<PAGE>
SECURITIES AND EXCHANGE: COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
(Mark One)
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 (FEE REQUIRED)
For the fiscal year ended September 30, 1996
AMENDMENT #4
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE
ACT OF 1934 (NO FEE REQUIRED)]
Commission file number 0-22242
CASINO RESOURCE CORPORATION
(Name of the small business issuer in its charter)
MINNESOTA 41-0950482
(State or jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
707 Bienville Boulevard
Ocean Springs, MS 39564
(Address of principal executive offices)
Issuer's telephone number (601) 872-5558
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Name of each exchange on which registered: N/A
Securities registered pursuant to Section 12(g) of the Exchange Act: Common
Stock and Class A Warrants
Check whether the company (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the Company was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes X No .
--- ---
Check if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-B is not contained herein, and will not be contained, to the best of
Registrant's knowledge, in the definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. [ ]
The Company's revenues for the fiscal year ended September 30,1996 were
$12,906,000.
As of December 13, 1996, 10,043,364 shares of Common Stock were
outstanding, and the aggregate market value of such Common Stock (based upon the
last reported sale price on the Nasdaq National Market), excluding outstanding
shares beneficially owned by affiliates was approximately $17,575,887.
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company opened the Country Tonite Theatre in Branson, Missouri; the
Grand Hinckley Inn in Hinckley, Minnesota in May 1994. The Company had
previously purchased the Country Tonite production show in March 1994.
RESULTS OF OPERATIONS
The following financial data presented below has been derived from the
Company's Consolidated Financial Statements for the fiscal years ended
September 30, 1996 and 1995.
Year Ended September 30
------------------------
1996 1995
-------- ---------
(in thousands)
INCOME FROM CONTINUING OPERATIONS
Entertainment revenues $8,938 $ 6,750
Hospitality revenues 3,968 3,658
Operating expense - entertainment 6,215 5,743
Operating expense - hospitality 2,660 2,032
General and administrative expense 2,190 2,006
Interest expense 1,828 1,193
Other income (expense) (540) 443
LOSS FROM CONTINUING OPERATIONS (527) (123)
DISCONTINUED OPERATIONS
Income from discontinued operations - 162
-------- ---------
NET INCOME (LOSS) $ (527) $ 39
-------- ---------
-------- ---------
Following is management's discussion and analysis of significant factors
which have affected the Company's financial position and operating results
during the periods reflected in the accompanying consolidated financial
statements.
<PAGE>
FISCAL 1996 COMPARED TO FISCAL 1995
CONSOLIDATED
The Company's revenues from continuing operations were $12,905,949, an
increase of $2,498,076, or 24%, from the $10,407,873 recorded in fiscal 1995.
Of the increase $2,188,241, or 88%, was provided by the entertainment segment
with the hospitality segment accounting for the remaining increase of $309,835.
ENTERTAINMENT
COUNTRY TONITE PRODUCTION SHOW
Country Tonite Production show revenues totaled $2,192,360 in fiscal 1996,
a decline of $173,762, or 7.3%, from fiscal 1995 revenues of $2,366,122. The
decline was due principally to a lower contractual rate with the Aladdin Hotel
in calendar 1996. Despite the decline in revenues, operating income increased
$205,300, or 85%, to $446,271 in fiscal 1996 from $240,971 in fiscal 1995.
Management successfully reduced operating costs (including project, general and
administrative costs and depreciation) from $2,125,152 in fiscal 1995 to
$1,746,089 in fiscal 1996, a savings of $379,063, or 18%, principally through a
concerted effort to reduce general and administrative expenses.
COUNTRY TONITE THEATRE
With paid attendance at the Branson Theatre reaching 40% of capacity in
fiscal 1996, up from 29% in fiscal 1995, and average ticket prices increasing
from $14.87 in fiscal 1995 to $15.57 in fiscal 1996, revenues increased
$2,362,003, or 54%, from the fiscal 1995 total of $4,383,934 to $6,745,937 in
fiscal 1996. Operating expenses (including project, general and administrative
costs and depreciation) rose at a lower pace by $850,376, or 24%, to $4,468,470
in fiscal 1996 from $3,618,094 in fiscal 1995. The economies of scale evident
at the 40% paid occupancy level provided an increase in operating income of
$1,511,627 or 197% to $2,277,467 in fiscal 1996 from $765,840 in fiscal 1995.
The marketing efforts at the Country Tonite Theatre and its acceptance in the
market have resulted in significant year to year increases in attendance and
revenues from the initial 1994 period.
HOSPITALITY
GRAND HINCKLEY INN
In fiscal 1996, the Grand Hinckley Inn continued its historical high
occupancy rates, achieving an average occupancy of 86% and average daily rate of
$54.85 compared to an average occupancy rate of 82% and an average daily rate of
$56.63 in fiscal 1995. Revenues
<PAGE>
for fiscal 1996 increased $309,835, or 8%, to $3,967,652 in fiscal 1996 from
$3,657,817 in fiscal 1995. Operating income fell $318,199, or 20%, from
$1,625,585 in fiscal 1995 to $1,307,386 in fiscal 1996. Operating expenses
(including project, general and administrative costs and depreciation) rose
$628,034, or 31%, to $2,660,266 in fiscal 1996 from $2,032,232 in fiscal 1995.
The increase in operating expenses and resulting decrease in operating income
were principally the result of higher property taxes and profit sharing
expenses. Profit sharing with the Enterprise totaled $786,000 in fiscal 1996
compared to $361,000 in fiscal 1995, as hotel revenues exceeded the cumulative
threshold during fiscal 1995.
GENERAL AND ADMINISTRATIVE
The Company's general and administrative expenses aggregated $2,190,154 in
fiscal 1996 compared to $2,006,272 for fiscal 1995. The increase resulted
primarily from higher legal and professional fees.
GAMING
Loss on gaming projects of $742,000 for fiscal 1996 consists principally of
the loss on abandonment of the Palace Casino acquisition in January 1996 of
$727,000. Although the Company reached an agreement as part of a joint venture
to again acquire the Palace Casino in September 1996, generally accepted
accounting principles do not allow reversal of the abandonment loss.
Loss on gaming projects for fiscal 1995 consists of $250,000 of fee income
received upon signing of a gaming contract, $600,000 of fee income in exchange
for the relinquishment of rights to gaming contracts, offset by $944,248 of
abandonment costs related principally to the Hoh, Cherokee and Louisiana gaming
projects.
OTHER
Other income for 1995 includes $403,000 from the reversal of excess
reserves principally related to the closing of the Biloxi Star Theatre.
During fiscal 1994, management elected to discontinue its recreational
property marketing efforts, and revenue and expenses from those activities were
categorized as discontinued operations. A gain of $162,217 from discontinued
operations during fiscal 1995 resulted from final revenues being received, and
from the reversal of excess reserves related to closing the Company's Wisconsin
offices.
Interest expense totaled $1,828,052 for fiscal 1996 compared to
$1,193,403 for fiscal 1995. The increase from 1995 was due principally to a
$550,000 charge from the discount upon conversion of subordinated debentures.
The FASB has issued SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets
<PAGE>
Being Disposed of," which provides guidance on how and when impairment losses
are recognized on long-lived assets. This statement, when adopted, is not
expected to have a material impact on the Company.
The FASB has issued SFAS No. 123, "Accounting for Stock-Based
Compensation," which establishes a fair value based method of accounting for
stock-based compensation plans. This statement provides a choice to either
adopt the fair value based method of accounting or continue to apply APB Opinion
No. 25, which would require only disclosure of the pro forma net income and
earnings per share, determined as if the fair value based method had been
applied. The Company plans to continue to apply APB Opinion No. 25 when
adopting this statement, and accordingly, this statement is not expected to have
a material impact on the Company.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents increased $503,469 to $1,546,422 at September 30,
1996 from $1,042,953 at September 30, 1995. In addition to funds provided by
operations, the Company's principal source of funds in fiscal 1996 consisted of
a placement of convertible subordinated debentures of $1,493,000 and warrant
exercises which provided $918,000. The Company's principal use of funds in
fiscal 1996 consisted of additions to deferred development costs of $2,039,165
payments of notes payable and long-term debt totaling $1,389,322 and capital
expenditures of $278,722.
At September 30, 1996, the Company has approximately $100,000 available
under a line of credit with a bank.
