CASINO RESOURCE CORP
S-3/A, 1997-11-19
AMUSEMENT & RECREATION SERVICES
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<PAGE>
   
   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 19, 1997
    
   
                                                      REGISTRATION NO. 333-37267
    
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------
 
   
                                 PRE-EFFECTIVE
                                AMENDMENT NO. 1
                                       TO
                                   FORM S-3/A
    
 
                             REGISTRATION STATEMENT
 
                                     UNDER
 
                           THE SECURITIES ACT OF 1933
                            ------------------------
 
                          CASINO RESOURCE CORPORATION
 
                 (Name of Small Business Issuer in its charter)
 
<TABLE>
<S>                              <C>                            <C>
          MINNESOTA                          7922                  41-0950482
 (State or other jurisdiction    (Primary standard industrial   (I.R.S. Employer
      of incorporation)          classification code number)     Identification
                                                                    Number)
</TABLE>
 
                707 BIENVILLE BOULEVARD, OCEAN SPRINGS, MS 39564
                                 (228) 872-5558
 
         (Address and Telephone Number of Principal Executive Offices)
 
                   MAURICE P. GAUDET, CHIEF FINANCIAL OFFICER
 CASINO RESOURCE CORPORATION, 707 BIENVILLE BOULEVARD, OCEAN SPRINGS, MS 39564
                           TELEPHONE: (228) 872-5558
 
           (Name, Address, and Telephone Number of Agent for Service)
                            ------------------------
 
                                   Copies to:
                             GIRARD P. MILLER, ESQ.
                         DOHERTY, RUMBLE & BUTLER, P.A.
                            3500 FIFTH STREET TOWERS
                              150 SOUTH FIFTH ST.
                           MINNEAPOLIS, MN 55402-4235
               TELEPHONE: (612) 340-5555 TELEFAX: (612) 340-5584
                            ------------------------
 
    APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: From time to time after the
effective date of this Registration Statement as determined by market conditions
and other factors.
 
    If any of the securities being registered on this form are being offered on
a delayed or continuous basis, pursuant to Rule 415 under the Securities Act of
1933, check the following: /X/
 
    If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
 
    If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
 
    If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box.
 
    The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a),
may determine.
 
   
<TABLE>
<CAPTION>
                                                                        PROPOSED MAXIMUM    PROPOSED MAXIMUM
TITLE OF SECURITIES                                   AMOUNT TO BE       OFFERING PRICE        AGGREGATE           AMOUNT OF
TO BE REGISTERED                                       REGISTERED         PER SHARE(1)     OFFERING PRICE(1)    REGISTRATION FEE
<S>                                                <C>                 <C>                 <C>                 <C>
Common Stock.....................................   1,075,500 shares        $1.8125          $1,949,343.75         $590.71(2)
($.01 par value)
underlying Stock Options
</TABLE>
    
 
(1) Estimated solely based for purposes of computing the registration fee. In
    accordance with Rule 457(c) and (h)(1), the price used is the average of the
    bid and asked price of the Common Stock on the over-the-counter market as of
    October 2, 1997.
 
   
(2) Previously paid on October 6, 1997.
    
 
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- --------------------------------------------------------------------------------
<PAGE>
   
                    SUBJECT TO COMPLETION, NOVEMBER 19, 1997
    
 
                                   PROSPECTUS
 
                                1,075,500 SHARES
 
                          CASINO RESOURCE CORPORATION
 
                                  COMMON STOCK
 
                               ------------------
 
    This Prospectus relates to the resale of up to 1,075,500 shares of Common
Stock, $.01 par value per share (the "Common Stock") of Casino Resource
Corporation, a Minnesota corporation (the "Company"), issued to certain
investors (the "Selling Shareholders") pursuant to registration rights
agreements with the Selling Shareholders. See "Selling Shareholders."
 
