Gaming & Development Company, Inc. (the
"Company") by a firm which acted as a co-representative in connection with the
Company's May 13, 1993 initial public offering and certain assignees of the
co-representatives ("Selling Shareholders"). In May, 1998, the Selling
Shareholders exercised warrants issued by the Company to the co-representatives
in connection with the 1993 offering and acquired the underlying shares. The
Company will receive no proceeds from sales of these shares. See "Selling
Shareholders."
This Prospectus may also be used by certain persons ("Optionholders")
who hold options issued by the Company on November 12, 1996 under its 1996
Incentive Stock Option Plan. There are 85,000 shares of Common Stock
underlying these options which may be acquired at an exercise price of $5.63
per share. See "Optionholders."
The Company's Common Stock is quoted on the NASD's National Market
System under the symbol BHWK.
_________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
_________________
THE COLORADO GAMING COMMISSION HAS NOT PASSED ON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS OR INVESTMENT MERIT OF THE SECURITIES DESCRIBED HEREIN. ANY
REPRESENTATION TO THE CONTRARY IS UNLAWFUL.
_________________
SEE "RISK FACTORS" ON PAGE 5 HEREOF FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON
STOCK.
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<TABLE>
<CAPTION>
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Underwriting Proceeds to Selling
Discounts/ Proceeds to Shareholder and
Price to Public Commissions Company Optionholders
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<S> <C> <C> <C>
(1) (2) (3) (1)(2)
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</TABLE>
(1) The Common Stock may be sold from time to time pursuant to this
Prospectus by the Selling Shareholders in the open market, to
broker/dealers or otherwise at negotiated prices. The Optionholders
may sell in similar fashion after having exercised their options to
acquire Common Stock from the Company. See "Plan of Distribution."
(2) Any discounts or commission on shares of Common Stock sold hereunder
by Selling Shareholders or Optionholders will be negotiated and paid
by them.
(3) The Company will receive no proceeds from the sale of shares of Common
Stock by either Selling Shareholders or Optionholders. The Company
will receive $5.63 per share upon the exercise of options held by
Optionholders.
The date of this Prospectus is June ___, 1998
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are hereby incorporated by reference into this
Prospectus.
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
2. The Company's Current Report on Form 8-K filed with the
Securities and Exchange Commission ("Commission") on January
6, 1998.
3. The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998.
4. The Company's Current Report on Form 8-K filed with the
Commission on April 28, 1998.
5. The Company's Current Report on Form 8-K filed with the
Commission on June 1, 1998.
6. The Company's definitive Proxy Statement filed with the
Commission on May 14, 1998 and dated June 4, 1998 for use at
its Annual Meeting of Shareholders on July 2, 1998.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934 subsequent to the date of
this Prospectus and prior to the termination of the offering shall be deemed to
be incorporated by reference into this Prospectus and to be a part hereof from
the date of the filing of such documents. Any statement contained in a
document incorporated or deemed to be incorporated herein by reference shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement.
The Company will provide, without charge, to each person to whom a
copy of this Prospectus is delivered, on the written or oral request of such
person, a copy of any or all of the documents referred to above which have been
or may be incorporated by reference in this Prospectus, other than certain
exhibits to such documents. Requests for such copies should be directed to Mr.
Stanley Politano, Vice President-Shareholder Relations, 17301 West Colfax
Avenue, Suite 170, Golden, Colorado 80401.
ADDITIONAL INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and in accordance therewith files
reports, proxy statements and other information with the Commission. Such
reports, proxy statements and other information may be inspected and copied at
prescribed rates, at the public reference facilities of the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549, Room 1024, and at
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the Commission's New York Regional Office at 75 Park Place, New York, New York
10007 and at the Commission's Chicago Regional Office at Northwest Atrium
Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
material also can be obtained at prescribed rates by writing to the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. Such reports, proxy statements and other information concerning the
Company are also available for inspection at the offices of the Nasdaq National
Market, Reports Section, 1735 K Street, N.W., Washington, D.C. 20006. The
Commission maintains a Web site, located at http://www.sec.gov, that contains
reports, proxy and information statements and other information regarding
registrants, including the Company that file electronically with the
Commission.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed information and financial statements appearing elsewhere in this
Prospectus and in the information incorporated herein by reference.
Prospective purchasers should carefully read the entire Prospectus and should
consider, among other things, the matters set forth under "RISK FACTORS" on
page 5 hereof.
THE COMPANY
GENERAL.
The Company is an owner, developer and operator of gaming properties
in Black Hawk, Colorado. The Company currently owns the Gilpin Hotel Casino,
which it developed and has operated since its inception in 1992. In December
1997, the Company entered into an agreement to acquire a 50% interest in the
Gilpin Hotel Casino that it did not already own. The acquisition was
completed on April 24, 1998. Along with its strategic partner, Jacobs
Entertainment Ltd., the Company developed The Lodge Casino at Black Hawk ("The
Lodge Casino"), a $72 million hotel/casino/parking project which is expected to
open in mid-June, 1998. The Gilpin Hotel Casino and The Lodge Casino are
collectively referred to as the "Casinos."
The Gilpin Hotel Casino was the Company's first casino project. The
37,000 square foot facility is located in the heart of the Black Hawk gaming
district. Originally built in the 1860s, the Gilpin Hotel is one of the oldest
in Colorado, however, no hotel or lodging facilities are offered by the casino.
Construction of the casino property began in February 1992 and was completed in
September 1992. The Gilpin Hotel Casino commenced operations in October 1992,
and was expanded through the acquisition of an adjacent casino in late 1994.
It now offers customers approximately 480 slot machines, 17 table games, two
restaurants and four bars. The Gilpin Hotel Casino also provides simulcast
off-track betting on dog and horse races conducted at various tracks in the
United States.
The Lodge Casino is also located in the heart of the Black Hawk gaming
district. The Company believes that The Lodge Casino is one of Colorado's
largest casinos and Black Hawk's premier gaming facility. The 250,000 square
foot project has approximately 50,000 square feet of casino space, 50 hotel
rooms, three restaurants, four bars and an approximate 700-car parking garage.
The Lodge Casino was developed jointly by the Company and Jacobs Entertainment
Ltd., a Cleveland, Ohio-based entity with which the Company has established a
strategic partnership. The Company and affiliates of Jacobs Entertainment
established a jointly owned entity to develop, own and operate The Lodge
Casino. The Company owns 75% of this entity and the Jacobs' affiliates own the
remaining 25%.