The Company expects that available cash and cash from future operations
will be sufficient to meet the capital expenditures, debt service and working
capital requirements of its existing businesses. The Company will need to
raise approximately $7,000,000 to meet the currently estimated capital
requirements of its new businesses (Tunisia Casino - $5,000,000 and Pigeon
Forge Theatre - $600,000) and proposed acquisition (Palace Casino -
$1,400,000). These estimates are subject to change as future development
takes place. The sources of such funding have not yet been identified and
cannot be assured. As of September 30, 1996, the Company has deferred costs
totalling $682,435 related to the Tunisia project and $466,398 related to the
proposed Palace Acquisition. In addition the Company made $75,000 of capital
contributions to the Country Tonite - Pigeon Forge joint venture through
September 30, 1996.
Notes receivable totaling $1,232,000 related to the warrant exercise
originally due in January and December 1996 are in the process of being
restructured due to the payor's failure to pay. Collection of monies due
is not anticipated in the 1997 fiscal year.
<PAGE>
CAPITAL EXPENDITURES
Capital expenditures by the Company were $278,722 for the year ended
September 30, 1996 compared to $85,836 for the 1995 fiscal year. Capital
expenditures for 1996 consisted principally of additional equipment purchases
for the entertainment segment.
FUTURE OPERATIONS
The Company is currently evaluating new venues for its Country Tonite
production in such high-tourist areas as Myrtle Beach, South Carolina; Reno,
Nevada; and Laughlin, Nevada.
Potential new hospitality opportunities continue to be explored as well.
The Grand Hinckley Inn has been profitable since inception and management
is presently exploring potential new hospitality endeavors.
The Country Tonite production, playing at the Aladdin Hotel and Casino in
Las Vegas, is contracted through December 31, 1997.
In September 1995 the Company abandoned its efforts as to the Cherokee,
Louisiana and Hoh gaming projects, but concluded negotiations with Harrah's
Entertainment, Inc. ("Harrah's") whereby the Company will act as a consultant in
the development and management of one or more casinos to be funded by Harrah's
for the Pokagon Band of Potawatomi Indians in northern Indiana and in
southwestern Michigan. The Company will, upon commencement of operations,
receive 21.6% of Harrah's management fee, without being required to provide any
of the capital necessary for development.
In March 1997, the Company, through a 60% owned joint venture, will operate
a theatre in Pigeon Forge, Tennessee, as a new venue for the Country Tonite
Show.
Under terms of the prospective transaction to purchase the Palace Casino as
part of a joint venture, the Company is scheduled to close the transaction in
January 1997, assuming all regulatory clearances have been obtained.
The Company continues to pursue other opportunities to own and manage
additional non-gaming and gaming facilities either singularly or in conjunction
with other gaming industry participants.
<PAGE>
SEASONALITY
The Company expects its hotel operations will be affected by seasonal
factors, including holidays, weather and travel conditions. The theatre
operation in Branson, Missouri will also be affected by seasonal factors and in
addition will be closed annually from mid-December through mid-March, a period
when theatres normally close in Branson.
IMPACT OF INFLATION
Management of the Company 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. However, an increase in the rate of
inflation could adversely affect the Company's future operations and expansion
plans.
FOREIGN CURRENCY TRANSACTIONS
The Company's transactions with respect to the proposed casino venture in
Tunisia will be in dinars. As such, there are all the risks pertaining to
fluctuations in foreign exchange rates and potential restrictions or costs
associated with the transfer of funds to the United States.
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; 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 to the date
made.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, hereunto duly authorized.
CASINO RESOURCE CORPORATION
Date: June 9, 1997 By: /s/ JOHN J. PILGER
-----------------------------------
John J. Pilger,
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below on June 9, 1997 by the following persons on behalf of
the Registrant and in the capacities and on the dates indicated.
Signature and Title
-------------------
/s/ JOHN J. PILGER
-------------------------------------------
John J. Pilger, Chief Executive Officer,
President and Chairman of the Board of
Directors
/s/ MAURICE GAUDET
-------------------------------------------
Maurice Gaudet, Chief Financial Officer
/s/ NOREEN POLLMAN
-------------------------------------------
Noreen Pollman, Vice President - Operations
and Director
/s/ ROBERT J. ALLEN
-------------------------------------------
Robert J. Allen, Vice President -
Entertainment and Director
<PAGE>
CASINO RESOURCE CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT F-2
CONSOLIDATED FINANCIAL STATEMENTS
Balance Sheets F-3-4
Statements of Operations F-5
Statements of Stockholders' Equity F-6
Statements of Cash Flows F-7-8
Notes to Consolidated Financial Statements F-9-23
F-1
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Casino Resource Corporation
and Subsidiaries
Biloxi, Mississippi
We have audited the accompanying consolidated balance sheets of Casino
Resource Corporation and Subsidiaries as of September 30, 1996 and 1995, and
the related consolidated statements of operations, stockholders' equity and
cash flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Casino Resource Corporation and Subsidiaries at September 30, 1996 and
1995, and the results of their operations and their cash flows for the years
then ended, in conformity with generally accepted accounting principles.
BDO SEIDMAN, LLP
Chicago, Illinois
November 5, 1996, except for Note 14
as to which the date is
December 26, 1996 and Note 6 as to
which the date is May 19, 1997
F-2
<PAGE>
CASINO RESOURCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
September 30, 1996 1995
- --------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $1,546,422 $1,042,953
Restricted cash 338,602 327,261
Accounts receivable - trade and other, net of
allowance for uncollectibles of $3,043 in 1996
and $3,000 in 1995 307,204 525,885
Prepaid expenses 438,042 413,897
- --------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 2,630,270 2,309,996
- --------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION
AND AMORTIZATION 15,082,906 15,860,940
- --------------------------------------------------------------------------------------
OTHER ASSETS
Cost in excess of fair value of assets acquired, less
accumulated amortization of $124,645 in 1996 and
$76,395 in 1995 599,097 647,347
Deferred development costs 2,201,211 895,358
Notes and advances receivable - related parties 556,895 443,931
Deferred charges, less accumulated amortization
of $244,047 in 1996 and $231,825 in 1995 40,781 102,526
Deposits and other 673,384 691,350
- --------------------------------------------------------------------------------------
TOTAL OTHER ASSETS 4,071,368 2,780,512
- --------------------------------------------------------------------------------------
$21,784,544 $20,951,448
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
F-3
<PAGE>
CASINO RESOURCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
September 30, 1996 1995
- --------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $1,173,449 $1,657,878
Notes and accounts payable to related parties - 103,243
Note payable - Grand Casinos, Inc. 589,410 1,289,410
Current maturities of long-term debt 547,755 677,801
Accrued expenses and other liabilities 917,370 600,237
Provision for contingencies 29,647 101,000
- --------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 3,257,631 4,429,569
- --------------------------------------------------------------------------------------
LONG-TERM LIABILITIES
Long-term debt, less current maturities 9,952,366 10,487,701
Subordinated Convertible Debentures 350,000 -
- --------------------------------------------------------------------------------------
Total long-Term Liabilities 10,302,366 10,487,701
- --------------------------------------------------------------------------------------
TOTAL LIABILITIES 13,559,997 14,917,270
Commitments and Contingencies
STOCKHOLDERS' EQUITY
Preferred stock, 8% cumulative; $.01 par value;
authorized 5,000,000 shares; none issued - -
Common stock, $.01 par value; authorized 30,000,000
shares; 9,761,803 and 7,746,007 shares issued and
outstanding in 1996 and 1995, respectively 97,618 77,460
Additional paid-in capital 22,671,175 18,741,575
Notes receivable - common stock (1,232,000) -
Deficit 13,312,246 (12,784,857)
- --------------------------------------------------------------------------------------
TOTAL STOCKHOLDERS' EQUITY 8,224,547 6,034,178
- --------------------------------------------------------------------------------------
$21,784,544 $20,951,448
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
CASINO RESOURCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
YEAR ENDED SEPTEMBER 30, 1996 1995
- --------------------------------------------------------------------------------------
<S> <C> <C>
REVENUE
Revenue - entertainment $8,938,297 $6,750,056
Revenue - hospitality 3,967,652 3,657,817
- --------------------------------------------------------------------------------------
Total revenue 12,905,949 10,407,873
- --------------------------------------------------------------------------------------
COSTS AND EXPENSES
Operating costs - entertainment 6,214,560 5,743,246
Operating costs - hospitality 2,660,266 2,032,232
General and administrative 2,190,154 2,006,272
Other (income) expense - principally adjustments
of provisions of contingencies in 1995 (65,893) (503,071)
Interest expense - net of interest income of
$136,019 and $34,959 in 1996 and 1995 1,692,033 1,158,444