    The resale of the securities covered by this Prospectus may be sold from
time to time by the Selling Shareholders, and such resales may be effected in
one or more transactions that may take place on the over-the-counter market,
including ordinary brokers' transactions, privately negotiated transactions or
through sales to one or more dealers for resale of such securities as
principals, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Shareholders.
 
    The Selling Shareholders and intermediaries through whom such securities are
sold may be deemed "underwriters" within the meaning of the Securities Act of
1933, as amended (the "Securities Act"), with respect to the securities offered
hereby, and any profits realized or commissions received may be deemed
underwriting compensation. The Company has agreed to indemnify the Selling
Shareholders against certain liabilities, including liabilities under the
Securities Act.
 
    The Company will not receive any proceeds from the sale of Common Stock by
the Selling Shareholders. The Company's Common Stock is traded on the Nasdaq
National Market ("NasdaqNM") under the symbol CSNR.
 
    THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE, INVOLVE A HIGH DEGREE
OF RISK AND SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO LOSE THEIR
ENTIRE INVESTMENT. SEE "RISK FACTORS."
 
                            ------------------------
 
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THE PROSPECTUS. ANY REPRESENTATION TO CONTRARY IS A
CRIMINAL OFFENSE.
 
   
The date of this Prospectus is November   , 1997.
    
<PAGE>
                             AVAILABLE INFORMATION
 
    The Company is subject to the informational requirements of Securities
Exchange Act of 1934, as amended (the "Exchange Act") and in accordance
therewith files reports, proxy and information statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy and information statements and other information filed by the Company can
by inspected and copied at the public reference facilities of the Commission,
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, as
well as at the following Regional Offices: 7 World Trade Center, Suite 1300, New
York, New York 10048 and Northwestern Atrium Center, Suite 1400, 500 West
Madison Street, Chicago, Illinois 60661. Copies can be obtained from the
Commission by mail at prescribed rates. Requests should be directed to the
Commission's Public Reference Section, Room 1024, Judiciary Plaza, 450 Fifth
Street N.W., Washington, D.C. 20549.
 
    The Commission maintains a web site that contains registration statements,
reports, proxy statements and other materials that are filed electronically with
the Commission. This web site can be accessed at HTTP://WWW.SEC.GOV.
 
    The Company has filed with Commission a Registration Statement under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
shares of Common Stock offered hereby. This Prospectus, does not contain all the
information set forth in the Registration Statement and the exhibits thereto.
For further information with respect to the Company and the Common Stock offered
hereby, reference is made to the Registration Statement and to the exhibits
filed therewith. Statements contained in this Prospectus as to the contents of
any contract or other document referred to are not necessarily complete, and in
each instance reference is made to the copy of such contract or other document
filed as an exhibit to the Registration Statement. The Registration Statement,
together with the exhibits thereto, may be inspected without charge at the
offices of the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street N.W.,
Washington, D.C. 20549, and copies of all or any part of the Registration
Statement may be obtained from the Public Reference Section of the Commission,
Washington, D.C. 20549 upon the payment of the fees prescribed by the
Commission.
 
                    INCORPORATION OF DOCUMENTS BY REFERENCE
 
    The following documents filed with the Commission by Casino Resource
Corporation (the "Company") are incorporated herein by reference:
 
(a) The Company's Annual Report on Forms 10-KSB and 10-KSB/A for the fiscal year
    ended September 30, 1996.
 
(b) The Company's Quarterly Reports on Forms 10-QSB and 10-QSB/A for the periods
    ended December 31, 1996, March 31, 1997 and June 30, 1997 and the Company's
    Current Reports on Forms 8-K and 8-K/A dated October 30, 1996, February 2,
    1997, February 24, 1997, April 2, 1997, September 12, 1997 and October 3,
    1997.
 
(c) The Company's annual Proxy Statement pursuant to Regulation 14A of the
    Exchange Act for the annual stockholder meeting held April 3, 1997.
 
(d) The description of the Company's securities contained in the Company's
    Registration Statement under Section 12 of the Exchange Act, and any and all
    amendments and reports filed for the purpose of updating such description.
 
