UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
OF 1934
For the quarterly period ended June 30, 1996
(Amendment #1)
[ ] TRANSITION REPORT UNDER SECTION 13 or 15(D) OF THE EXCHANGE ACT
Commission file number: 0-22242
CASINO RESOURCE CORPORATION
Minnesota
(State or other jurisdiction of 41-0950482
incorporation or organization) (I.R.S. Employer Identification No.)
1719 Beach Boulevard, Suite 306
Biloxi, Mississippi 39531
(Address of principal executive officers)
601-435-1976
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
[X] Yes [ ] No
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. [ ] Yes [ ] No
As of August 6, 1996, 9,637,984 Shares of Common Stock and 2,760,000 of
Redeemable Class A Warrants of the Company were outstanding.
<PAGE>
INDEX TO QUARTERLY REPORT
ON FORM 10-QSB
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Exhibits and Reports on Form 8-K
SIGNATURES
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
CASINO RESOURCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS(In thousands)
(In Thousands)
June 30, September 30,
1996 1995*
(unaudited)
<CAPTION>
<S> <C> <C>
ASSETS:
Current Assets
Cash and cash equivalents $ 1,452 $ 1,043
Restricted cash 335 327
Accounts receivable, net 455 526
Prepaid expenses 468 313
-------- --------
Total Current Assets 2,710 2,209
Property and Equipment 17,633 17,391
Less accumulated depreciation ( 2,327) ( 1,530)
-------- --------
Net property and equipment 15,306 15,861
Other Assets
Related parties assets 351 359
Deferred development costs 1,423 980
Intangibles, net 645 647
Other 698 895
-------- --------
Total Other Assets 3,117 2,881
-------- --------
$21,133 $20,951
======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
<S> <C> <C>
Current Liabilities
Accounts payable $ 1,017 $ 1,658
Accrued expenses 1,077 701
Related parties -- 103
Line-of-credit and current maturities
of long-term debt 1,071 1,967
-------- --------
Total Current Liabilities 3,165 4,429
Convertible debt 495 --
Long-term debt 10,255 10,488
-------- --------
Total Liabilities 13,915 14,917
Commitments and Contingencies
Stockholders' Equity
Capital shares 96 77
Paid-in Capital 21,955 18,742
Deficit ( 13,601) (12,785)
-------- --------
8,450 6,034
Note receivable related to common stock ( 1,232) --
-------- --------
Total Stockholders' Equity 7,218 6,034
-------- --------
$21,133 $20,951
======== ========
<FN>
*Condensed from audited financial statements
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
<PAGE>
<TABLE>
CASINO RESOURCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30
(unaudited)
(In thousands, except per share data)
1996 1995
<CAPTION>
<S> <C> <C>
INCOME FROM CONTINUING OPERATIONS
Entertainment revenues $ 5,983 $ 4,247
Hospitality revenues 2,776 2,545
Operating costs - entertainment 4,485 4,073
Operating costs - hospitality 1,730 1,161
Loss on gaming projects 771 --
General and administrative expense 1,685 1,188
Other income (expense) ( 904) (719)
---------- ----------
LOSS FROM CONTINUING OPERATIONS ( 816) ( 349)
DISCONTINUED OPERATIONS:
Income from discontinued operations
net of applicable taxes -- 55
---------- ----------
NET LOSS $( 816) $( 294)
========== ==========
NET LOSS PER COMMON SHARE $( .09) $( .04)
========== ==========
Weighted average shares, common stock 8,724,345 7,479,368
========== ==========
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $( 816) $( 294)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities
Depreciation and amortization 984 960
Changes in assets and liabilities
Accounts receivable 71 171
Prepaid expenses ( 155) ( 53)
Other assets 12 80
Accounts payable ( 641) (1,366)
Accrued expenses 376 ( 63)
--------- ---------
Net Cash Used In Operating
Activities ( 169) ( 565)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease (increase) in restricted cash ( 8) 693
Purchase of property and equipment ( 242) ( 44)
Increase in deferred development costs ( 443) ( 355)
Decrease (increase) in due to/from related
parties-net ( 95) ( 81)
--------- ---------
Cash (Used In) Provided by Investing Activities ( 788) 213
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock and