Loss on abandonment of gaming projects - net 742,218 94,248
- --------------------------------------------------------------------------------------
Total costs and expenses 13,433,338 10,531,371
- --------------------------------------------------------------------------------------
Loss from continuing operations (527,389) (123,498)
- --------------------------------------------------------------------------------------
INCOME FROM DISPOSAL OF DISCONTINUED OPERATIONS - 162,217
- --------------------------------------------------------------------------------------
Income from discontinued operations - 162,217
- --------------------------------------------------------------------------------------
NET INCOME (LOSS) $(527,389) $38,719
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
INCOME (LOSS) PER COMMON SHARE
Loss from continuing operations $(0.05) $(0.01)
Income from disposal of discontinued operations 0.02
- --------------------------------------------------------------------------------------
NET INCOME (LOSS) PER COMMON SHARE $(0.05) $0.01
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 8,980,105 7,609,076
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
CASINO RESOURCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Additional Notes
Common Stock Paid-in Receivable
Shares Amount Capital Common Stock Deficit Total
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, SEPTEMBER 30, 1994 7,390,007 $73,900 $17,561,810 $ - ($12,823,576) $4,812,134
Issuance of common stock - purchase
of gaming contract 100,000 1,000 330,250 - 331,250
Issuance of common stock - acquisition 10,000 100 20,212 - 20,312
Issuance of common stock - employee stock
options 29,000 290 3,980 - 4,270
Issuance of common stock - settlement of
advances and expenses 92,000 920 183,973 - 184,893
Issuance of common stock - exercise of
warrants 125,000 1,250 530,000 - 531,250
Other - - 111,350 - 111,350
Net income - - - 38,719 38,719
- --------------------------------------------------------------------------------------------------------------------------------
BALANCE, SEPTEMBER 30, 1995 7,746,007 77,460 18,741,575 - (12,784,857) 6,034,178
Issuance of common stock - conversion of
debenture 839,852 8,399 1,768,390 - 1,776,789
Issuance of common stock - acquisition 17,500 175 35,919 - 36,094
Issuance of common stock - settlement of
litigation 15,000 150 31,725 - 31,875
Issuance of common stock - exercise of
warrants 1,143,444 11,434 2,138,566 (1,232,000) - 918,000
Cancellation of previously issued warrants - - (45,000) - (45,000)
Net loss - - - (527,389) (527,389)
- --------------------------------------------------------------------------------------------------------------------------------
BALANCE, SEPTEMBER 30, 1996 9,761,803 $97,618 $22,671,175 ($1,232,000) ($13,312,246) $8,224,547
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
CASINO RESOURCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Year ended September 30, 1996 1995
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Loss from continuing operations ($527,389) ($123,498)
Adjustments to reconcile loss from continuing operations to
net cash provided by (used in) operating activities
Depreciation and amortization 1,203,049 1,349,909
Abandonment cost - gaming ventures 742,218 255,255
Discount upon conversion of convertible debentures 550,000 -
Provision for doubtful accounts 43 (33,458)
Expenses paid through issuance of common stock 57,297 84,893
Loss on sale/abandonment of property and equipment - 104,986
Changes in assets and liabilities
Accounts receivable - trade and other 218,638 71,448
Prepaid expenses 22,141 (97,733)
Other assets 17,966 103,087
Accounts payable - trade (484,429) (1,216,295)
Accrued expenses and other liabilities 317,133 (192,093)
- ---------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY CONTINUING OPERATING ACTIVITIES 2,116,667 306,501
Income from discontinued operations - 162,217
Change in provision for contingencies (71,353) (189,565)
- ---------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 2,045,314 279,153
- ---------------------------------------------------------------------------------------------------
Cash Flows From Investing Activities
Decrease (increase) in restricted cash (11,341) 692,793
Increase in deferred development costs (2,039,165) (759,220)
Purchase of property and equipment (278,722) (85,536)
Increase in due to/from related parties (26,207) (91,670)
Increase in deferred charges and other (272,584) (106,492)
- ---------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (2,628,019) (350,125)
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
</TABLE>
F-7
<PAGE>
CASINO RESOURCE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
Year ended September 30, 1996 1995
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock and other equity
transactions 801,555 586,869
Proceeds from (payments on) line-of-credit borrowings (700,000) 1,289,410
Proceeds from long-term debt 1,673,941
Payments on long-term debt (689,322) (902,292)
- ---------------------------------------------------------------------------------------------------
Net cash provided by financing activities 1,086,174 973,987
- ---------------------------------------------------------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents 503,469 903,015
Cash and Cash Equivalents, at beginning of year 1,042,953 139,938
- ---------------------------------------------------------------------------------------------------
Cash and Cash Equivalents, at end of year $1,546,422 $1,042,953
- ---------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for
Interest $1,296,763 $1,166,139
Income taxes 68,603 21,223
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Issuance of common stock as payment for deferred
development costs $36,084 $491,250
Conversion of subordinated convertible debentures 1,300,000 -
Deferred cost write-offs (49,670) -
</TABLE>
F-8
<PAGE>
NOTE 13. COMMITMENTS AND CONTINGENCIES
A) Under a Marketing Enhancement Agreement, entered into with the Tribal
Commission of the Mille Lacs Band of Ojibwe Indians (owners of the Grand Casino
Hinckley) and Grand, the Company receives a $20 fee per night per occupied room.
The Company recognized approximately $982,000 and $925,000 from the marketing
subsidy in 1996 and 1995, respectively. In return for the marketing enhancement
fee, the hotel has entered into a revenue-sharing plan with the casino which
requires that 50% of all room revenues above a defined cumulative threshold (up
to the amount of marketing subsidy paid to the hotel) be paid to the casino.
The cumulative threshold was exceeded in fiscal 1995. Payments due under the
revenue sharing plan totaled $786,000 and $361,000 in 1996 and 1995,
respectively. Payments to Grand under this windfall profit sharing agreement
for fiscal 1997 will vary based on revenues and the change, if any, in the
operating cost threshold. The Company and the Tribal Commission of the Mille
Lacs Band have entered into an agreement regarding future ownership of the
hotel. The Tribal Commission has the unilateral right to purchase the hotel on
the anniversary date of its initial occupancy (May 1994) in each of years 2001
through 2006 at a cost equivalent to the original development cost of the hotel
plus the depreciated cost of personal property and all inventories. Conversely,
in the event that the Tribal Commission allows the construction of more than 500
hotel or equivalent rooms on property owned by the Tribal Commission or Grand,
the Company has the right to require the Tribal Commission to purchase the hotel
at the cost stated above.
B) The Company has guaranteed rent payments, totaling $360,000 per year
for up to five years, of its 60% owned joint venture, Country Tonite Theatre,
L.L.C., commencing March 1, 1997.
<PAGE>
C) The Company commenced an arbitration action in November 1994 with the
Arbitration Association in Minneapolis, Minnesota, against Cuningham Hamilton
Quiter, P.A. (CHQ), the architect it retained in connection with the
construction of the Biloxi theatre. In this action, the Company seeks to
recover the damages it believes it incurred as a result of the architectural
design work on the Biloxi theatre relating to cost overruns in the construction
of the Biloxi theatre. The arbitration demand seeks damages in an amount in
excess of $1,000,000. On December 30, 1994, the architectural firm commenced a
suit in a Mississippi state court seeking, among other things, to foreclose on a
mechanics' lien it filed on the Biloxi theatre project in the amount of
approximately $321,000. The architectural firm has also asserted claims for
breach of contract, tortuous interference with economic advantage and punitive
damages. The Company previously placed $321,000 in escrow to cover such
mechanics' lien claim. The Company and the architectural firm have agreed to,
among other things, resolve all disputes between them with respect to the Biloxi
theatre project in the Minneapolis arbitration action and stay the lawsuit in
Mississippi. The arbitration action was heard by a panel of arbitrators in
November. A decision was rendered on December 26, 1996 (See Note 14).
D) In 1995, a suit was brought against the Company in the Federal District
Court of New Jersey in connection with the Company's former ownership of the
Biloxi theatre. The Company sold the Biloxi Star Theatre in September 1994.
Venue was subsequently transferred to the Federal District Court for the
Southern District of Mississippi. The plaintiff asserts it had a contract
with the Company for the promotion of eight professional boxing events at the
Company's former Biloxi theatre. Total claims are for $500,000 in compensatory
damages, punitive damages and attorneys' fees, interest and costs, and other
relief the court may deem just and proper. The Company intends to vigorously
defend itself in this action.
E) In May 1995, the Company was advised by written correspondence that a
Minnesota company claims an interest in certain assets of Monarch, principally
Monarch's interest in Indian gaming ventures. No specific amount was claimed.