    All documents subsequently filed by the Company pursuant to Sections 13(a),
13(c), 14, and 15(d) of the Exchange Act, subsequent to the date of this
Prospectus and prior to the termination of the offering of the Shares hereby
offered shall be deemed to be incorporated by reference into this Prospectus and
to be a part of this Prospectus from the date of filing such documents. Any
statement contained in a document incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this
 
                                       2
<PAGE>
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
 
    The Company will provide, without charge to each person, including any
beneficial owner, to whom a prospectus is delivered, upon written or oral
request of such person, a copy of any and all information that has been
incorporated by reference (other than exhibits to such documents which are not
specifically incorporated by reference in such documents). Requests for such
documents should be addressed to Maurice P. Gaudet, Chief Financial Officer, 707
Bienville Boulevard, Ocean Springs, MS 39564, telephone number (228) 872-5558.
 
                                       3
<PAGE>
                               PROSPECTUS SUMMARY
 
    The following summary is qualified in its entirety by the more detailed
information and financial statements (including the notes thereto) appearing
elsewhere in this Prospectus. The Company has five active wholly owned
subsidiaries, namely, Casino Building Corporation, Inc., CRC of Branson, Inc.,
Country Tonite Enterprises, Inc., Casino Resource Corporation of Tennessee, Inc.
(which holds a 60% in CTT, LLC), and Casino Resource Corporation Tunisia, S.A.
Where the context requires, references in this Prospectus to the "Company"
include all or one of such subsidiaries, as the case may be. Investors should
carefully consider the information set forth under the caption "Risk Factors."
 
                                  THE COMPANY
 
    Between 1987 and 1991 the Company's primary business was owning and managing
recreational vehicle resorts, and providing direct marketing services related
thereto. The Company sold its capital-intensive camp resort properties during
the period 1988-1991 and began offering its direct marketing services to the
recreational real estate industry, primarily focusing on time share and camp
resort developments and, eventually, to the casino industry. The Company sold
its direct marketing business that provided services to the time-share and camp
resort industry in May 1994 but retained the capacity to provide marketing
services to the casino industry.
 
   
    The Company believes that the expansion of gaming into emerging markets,
including riverboat and dockside gaming, state-sponsored video lotteries, small
stakes casino gaming and gaming on Indian land, reflects the increasing
popularity and acceptability of gaming activities, generally, in the United
States. The past year has seen continued growth in gaming facilities and the
acceptance of gaming as a recreational pastime, although several states have
rejected attempts to expand the nature of the gaming activities within their
border. Additionally, and as a result of the Indian Gaming Regulatory Act of
1988, 25 U.S.C. Section 2701 et seq. ("IGRA"), Indian casino gaming has become a
rapidly growing part of the casino gaming industry. The Company's strategy is to
develop alliances and formulate joint ventures with gaming operators or other
participants in the gaming industry and to explore opportunities for the Company
to develop its own wholly-owned gaming operations and provide support amenities
to the game industry. These opportunities would require the raising of
additional debt or equity. The Company opened a casino and 500-seat theatre on
October 18, 1997, in Sousse, Tunisia.
    
 
    The Company intends also to seek opportunities with respect to the
development, ownership and management of hospitality and entertainment
facilities. In May 1994, the Company completed construction of a 1,872-seat "Las
Vegas-style" show theater adjacent to the Grand Casino Biloxi, on the Gulf Coast
of Mississippi, and a 154-room hotel near the Grand Casino Hinckley, in
Minnesota. Subsequently, the Company sold the theater in September 1994 to Grand
Casinos, Inc. ("Grand Casinos"). In addition, the Company purchased the former
Ray Stevens Theatre in Branson, Missouri in March 1994, and was reopened for
business in May 1994. This facility was renamed the "Country Tonite Theatre." In
March 1994, the Company purchased a musical production company that provides
entertainment at the Aladdin Hotel in Las Vegas, Nevada, as well as the
Company's theaters in Branson and Pigeon Forge. In 1996 the Company entered into
a joint venture to operate another "Country Tonite Theatre" in Pigeon Forge,
Tennessee which opened in March 1997. Casino Resource Corporation of Tennessee,
Inc. holds the majority interest in this joint venture (CTT, LLC.)
 