other equity transactions 1,002 ( 9)
Proceeds from convertible debenture offering 1,493 --
Proceeds from line-of-credit borrowings and 24 1,282
long-term debt
Payments on line-of-credit and long-term debt (1,153) ( 587)
--------- ---------
Net Cash Provided by Financing Activities 1,366 686
--------- ---------
Net Increase in Cash and Cash Equivalents 409 334
CASH AND CASH EQUIVALENTS:
At beginning of period 1,043 140
--------- ---------
At end of period $ 1,452 $ 474
========= =========
<FN>
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
<PAGE>
<TABLE>
CASINO RESOURCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30
(unaudited)
(In thousands, except per share data)
1996 1995
<CAPTION>
<S> <C> <C>
INCOME FROM CONTINUING OPERATIONS
Entertainment revenues $ 2,716 $ 1,918
Hospitality revenues 982 895
Operating costs - entertainment 1,802 1,505
Operating costs - hospitality 645 392
Loss on gaming projects -- --
General and administrative expense 504 399
Other income (expense) ( 292) ( 293)
INCOME FROM CONTINUING OPERATIONS 455 224
DISCONTINUED OPERATIONS:
Income from discontinued operations net of
applicable taxes -- --
NET INCOME $ 455 $ 224
========= =========
NET INCOME PER COMMON SHARE $ .05 $ .03
========= =========
Weighted average shares, common stock 9,152,209 8,106,789
========== ==========
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income 455 224
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities
Depreciation and amortization 372 317
Changes in assets and liabilities
Accounts receivable 146 261
Prepaid expenses ( 25) ( 125)
Other assets 3 21
Accounts payable ( 212) ( 578)
Accrued expenses 134 284
--------- ---------
Net Cash Used In Operating Activities 873 404
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in restricted cash ( 3) ( 1)
Purchase of property and equipment ( 59) ( 11)
Decrease in deferred development costs ( 421) ( 236)
Increase in due to/from related parties-net ( 35) ( 3)
--------- ---------
Net Cash Used In Investing Activities ( 518) ( 251)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock
and other equity transactions 60 ( 20)
Proceeds from debenture offering -- --
Proceeds from line-of-credit borrowings
and long-term debt -- 32
Payments on line of credit and long-term debt ( 295) ( 52)
--------- ---------
Net Cash Used In Financing Activities ( 235) ( 40)
Net Increase in Cash and Cash Equivalents 120 113
CASH AND CASH EQUIVALENTS:
At beginning of period 1,332 361
--------- ---------
At end of period $ 1,452 $ 474
========= =========
<FN>
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
<PAGE>
CASINO RESOURCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 Basis of Presentation
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim periods.
Certain reclassifications of prior period amounts have been made to conform
to current period presentation.
Because of the seasonal closing of the Company's theater the results of
operations for the nine-month and three-month periods ended June 30, 1996
are not necessarily indicative of the results to be expected for the full year.
NOTE 2 Debt
The Company's debt at June 30, 1996 consists primarily of a first lien
mortgage on its Grand Hinckley Inn of $2,832,000; a secured furniture and
equipment loan relating to the Grand Hinckley Inn of $31,000; a first lien
mortgage on the Country Tonite Theatre of $7,643,000; a working capital
line of credit owing to Grand Casinos, Inc. of $689,000, and convertible
debentures totaling $495,000.
NOTE 3 Capital Stock
In November 1995, investors exercised warrants to acquire 1,143,444 of the
Company's common shares for cash of $650,000 plus $1.5 million in promissory
notes due $500,000 in January 1996 ($268,000 of which has been paid and
$232,000 of which is anticipated to be paid in September 1996) and $1.0
million in December 1996.
In February 1996, 15,000 shares of common stock were issued pursuant to a
settlement agreement with a former officer of the Company. Through August 6,
1996, $1,175,000 of convertible debentures have been converted into 733,533
shares of common stock.