On November 13, 1995 Casino Resorts, Inc. commenced an action in the Hennepin
County District Court in Minneapolis, Minnesota against Monarch and the Company
alleging breach of contract against Monarch and tortuous interference with a
contractual or business relationship against the Company. Management of the
Company and Monarch each plan to vigorously defend themselves against the
claims.
F) James Barnes and Prudence Barnes, two former officers of a subsidiary
of the Company have brought suit on January 31, 1996 against the Company in the
State District Court, Clark County, Nevada, in connection with their employment
termination in June 1995. No specific amount of damages has been claimed,
however, prior to the filing of the suit the plaintiffs offered to settle the
matter for $500,000. The Company intends to vigorously defend itself in this
matter.
In March 1996, PDC, a Minnesota limited liability company, and two of its
officers filed suit against the Company and Harrah's Entertainment, in
Minnesota, the Fourth Judicial District Court of Minnesota, (and Michigan,
which venue has been dropped), alleging tortuous 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 intends to vigorously defend itself in this matter.
G) The Company is also party to other items of litigation, none of which,
either individually or collectively, are material.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
Casino Resource Corporation and Subsidiaries (the "Company") is primarily
engaged in the hospitality and entertainment businesses. The Company owns
and operates a hotel in Hinckley, Minnesota (the Grand Hinckley Inn), a
production theatre in Branson, Missouri (the Country Tonite Theatre) and
a production company in Las Vegas, Nevada (Country Tonite Enterprises)
and has formed a joint venture, Country Tonite Theatre, L.L.C., to lease
and operate a theatre in Pigeon Forge, Tennessee beginning in March 1997.
The Company is in the process of entering the gaming industry as a result
of its participation with Harrah's Entertainment, Inc. in a major Indian
gaming award in Indiana and Michigan, its pending contract as part of a
joint venture to purchase an existing casino in Biloxi, Mississippi, and
its agreement to lease and operate a casino in Tunisia.
BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts
of Casino Resource Corporation and its majority and wholly owned
subsidiaries. All significant intercompany balances and transactions have
been eliminated.
ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statement, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
F-9
<PAGE>
CASH AND CASH EQUIVALENTS
For purposes of the consolidated statements of cash flows, cash
equivalents consist of short-term investments having an original maturity
of three months or less. Carrying amounts approximate fair value because
of the short-term maturity of the investments.
RESTRICTED CASH
The Company has restricted cash being held by a Mississippi state court
in conjunction with litigation involving the construction and subsequent
sale of the Biloxi Star Theatre.
CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Company to significant
concentrations of credit risk consist principally of cash instruments and
accounts receivables. The Company maintains cash, cash equivalents with
various financial institutions. The Company provides credit in the normal
course of business. The Company performs ongoing credit evaluation of its
customers and maintains allowances for potential credit loses, if
necessary.
ADVERTISING
Advertising expenditures are generally charged to operations in the year
incurred and totaled $289,906 in 1996 and $271,186 in 1995. The company has
advertising commitments for fiscal 1997 totaling $24,960 at September 30,
1996, which consist primarily of outdoor sign contracts.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. For financial reporting
purposes depreciation and amortization is computed over the estimated
useful lives of the assets (or the lease term, if shorter) by the
straight-line method over the following lives:
Land improvements 20 - 25 years
Buildings 35 - 40 years
Leasehold improvements 10 - 15 years
Office equipment 5 - 6 years
Transportation equipment 5 - 7 years
Other 5 years
COST IN EXCESS OF FAIR VALUE OF ASSETS ACQUIRED
Cost in excess of fair value of assets acquired is amortized using the
straight-line method over fifteen years.
F-10
<PAGE>
DEFERRED DEVELOPMENT COSTS
Deferred development costs consist of external costs incurred in the
evaluation of potential ventures. The costs are expensed if a
determination is made to abandon the project.
DEFERRED CHARGES
Deferred charges consist of pre-opening expenses at the Country Tonite
Theatre, loan and convertible debt origination fees and organization
expenses. Amortization is on the straight-line method over estimated
useful lives ranging from one to five years.
DISCONTINUED OPERATIONS
Until the third quarter of 1994, the Company was in the resort marketing
business. The operations of this business segment have been accounted for
as a discontinued operation. A gain of $162,217 from discontinued
operations in 1995 results from reversing a portion of the provision for
contingencies established in 1994 and from additional revenues being
received during 1995 whereas related operating expenses were previously
recognized.
NET INCOME (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE
Net income (loss) per share data are computed using the weighted average
number of common stock outstanding during each period. Common equivalent
shares from stock options and warrants have been included in the
computation using the treasury stock method only when their effect would
be dilutive. Fully dilutive net income per share has not been presented
as the difference is not significant.
RECLASSIFICATIONS
Certain reclassifications have been made to the previously reported 1995
financial statements to conform with the 1996 presentation.
RECENT ACCOUNTING PRONOUNCEMENTS
Effective for fiscal years beginning after December 15, 1995, Statement
of Financial Accounting Standards Number 121; "Accounting for the
Impairment of Long-Lived Assets to be Disposed of" ("Statement 121")
was adopted by the Financial Accounting Standards Board ("FASB"). The
adoption by the Company of Statement 121 is not expected to have a
materially adverse effect on the Company's financial condition or results
of operations.
In December 1995, FASB issued Statement of Financial Standards Number
123, "Accounting for Stock-Based Compensation." This standard encourages a
new method of recognizing stock-based compensation expense using an option
pricing model measurement of estimated fair value of employee stock options.
Alternatively, companies may choose to retain the current approach set forth
in Accounting Principles Board Opinion Number 25, "Accounting for Stock
Issued to Employees," and provide expanded footnote disclosure as to what
the
F-11
<PAGE>
effects of utilizing the option pricing model measurement would have been.
Statement 123 is effective for fiscal years beginning in 1996. The Company
does not plan to use the option pricing model measurement of Statement 123
and will provide the required footnote disclosure.
2. RELATED PARTIES
The related party receivables and payables of the Company consist
primarily of funds loaned to and from the Company by and to shareholders
and related entities.
As described in Note 8, the Company has leased various equipment and
facilities from related parties.
Notes and advances receivable includes notes and related interest due
from officers and stockholders totaling $806,895 and $443,931 at September
30, 1996 and 1995, respectively, at interest rates ranging from 7% to 9.5%.
The notes mature from December 31, 1996 to October 15, 1998. Interest
income from these notes was $88,448 and $30,840 in 1996 and 1995,
respectively.
Notes and accounts payable at September 30, 1995 consist of
reimbursements due officers and accrued and unpaid compensation to an
officer of the Company who is a significant shareholder and director.
The debt was due on demand and carried a 7% interest rate. Related
party interest expense was $1,065 and $17,277 in 1996 and 1995,
respectively.
In October 1996, the Company extended a $100,000 promissary note to an
officer with interest at the prime rate. The note matures on April 13,
1997 with interest payable quarterly.
Subsequent to year end, the Company extended a $135,000 line of credit to an
officer of the Company. The loan accrues interest at the prime rate and is
due on May 11, 1997. This line is secured by common stock.
3. PROPERTY AND EQUIPMENT
SEPTEMBER 30, 1996 1995
------------- ---- ----
Land and improvements $ 2,226,724 $ 2,226,724
Buildings 11,327,492 11,309,549
Leasehold improvements 404,364 404,364
Furniture, fixtures and equipment 3,711,359 3,450,580
----------- -----------
17,669,939 17,391,217
Less accumulated depreciation
and amortization (2,587,033) (1,530,277)
----------- -----------
Net property and equipment $15,082,906 $15,860,940
----------- -----------
----------- -----------
F-12
<PAGE>
4. DEFERRED DEVELOPMENT COSTS
Deferred development costs consist of the following:
SEPTEMBER 30, 1996 1995
------------------------------------------------------------------------
Pokagon Indian Gaming Project (A) $ 1,052,378 $ 645,287
Tunisia Casino Project (B) 682,435 -
Palace Casino Project (C) 466,398 250,071
------------------------------------------------------------------------
$ 2,201,211 $ 895,358
------------------------------------------------------------------------
(A) Monarch Casinos, Inc. sold its rights to the Pokagon Indian gaming
contract to the Company in fiscal 1995 for consideration consisting of
the Company's assumption of certain trade payables of the seller; the
Company's obligation to reimburse certain of the seller's principals for
travel and other new business development costs; the Company's
obligation to loan the seller limited amounts of funding; the execution
of an agreement with the seller for the payment of future new business
development fees; and the issuance of 100,000 of the Company's common
shares plus the contingent issuance of an additional 1.9 million common
shares (to be earned as the Pokagon gaming contract achieves certain
governmental approval levels and upon commencement of operations of the
initial casino).