    The Company was organized in 1969. In 1987, the Company merged into an
inactive public corporation and the surviving Company's name was changed to
Rubidell Recreation, Inc., which was changed in 1993 to Casino Resource
Corporation. Prior to 1987, the Company engaged in various business activities
unrelated to its current proposed businesses. The Company is incorporated under
the laws of the State of Minnesota. The Company's principal office is located at
707 Bienville Boulevard, Ocean Springs, Mississippi 39564. Its telephone number
is (228) 872-5558.
 
                                       4
<PAGE>
                                  THE OFFERING
 
<TABLE>
<S>                                                                          <C>
Common Stock offered by the Company........................................             None
 
Common Stock offered by Selling Shareholders...............................        1,075,500
                                                                                      shares
 
NasdaqNM Symbols Common Stock..............................................             CSNR
</TABLE>
 
                                  RISK FACTORS
 
    An investment in the shares of Common Stock offered hereby is highly
speculative, involves a high degree of risk and should only be purchased by
persons who can afford to lose their entire investment. See "Risk Factors" for a
discussion of risk factors that should be considered in connection with an
investment in the shares of Common Stock offered hereby.
 
                      SUMMARY CONSOLIDATED FINANCIAL DATA
 
    The selected financial data presented below for, and as of the end of, each
of the years ended September 30, 1996 and 1995, have been derived from the
financial statements of the Company, which financial statements have been
audited by independent certified public accountants. The consolidated financial
statements as of September 30, 1996, and for each of the years in the two-year
period ended September 30, 1996, and the reports thereon, are included elsewhere
in this Prospectus. The selected financial data presented below for the nine
months ended June 30, 1997 and 1996, are from the unaudited financial statements
of the Company included elsewhere in this Prospectus or incorporated by
reference. In the opinion of the Company's management, such unaudited financial
statements include all adjustments, consisting only of normal recurring
adjustments necessary for a fair presentation of the financial position and
results of operations for the periods represented. The results of operations for
the nine months ended June 30, 1997 are not necessarily indicative of the
results to be expected for the year ending September 30, 1997. The selected
financial data should be read in conjunction with the financial statements and
notes thereto included elsewhere in this Prospectus and Management's Discussion
and Analysis of Financial Condition and Results of Operations.
<TABLE>
<CAPTION>
                                                                  YEAR ENDED               NINE MONTHS ENDED
                                                                SEPTEMBER 30,                  JUNE 30,
                                                          --------------------------  ---------------------------
<S>                                                       <C>           <C>           <C>            <C>
                                                              1996          1995          1997           1996
                                                          ------------  ------------  -------------  ------------
                                                                                             (AS RESTATED)
                                                                (AS RESTATED)
 
<CAPTION>
                                                                   (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                                       <C>           <C>           <C>            <C>
STATEMENTS OF OPERATIONS DATA:
Revenue.................................................  $     12,906  $     10,408  $      10,504  $      8,759
Loss from continuing operations.........................          (527)         (123)           (37)       (1,366)
Income from discontinued operations.....................       --                162       --             --
Net income (loss).......................................          (527)           39            (37)       (1,366)
Loss per share from continuing operations...............         (0.05)        (0.01)          (.00)         (.16)
Net Income (loss) per share.............................         (0.05)         0.01           (.00)         (.16)
Weighted average number of shares of Common Stock
  outstanding...........................................     8,980,105     7,609,076     10,006,609     8,724,345
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                      SEPTEMBER 30,      JUNE 30,
                                                                                     1996       1995       1997
                                                                                   ---------  ---------  ---------
<S>                                                                                <C>        <C>        <C>
BALANCE SHEET DATA:
Total assets.....................................................................  $  21,785  $  20,951  $  23,000
Long-term liabilities............................................................     10,302     10,487     11,029
Total liabilities................................................................     13,560     14,917     14,397
Stockholders' equity.............................................................      8,225      6,034      8,538
</TABLE>
 
- ------------------------
 
(1) See the consolidated financial statements of the Company and related notes
    included elsewhere in this Prospectus.
 