In June, 1996, the Board of Directors approved an Executive Stock Option
Plan. Five percent of the shares of common stock outstanding as of the third
Monday in June will be used as the basis for option distribution under the
plan. Approximately 445,000 shares of common stock will be placed in reserve
with a grant date of June 17, 1996. Options totaling 405,000 shares were
granted on June 17, 1996 at $1.6875 (Fair Market Value). One third of
awarded options vest immediately, with an additional one third vesting in
each of the next two years of service.
<PAGE>
NOTE 4 Deferred Development Costs
Deferred development costs consist of externally incurred charges
principally related to the development of the Company's gaming ventures.
NOTE 5 Supplemental Disclosure of Cash Flow Information
Cash expended during the six months ended June 30, 1996 and 1995 for
interest was $913,000 and $879,000, respectively, and income tax payments
for the same periods were $74,000 and $2,000, respectively. The Company has
federal and state tax loss carry forwards of approximately $10.9 million.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results during the periods included in the accompanying condensed
consolidated financial statements.
NINE MONTHS ENDED JUNE 30, 1996 COMPARED TO NINE MONTHS ENDED JUNE 30, 1995
Revenues from continuing operations for the nine months ended June 30, 1996
aggregated $8,759,000 including hospitality segment revenues of $2,776,000
(from the Grand Hinckley Inn) and entertainment segment revenues of
$5,983,000 ($4,341,000 for the Country Tonite Theatre and $1,642,000 for the
Country Tonite production show). For the nine months ended June 30, 1995,
comparable revenues totaled $6,792,000, including $2,545,000 for the
hospitality segment and $4,247,000 for the entertainment segment ($2,461,000
for the Country Tonite Theatre and $1,786,000 for the Country Tonite
Production Show).
The Country Tonite production show had operating costs (including general
and administrative costs and depreciation) of $1,320,000 for the nine months
ended June 30, 1996, resulting in operating income of $322,000 for the
period. For the nine months ended June 30, 1995, comparable operating costs
were $1,629,000, resulting in operating income of $157,000 for the period.
Operating costs in the first nine months of fiscal 1996 were lower due to
reduced administrative costs.
Hospitality operating costs (including project, general and administrative
costs, and depreciation) were $1,730,000 for the nine months ended June 30,
1996, producing operating income of $1,046,000. During this period, the
hotel had an average daily occupancy rate of 85%, with an average daily room
rental rate of $53 augmented by a $20 per night per occupied room fee paid
by Grand Casino Hinckley. In the comparable period of the prior fiscal year,
operating costs were $1,161,000 with operating income of $1,384,000 while the
average daily occupancy rate was 78% and the average daily room rental was
$51. Under the Company's profit sharing agreement with Grand Casino Hinckley,
the Company allocated approximately $380,000 in profit sharing fees to the
Enterprise for the first nine months of fiscal 1996 compared to $35,000
required during the compararable period in fiscal 1995. The increase in profit
sharing expense resulted from depletion of a one time exemption which was
fully utilized in fiscal 1995. The increase in operating costs between the
1996 and 1995 fiscal periods was due principally to an increase in profit
sharing fees.
<PAGE>
The Country Tonite Theatre was open for two shows daily on a six-day-per-
week basis until December 18, 1995, when it closed for the season. Country
Tonite Theatre reopened on March 14, 1996. Country Tonite Theatre operating
costs (including project, general and administrative costs and depreciation)
were $3,165,000 for the nine months ended June 30, 1996, producing operating
income of $1,176,000 for the period. Operating costs were $2,444,000,
resulting in an operating income of $17,000, for the same period in the prior
fiscal year.
During the first nine months of fiscal 1996, the Country Tonite Theatre
averaged daily paid attendance of 1,572, with an average ticket price of
$15.24, compared to average paid attendance of 1,213 and an average ticket
price of $14.22 during the first nine months of 1995. The substantial
increase in ticket sales and revenues resulted from enhanced marketing
efforts. New venues are being explored for possible expansion of the Country
Tonite production to other geographic areas.
The Company's corporate general and administrative expenses aggregated
$1,685,000 for the nine months ended June 30, 1996, compared to $1,188,000
for the same period in the prior year. The increase is due principally to
higher legal and professional costs associated with the Company's pursuit of
new business opportunities.