Also, included in this amount is a $250,000 advance to an officer of
Monarch Casinos, Inc. This advance was made in accordance with the
contract described above. This advance accrues interest at 7% and
is due on demand after June 6, 1995, or will be canceled upon the second
anniversary date of the opening of the first Pokagon casino.
All external costs and costs assigned to the issuance of the Company's
common shares will be capitalized and expensed over five years
commencing with the receipt of initial management fees from the Pokagon
gaming venture.
The Company in turn entered into an agreement with Harrah's
Entertainment, Inc. ("Harrah's") whereby the Company's rights to the
Pokagon gaming contract were assigned to Harrah's in return for a share
of Harrah's future management fee from operations of planned Pokagon
tribal casinos. Harrah's is primarily responsible to fund all costs
attributable to development and operation of the casinos, receiving in
return a management fee, as defined. The Company, while not primarily
responsible to fund any such development or operational costs might, in
certain circumstances, be required to provide reimbursements to
Harrah's. The Company will receive 21.6% of Harrah's fees earned. The
Company has agreed to pay a percentage of the fees it earns from Indian
gaming contracts to certain consultants.
In addition to the agreement above, Harrah's agreed to reimburse the
Company for all the costs associated with the venture related to the
Eastern Band of Cherokee Indians in exchange for the Company renouncing
any rights or claims to any other business ventures of
F-13
<PAGE>
Harrah's and its affiliates. The amount to be reimbursed is $600,000
which is recorded as an other asset. Harrah's will pay CRC $120,000 per
year commencing on the opening of the first Pokagon casino and each year
after for four years. These payments will be reduced by $5,000 each
month for a period of 40 months to cover Harrah's costs for
administering the contract. Harrah's is in the process of obtaining the
necessary regulatory approvals for the project.
B) The Company entered into a lease agreement with Samara Casino
Company in June 1996 for the casino and its surroundings. The annual
rent is $460,000 with a ten percent increase each year plus a variable
percentage of the casino's gross income as defined per the agreement.
In 1996, the Company paid $682,435 for costs related to the lease
agreement. The principal portion of these costs, $480,000, are rent
prepayments for the casino's first year of operation. The casino has a
June 1, 1997 tentative opening date and this amount will be written off
over twelve months of the casino's opening.
The remaining costs incurred of $202,435 are costs associated with
obtaining the agreement including architect and legal fees. These costs
will be amortized overt the initial lease term of three years. The
lease agreement can be renewed for two successive periods of three years.
C) In 1995, the Company attempted to purchase certain assets of the
Palace Casino. In February 1996, the Company did not consummate the
planned purchase and expensed costs totaling approximately $727,000 of
which $250,071 were deferred at September 30, 1995.
In 1996, the Company entered into an operating agreement with two
individuals acting as joint tenants to purchase certain assets of the
Palace Casino. The Company has a 20% interest in the joint venture with
an option to purchase up to 49%.
The Company incurred $466,398 of costs relating to the project. The
costs consist principally of the Company's initial investment of
$400,000 and $46,094 for stock issued and other payments for land
rights. The acquisition is expected to close in the second quarter of
fiscal 1997.
F-14
<PAGE>
5. ACCRUED EXPENSES AND OTHER LIABILITIES
Accrued expenses and other liabilities consist of the following:
SEPTEMBER 30, 1996 1995
------------------------------------------------------------------------
Payroll and payroll taxes $204,888 $142,487
Sales tax 44,612 61,270
Interest 95,136 113,699
Real estate taxes 128,714 82,244
Other 444,020 200,537
------------------------------------------------------------------------
$917,370 $600,237
------------------------------------------------------------------------
6. SUBORDINATED CONVERTIBLE DEBENTURES
In February 1996, the Company completed a private placement of
$1,650,000, 8% subordinated convertible debentures (with net proceeds of
$1,493,000). The debentures have a one year maturity with conversion into
shares of common stock on or prior to the anniversary date at a price equal
to 75% of market value based on the then current trading prices. The
debentures were not registered under the Securities Act of 1933.
Through September 30, 1996, $1,300,000 of principal amount of the
debentures have been converted into 839,851 common shares.
Recognition of the discount upon conversion of the subordinated debentures
resulted in a charge of $550,000 to interest expense in 1996 with an
offsetting credit of $550,000 to Additional Paid-in capital.
7. LONG-TERM DEBT
Long-term debt consists of the following:
SEPTEMBER 30, 1996 1995
------------------------------------------------------------------------
Mortgage payable, prime plus 1% (9.25% at
September 30, 1996)(7% floor and 10% ceiling),
collateralized by real estate, payable in monthly
installments of $73,035 including interest through
March 1999, with a final payment of $7,077,978
due in April 1999 $7,600,142 $7,756,403
Mortgage payable, prime plus 2% (10.25% at
September 30, 1996)(11% ceiling), guaranteed
by Grand Casinos, Inc. (see Note 11),
collateralized by real estate, payable in monthly
installments of $43,942 including interest through
May 2004 2,771,952 3,000,151
F-15
<PAGE>
Other notes payable, interest at rates ranging from
8.5% to 10%, collateralized by real estate, other
assets and the personal guarantee by a certain
officer, payable in monthly installments of $3,002
through October, 2000. 128,027 126,628
Notes payable, 10.75%, repaid during 1996 0 282,320
-------------------------------------------------------------------------
10,500,121 11,165,502
Less current maturities (547,755) (677,801)
-------------------------------------------------------------------------
$ 9,952,366 $10,487,701
-------------------------------------------------------------------------
Maturities of long-term debt are as follows:
YEAR ENDING SEPTEMBER 30,
-------------------------------------------------------------------------
1998 $ 485,436
1999 7,538,639
2000 352,005
2001 383,969
Thereafter 1,192,317
-------------------------------------------------------------------------
$9,952,366
-------------------------------------------------------------------------
8. LEASE COMMITMENTS
The Company leases various equipment and facilities from related and
unrelated parties. These leases require that the Company pay
maintenance, utilities, insurance and taxes.
Based upon the terms of the leases, they have been classified in the
accompanying consolidated financial statements as operating leases.
Total rent expense under operating leases was $106,272 and $224,527 for
the years ended September 30, 1996 and 1995, respectively.
Related-party rent expense was $45,905 and $60,909 in 1996 and 1995,
respectively.
F-16
<PAGE>
Minimum annual rental commitments of noncancellable operating leases
covering facilities and equipment at September 30, 1996 are
approximately:
RELATED
YEAR ENDING SEPTEMBER 30, PARTY OTHER TOTAL
-------------------------------------------------------------------------
1997 $24,000 $641,979 $665,979
1998 0 880,303 880,303
1999 0 865,319 865,319
2000 - 799,543 799,543
2001 - 672,001 672,001
Thereafter - 280,002 280,002
----------------------------------------
$24,000 $4,139,147 $4,163,147
----------------------------------------
9. TAXES ON INCOME
The provision or income taxes include federal and state income taxes
currently payable and those deferred because of temporary differences
between financial statement and the tax bases of assets and liabilities
and the utilization of net operating loss carryforward.
The Company's provision for income taxes ($0) differs from the federal
statutory rate due to the utilization of net operating loss carryforward.
Deferred income taxes consist of the following:
SEPTEMBER 30, 1996 1995
-------------------------------------------------------------------------
Total deferred tax assets, relating principally
to net operating loss carryforward $ 4,500,000 $ 4,600,000
Deferred tax liabilities - (20,000)
-------------------------------------------------------------------------
4,500,000 4,580,000
Less Valuation allowance (4,500,000) (4,580,000)
-------------------------------------------------------------------------
Total net deferred tax assets $ - $ -
-------------------------------------------------------------------------
Due to the uncertainty of realizing the deferred tax asset in the
future, the Company has recorded a valuation allowance equaling the
deferred tax asset. At September 30, 1996, the Company has federal net
operating loss carryforwards available to offset future taxable income
of approximately $11,000,000, which expire in various years through 2010.
F-17
<PAGE>
10. CAPITAL STOCK
In 1995, a consultant to the Company received 50,000 common shares for
services rendered, and 100,000 shares were issued to Monarch Casinos,
Inc., as consideration for introducing the Company to potential gaming
ventures, including the Pokagon Tribal award (see Note 4).
During fiscal 1995, 71,000 common shares were issued to current and
former employees under the exercise of employee incentive options and
severance agreements.