                                       5
<PAGE>
                                  RISK FACTORS
 
    The Common Stock offered hereby is highly speculative and involves a high
degree of risk and, accordingly, is not an appropriate investment for persons
who cannot afford the loss of their entire investment. Prospective investors
should be aware of the following risk factors and should review carefully the
financial and other information provided or incorporated herein. Capitalized
terms used in this section and not previously defined are defined under
"Business" or "Description of Capital Stock."
 
    NO ASSURANCE OF PROFITABILITY; ACCUMULATED DEFICIT AND NEGATIVE WORKING
CAPITAL.  The company has previously suffered significant losses from
operations, resulting in an accumulated deficit at June 30, 1997 of $13.3
million. Such losses relate principally to the discontinued operation and sale
of the Biloxi Star Theatre in fiscal 1994. Although the Company was marginally
profitable overall before gaming project losses and financing charges for fiscal
1995 and 1996, there can be no assurance of future profits from operations. Such
profits will be necessary for the Company to continue operations. In addition,
the Company had a working capital deficit of approximately $552,000 at June 30,
1997. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources," and the Consolidated
Financial Statements.
 
    SIGNIFICANT LEVERAGE AND DEBT REPAYMENT OBLIGATIONS.  At June 30, 1997, the
Company had an aggregate of approximately $12.6 million of long-term
indebtedness outstanding, requiring monthly payments of principal and interest
aggregating approximately $155,000. In addition to such monthly payments, the
Company is obligated to repay indebtedness of approximately $7.1 million in
April 1999. Although management believes, based on current business levels, that
cash flows are and will continue to be sufficient to support the Company's
monthly debt service obligations, if there is a material downturn in the
performance of any of its businesses, the Company may be unable to make such
payments on a timely basis. In addition, the Company will require funding beyond
its operating cash flows to make the principal repayment due in 1999, the
availability of which cannot be assured. The ability of the Company to satisfy
its debt service and repayment obligations may also be affected by the level of
funds expended by the Company in development activities. In the event the
Company fails to make interest or principal payments when due, it could lose
ownership of the Grand Hinckley Inn or the County Tonite Theatre in Branson,
each of which is pledged as collateral security for certain of the Company's
long-term indebtedness. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the Consolidated Financial Statements.
 
    DEPENDENCE OF GRAND HINCKLEY INN ON ADJACENT CASINO.  The Grand Hinckley Inn
is dependent upon the adjacent Grand Casino Hinckley, the customers of which
constitute the large majority of the hotel's patrons. As a result, any
significant decrease in the level of customer traffic at the Grand Casino
Hinckley would be expected to adversely affect the Grand Hinckley Inn. Customer
volumes at the Grand Casino Hinckley could be adversely impacted by, among other
business factors, increased competition, whether from other Indian-owned casinos
or from other forms of gaming, including forms of gaming which are not now but
may later be legalized in Minnesota or neighboring states. In addition, because
the Company's hotel revenues include a fee paid to it under a marketing
enhancement agreement with Grand Casinos and the Corporate Commission of the
Mille Lacs Band of Ojibwe Indians (the "Corporate Commission"), of $20 for each
occupied room, any reduction in occupancy levels resulting from a decrease in
the number of gaming visitors would result in reduced fee income as well as
reduced room rental income. Also, a 285-room hotel project is being built by the
Commission adjacent to the Grand Casino Hinckley and the Grand Hinckley Inn,
will thus be in competition with such new hotel. Such competition could
adversely affect the Grand Hinckley Inn. The new hotel is presently scheduled
for completion in late 1997.
 