The Company did not consumate the planned purchase of certain assets of the
Palace Casino. As a result, the Company expensed costs totalling
approximately $771,000 in the nine month period ended June 30, 1996.
Interest expense totaled $879,000 for the first nine months of fiscal 1996,
compared to $974,000 for the first nine months of fiscal 1995. The decrease
reflects lower indebtedness.
THREE MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE MONTHS ENDED JUNE 30, 1995
Revenues from continuing operations for the three months ended June 30, 1996
aggregated $3,698,000, including hospitality segment revenues of $982,000
(from the Grand Hinckley Inn) and entertainment segment revenues of
$2,716,000 ($2,170,000 for the Country Tonite Theatre and $546,000 for the
Country Tonite production show). For the three months ended June 30, 1995,
comparable revenues totaled $2,813,000, including $895,000 for the
hospitality segment and $1,918,000 for the entertainment segment ($1,339,000
for the Country Tonite Theatre and $579,000 for the Country Tonite Production
Show).
The Country Tonite production show had operating costs (including general
and administrative costs and depreciation) of $427,000 for the three months
ended June 30, 1996, resulting in operating income of $119,000 for the
period. For the three months ended June 30, 1995, comparable operating costs
were $518,000, resulting in operating income of $61,000 for the period.
Operating costs in the third quarter of fiscal 1996 were lower due to reduced
administrative costs.
<PAGE>
Hospitality operating costs (including project, general and administrative
costs, and depreciation) were $645,000 for the three months ended June 30,
1996, producing operating income of $337,000. During this period, the hotel
had an average daily occupancy rate of 84%, with an average daily room rental
rate of $56.00 augmented by a $20.00 per night per occupied room fee paid by
Grand Casino Hinckley. In the comparable period of the prior fiscal year,
operating costs were $392,000 with operating income of $503,000. The average
daily occupancy rate was 78% and the average daily room rental was $59.00.
Under the Company's profit sharing arrangement with Grand Casino Hinckley,
the Company allocated approximately $200,000 in profit sharing fees to the
Enterprise for the third quarter of fiscal 1996. There was $34,000 of profit
sharing required during the comparable period in fiscal 1995. The increase
in profit sharing is due to the utilization of a one time exemption in 1995.
The increase in operating expenses between the 1996 and 1995 fiscal periods
was due principally to profit sharing fees.
Country Tonite Theatre operating costs (including project, general and
administrative costs and depreciation) were $427,000 for the three months
ended June 30, 1996, resulting in an operating income of $118,000 for the
quarter. Operating costs were $518,000, resulting in an operating income of
$61,000, for the same period in the prior fiscal year. Operating costs for
the third quarter of 1996 were lower due to reduced administrative costs.
During the third quarter of fiscal 1996, the Country Tonite Theatre averaged
daily paid attendance of 1,498, with an average ticket price of $16.24,
compared to average paid attendance of 1,040 and an average ticket price of
$14.63 during the third quarter of fiscal 1995. The substantial increase in
ticket sales and revenues resulted from enhanced marketing efforts.
The Company's corporate general and administrative expenses aggregated
$504,000 for the three months ended June 30, 1996 compared to $399,000 for
the same period in the prior year. The current year quarter reflects higher
legal and professional fees principally associated with the Company's pursuit
of new business opportunities.
Interest expense totaled $311,000 for the quarter ended June 30, 1996,
compared to $332,000 for the comparable fiscal 1995 quarter.
CAPITAL EXPENDITURES
Capital expenditures by the Company were $59,000 for the three months ended
June 30, 1996 compared to $11,000 for the comparable period in the prior
year. Capital expenditures for the 1996 fiscal quarter consisted principally
of additional equipment purchases for the entertainment segment.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company financed the expansion of its operations commencing in fiscal
1993 through the public offering and private placement of its Common Stock.
