UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
Amendment #2
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 or 15(D) OF THE EXCHANGE ACT
Commission file number: 0-22242
CASINO RESOURCE CORPORATION
Minnesota 41-0950482
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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 May 13, 1996, 9,007,225 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
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
CASINO RESOURCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<CAPTION>
March 31, September 30,
1996 1995*
(unaudited and restated)
<S> <C> <C>
ASSETS:
Current Assets
Cash and cash equivalents $ 1,332 $ 1,043
Restricted cash 332 327
Accounts receivable, net 601 526
Prepaid expenses 493 313
--------- ---------
Total Current Assets 2,758 2,209
Property and Equipment 17,574 17,391
Less accumulated depreciation ( 2,061) ( 1,530)
--------- ----------
Net property and equipment 15,513 15,861
Other Assets
Related parties assets 316 359
Deferred development costs 1,002 980
Intangibles, net 623 647
Other 899 895
--------- ---------
Total Other Assets 2,840 2,881
--------- ---------
$21,111 $20,951
========= =========
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Current Liabilities
Accounts payable $ 1,229 $ 1,658
Accrued expenses 943 701
Related parties -- 103
Line-of-credit and current maturities
of long-term debt 1,332 1,967
--------- ---------
Total Current Liabilities 3,504 4,429
Convertible debentures 1,650 --
Long-term debt 10,289 10,488
--------- ---------
Total Liabilities 15,443 14,917
Commitments and Contingencies
Stockholders' Equity
Capital shares 89 77
Paid-in Capital 21,145 18,742
Deficit (14,334) (12,785)
--------- ---------
6,900 6,034
Note receivable related to common stock ( 1,232) --
Total Stockholders' Equity 5,668 6,034
--------- ---------
$21,111 $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 SIX MONTHS ENDED MARCH 31
(unaudited)
(In thousands, except per share data)
<CAPTION>
1996 1995
(restated)
<S> <C> <C>
INCOME FROM CONTINUING OPERATIONS
Entertainment revenues $ 3,268 $ 2,329
Hospitality revenues 1,793 1,650
Operating costs - entertainment 2,683 2,858
Operating costs - hospitality 1,084 978
Loss on gaming projects 771 ---
General and administrative expense 1,181 796
Other income (expense) ( 891) 81
---------- ----------
LOSS FROM CONTINUING OPERATIONS ( 1,549) ( 572)
DISCONTINUED OPERATIONS:
Income from discontinued operations net of
applicable taxes --- 54
---------- ----------
NET LOSS $( 1,549) $( 518)
========== ==========
NET LOSS PER COMMON SHARE $( .18) $( .07)
========== ==========
Weighted average shares, common stock 8,511,582 7,428,879
========== ==========
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $( 1,549) $( 518)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities
Depreciation and amortization 696 637
Discount upon conversion of subordinated
debentures 278 -
Changes in assets and liabilities
Accounts receivable ( 75) 89
Prepaid expenses ( 180) ( 113)
Other assets 1 ( 2)
Accounts payable ( 429) ( 532)
Accrued expenses 242 ( 615)
---------- ----------
Net Cash Used In Operating Activities ( 1,016) ( 1,054)
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease (increase) in restricted cash ( 5) 694
Purchase of property and equipment ( 158) ( 33)
Increase in deferred development costs ( 22) ( 330)
Decrease (increase) in due to/from
related parties - net ( 60) 40
Net Cash (Used In) Provided by Investing ---------- ----------
Activities ( 245) 371
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock and
other equity transactions 873 217
Proceeds from debenture offering 1,493 ---
Proceeds from line-of-credit borrowings --- 1,250
Payments on line-of-credit and long-term debt ( 816) ( 563)
Net Cash Provided by Financing Activities 1,550 904
---------- ----------
Net Increase in Cash and Cash Equivalents 289 221
CASH AND CASH EQUIVALENTS:
At beginning of period 1,043 140
---------- ----------
At end of period $ 1,332 361
========== ==========
<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 MARCH 31
(unaudited)
(In thousands, except per share data)
<CAPTION>
1996 1995
(restated)
<S> <C> <C>
INCOME FROM CONTINUING OPERATIONS
Entertainment revenues $ 880 $ 749
Hospitality revenues 921 810
Operating costs - entertainment 1,002 1,151
Operating costs - hospitality 575 501
Loss on gaming projects 771 ---
General and administrative expense 630 438
Other income (expense) ( 595) 31
---------- ----------
LOSS FROM CONTINUING OPERATIONS ( 1,772) ( 500)
DISCONTINUED OPERATIONS:
Income from discontinued operations net of
applicable taxes --- 29