In September 1995 an investor exercised warrants to acquire 125,000
common shares. (See Warrants)
In November 1995 the Company's former Chairman of the Board exercised
warrants to acquire 1,143,444 shares of common stock for $2,150,000 or
$1.88 per share, by the payment of $650,000 cash and execution of
promissory notes due January 31, 1996 ($500,000) and December 31, 1996
($1.0 million). At September 30, 1996, $1,232,000 is outstanding.
During 1996, 15,000 shares of stock were issued in settlement of
litigation with a former officer of the Company.
In 1996, 17,500 shares of common stock were issued in connection with the
acquisition of leasehold rights for the proposed Palace Casino
acquisition.
Through September 30, 1996, 839,581 shares were issued upon conversion
of subordinated convertible debentures (see Note 6).
WARRANTS
As part of the public offering in September and October 1993 the Company
issued Class A Warrants (the IPO Warrants), expiring, after a one year
extension, on September 15, 1997, for the purchase of 2,760,000 common
shares at $6.75 per share. None of these warrants have been exercised to
date.
In connection with the sale of the Biloxi Star Theater in September
1994, the Company issued warrants for the purchase of 1,018,444 common
shares to Grand Casinos, Inc. ("Grand"). These warrants, originally
priced to exercise at $2.00 per share, were transferred by Grand to the
Company's former Chairman of the Board in exchange for services provided
to Grand. The warrants were exercised in November 1995 at a price of
$1.88 per share.
Options to acquire 35,000 common shares issued to the former owners of
Country Tonite Enterprises expired in March 1996.
F-18
<PAGE>
In April 1994 the Company issued warrants to Grand for the purchase of
250,000 common shares at $4.50 per share, as partial consideration for
Grand's guarantee of Company debt. During 1995 these warrants were
transferred by Grand to an investor and to the Company's former Chairman
of the Board in exchange for services provided to Grand. In September
1995, 125,000 shares were issued to the investor pursuant to a partial
exercise of these warrants for $531,250. The Company escrowed $50,000 of
such funds and paid to the investor his interest and transaction costs
equal to such escrow. The remaining 125,000 warrants were exercised in
November 1995 at $1.88 per share.
The managing underwriter of the public offering received warrants to
acquire 240,000 shares at $8.25 per share (expiring on September 18,
1998) and options to acquire 240,000 IPO warrants at $.41 per warrant
(expired on September 18, 1996). The warrants are exercisable at $6.75
per share. None of these warrants have been exercised to date.
Warrants for the purchase of 200,000 common shares issued in May 1995 to
an investment advisor were cancelled in 1996.
OPTIONS AND AWARDS
Certain financial consultants to the Company received options in
December 1992 and in January 1993 to acquire 87,500 shares of common
stock as consideration for services rendered. These options are fully
vested and are exercisable at $2.375 per share (17,500 shares) and at
$.75 per share (70,000 shares). None of these options have been exercised
to date.
A former Company executive was granted options in September 1995, as
part of an employment termination arrangement, to acquire 50,000 shares
of common stock at $2.50 each (as to 25,000 shares) and $6.80 each (as
to 25,000 shares). The aggregate options expire in September 2003 and
none of the options have been exercised to date.
STOCK INCENTIVE PLAN
In fiscal 1995 the Company's 1993 Long-Term Incentive and Stock Option
Plan was amended (now the Amended and Restated 1993 Long-Term Incentive
and Stock Option Plan) to provide for the issuance of an aggregate
500,000 options/awards of shares. Likewise, all previously outstanding
options or awards were canceled and replacement awards issued at fair
market value.
F-19
<PAGE>
<TABLE>
<CAPTION>
Exercise Price
Shares Per Share
--------------------------------------------------------------------------
<S> <C> <C>
Outstanding, October 1, 1994 188,000 $3.75 - $5.00
Granted 310,000 $1.70 - $4.14
Exercised (29,000) $2.13 - $3.88
Canceled and Expired (188,000) $3.75 - $5.00
--------------------------------------------------------------------------
Outstanding, September 30, 1995 281,000 $1.70 - $4.14
Granted 154,000 $1.94 - $3.13
Exercised - -
Canceled and Expired 53,600 $2.00 - $4.14
--------------------------------------------------------------------------
Outstanding, September 30, 1996 381,400 $1.60 - $4.14
--------------------------------------------------------------------------
Options exercisable at
September 30, 1996 227,500 $1.60 - $4.14
Options available for future grant 89,600
--------------------------------------------------------------------------
</TABLE>
11. TRANSACTIONS WITH GRAND CASINOS, INC.
On September 23, 1994 the Company entered into a term loan agreement
with Grand Casinos, Inc. (Grand). Under the agreement the Company
obtained advances aggregating $1,289,410 through September 30, 1995.
Advances under this agreement bear interest at 10% per annum. Through
July 31, 1996, $600,000 was repaid. Beginning in August, 1996, the
loan is being amortized at a rate of $50,000 principal per month plus
interest.
In connection with provisions of the term loan, the Company granted
Grand a second mortgage on the Grand Hinckley Inn. In addition, the
Company granted to Grand a right of first refusal to purchase the hotel
on the same terms and conditions offered by a prospective purchaser.
This right is exercisable for a period of 30 days after the Company
notifies Grand of a pending offer.
The Company issued common stock warrants in April 1994, which entitles
Grand to acquire 250,000 shares of common stock. The warrants are
exercisable between April 1995 and April 1998 at an exercise price of
$4.25 per share. These warrants were issued as consideration for Grand's
guarantee of the Company's debt (see Note 10).
For the years ended September 30, 1996 and 1995, 21% and 19% of total
revenues and 55% and 54% of hospitality revenues were received through
Grand's marketing department, respectively.
F-20
<PAGE>
12. BUSINESS SEGMENTS
The Company operates principally in two industry segments: (1)
Entertainment Industry includes Country Tonite Enterprises, a production
company, and the Branson Theatre; and (2) Hospitality Industry includes
the Hinckley Hotel.
Specified financial information by business segment is included in the
following summary:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30, 1996 1995
-------------------------------------------------------------------------
<S> <C> <C>
Net Sales
Entertainment $ 8,938,297 $ 6,750,056
Hospitality 3,967,652 3,657,817
-------------------------------------------------------------------------
Consolidated $12,905,949 $10,407,873
-------------------------------------------------------------------------
Operating income (loss)
Entertainment $ 2,723,739 $ 1,006,810
Hospitality 1,307,386 1,625,585
Corporate (2,190,156) (2,006,272)
-------------------------------------------------------------------------
Consolidated $ 1,840,969 $ 626,123
-------------------------------------------------------------------------
Identifiable assets
Entertainment $11,085,112 $11,183,101
Hospitality 5,894,115 6,235,176
Corporate 4,805,317 3,533,171
-------------------------------------------------------------------------
Consolidated $21,784,544 $20,951,448
-------------------------------------------------------------------------
Capital expenditures
Entertainment $ 240,328 $ 29,890
Hospitality 11,602 50,952
Corporate 26,792 4,694
-------------------------------------------------------------------------
Consolidated $ 278,722 $ 85,536
-------------------------------------------------------------------------
Depreciation and amortization
Entertainment $ 705,386 $ 879,483
Hospitality 399,317 380,019
Corporate 98,346 90,407
-------------------------------------------------------------------------
Consolidated $ 1,203,049 $ 1,349,909
-------------------------------------------------------------------------
</TABLE>
F-21
<PAGE>
13. COMMITMENTS AND CONTINGENCIES
A) Under a Marketing Enhancement Agreement, entered into with the Tribal
Commission of the Mille Lacs Band of Ojibwe Indians (owners of the Grand Casino
Hinckley) and Grand, the Company receives a $20 fee per night per occupied room.
The Company recognized approximately $982,000 and $925,000 from the marketing
subsidy in 1996 and 1995, respectively. In return for the marketing enhancement
fee, the hotel has entered into a revenue-sharing plan with the casino which
requires that 50% of all room revenues above a defined cumulative threshold (up
to the amount of marketing subsidy paid to the hotel) be paid to the casino.
The cumulative threshold was exceeded in fiscal 1995. Payments due under the
revenue sharing plan totaled $786,000 and $361,000 in 1996 and 1995,
respectively. Payments to Grand under this windfall profit sharing agreement
for fiscal 1997 will vary based on revenues and the change, if any, in the
operating cost threshold. The Company and the Tribal Commission of the Mille
Lacs Band have entered into an agreement regarding future ownership of the
hotel. The Tribal Commission has the unilateral right to purchase the hotel on
the anniversary date of its initial occupancy (May 1994) in each of years 2001
through 2006 at a cost equivalent to the original development cost of the hotel
plus the depreciated cost of personal property and all inventories. Conversely,
in the event that the Tribal Commission allows the construction of more than 500
hotel or equivalent rooms on property owned by the Tribal Commission or Grand,
the Company has the right to require the Tribal Commission to purchase the hotel
at the cost stated above.