Casino gaming in Colorado is restricted to the three towns of Black
Hawk, Central City and Cripple Creek and two Native American gaming facilities
located in the southwest corner of the state. The Black Hawk market, which
includes both Black Hawk and Central City, primarily attracts drive-in or "day
trip" customers from such key population centers as Denver,
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Boulder, Fort Collins and Golden, Colorado and Cheyenne, Wyoming. These
population centers are located within a 100- mile radius of Black Hawk. The
population within this 100-mile radius has experienced steady growth from
approximately 2.8 million in 1990 to 3.2 million in 1996. Gaming revenues
generated in the Black Hawk market have increased from $128 million in 1992,
the first full year of gaming operations, to $234 million in 1997.
According to the Colorado Gaming Commission, the Colorado gaming
industry's adjusted gross proceeds have grown from approximately $23 million in
1991 to $431 million in 1997. The Company believes that the Colorado market
continues to offer significant growth opportunities for newer and larger gaming
establishments with amenities such as hotel facilities as offered by The Lodge
Casino. At present, Black Hawk has no other significant lodging facilities.
The Company's strategy focuses on increasing revenues and earnings through
continued development efforts that offer the opportunity to increase its market
share and enhance its operational efficiencies. The Company's purchase of its
joint venture partner's 50% ownership interest in the Gilpin Hotel Casino and
the development of The Lodge Casino are key components of this strategy. The
Company believes that The Lodge Casino offers an important opportunity to
increase its share of the Black Hawk gaming market and generate increased
revenue and earnings growth. The acquisition of the other 50% interest in the
Gilpin Hotel Casino will increase the Company's ability to conduct joint
marketing activities with The Lodge Casino, and management believes that the
acquisition also will permit the Company to achieve economies of scale in a
number of important operational areas.
THE COMPANY'S SECURITIES.
<TABLE>
<S> <C>
Common Stock presently outstanding . . . . . . . . . . . . . 4,053,454
Common Stock to be outstanding if all
options exercise(1) . . . . . . . . . . . . . . . . . . . 4,696,954
Nasdaq National Market System Symbol . . . . . . . . . . . . BHWK
</TABLE>
_______________
(1) The Company has 236,850 options to purchase Common Stock outstanding
under its 1994 Employees' Incentive Stock Option Plan and 406,650
options to purchase Common Stock outstanding under its 1996 Incentive
Stock Option Plan, which latter plan includes options on 85,000 shares
of Common Stock being registered hereunder.
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RISK FACTORS
The following describes various risks associated with an investment in
the securities of the Company. Prospective purchasers should carefully
consider among other factors, the following risks:
GENERAL AND INDUSTRY RISKS
NATURE OF THE GAMING INDUSTRY; DEPENDENCE ON SUCCESSFUL GAMING
OPERATIONS. Unfavorable changes in general and local economic conditions may
adversely affect investments in gaming-related enterprises, like other
investments. The success of the Company will depend largely on the success of
gaming operations conducted and to be conducted at the Casinos, particularly
The Lodge Casino. Some of the conditions and other factors beyond the
Company's control that could have a material adverse effect on the Company
include (i) competition from other casinos and non-gaming recreational,
entertainment and resort facilities; (ii) changes in regional and local
population and disposable income composition; (iii) unanticipated increases in
operating costs; (iv) changes in federal, state and local laws, rules and
regulations; (v) seasonality and weather patterns; (vi) changes in the
frequency and type of local tourist, athletic or cultural events; and (vii)
changes in travel patterns or preferences which may be affected by increases in
gasoline prices, changes in airline schedules and fares, strikes, and/or
relocation or reconstruction of highways, among other factors. The industry in
which the Company operates has been undergoing significant changes in
operations, amenities and technological advances. Given the rapid developments
and changes in the industry, it is impossible to accurately predict future
patterns or changes in the gaming industry or their effect on the Company.
NEW INDUSTRY. The Colorado limited stakes gaming industry is six
years old. As a result, there is only a relatively limited period of historic
results against which to evaluate the likelihood of the continued success of
the Company's gaming operations in the state. Results to date may reflect the
novelty of limited stakes gaming. Consequently, the Company's casino
operations in Colorado are subject to the numerous risks inherent in a business
operating in a new industry. These include fluctuations in levels of customer
demand, increasing competition from other entertainment alternatives, potential
changes in the bases of competition associated with the maturation of the
market, and costs associated with increasing regulatory oversight. There can
be no assurance that the initial success of limited stakes gaming in Colorado
will not decrease as the novelty wears off. There is intense competition in
the limited stakes gaming industry and in the Black Hawk/Central City gaming
district in particular, where the Company competes with approximately 31 gaming
establishments. Historically, Black Hawk has enjoyed an advantage over Central
City because customers have to drive by and, in part, through Black Hawk to
reach Central City. Central City has proposed the development of a road
directly connecting Central City and Black Hawk with Interstate 70 which could
result in the elimination of this particular advantage, since customers would
be able to reach Central City without driving by or through Black Hawk.
COMPETITION. The Company competes with many established companies,
some of which have greater financial resources, experience and expertise than
the Company. Various published reports detailing additional gaming projects
have been announced for Black Hawk.
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These projects include: the Riviera Casino, the Isle of Capri Casino (Casino
America), the St. Moritz Hotel & Casino (Hyatt Hotels), Country World Casino
and an expansion of Jazz Alley Casino. The majority of the new Black Hawk
projects are along the southern end of Black Hawk at the first major
intersection off of State Highway 119, providing these projects with the
initial opportunity to capture visitors to Black Hawk and Central City from the
Denver metropolitan area. While it is difficult to assess the development
state of each of the announced projects and the likelihood of whether any or
all will eventually be built and at what size, it is reasonably likely that at
least some of the new competition may be completed and open to the public
during 1998. Therefore, should several of the competitive projects open, the
increased competition may adversely affect the Company's operations in Black
Hawk and, accordingly, may have a material adverse effect on the Company's
consolidated results of operations and financial position. Recently, Ladbroke
Group PLC, a large international company, purchased two Bullwhackers Casinos
and Bronco Billy's Casino. Other large, well financed companies may enter the
Black Hawk and other Colorado markets through the purchase and/or expansion of
existing facilities in the future. Because of the intense nature of this
competition, there can be no assurance that the Company's current operations
will remain profitable or that the Casinos will operate profitably.