---------- ----------
NET LOSS $( 1,772) $( 471)
========== ==========
NET LOSS PER COMMON SHARE $( .20) $( .06)
========== ==========
Weighted average shares, common stock 8,896,044 7,465,529
========== ==========
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $( 1,772) $( 471)
Adjustments to reconcile net loss to net
cash (used in) provided by operating
activities
Discount upon conversion of subordinated
debentures 278 -
Depreciation and amortization 321 303
Changes in assets and liabilities
Accounts receivable ( 41) ( 45)
Prepaid expenses ( 305) ( 134)
Other assets ( 8) 6
Accounts payable 237 ( 111)
Accrued expenses 267 352
---------- ----------
Net Cash Used In Operating Actvities ( 1,023) ( 100)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease (increase) in restricted cash ( 3) 235
Purchase of property and equipment ( 133) ( 16)
Decrease (increase) in deferred development
costs 470 ( 176)
Decrease in due to/from related parties-net 20 19
Net Cash (Used In) Provided by Investing ---------- ----------
Activities 354 62
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock and
other equity transactions 250 112
Proceeds from debenture offering 1,493 ---
Proceeds from line-of-credit borrowings --- 330
Payments on line-of-credit and long-term
debt ( 365) ( 354)
---------- ----------
Net Cash Provided by Financing Activities 1,378 88
---------- ----------
Net Increase in Cash and Cash Equivalents 709 50
CASH AND CASH EQUIVALENTS:
At beginning of period 623 311
---------- ----------
At end of period $ 1,332 $ 361
========== ==========
<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 in-
formation reflects all adjustments (consisting solely of normal recurring ad-
justments) 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 theatre, the results of
operations for the six-month and three-month periods ended March 31, 1996 are
not necessarily indicative of the results to be expected for the full year.
NOTE 2 Debt
The Company's debt at March 31, 1996 consists primarily of a first lien
mortgage on its Grand Hinckley Inn ($2,890,000); a secured furniture and equip-
ment loan relating to the Grand Hinckley Inn ($111,000); a first lien mort-
gage on the Country Tonite Theatre ($7,683,000); a working capital line-of-
credit owing to Grand Casinos, Inc. due in full on June 30, 1996 of $789,000,
and convertible debentures totalling $1,650,000.
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 June 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 May 13,
1996, $225,000 of convertible debentures have been converted into 102,774
shares of common stock.
NOTE 4 Deferred Development Costs
Deferred development costs consist of externally incurred charges princi-
pally related to the development of the Company's rights to receive, individual-
ly, certain fees out of gaming revenues anticipated to be generaged by the
Pokagon Indians in Indiana and Michigan.
<PAGE>
NOTE 5 Supplemental Disclosure of Cash Flow Information
Cash expended during the six months ended March 31, 1996 and 1995 for
interest was $614,000 and $514,000, respectively, and income tax payments for
the same periods were $70,000 and $1,000, respectively. The Company has federal
and state tax loss carryforwards 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 signi-
ficant factors which have affected the Company's financial position and operat-
ing results during the periods included in the accompanying condensed consoli-
dated financial statements.
SIX MONTHS ENDED MARCH 31, 1996 COMPARED TO SIX MONTHS ENDED MARCH
31, 1995
Revenues from continuing operations for the six months ended March 31, 1996
aggregated $5,061,000, including hospitality segment revenues of $1,793,000
(from the Grand Hinckley Inn) and entertainment segment revenues of $3,268,000
($2,171,000 for the Country Tonite Theatre and $1,097,000 for the Country Tonite
production show). For the six months ended March 31, 1995, comparable revenues
totaled $3,979,000, including $1,650,000 for the hospitality segment and
$2,329,000 for the entertainment segment ($1,122,000 for the Country Tonite
Theatre and $1,207,000 for the Country Tonite production show).
The Country Tonite production show had operating costs (including general
and administrative costs and depreciation) of $894,000 for the six months ended
March 31, 1996, resulting in operating income of $203,000 for the period. For
the six months ended March 31, 1995, comparable operating costs were $1,111,000,
resulting in operating income of $96,000 for the period. Operating costs in the
first six months of fiscal 1996 were lower due to reduced administrative costs.