B) The Company has guaranteed rent payments, totaling $360,000 per year
for up to five years, of its 60% owned joint venture, Country Tonite Theatre,
L.L.C., commencing March 1, 1997.
C) The Company commenced an arbitration action in November 1994 with the
Arbitration Association in Minneapolis, Minnesota, against Cuningham Hamilton
Quiter, P.A. (CHQ), the architect it retained in connection with the
construction of the Biloxi theatre. In this action, the Company seeks to
recover the damages it believes it incurred as a result of the architectural
design work on the Biloxi theatre relating to cost overruns in the construction
of the Biloxi theatre. The arbitration demand seeks damages in an amount in
excess of $1,000,000. On December 30, 1994, the architectural firm commenced a
suit in a Mississippi state court seeking, among other things, to foreclose on a
mechanics' lien it filed on the Biloxi theatre project in the amount of
approximately $321,000. The architectural firm has also asserted claims for
breach of contract, tortuous interference with economic advantage and punitive
damages. The Company previously placed $321,000 in escrow to cover such
mechanics' lien claim. The Company and the architectural firm have agreed to,
among other things, resolve all disputes between them with respect to the Biloxi
theatre project in the Minneapolis arbitration action and stay the lawsuit in
Mississippi. The arbitration action was heard by a panel of arbitrators in
November. A decision was rendered on December 26, 1996 (See Note 14).
F-22
<PAGE>
D) In 1995, a suit was brought against the Company in the Federal District
Court of New Jersey in connection with the Company's former ownership of the
Biloxi theatre. The Company sold the Biloxi Star Theatre in September 1994.
Venue was subsequently transferred to the Federal District Court for the
Southern District of Mississippi. The plaintiff asserts it had a contract
with the Company for the promotion of eight professional boxing events at the
Company's former Biloxi theatre. Total claims are for $500,000 in compensatory
damages, punitive damages and attorneys' fees, interest and costs, and other
relief the court may deem just and proper. The Company intends to vigorously
defend itself in this action.
E) In May 1995, the Company was advised by written correspondence that a
Minnesota company claims an interest in certain assets of Monarch,
principally Monarch's interest in Indian gaming ventures. No specific amount
was claimed. On November 13, 1995 Casino Resorts, Inc. commenced an action in
the Hennepin County District Court in Minneapolis, Minnesota against Monarch
and the Company alleging breach of contract against Monarch and tortuous
interference with a contractual or business relationship against the Company.
The plaintiff seeks compensatory damages and has not claimed a specific
amount of damages but claims damages in excess of $50,000. The plaintiff
also seeks reimbursement of its costs and disbursements. Management of the
Company and Monarch each plan to vigorously defend themselves against the
claims.
F) James Barnes and Prudence Barnes, two former officers of a subsidiary
of the Company have brought suit on January 31, 1996 against the Company in the
State District Court, Clark County, Nevada, in connection with their employment
termination in June 1995. No specific amount of damages has been claimed,
however, prior to the filing of the suit the plaintiffs offered to settle the
matter for $500,000. The Company intends to vigorously defend itself in this
matter.
G) In March 1996, PDC, a Minnesota limited liability company, and two of
its officers filed suit against the Company and Harrah's Entertainment, in
Minnesota, the Fourth Judicial District Court of Minnesota, (and Michigan,
which venue has been dropped), alleging defamation, violation of the Lanham
Act, violation of the Michigan Consumer Protection Act, tortuous 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 plaintiffs seek compensatory damages and have not claimed a
specific amount of damages, but claim such damages exceed $50,000. The
plaintiffs also seek recovery of their attorneys' fees. Under the Lanham Act,
the plaintiffs are claiming a right to treble damages. The Company's general
liability carrier has taken up the defense of the Company. The Company
intends to vigorously defend itself in this matter.
H) The Company is also party to other items of litigation, none of
which, either individually or collectively, are material.
14. SUBSEQUENT EVENT
On December 26, 1996, the arbitrators for the CHQ arbitration case
announced their decision. The Company's recovery was limited to a reduction
of previously escrowed fees of approximately $321,000, on deposit with a
Mississippi state court, to approximately $142,000. The decision which is
subject to appeal, would result in a gain to the Company of approximately
$139,000.
F-23
<PAGE>
EXHIBIT INDEX
- -------------
Sequentially
Exhibit No. Description of Exhibit Numbered Pages
- ----------- --------------------------------------------------- --------------
2.1 Palace Casino Asset Acquisition Agreement(7)
3.1 Restated Articles of Incorporation of the Company,
as amended(2)
3.2 Bylaws of the Company, as amended(3)
10.1 Employment Agreement dated May 20, 1996 between the
Company and John J. Pilger(7)
10.2 Ground Lease dated as of August 11, 1993, as
amended by the Amendment to Ground Lease date as
of April 5, 1995, between Casino Building
Corporation and Grand Casinos, Inc. relating to the
site for the Grand Hinckley Inn.(5)
10.3 Hotel Development Agreement dated July 23, 1993,
between the Company and Grand Casinos, Inc.
relating to the development of the Grand Hinckley
Inn.(1)
10.4 Marketing Enhancement and Purchase/Put Option
Agreement dated as of August 11,1993, between the
Company, the Corporate Commission and Grand
Casinos, Inc. relating to the Grand Hinckley Inn.(1)
10.5 Form of Warrant Agreement between the Company and
Norwest Bank Minnesota, N.A., as Warrant Agent,
dated September 15, 1993(1)
10.6 Promissory Note dated as of September 15, 1993,
made by John J. Pilger in favor of the Company.(3)
10.7 Contract to Produce Show dated December 28, 1995,
between JMJ, Inc., dba Aladdin Hotel & Casino and
Country Tonite Enterprises, Inc. relating to the
Las Vegas production show(2)
10.8 Agreement for Purchase and Sale of Theatre dated
March 11, 1994, among the Company, CRC of Branson,
Inc. and Ahab of the Ozarks, Inc. relating to the
acquisition of the Country Tonite Theatre.(2)
10.9 Construction and Term Loan Agreement dated as of
April 1, 1994, as amended by the Amendment to
Construction and Term Loan Agreement dated as of
May 1, 1994, between the Casino Building
Corporation and Miller & Schroeder Investments
Corporation relating to the construction and
financing of the Grand Hinckley Inn.(5)
10.10 Promissory Note dated April 5, 1994, made by Casino
Building Corporation in favor of Miller & Schroeder
Investments Corporation in the amount of
$3,300,000.(5)
10.11 Mortgage, Security Agreement and Financing
Statement dated as of April 1, 1994, between the
Casino Building Corporation and Miller & Schroeder
Investments Corporation.(5)
10.12 Guaranty Agreement dated April 1, 1994, by the
Company in favor of Miller & Schroeder Investments
Corporation.(5)
E-1
<PAGE>
10.13 Assignment of Rents and Leases dated as of April
1, 1994, as amended by the Amendment to Assignment
of Rents and Leases dated as of May 1, 1994,
between Casino Building Corporation and Miller &
Schroeder Investments Corporation.(5)
10.14 Subordination Agreement dated as of April 1, 1994,
among the Company, Casino Building Corporation and
Miller & Schroeder Investments Corporation.(5)
10.15 Loan Purchase Agreement dated April 1, 1994, among
the Company, Casino Building Corporation and
Miller & Schroeder Investments Corporation.(5)
10.16 Assignment dated as of April 1, 1994, between
Casino Building Corporation and Miller & Schroeder
Investments Corporation relating to the assignment
of the Marketing Enhancement and Purchase/Put
Option Agreement.(5)
10.17 Common Stock Purchase Warrant dated April 5, 1994,
granted to Grand Casino, Inc. by the Company with
respect to 98,130 shares.(5)
10.18 Common Stock Purchase Warrant dated April 19,
1994, granted to Grand Casino Inc. by the Company
with respect to 151,870 shares.(5)
10.19 Promissory Note dated March 29, 1994, made by
Casino Building Corporation for $939,739.50 in
favor of PDS Financial Corporation relating to the
financing of furniture, fixtures and equipment for
the Grand Hinckley Hotel.(5)
10.20 Security Agreement dated March 29, 1994, between
Casino Building Corporation and PDS Financial
Corporation.(5)
10.21 Guaranty dated March 29, 1994, made by the Company
in favor of PDS Financial Corporation(5)
10.22 Debt Subordination Agreement date March 29, 1994,
among Casino Building Corporation, the Company and
PDS Financial Corporation(5)
10.23 Assignment dated March 29, 1994, among Casino
Building Corporation, the Company and PDS Financial
Corporation(5)
10.24 Biloxi Star Theater Asset Purchase Agreement dated
August 18, 1994, among Grand Casinos, Inc., Grand
Casinos of Mississippi, Inc., -Biloxi, the Company
and Casino Building Corporation of Mississippi,
Inc.(2)
10.25 Assignment and Assumption of Ground Sublease and
Related Documents dated September 30, 1994,
between Casino Building Corporation of Mississippi,
Inc. and Grand Casinos Biloxi Theater, Inc.(2)
10.26 Bill of Sale date September 30, 1994, between
Casino Building Corporation of Mississippi, Inc.