POSSIBLE ADVERSE EFFECTS OF EXPANSION OF GAMING. Several lobbying
groups placed initiatives for additional Colorado limited stakes gaming venues,
including Denver, on the November 1992 statewide ballot. Each of these
initiatives was defeated by a wide margin, including a November 1996 initiative
to expand limited stakes gaming to the city of Trinidad, approximately 185
miles south of Denver. Similar initiatives, legislation or regulation could be
introduced in the future. The enactment of any initiatives, legislation, or
regulations legalizing gaming elsewhere in Colorado could, and if such
legalized gaming was closer to Denver would, have a material adverse effect on
the Company's consolidated results of operations and financial position.
Legislation was introduced but not passed in the last session, which if passed
in the future could create additional competition for Black Hawk, Central City
and Cripple Creek. It was proposed that video lottery terminals be allowed at
Colorado's six dog and horse racing tracks. Each facility could initially have
up to 500 devices and more with regulatory approvals. Moreover, there would be
no maximum wagering amount as contrasted with the $5 limit which restricts
Colorado's mountain casinos. In addition, bingo parlors in Colorado are
introducing electronic "pull-tab" games which have many of the characteristics
of typical gaming devices. The regulation of these games at present is
somewhat uncertain, but if they proliferate, they could pose a competitive
threat to limited stakes gaming. Any additional legalization of gaming in
areas close to or within the Denver market could have a material adverse affect
on the Company's operations.
RECENT GAMING FAILURES. A number of casinos located in Colorado have
ceased operations since limited stakes gaming was commenced in October 1991,
and others have filed for protection under Chapter 11 of the United States
Bankruptcy Code. In addition, others have closed temporarily or reduced
staffing, and many casinos are not operating profitably.
SIGNIFICANT GAMING REGULATION. The Colorado Gaming Commission
("Gaming Commission") has adopted certain rules and regulations governing the
operation of limited gaming establishments in Colorado and certain rules and
regulations governing stock ownership of and reporting by public companies
engaged in Colorado gaming activities. The
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Gaming Commission's rules and regulations are extensive and any violations
thereof could subject the Company's proposed operations to monetary penalties
and/or other materially adverse consequences. The Company and its key
personnel are required to hold various gaming licenses; their failure to obtain
or retain a license could have a material adverse effect on the Company.
Generally, the Gaming Commission has broad discretion in granting, renewing and
revoking licenses. Gaming licenses and related approvals are deemed to be
privileges under Colorado law, and no assurance can be given that any new
licenses, permits, or approvals that may be required in the future will be
given or that existing ones will be renewed or will not be revoked. Regulatory
changes or increases in applicable taxes or fees in Colorado could have a
material adverse effect on the Company.
SIGNIFICANT TAXATION. Gaming operators in Colorado are subject to
state and local taxes and fees in addition to ordinary federal and state income
taxes. Black Hawk has imposed an annual license fee, currently $750, for each
gaming device installed in a casino. Colorado currently levies an annual
device fee of $75 for each gaming device installed in a casino. In addition,
the Gaming Commission has adopted an annual gross gaming revenue tax (gross
gaming revenue being generally defined as the total amount wagered less the
total amount paid out in prizes) of 2% of the gross gaming revenue up to and
including $2 million, 4% of the gross gaming revenue above $2 million up to and
including $4 million, 14% of gross gaming revenue above $4 million up to and
including $5 million, 18% of gross gaming revenue above $5 million up to and
including $10 million, and 20% of gross gaming revenue in excess of $10
million. Under the Colorado Constitution, the Gaming Commission could increase
the top rate to as much as 40%. Pursuant to a more recent tax limitation
amendment to the Colorado Constitution, however, neither the state nor any
local government may increase a tax rate without an affirmative vote of the
people; therefore, there is some question as to whether the Gaming Commission
could constitutionally increase the state tax levied on gross gaming revenues
without such a vote. In addition, the gaming industry in the United States
faces the possibility of a national gaming tax as Congress and the executive
branch may look for sources to reduce tax burdens on some taxpayers, as well as
new sources of revenue to fund policies and programs. Efforts to impose a
federal tax on gaming were defeated in the 104th Congress, but a new effort to
impose a so-called "sin tax" on gaming could be launched.
LIQUOR REGULATION. The sale of alcoholic beverages is subject to
licensing, control and regulation by certain Colorado state and local agencies
(the "Liquor Agencies"). Subject to certain exceptions, all persons who
directly or indirectly own 5% or more of the Company or its casino must file
applications with and are subject to investigation by the Liquor Agencies. The
Liquor Agencies also may investigate persons who, directly or indirectly, loan
money to liquor licensees. All liquor licenses are renewable, are revocable
and are not transferable. The Liquor Agencies have broad powers to limit,
condition, suspend or revoke any liquor license. Any such disciplinary action
could, and any failure to renew or other revocation of any of its liquor
licenses would, have a material adverse effect upon the operations of the
Company and its casinos. Under Colorado law, it is a criminal violation for
any person or entity to own a direct or indirect interest in more than one type
of alcoholic beverage license or more than three gaming tavern liquor licenses.
The Company's casinos have or will have gaming tavern liquor licenses.
Accordingly, the Company's expansion opportunities in Colorado are limited by
such licensing restriction.
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ENVIRONMENTAL CONSIDERATIONS. The Company operates and is developing
real property in an area that was once active in the mining industry. Much of
Clear Creek and Gilpin Counties, Colorado has been identified as federal
superfund study areas by the Environmental Protection Agency. A superfund
study area is generally adjacent to or impacted by discharge from a designated
superfund site. At present, there are no federal regulations for dealing with
development within a superfund study area. Under federal statutes, any
liability required for cleanup of a contaminated site will rest primarily with
the current owner. Moreover, it is possible that expense for cleanup of a
contaminated site will rest primarily with the current owner. It is possible
that remediation activity for cleanup, if required, may be greater than is
technologically and/or economically feasible. The Company, through independent
environmental consultants, has conducted a Phase I examination and has obtained
subsequent follow-up reports on its properties and, on that basis, has not been
alerted to significant or imminent environmental problems.
SPECIFIC COMPANY RISKS
TEMPORARY INTERRUPTION OF PARKING. The Gilpin Hotel Casino has
enjoyed a competitive advantage in the past because of the availability of
ample, close-by parking. Construction of the Company's Lodge Casino began
restricting such parking availability in November, 1997. While construction of
an overflow parking garage continues and until its completion in the summer of
1998, the Gilpin Hotel Casino's parking will be severely limited. No assurance
can be given that the inconvenience will not cause patrons to go elsewhere or
that such patrons will return when adequate on-site parking again becomes
available.