In 1994, the Company obtained mortgage financing for the Grand Hinckley Inn
and Biloxi Star Theatre in the amounts of $3,300,000 and $5,200,000,
respectively. The Company also incurred $940,000 in equipment financing for
the Grand Hinckley Inn. The Company then obtained additional mortgage
financing for the Biloxi Star Theatre in the amount of $1,200,000. The
Company also incurred seller financing of $8,000,000 with respect to the
purchase of the Country Tonite Theatre. The Biloxi Star Theatre mortgage
financing and additional financing of $5,200,000 and $1,200,000,respectively,
were repaid at the time of its sale. Concurrent with the sale the Company
entered into a credit agreement with Grand Casinos which provided the Company
with a line of credit of $1,750,000, secured by a second mortgage on the Grand
Hinckley Inn. The Company can draw only $1,250,000 (subsequently increased to
$1,289,000) of this line and such draws must be for working capital needs.
The remaining $500,000 (none of which has been drawn) is only available
for payment of additional, unknown liabilities relating to the Biloxi Star
Theatre. The Company had drawn the full $1,289,000 available for working
capital purposes, but has since repaid an aggregate of $600,000 in
principal.
The Grand Hinckley Inn first lien mortgage balance was approximately
$2,832,000 as of June 30, 1996. This note is payable in monthly
installments of principal and interest of $43,942 through May 1, 2004.
In addition, an aggregate of approximately $31,000 of equipment financing is
outstanding as of June 30, 1996. The Country Tonite Theatre first lien
mortgage has an outstanding principal balance of $7,643,000 at June 30, 1996. is
This note is payable in monthly installments of principal and interest of
$73,035, with a final payment due at maturity of $7,078,000. The $689,000
principal amount outstanding under the Grand credit line, as recently
amended, is now due in installments of $50,000 a month plus interest.
At the time the Company sold the Biloxi Star Theatre and obtained the working
capital line of credit, management undertook a major general and
administrative cost reduction program (both at the corporate level and
operations level), and enhanced marketing efforts for its entertainment
businesses.
In September and November 1995, certain investors exercised warrants to
acquire 1,268,444 shares of the Company's Common Stock for $1,180,000 in cash
and $1.5 million in promissory notes due $500,000 in January 1996 ($268,000
of which has been paid to date and the balance of which is anticipated to be
received by September 1996) and $1 million in December 1996.
In February 1996, the Company completed a private placement of $1,650,000 in
principal amount of 8% convertible debentures (with net proceeds of
$1,493,000). The debentures have a one year maturity but are convertible
into shares of common stock at a price equal to 75% of market value based on
then current trading prices. The debentures were not registered and will not
be registered under the Securities Act of 1933. Through August 6, 1996,
$1,175,000 of the principal amount of the debentures have been converted to
733,533 common shares.
Although the Company's working capital position remains negative, it has
improved over the last year during which all debt payments were timely made.
In addition, cash balances continue to improve, as an operating profit was
realized in the last two quarters of fiscal 1995 and the first and third
quarters of fiscal 1996 for the entertainment segment while the hospitality
segment has remained consistently profitable. Moreover, revenues at the
Country Tonite Theatre improved substantially in fiscal 1995 and the first
three quarters of fiscal 1996. Management anticipates positive net income
and cash flow from such operations during the remaining months of fiscal 1996.
It is unlikely that ant material income tax payments will be required until
existing state and federal tax loss carry forwards of approximately $10.9
million are absorbed.
Management believes that notes due in connection with the November 1995
warrant exercises, cash on hand, and funds from operations will be sufficient
to enable the Company to meet its operating cash needs and to repay its debt
service obligations. However, additional capital, the source of which has not
been identified, will be needed to fund a proposed gaming venture in Tunisia.
SEASONALITY
The Company expects its hotel operations will be affected by seasonal
factors, including holidays, weather and travel conditions. The theater
operation in Branson, Missouri, will also be affected by seasonal factors and
,in addition, will be closed from mid-December through mid-March. This
period is historically when theaters normally close in Branson.
IMPACT OF INFLATION
Management does not believe that inflation has had any significant adverse
impact on the Company's financial condition or results of operations for the
periods presented. An increase in the rate of inflation could adversely
affect the Company's future operations and expansion plans.