Hospitality operating costs (including project, general and administrative
costs, and depreciation) were $1,084,000 for the six months ended March 31,
1996, producing operating income of $709,000. During this period, the hotel had
an average daily occupancy rate of 83%, with an average daily room rental rate
of $54.00 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 $769,000 with operating income of $881,000. The average daily
occupancy rate was 80% and the average daily room rental rate was $53.00. Under
the Company's profit sharing arrangement with Grand Casino Hinckley, the Company
allocated approximately $180,000 in profit sharing fees to the enterprise for
the first six months of fiscal 1996. There was no profit sharing required
during the comparable period in fiscal 1995. The increase in operating costs
between the 1996 and 1995 fiscal periods was due principally to 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 $1,789,000 for the six months ended March 31, 1996, producing operating
income of $381,000 for the period. Operating costs were $1,458,000, resulting
in an operating loss of $336,000, for the same period in the prior fiscal year,
as a result of significant marketing and start-up costs.
During the first six months of fiscal 1996, the Country Tonite Theatre
averaged daily paid attendance of 1,619, with an average ticket price of $14.03,
compared to average paid attendance of 983 and an average ticket price of $14.97
during the first six months of 1995. The substantial increase in ticket sales
and revenues resulted from enhanced marketing efforts and improvements to the
facility.
The Company's corporate general and administrative expenses aggregated
$1,181,000 for the six months ended March 31, 1996, compared to $796,000 for the
same period in the prior year.
Interest expense totaled $941,000 for the first six months of fiscal 1996,
compared to $547,000 for the first six months of fiscal 1995. The increase
reflects additional indebtedness and an increase in the prime rate as well as
a $278,000 charge in the quarter ended March 31, 1996 for the discount upon
conversion of subordinated debentures.
THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE MONTHS ENDED
MARCH 31, 1995
Revenues from continuing operations for the three months ended March 31,
1996 aggregated $1,801,000, including hospitality segment revenues of $921,000
(from the Grand Hinckley Inn) and entertainment segment revenues of $880,000
($339,000 for the Country Tonite Theatre and $541,000 for the Country Tonite
production show). For the three months ended March 31, 1995, comparable
revenues totaled $1,559,000, including $810,000 for the hospitality segment and
$749,000 for the entertainment segment ($188,000 for the Country Tonite Theatre
and $561,000 for the Country Tonite production show).
The Country Tonite production show had operating costs (including general
and administrative costs and depreciation) of $454,000 for the three months
ended March 31, 1996, resulting in operating income of $87,000 for the period.
For the three months ended March 31, 1995, comparable operating costs were
$510,000, resulting in operating income of $51,000 for the period. Operating
costs in the second quarter of fiscal 1996 were lower due to reduced administra-
tive costs.
<PAGE>
Hospitality operating costs (including project, general and administrative
costs, and depreciation were $577,000 for the three months ended March 31, 1996,
producing operating income of $346,000. During this period, the hotel had an
average daily occupancy rate of 90%, with an average daily room rental rate of
$51.00 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 $398,000 with operating income of $412,000. The average daily
occupancy rate was 82% and the average daily room rental rate was $50.00. Under
the Company's profit sharing arrangement with Grand Casino Hinckley, the Company
allocated approximately $90,000 in profit sharing fees to the Enterprise for the
second quarter of fiscal 1996. There was no profit sharing required during the
comparable period in fiscal 1995. The increase in operating costs between the
1996 and 1995 fiscal periods was due principally to profit sharing fees.
The Country Tonite Theatre was closed for the off-season for most of the
second quarter of fiscal 1996, having reopened on March 14, 1996, the beginning
of the tourist season in Branson, Missouri. Country Tonite Theatre operating
costs (including project, general and administrative costs and depreciation)
were $548,000 for the three months ended March 31, 1996, resulting in an oper-
ating loss of $210,000 for the quarter. Operating costs were $495,000, result-
ing in an operating loss of $307,000, for the same period in the prior fiscal
year, as the result of significant marketing and start-up costs.
During the second quarter of fiscal 1996, the Country Tonite Theatre
averaged daily paid attendance of 1,446, with an average ticket price of $16.20,
compared to average paid attendance of 1,051 and an average ticket price of
$15.10 during the second quarter of fiscal 1995. The substantial increase in
ticket sales and revenues resulted from enhanced marketing efforts and improve-
ments to the facility.
The Company's corporate general and administrative expenses aggregated
$630,000 for the three months ended March 31, 1996 compared to $438,000 for the
same period in the prior year. The current year quarter reflects higher legal
and professional fees.
CAPITAL EXPENDITURES
Capital expenditures by the Company were $133,000 for the three months
ended March 31, 1996 compared to $16,000 for the comparable period in the prior
year. Capital expenditures for the 1996 fiscal quarter consisted principally of
additional equipment purchases for the Country Tonite Theatre.