ADEQUACY OF MUNICIPAL SERVICES. Black Hawk has experienced
unanticipated demands upon its municipal systems, including roads, water and
sewage treatment facilities. Recently announced projects Black Hawk will
increase levels of activity in the Black Hawk area may burden existing systems
and pose new municipal and environmental problems, the costs of which could be
imposed on the gaming industry, or inhibit such industry's ability to attract
customers to casinos in Black Hawk. In order to address these infrastructure
issues, the City of Black Hawk has been constructing significant improvements
to Main Street in Black Hawk over the past two years. This project adversely
affected the Gilpin Hotel Casino's operations in 1996 and 1997, and future
infrastructure related projects may have an adverse effect on the Company's
operations during future periods.
POTENTIAL "DRAM SHOP" LIABILITY. Restaurants and bars in most states,
including Colorado, are subject to "dram shop" laws and regulations, which
impose liability on licensed alcoholic beverage servers for injuries or damages
caused by their negligent service of alcoholic beverages to a visibly
intoxicated person or to a minor, if such service is the proximate cause of the
injury or damage and such injury or damage is reasonably foreseeable. While the
Company maintains liquor liability insurance as part of its comprehensive
general liability insurance, which management believes is adequate to protect
against such liability, there can be no assurance that the Company will not be
subject to a judgment in excess of such insurance coverage or that it will be
able to continue to maintain such insurance coverage at reasonable cost, or at
all. The imposition of a judgment substantially in excess of the Company's
insurance coverage or the failure of the Company to obtain and maintain
insurance coverage could materially and adversely affect the Company.
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OPERATIONS OF CASINOS. The Company's construction of The Lodge Casino
represents a high-risk investment involving many factors beyond the control of
the Company. Such factors could adversely affect the operation and value of The
Lodge Casino and the Gilpin Hotel Casino to extents not currently ascertainable
and, consequently, the value of the Company's Common Stock. Such factors
include, but are not limited to, changes in general or local economic
conditions, including changes in interest rates; challenges to the Casinos as a
result of competition; demographic trends; increases in real estate taxes;
changes in the state or federal gaming laws (which could be applied
retroactively); geographic expansion of areas in Colorado where gaming is
permitted; local, state and federal environmental and other regulations;
possible restrictive changes in the uses applicable to real estate, zoning and
similar land use and environmental laws and regulations; and acts of God.
Finally, the Company cannot predict what effect the new operations of The Lodge
Casino may have on the Gilpin Hotel Casino across the street. The latter
casino's business may be significantly reduced because of the attraction to
patrons of The Lodge Casino's newer facilities.
HIGH LEVEL OF INDEBTEDNESS. The Company and its affiliates are
financially leveraged. As of March 31, 1998, the Company's long term debt
would have been approximately $37 million and its stockholders' equity would
have been approximately $27 million on a pro forma consolidated basis giving
effect to the Gilpin Hotel Casino acquisition and related borrowings which
closed on April 24, 1998. A credit facility of $40 million was utilized in
construction of The Lodge Casino and it imposes a number of obligations and
requirements on The Lodge Casino and indirectly on the Company. The Company is
not obligated on the credit facility, however its ability to obtain
distributions of cash flow is restricted by these loan covenants. Moreover,
all of The Lodge Casino's land and other assets are pledged on the credit
facility; if The Lodge Casino is unable to meet its debt service obligations,
the Company's entire investment could be lost or materially impaired.
The Company's own relatively high level of indebtedness and the
provisions of its $20 million credit facility could have important and negative
consequences to the Company, including the following: (i) if it experiences
adverse operating results, the Company could be unable to service its
indebtedness; (ii) a substantial portion of the Company's cash flow from
operations may be dedicated to the payment of principal and interest on its
indebtedness and would not be available for other purposes such as maintenance
and improvement of casino facilities or expansion into other markets; (iii) the
Company's ability to obtain additional financing in the future for working
capital, capital expenditures or acquisitions may be limited; and (iv) the
Company's level of indebtedness could limit its flexibility in planning for, or
reacting to, changes in the gaming industry. Pursuant to a provision in the
Company's credit facility, if The Lodge Casino defaults in obligations under
its separate credit facility, such will also constitute a default under the
Company's credit facility.
REQUIREMENTS FOR MANAGEMENT OF GROWTH. In connection with managing
the Gilpin Hotel Casino and in opening The Lodge Casino, the Company has been
and will be required to add and train personnel, continuously evaluate its
management structure, expand its management information systems and control its
operating expenses. If the Company's actions do not successfully meet its
increased management and personnel needs or the Company otherwise is unable to
manage growth effectively, the Company's operating results could be adversely
affected.
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<PAGE> 14
AVAILABILITY AND RETENTION OF MANAGEMENT; EMPLOYEES. The Company's
operations and development are dependent upon the efforts and experience of its
executive officers. Although certain key employees, including Jeffrey P.
Jacobs, its Chief Operating Officer and Chairman of the Board, have entered
into employment agreements with the Company, the loss of the services of Mr.
Jacobs would adversely affect the Company. The Company does not maintain
key-man life insurance on any of its key officers. The Company's operations
and development also are dependent in part on its ability to attract and retain
qualified lower level management personnel and competent employees.
Competition for such personnel and employees in Colorado is intense and there
can be no assurance that in the future the Company will be able to attract and
retain such personnel or employees.
LACK OF DIVERSIFICATION; RELIANCE ON DENVER MARKET. Both the Gilpin
Hotel Casino and The Lodge Casino are located in Black Hawk, Colorado. At
present, the Company has no operations elsewhere and therefore lacks
geographical diversification. Both Casino's gaming revenues will depend
primarily upon "day-tripper" visitor traffic from Denver metropolitan area
residents. A decline in the Denver economy, a decline in the Black Hawk gaming
market, or increased competition for Denver metropolitan area residents from
other gaming jurisdictions both inside and outside Colorado, could have a
material adverse effect on the Company's results of operations, financial
position and cash flows.
RISKS ASSOCIATED WITH EXPANSION TO OTHER LOCATIONS. The Company may
seek to expand its operations into additional jurisdictions that have legalized
or are anticipated to legalize casino gaming. The Company's ability to expand
to additional locations will depend upon a number of factors, including, but
not limited to: (i) the identification and availability of suitable locations,
and the negotiation of acceptable purchase, lease, joint venture or other
terms; (ii) the securing of required state and local licenses, permits and
approvals, which in some jurisdictions may be limited in number; (iii)
political factors; (iv) the risks typically associated with any new venture;
and (v) the availability of adequate financing on acceptable terms. Certain
jurisdictions issue licenses or approval for gaming operations by inviting
proposals from all interested parties, which may increase competition for such
licenses or approvals. In addition, certain jurisdictions require new gaming
operations to be in the form of joint ventures with local participants and that
the proposed operator provide evidence of ability to finance construction and
start-up costs. Most of these factors are beyond the control of the Company.