IMPACT OF NEW ACCOUNTING STANDARDS
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of." This Statement establishes accounting standards for the impairment of
long-lived assets, certain identifiable intangibles, and goodwill related to
those assets to be held and used and for long-lived assets and certain
identifiable intangibles to be disposed of. The Company will adopt this
standard on October 1, 1996, the impact of which is not anticipated to be
material.
<PAGE>
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
All statements contained herein that are not historical facts are based on
current expectations. These statements are forward looking in nature and
involve a number of risks and uncertainties. Actual results may differ
materially. Among the factors that could cause actual results to differ
materially are the following: the availability of sufficient capital to
finance the Company's business plan on terms satisfactory to the Company;
competitive factors, such as the introduction of new hotels or renovation
of existing hotels in the same markets; change in travel patterns which could
affect demand for the Company's hotel; changes in development and operating
costs, including labor, construction, land, equipment, and capital costs;
general business and economic conditions; and other risk factors described
from time to time in the Company's reports filed with the Securities and
Exchange Commission. The Company wishes to caution readers not to place undue
reliance on any such forward looking statements, which statements are made
pursuant to the Private Securities Act Litigation Reform Act of 1995, and as
such, speak only as of the date made.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
The Company is party to various legal proceedings as described in its Annual
Report on Form 10-KSB for the year ended September 30, 1995. There have been
no further developments regarding such proceedings during the three months
ended June 30, 1996, except as described below.
On November 13, 1995, Casino Resorts, Inc., a Minnesota corporation,
commenced an action in a Minnesota state court against Monarch and the
Company alleging breach of contract against Monarch and tortious interference
with a contractual or business relationship against the Company.
The claims arise out of a July 1993 letter of intent between the plaintiff
and Monarch. The Company has filed an answer to the complaint asserting
affirmative defenses relying in part on its lack of knowledge of the
existence of the July 1993 letter of intent when it negotiated its January
1995 memorandum of understanding with Monarch. Management believes that the
claim against it is without merit and plans to vigorously defend against this
matter.
James and Prudence Barnes, former officers of a subsidiary of the Company,
have brought suit against the Company in connection with their employment
termination in June 1995. No specific amount of damages have been
claimed, however, prior to the filing of the suit, the Barnes' offered to
settle the matter for $500,000. The Company believes that damages, if
warranted, are well below such amount and, accordingly, intends to vigorously
defend this matter.
<PAGE>
In March 1996, PDC, a Minnesota limited liability company, and two of its
officers, filed suit against the Company, Harrah's Entertainment and Monarch
Casinos in Minnesota and Michigan, alleging tortious interference with its
business relations and prospective economic advantage, as well as false light
invasion of privacy in connection with the Pokagon Indian gaming award.
The Company's general liability carrier has taken up the defense of the
Company. The Company and its insurance carrier intend to vigorously
defend this matter, as management believes that the claims are without merit.
Item 2. Exhibits and Reports on Form 8-K
(A) EXHIBITS
1. Financial Data Schedule(EX-27)
(B) FILINGS ON FORM 8-K
The following Forms 8-K have been filed during the three months ended
June 30, 1996:
1. April 1, 1996 announcing extension of warrant exercise period.
SIGNATURES
In accordance with requirements of the Exchange Act, the registrant caused this
report to be signed on behalf by the undersigned, thereunto duly authorized.
CASINO RESOURCE CORPORATION
Date August 14, 1996
- -------------------------------
John J. Pilger, President & CEO
Date August 14, 1996
- -------------------------------
Maurice P. Gaudet, Controller
and Acting Chief Financial Officer
(Chief Accounting Officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Casino Resource Corporation quarterly report to stockholders for the
quarter ended June 30, 1996 and is qualified in its entirety by reference
to such financial statements
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 1452
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<RECEIVABLES> 455
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<CURRENT-ASSETS> 2710
<PP&E> 17633
<DEPRECIATION> (2327)
<TOTAL-ASSETS> 21133
<CURRENT-LIABILITIES> 3165
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0
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<COMMON> 96
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<CHANGES> 0
<NET-INCOME> (816)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