<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, respective-
ly. 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 fi-
nancing 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 arrange-
ment 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 only draw $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 available only for payment of any 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 $500,000 in principal amount.
The Grand Hinckley Inn first mortgage note, approximately $2,890,000 in
principal amount of which was outstanding at March 31, 1996, is payable in
monthly installments of principal and interest of $44,725 through May 1, 2004.
In addition, an aggregate of approximately $111,000 of equipment financing was
then outstanding. The Country Tonite Theatre mortgage note, with an outstanding
principal balance of $7,683,000 at March 31, 1996, is payable in monthly
installments of principal and interest of $73,035, with a final payment due at
maturity of $7,078,000. The $789,000 principal amount outstanding under the
credit line is due on June 30, 1996.
In order to restore liquidity to the Company's operations, 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), an enhanced market-
ing 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 re-
ceived in June 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 May 13, 1996, $225,000
of principal ampunt of the debentures have been converted into 102,744 common
shares.
<PAGE>
The Company did not consummate the planned purchase of certain assets of
the Palace Casino. As a result, the Company expensed costs totaling approxi-
mately $771,000 in the quarter ended March 31, 1996.
Although the Company's working capital position remained negative as of
March 31, 1996, all debt payments were timely made. In addition, cash
balances continue to improve and an operating profit was realized in the last
two quarters of fiscal 1995 and the first quarter of fiscal 1996 for the
hospitality and entertainment segments. Moreover, revenues at the Country
Tonite Theatre improved substantially in fiscal 1995 and the first two
quarters of fiscal 1996, and management anticipate positive net income and
cash flow from such operations during the peak season months of calendar 1996.
If profits from continuing operations are achieved on an annual basis, it
is unlikely that substantial income tax payments will be required until existing
state and federal tax loss carryforwards of approximately $10.9 million are
absorbed.
Management believes that sums 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, including the remaining balance of $789,000 due under its
line of credit on June 30, 1996, although no assurance can be given in this
regard.
SEASONALITY
The Company expects its hotel operations will be affected by seasonal
factors, including holidays, weather and travel conditions. The theatre oper-
ation 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 theatres like the Company's 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, cer-
tain 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 cur-
rent 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 follow-
ing: 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;
changes in travel patterns which could affect demand for the Company's hotels;
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 Litigation Reform
Act of 1995, and as such, speak only as of the date made.
<PAGE>
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 March 31, 1996, except as described below.
On April 17, 1995, David C. Fondrie, a former Chief Executive officer and
President of the Company brought suit against the Company and its chairman in
connection with the termination of his employment contract. On February 13,
1996, the parties entered into a Settlement Agreement and Mutual Release
pursuant to which the Company has paid $20,000 and issued 15,000 shares of the
common Stock to Mr. Fondrie. The Company has also agreed to pay an additional
$20,000 on or before March 30, 1996 to Mr. Fondrie and to register the shares on
a piggy-back basis. Mr. Fondrie has released the Company and its chairman from
all claims. The parties have filed a stipulation and order for the dismissal of
the court action with prejudice.
On November 13, 1995, Casino Resorts, Inc., a Minnesota corporation, com-
menced 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 termination from
employment 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.
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,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.
<PAGE>
Item 2. Exhibits and Reports on Form 8-K
1. Exhibits
1. Financial Data Schedule(EX-27)
2. Reports on Form 8-K
The following Forms 8-K have been filed during the three months
ended March 31, 1996:
1. January 4, 1996 announcing exercise of certain company warrants.
2. January 30, 1996 reporting termination of chief financial officer.
3. January 31, 1996 reporting the termination of the agreement to
purchase certain Palace Casino assets.
4. March 7, 1996 reporting the private sale of debentures.
<PAGE>
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 May 16, 1997 s/ John J. Pilger
John J. Pilger, President & CEO
Date May 16, 1997 s/ Maurice P. Gaudet
Maurice P. Gaudet, Chief Financial Officer
<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 March 31, 1996 and is qualified in its entirety by reference
to such financial statements
</LEGEND>
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 1332
<SECURITIES> 0
<RECEIVABLES> 601
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2758
<PP&E> 17574
<DEPRECIATION> (2061)
<TOTAL-ASSETS> 21111
<CURRENT-LIABILITIES> 3504
<BONDS> 0
0
0
<COMMON> 89
<OTHER-SE> 5579
<TOTAL-LIABILITY-AND-EQUITY> 21111
<SALES> 5061
<TOTAL-REVENUES> 5061
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1549)
<EPS-PRIMARY> (.18)
<EPS-DILUTED> (.18)
</TABLE>