As a result, there can be no assurance that the Company will be able to expand
to additional locations or, if such expansion occurs, that it will be
successful. Further, the Company anticipates that it will continue to expense
certain costs, which may be substantial, in connection with the pursuit of
expansion projects, and may be required to write-off any capitalized costs
incurred in connection with these ventures.
RISKS OF CLOSURE DUE TO MECHANICAL FAILURE AND SEVERE WEATHER;
SEASONALITY. The Casinos' operations will be subject to risks, including the
loss of service due to casualty, mechanical failure, extended or extraordinary
maintenance or severe weather conditions. Mechanical failures which could
result in the temporary loss of service of all or portions of a facility
include loss of electrical power for lighting, heating or air conditioning
through the loss of generators, transformers or the like. The Company has no
business interruption insurance covering these risks. Because the Casinos are
located in the Rocky Mountains, they are subject to the effects of sudden and
severe winter storms and spring rains and runoff. Access
10
<PAGE> 15
to Black Hawk, which is located ten miles from Interstate 70, is made via a
two-lane secondary road. In bad weather, and in the winter months generally,
this access road is difficult to traverse, which reduces the number of patrons
traveling to Black Hawk and, accordingly, negatively affects the Company's
operating results during these periods. As a result, the Casino's business
tends to be seasonal, with the highest level of activity occurring during the
summer months.
The sites of the Casinos are located in a 100-year flood plain. To
date, the Company has not experienced any flooding resulting in damage to the
Casinos. The Company carries no significant flood insurance on the Casinos.
There can be no assurance that the Casinos will not suffer flood damage in the
future or that any damage will be adequately covered by insurance.
SUPERIOR RIGHTS OF PREFERRED SHARES. The Company's Articles of
Incorporation authorize the issuance of up to 10,000,000 preferred shares with
such rights and preferences as may be determined from time to time by the Board
of Directors. The Board of Directors may, without shareholder approval (unless
limited by rules of stock exchanges or market making facilities on which its
shares are traded), issue preferred shares with dividend, liquidation,
conversion, voting or other rights which could adversely affect the voting
power or other rights of the holders of the Company's Common Stock. In
addition, the issuance of preferred shares may have the effect of rendering
more difficult or discouraging an acquisition of the Company or changes in
control of the Company. Although the Company does not currently intend to
issue any preferred shares, there can be no assurance that the Company will not
do so in the future.
LACK OF DIVIDENDS. The Company has never paid any cash dividends on
its Common Stock and does not anticipate paying any cash dividends in the
future. In addition, its credit facilities prohibit the payment of dividends
in certain circumstances. The Lodge Casino credit facility presently restricts
distributions to the Company. Even if such restrictions were removed, the
Company currently intends to retain earnings, if any, to fund the development
and growth of its business.
SHARES RESERVED FOR EXERCISE AND GRANTING OF OPTIONS. The Company has
adopted Stock Option Plans for employees, officers, directors, consultants and
others pursuant to which the Company may grant options to purchase up to
800,000 shares of Common Stock. As of the date hereof, the Company has issued
and outstanding options to purchase 643,500 shares at prices ranging from $5.63
to $7.75 per share. The holders of outstanding options may exercise them at a
time when the Company would otherwise be able to obtain additional equity
capital on terms more favorable to the Company.
CONTROL OF THE COMPANY. The Company's directors and officers own
beneficially approximately 46% of the outstanding shares of Common Stock, not
assuming the exercise of stock options held by them. Since cumulative voting
rights are not provided for in the Company's Articles of Incorporation, these
persons are likely to be in a position to practically control the election of a
majority of the Board of Directors and control most corporate actions,
including, without limitation, the sale of equity or debt securities of the
Company, the
11
<PAGE> 16
appointment of officers, the determination of officers' compensation and the
determination of who will serve on the Company's Board of Directors.
RELATED PARTY TRANSACTIONS; POTENTIAL CONFLICTS OF INTEREST. The
Company is a party to a number of agreements with certain entities affiliated
with Jeffrey P. Jacobs, its Chief Executive Officer and Chairman of the Board
of Directors. In addition to providing for a significant investment in the
Company by these Jacobs affiliates and for the joint development, operation and
ownership of The Lodge Casino, these agreements provided for Mr. Jacobs to be
appointed Chairman and Chief Executive Officer of the Company, and also gave
Mr. Jacobs the right to nominate five of the Company's nine Directors. Given
the relationship between the Company and Mr. Jacobs, and Mr. Jacobs' 25%
indirect ownership interest in The Lodge Casino, there exists the potential for
conflicts of interest arising from the ownership, financing and operation of
the Casinos.
POSSIBLE VOLATILITY OF STOCK PRICE. The trading price of the Common
Stock has been and may in the future be subject to wide fluctuations in
response to quarter-by-quarter variations in the operating results and other
events or factors. In addition, the stock market has experienced extreme price
and volume fluctuations that have affected stock prices for many companies and
industries, including the gaming industry. In some cases these fluctuations
have been unrelated to operating performance. Casino stocks, in particular,
have experienced fluctuations in response to legislative and regulatory news
relating to gaming opportunities as well as other developments. These markets
and industry fluctuations may adversely affect the market price of the Common
Stock.
FORWARD-LOOKING STATEMENTS. This Prospectus and other documents
incorporated herein by reference contain statements that constitute
forward-looking statements. Those statements appear in a number of places in
this Prospectus and other documents incorporated herein by reference and
include statements regarding the intent, belief or current expectations of the
Company, its directors or its officers with respect to: (i) benefits to be
derived from the Gilpin Casino acquisition; (ii) opening and initial operations
of The Lodge Casino; and (iii) potential acquisitions by the Company.
Prospective investors are cautioned that any such forward-looking
statement is not a guarantee of future performance and involves risks and
uncertainties, and that actual results may differ materially from those in the
forward-looking statement as a result of various factors. With respect to any
such forward-looking statement that includes a statement of its underlying
assumptions or bases, the Company cautions that, while it believes such
assumptions or bases to be reasonable and has formed them in good faith,
assumed facts or bases almost always vary from actual results, and the
differences between assumed facts or bases and actual results can be material
depending on the circumstances. When, in any forward-looking statement, the
Company, or its management, expresses an expectation or belief as to future
results, that expectation or belief is expressed in good faith and is believed
to have a reasonable basis, but there can be no assurance that the stated
expectation or belief will result or be achieved or accomplished.