and Grand Casinos Biloxi Theater, Inc.(2)
10.27 Assignment of Warranties, Permits, Licenses,
Contracts, Service Agreements and other Intangible
Rights dated September 30, 1994, between Casino
Building Corporation of Mississippi, Inc. and
Grand Casinos Biloxi Theater, Inc.(2)
E-2
<PAGE>
10.28 Indemnification Agreement dated September 30,
1994, among the Company, Casino Building
Corporation of Mississippi, Inc., Grand Casinos,
Inc., Grand Casinos, of Mississippi, Inc.-Biloxi
and Grand Casinos Biloxi Theater, Inc.(2)
10.29 Non-Compete Agreement dated September 30, 1994,
among the Company, Casino Building Corporation of
Mississippi, Inc., Grand Casinos, Inc., Grand
Casinos Biloxi Theater, Inc. and John J. Pilger.(2)
10.30 Termination Agreement dated as of September 30,
1994, among the Company, Casino Building
Corporation of Mississippi, Inc., Grand Casinos,
Inc., Grand Casinos of Mississippi, Inc.-Biloxi(2)
10.31 Registration Rights Agreement dated as of
September 30, 1994, between the Company and Grand
Casinos, Inc.(2)
10.32 Term Loan Agreement dated as of August 18, 1894,
between Casino Building Corporation and Grand
Casinos, Inc. relating to the line of credit.(2)
10.33 Term Note dated as of September 23, 1994, between
Casino Building Corporation and Grand Casinos,
Inc.(2)
10.34 Mortgage, Security Agreement, Fixture Financing
Statement and Assignment of Leases and Rents,
dated as of September 23, 1994, made by Casino
Building Corporation to Grand Casinos, Inc.,
securing $1,750,000 Term Note.(2)
10.35 Continuing Guaranty (Unlimited) made by the
Company in favor of Grand Casinos, Inc. dated as
of September 23, 1994, relating to the $1,750,000
Term Note.(2)
10.36 Third Party Pledge Argeement dated as of September
23, 1994, made by the Company in favor of Grand
Casinos, Inc. and relating to the Term Loan.(2)
10.37 Warrant to Purchase Common Stock dated as of
September 27, 1994, granted to Grand Casinos,
Inc.(2)
10.38 Rights of First Refusal Agreement dated as of
September 23, 1994, between the Company and Grand
Casinos, Inc., with respect to the sale of the
Grand Hinckley Inn.(2)
10.39 Stock Purchase Agreement, dated as of December 18,
1992, between Mr. Pilger and Mr. Howarth(1) as
amended by First Amendment dated June 2, 1993(5)
Second Amendment dated July 2, 1993(5), and Third
Amendment dated November 30, 1994.(4)
10.40 Settlement Agreement dated as of September, 1994,
between the Company and Gerald North.(2)
10.41 Settlement Agreement dated December 8, 1994
between the Company and Resource Financial
Services.(2)
10.42 Agreement dated as of October 15, 1993, between
the Company and Kevin Kean Company, Inc.(3) as
amended by the Amendment dated as of December 15,
1994, relating to Cherokee gaming project.(5)
10.43 Management Agreement dated February 1995 between
CRC West, Inc. and Hoh Indian Tribe.(5)
E-3
<PAGE>
10.44 Mutual Release dated August 31, 1995, between CRC
West, Inc. and Hoh Indian Tribe.(5)
10.45 Memorandum of Understanding dated January 10,
1995, between The Promus Companies Incorporated
and the Company with respect to the development of
certain gaming projects.(3)
10.46 Memorandum of Understanding dated January 18,
1995, between Monarch Casinos, Inc. and the
Company with respect to the development of certain
gaming projects.(3)
10.47 Memorandum of Understanding dated March 10, 1995,
between the Company, the Kevin Kean Company, Inc.
and James E. Barnes with respect to the
development of certain gaming projects.(5)
10.48 Agreement dated May 8, 1995, between Monarch
Casinos, Inc. an the Company with respect to the
January 18, 1995, Memorandum of Understanding.(5)
10.49 Lease Modification Agreement dated August 7, 1995,
with respect to the Elkhorn Wisconsin Lease.(3)
10.50 Settlement Agreement dated August 7, 1995, between
the Company, John J. Pilger an Richard A. Howarth,
Jr.(3)
10.51 Letter Agreement dated August 22, 1995, relating
to extension of maturity date for September 23,
1994 Term Note.(3)
10.52 Agreement dated December 1, 1995, between the
Company and Kevin M. Kean.(5)
10.53 Warrant Purchase Agreement and Cherokee Dispute
Resolution dated December 1, 1995, between the
Company and Kevin M. Kean.(5)
10.54 Promissory Notes dated December 1, 1995, made to
Kevin M. Kean in favor of the Company.(5)
10.55 Promissory Note dated December 31, 1994, between
the Company and John J. Pilger.(7)
10.56 Promissory Note dated October 25, 1995, between
the Company and John J. Pilger.(7)
10.57 Promissory Note dated April 8, 1996 between the
Company and John J. Pilger.(7)
10.58 Non-Circumvention and Non-Disclosure Agreement
dated July 26, 1996, between the Company and Huong
"Henry" Le.(7)
10.59 Consulting Agreement dated December 6, 1995,
between the Company and Monarch Casinos.(7)
10.60 Technical Assistance and Consulting Agreement
dated June 10, 1996, between the Company and
Harrah's Southwest Michigan Casino Corporation.(7)
10.61 Lease Agreement dated September 4, 1996, between
J. MacDonald Burkhart M.D. and Country Tonite
Theatre L.L.C.(7)
10.62 Operating Agreement of Country Tonite Theatre
L.L.C. dated September 24, 1996(7).
10.63 Limited Liability Company Operating Agreement of
New Palace Casino, L.L.C(7)
10.64 Lease Contract dated June, 1996 between the
Company and Samara Casino Company.(7)
10.65 Consultanting Agreement between the Company and
Mondhor Ben Hamida.(7)
E-4
<PAGE>
11.1 Statement Re. Computation of Per Share Earnings.(7)
21.1 Subsidiaries of Registrant (7)
23.1 Consent of BDO Seidman, L.L.P.(6)
27.1 Financial Data Schedule.(7)
(1) Incorporated by reference to the Company's Registration
Statement on Form SB-2, File No. 33-66504, declared effective
September 15, 1993.
(2) Incorporated by reference to the Company's Form 10-KSB for
the fiscal year ended September 30, 1994, filed on
January 12, 1995.
(3) Incorporated by reference to the Company's Registration
Statement on Form SB-2, File No. 33-90114, originally
declared effective May 5, 1995.
(4) Incorporated by reference to the Company's Form 10-KSB for
the fiscal year ended September 30, 1995, filed on
January 16, 1996.
(5) Incorporated by reference to the Company's Registration
Form S-3, File No. 33-31534, originally declared effective
February 29, 1996.
(6) Filed herewith.
(7) Previously filed with Form 10-KSB for the fiscal year ended
September 30, 1996.
E-5
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Casino Resource Corporation
Biloxi, Mississippi
We hereby consent to the incorporation by reference in the Company's previously
filed Registration Statements (file no. 33-31534) of our report dated
November 5, 1996 except for Note 14 as to which the date is December 26, 1996,
and Note 6 as to which the date is May 19, 1997, relating to the consolidated
financial statements of Casino Resource Corporation appearing in the Company's
Annual Report on Form 10-KSB for the year ended September 30, 1996.
Chicago, Illinois BDO SEIDMAN, LLP
June 9, 1997