12
<PAGE> 17
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of shares of
Common Stock by the Selling Shareholders or the Optionholders. The Company may
receive up to an aggregate of $478,550 if all options are exercised; any such
funds will be added to the Company's working capital and used for general
corporate purposes.
DIVIDEND POLICY
The Company intends to retain all future earnings for use in its
business and does not anticipate paying any cash dividends on its Common Stock.
13
<PAGE> 18
SELLING SECURITY HOLDERS
Information with respect to each person who may sell shares of the
Company's Common Stock pursuant to this Prospectus is as follows:
<TABLE>
<CAPTION>
Number of Percentage
Shares of Company's
Beneficially Outstanding
Selling Shareholders(1) Owned Common Stock
- -------------------- ------------ ------------
<S> <C> <C>
RAF Financial Corporation 27,447 *
1700 Lincoln Street, Suite 3200
Denver, CO 80202
North Hampton Holdings Corp. III 51,064 1.1%
James Villa, President
1895 Mt. Hope Avenue
Rochester, NY 14620
Robert Long(2) 27,447 *
1700 Lincoln Street, Suite 3200
Denver, CO 80202
Optionholders(2)
- -------------
David Grunenwald 30,000 *
Jacobs Entertainment Ltd.
1231 Main Avenue
Cleveland, OH 44113
Jiang He 10,000 *
Jacobs Entertainment Ltd.
1231 Main Avenue
Cleveland, OH 44113
Anthony Weigand 2,500 *
The Richard E. Jacobs Group
25425 Center Ridge Road
Westlake, OH 44145
Kathleen Ostrowski 10,000 *
7262 Rosegate Place
Dublin, OH 43017
</TABLE>
14
<PAGE> 19
<TABLE>
<S> <C> <C>
Susan Eyerman 5,000 *
Jacobs Entertainment Ltd.
1231 Main Avenue
Cleveland, OH 44113
Pat McKinley 10,000 *
Jacobs Entertainment Ltd.
1231 Main Avenue
Cleveland, OH 44113
Paul Ertel 5,000 *
Jacobs Entertainment Ltd.
1231 Main Avenue
Cleveland, OH 44113
Bill Mawby 5,000 *
Jacobs Entertainment Ltd.
1231 Main Avenue
Cleveland, OH 44113
Michael Mercer 5,000 *
Jacobs Entertainment Ltd.
1231 Main Avenue
Cleveland, OH 44113
Donna Votaw 2,500 *
Jacobs Entertainment Ltd.
1231 Main Avenue
Cleveland, OH 44113
- ------------------
</TABLE>
* Less than 1%.
(1) None of the Selling Shareholders has a material relationship with the
Company.
(2) Mr. Long is an affiliate of RAF Financial Corporation but disclaims
beneficial ownership of shares of the Company's Common Stock owned by
it.
(3) Options to purchase these shares were granted on November 12, 1996 at
an exercise price of $5.63 per share, the fair market value of the
Common Stock at that time. Approximately one-third of the shares
under option are vested in the case of each person; one-third will
vest on December 31, 1998 and the final third on December 31, 1999.
Such options were not included in the Company's registration statement
on Form S-8 because these persons are not officers, directors or
employees of the Company. The Optionholders are employees of Jacobs
Entertainment Ltd., or its affiliates. Jeffrey P. Jacobs, Chief
Executive Officer of the Company, is the controlling person of Jacobs
Entertainment Ltd. and its affiliates. Mr. Jacobs, Jacobs
Entertainment Ltd. and its affiliates disclaim any beneficial
ownership of the options or shares underlying such options.
15
<PAGE> 20
PLAN OF DISTRIBUTION
The sale of the Common Stock by the Selling Security Holders and
Optionholders may be effected from time to time in transactions in the over the
counter market on the automated interdealer system on which shares of Common
Stock of the Company are then listed, in negotiated transactions, or through a
combination of such methods of sale, and at prices prevailing at the time of
sale, at prices related to such prevailing market prices, at negotiated prices,
or at fixed prices which may be changed. The Selling Security Holders or
Optionholders may effect such transactions directly with purchasers or by
selling the securities to or through broker-dealers, and such broker-dealers
may receive compensation in the form of discounts, concessions, or commissions
from the Selling Security Holders or Optionholders and/or the purchasers of the
securities for which such broker-dealers may act as agent or to whom they may
sell, as principal, or both (which compensation as to a particular
broker-dealer may be in excess of customary compensation). The Selling
Security Holders or Optionholders and any broker-dealers who act in connection
with the sale of the securities hereunder may be deemed to be underwriters
within the meaning of the Securities Act of 1933, and any commissions received
by them and any profit on any resale of the securities as principal might be
deemed to be underwriting discounts and commissions under the Securities Act of
1933.
The Selling Security Holders and Optionholders have been advised that
they and any securities broker-dealers or others who may be deemed to be
statutory underwriters may be subject to the prospectus delivery requirements
under the Securities Act of 1933. The Selling Security Holders and
Optionholders have also been advised that Regulation M under the Securities
Exchange Act of 1934 prohibits any "stabilizing bid" or "stabilizing purchase"
for the purpose of pegging, fixing, or stabilizing the price of the securities
in connection with this offering. The Company has agreed to indemnify the
Selling Security Holders against certain liabilities, including liabilities
under the Securities Act of 1933.
TRANSFER AGENT AND REGISTRAR
The Company's transfer agent is Corporate Stock Transfer, Inc., 370
Seventeenth Street, Suite 2350, Denver, Colorado 80202.
DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 40,000,000
shares of Common Stock, and 10,000,000 shares of Preferred Stock.
COMMON STOCK
Holders of Common Stock are entitled to one vote per share on all
matters submitted to a vote of the stockholders, including the election of
directors, and except as otherwise required by law or as provided in any
resolution adopted by the Board of Directors with respect to any series of
Preferred Stock, the holders of such shares will exclusively possess all voting
power. Holders of Common Stock do not have the right of cumulative voting for
the election of directors. Subject to the preferential rights of any
outstanding series of Preferred Stock, the holders of Common Stock will be
entitled to such dividends as may be declared from time to
16
<PAGE> 21
time by the Board of Directors from funds legally available therefor, and will
be entitled to receive pro rata all assets of the Company available for
distribution to such holders upon liquidation. All of the shares underlying
the Warrants will be, upon exercise, validly issued, fully paid and
nonassessable.
PREFERRED STOCK
AUTHORIZED. The Board of Directors has authority to establish the
designation, liquidation preferences, dividend rights, terms of redemption,
conversion rights, sinking fund terms and all other preferences and rights
(including voting rights) of any series of Preferred Stock. The Board of
Directors without stockholder approval (unless otherwise required by rules of
any stock exchange or trading market system on which the Company's shares are
quoted), can issue Preferred Stock with voting and conversion rights which
could adversely affect the voting power and other rights of holders of shares
Common Stock. The Board of Directors has no current plans to issue any
preferred shares or to designate any series of Preferred Stock. Any
designation and issuance of such shares could be used to dilute the stock
ownership of persons seeking to gain control to the Company and could otherwise
have the effect of delaying, deferring or preventing a change in control of the
Company.
COLORADO GAMING REGULATIONS. Pursuant to the Colorado gaming
regulations, the Gaming commission has broad powers to require certain
stockholders of the Company, as a gaming licensees, to provide it with
information and to determine the suitability of any stockholders of the Company
to hold voting interests in the Company, whether directly or indirectly, the
Company may be sanctioned (including by loss of any gaming licenses) unless
such person or entity disposes of its voting interests. In addition, the
Colorado regulations prohibit a licensee from paying dividends, interest or
other remuneration to any person found to be unsuitable, or from recognizing
the exercise of any voting rights by any person found to be unsuitable. The
Colorado regulations require a casino licensee to include in its corporate
charter provisions to require the repurchase of the voting interests of any
person who the Gaming Commission finds unsuitable. The Company has included
the required provisions in its Articles of Incorporation. See "--Certain
Articles of Incorporation and Bylaw Provisions" below. In addition, a person
or entity may not sell, lease, purchase, convey, acquire or pledge 5% or more
of the stock, of a "publicly traded" gaming licensee, such as the Company,
shares in a gaming license without the prior approval of the Gaming Commission,
except for sales or other transactions involving less than a 5% interest in a
publicly traded licensee.
CERTAIN ARTICLES OF INCORPORATION PROVISIONS. To enable the Company
to secure and maintain the business and other regulatory approvals necessary
for operating a gaming-related business, the Company's Articles of
Incorporation provide that the Company may not issue any voting securities
except in compliance with the rules of any gaming authority. The Company's
Articles of Incorporation provide that the Company may not issue any voting
securities except in compliance with the rules of any gaming authority. The
Company's Articles of Incorporation also provide that all transfers of voting
securities of the Company must be in compliance with applicable gaming
authority rules and if any gaming authority issues an order disqualifying a
person from owning shares of Common Stock, the Company must redeem the stock of
the disqualified holder unless Common Stock is transferred to a person found by
the Gaming Commission to be suitable within 60 days from the finding of
unsuitability. The redemption
17
<PAGE> 22
price will be equal to the lesser of the holder's investment in the voting
securities or the current market price as of the finding of unsuitability. No
holder of voting securities of the Company which has been found to be
unsuitable may vote any such voting securities and such voting securities shall
not be deemed outstanding for quorum or other purposes and the disqualified
holder shall not be entitled to any dividends or other remuneration with
respect to such voting securities.
As permitted by the provisions of the Colorado Business Corporation
Act (the "CBCA"), the Company's Articles of Incorporation eliminates in certain
circumstances the liability of directors of the Company for a breach of their
fiduciary duty as directors. These provisions do not eliminate the liability
of a director for: (i) breach of the director's duty of loyalty to the Company
or its stockholders; (ii) acts or omissions by a director not in good faith or
which involve intentional misconduct or a knowing violation of the law: (iii)
liability arising under the CBCA (relating to the declaration of dividends and
purchase or redemption of shares in violation of the CBCA); or (iv) any
transaction from which the director derived an improper personal benefit. In
addition, these provisions do not eliminate the liability of a director for
violations of federal securities laws, nor do they limit the rights of the
Company or its stockholders, in appropriate circumstances, to seek equitable
remedies such as injunctive or other forms of non-monetary relief. Such
remedies may not be effective in all cases.
The Company's Articles of Incorporation and Bylaws provide that the
Company shall indemnify all directors and officers of the Company to the full
extent permitted by the CBCA. Under such provisions, any director or officer,
in his capacity as such, who is made or threatened to be made a party to any
suit or proceeding, may be indemnified if the Board determines such director or
officer acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interest of the Company. The Company's Articles of
Incorporation, Bylaws and the CBCA, further provide that such indemnification
is not exclusive of any other rights to which such individuals may be entitled
under the Company's Articles of Incorporation and Bylaws, or under any
agreement, vote of stockholders or disinterested directors or otherwise.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise the Company
has been advised that in the opinion of the United States Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore unenforceable.
18
<PAGE> 23
OTHER MATTERS
Samuel E. Wing, a shareholder of Jones & Keller, P.C., counsel to the
Company, through his SEP/IRA Plan owns 5,000 shares of the Company's Common
Stock.
19
<PAGE> 24
================================================================================
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE REPRESENTATIVE. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR
IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL,
UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE
IN THE AFFAIRS OF THE COMPANY OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
_______________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary 3
The Company 3
Risk Factors 5
Use of Proceeds 13
Dividend Policy 13
Selling Security Holders 14
Plan of Distribution 16
Transfer Agent and Registrar 16
Description of Securities 16
Other Matters 19
</TABLE>
================================================================================
190,958 SHARES OF
COMMON STOCK
BLACK HAWK GAMING &
DEVELOPMENT COMPANY, INC.
______________________
PROSPECTUS
______________________
JUNE ___, 1998
20
<PAGE> 25
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
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 1933 Act; (ii) to reflect in the prospectus any
facts or events arising after the effective date of the 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; (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 clauses (a)(1)(i)(ii) do not
apply if the information required to be included in a post-effective amendment
by those clauses is contained in periodic reports filed by the Registrant
pursuant to Section 13 or 15(d) of the 1934 Act that are incorporated by
reference in the Registration Statement; (2) that, for the purpose of
determining any liability under the 1933 Act, each such post-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; and (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
purposes of determining any liability under the 1933 Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
1934 Act that is incorporated by reference in the 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
1933 Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the 1933 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 1933 Act and will be governed by the
final adjudication of such issue.
II-1
<PAGE> 26
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the expenses in connection herewith:
<TABLE>
<S> <C>
Commission registration fee $ 501
Printing and Edgar costs 2,000
Legal fees and expenses 6,000
Accounting fees and expenses 2,000
Miscellaneous 1,499
------------------
Total $ 12,000
==================
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Directors, officers, employees and agents of the Registrant may be
entitled to benefit from the indemnification provisions contained in the
Colorado Business Corporation Act, Title Seven of the Colorado Revised Statutes
(the "CBCA") and the Registrant's Articles of Incorporation. In addition,
certain provisions in the CBCA and the Articles of Incorporation limit the
liability of directors of the Registrant. The general effect of these
provisions is summarized below:
Article 109 of the CBCA permits a Colorado corporation to indemnify
any person who was or is a party or is threatened to be made a party to any
suit, action or other proceeding by reason of the fact that such person is or
was a director, officer, employee or agent of the corporation, or is or was
serving at the request of the corporation as a director, officer, employee or
agent of another corporation, partnership, or other enterprise. Such
indemnification may be against expenses, including attorneys' fees, judgments,
fines and other amounts in connection with such proceeding. Indemnification is
available if such person acted in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the corporation, or,
with respect to any criminal action or proceeding, such person had no
reasonable cause to believe that the conduct was unlawful. Unless a court of
competent jurisdiction otherwise orders, indemnification is not available in
connection with a proceeding by or in the right of the corporation if the
person is adjudged liable to the corporation or derived an improper personal
benefit. A corporation is required to indemnify a director or officer who is
wholly successful in the defense of any such proceeding. Expenses (including
attorneys' fees) incurred by a director, officer, employee or agent of the
corporation in defending any such proceeding may be advanced by the corporation
before the final disposition if such person furnishes an undertaking to repay
such advances if it is ultimately determined that such person is not entitled
to be indemnified. Before a corporation may indemnify or advance expenses to a
person under these provisions, the board of directors (excluding any directors
are parties to such a proceeding), independent legal counsel appointed by the
board of directors, or the shareholders must provide authorization. A
corporation may purchase insurance against any liability of individuals for
whom the corporation may provide such indemnification. Any provisions in a
corporation's articles of incorporation, bylaws, resolutions or in a contract
(except an insurance policy) for such indemnification are valid only to the
extent not inconsistent with Article 100 of the CBCA.
II-2
<PAGE> 27
Section 7-108-402 of the CBCA permits a corporation, if so provided in
the articles of incorporation, to eliminate or limit the personal liability of
a director to the corporation or its shareholders for monetary damages for
breach of fiduciary duty. However, such a provision cannot eliminate or limit
such liability arising out of a breach of the director's duty of loyalty, acts
or omissions not in good faith or which involve intentional misconduct or
knowing violations of law, unlawful distributions, or any transaction for which
the director derived an improper personal benefit. Article XV of the Company's
Articles of Incorporation provides for such elimination of director liability.
Article NINTH of the Registrant's Articles of Incorporation also
provides broad indemnification to officers, directors, employees and agents,
generally paralleling those available under the statute described above.
Article VIII of the Registrant's Bylaws provide indemnification to
officers, directors, employees and agents, again generally paralleling and
reiterating the above referenced basis of such indemnification.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
5 Opinion and Consent of Jones & Keller, P.C. as to the legality of the
securities being registered.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Jones & Keller, P.C. (see Exhibit No. 5).
</TABLE>
II-3
<PAGE> 28
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 of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Golden, State of Colorado, on this 29th day of
May, 1998.
BLACK HAWK GAMING & DEVELOPMENT
COMPANY, INC.
By: /s/ Stephen R. Roark
----------------------------
Stephen R. Roark, President
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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
By: /s/ Jeffrey P. Jacobs Chairman of the Board and Chief May 29, 1998
--------------------------------------- Executive Officer
Jeffrey P. Jacobs
By: /s/ Stephen R. Roark President and Chief Financial and May 29, 1998
--------------------------------------- Accounting Officer and a Director
Stephen R. Roark
By: /s/ Frank B. Day Director May 29, 1998
---------------------------------------
Frank B. Day
By: /s/ J. Patrick McDuff Director May 29, 1998
---------------------------------------
J. Patrick McDuff
By: /s/ Robert H. Hughes Director May 29, 1998
---------------------------------------
Robert H. Hughes
By: /s/ Martin S. Winick Director May 29, 1998
---------------------------------------
Martin S. Winick
By: /s/ Timothy Knudsen Director May 29, 1998
---------------------------------------
Timothy Knudsen
</TABLE>
II-4
<PAGE> 29
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
5 Opinion and Consent of Jones & Keller, P.C. as to the legality of the
securities being registered.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Jones & Keller, P.C. (see Exhibit No. 5).
</TABLE>
<PAGE> 1
JONES & KELLER, P.C.
1625 Broadway, Suite 1600
Denver, Colorado 80202
(303) 573-1600
EXHIBIT 5
May 29, 1998
Black Hawk Gaming & Development Company, Inc.
17301 West Colfax Avenue, Suite 170
Golden, Colorado 80401
Gentlemen:
You have requested our opinion in connection with the Registration
Statement on Form S-3 (the "Registration Statement") of Black Hawk Gaming &
Development Company, Inc. (the "Corporation"), relating to the offer and sale
of up to 85,000 shares of the Common Stock of the Corporation (the "Common
Stock") under the 1996 Incentive Stock Option Plan approved by the
Corporation's Board of Directors and by the Corporation's shareholders (the
"Plan"). In connection with your request, we have made such examinations of
the corporate records and proceedings of the Corporation and considered such
questions of law and taken such further action as we deemed necessary or
appropriate to enable us to render this opinion.
Based upon such examination, we are of the opinion that when the
Common Stock has been purchased and the purchase price therefor has been paid
as described in the Registration Statement, as the same may be amended, and
when the Corporation has complied with the Securities Act of 1933, as amended,
and with the securities laws of the State of Colorado and all other
jurisdictions in which Common Stock is to be sold pursuant to the exercise of
stock options granted under the Plan, the Common Stock will be legally issued,
fully paid and nonassessable.
We consent to the filing of this opinion as Exhibit 5 to the
Registration Statement. In giving this consent, however, we do not admit that
we are in the category of persons whose consent is required under Section 7 of
the Securities Act of 1933 or the Rules and Regulations of the Securities and
Exchange Commission thereunder.
Very truly yours,
JONES & KELLER, P.C.
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Black Hawk Gaming & Development Company, Inc. on Form S-3 of our report dated
March 2, 1998, appearing in the Annual Report on Form 10-K of Black Hawk Gaming
& Development Company, Inc. for the year ended.
/s/ DELOITTE & TOUCHE LLP
DELOITTE & TOUCHE LLP
Denver, Colorado
May 27, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF COUNSEL
Our consent appears in Exhibit 5 to this Registration Statement and is
incorporated herein by reference.