    In addition to the marketing enhancement agreement, the success of the Grand
Hinckley Inn depends on other agreements entered into with Grand Casinos, most
importantly a ground lease for the real property underlying the hotel at a
nominal rental rate (subsequently assigned to the Corporate Commission.) The
Company's agreements with Grand Casinos expire in May 2004, although the Company
may
 
                                       6
<PAGE>
renew the ground lease, at its option, up to four times, each for an additional
10-year term. However, because the existing Management Agreement between Grand
Casinos and the Corporate Commission expires in May 1999 and there is no
assurance that it will be renewed or extended, the Company may be required at a
future date to work directly with the Corporate Commission or establish a
relationship with another manager of the casino. No assurance can be given that
the Company would be able to do so on terms as beneficial to it as are currently
in effect. Similarly, there is no assurance that the current relationship
between the Company and Grand Casinos will continue to be successful. See
"Business-- Existing Operations--Grand Hinckley Inn."
 
    ANTICIPATED DECREASE IN OPERATING INCOME AT GRAND HINCKLEY INN.  Under the
marketing enhancement agreement, the Company is required to pay to the Corporate
Commission a windfall profits fee equal to 50% of its gross room revenues
(including marketing enhancement fees) above a defined annual cumulative
threshold up to the amount of the marketing enhancement fees received by the
Grand Hinckley Inn from the Grand Casino Hinckley. The threshold amount is based
on an 80% hotel occupancy rate. The threshold was increased on a one-time basis,
however, by an aggregate of $900,000 to reflect increases in the Company's cost
of constructing the hotel, and such one-time increase was fully utilized by June
1995. The threshold amount increases for subsequent years to the extent
operating costs increase from year to year. As a result of higher levels of
profit sharing and higher real estate taxes the Grand Hinckley Inn's operating
income decreased from 1995 to 1996 and is expected to remain at a lower level
due to the impact of profit sharing. In addition, operating income may be
adversely impacted by the opening of a 285-room hotel adjacent to the casino in
late 1997. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Results of Operations" and "Business--Existing
Operations-- Grand Hinckley Inn."
 
    MILLE LACS PURCHASE OPTION.  The Corporate Commission may, at its option,
purchase the Grand Hinckley Inn as early as May 2001 at a price equal to the
Company's cost of developing the property plus the depreciated cost of equipment
and other property within the hotel. If this option were to be exercised, the
Company would be required to sell, and would no longer receive revenues from the
hotel, currently its only hospitality asset. In addition, the Company believes
that the purchase price under the option is currently significantly less than
the fair market value of the hotel, although no appraisal or other valuation has
been conducted.
 
    DEPENDENCE OF ENTERTAINMENT BUSINESS ON BRANSON MARKET AND ALADDIN CONTRACT;
LACK OF PROFITABILITY OF PIGEON FORGE THEATRE.  The Country Tonite Theatre is
dependent upon the success of the Branson, Missouri tourism industry and any
contraction of such industry will likely adversely affect the theater's
performance and prospects. The Country Tonite Show has been playing at the
Aladdin Hotel & Casino in Las Vegas, Nevada since 1992. The Aladdin has
announced that it will close for remodeling in November 1997. The Company
received notice that its contract with the Aladdin Hotel & Casino was cancelled,
effective November 15, 1997. The Company's management is attempting to locate a
new venue for The Country Tonite show in Las Vegas. Failure to locate a new
venue could have a material adverse effect on the Company's consolidated
operating income.
 
    The Company's new theater in Pigeon Forge, Tennessee, a 60% owned joint
venture, is currently unprofitable. There is no assurance that the Pigeon Forge
theater can ever be operated at a profitable level. Under terms of the lease and
operating agreements, the Company may be liable for a $30,000 monthly payment
for a term of up to five years if the joint venture is unable to meet its lease
obligations. In addition the Company has guaranteed certain leases of the joint
venture. In addition the success of the Pigeon Forge theater is dependent on the
Pigeon Forge area tourism market. A decline in the number of visitors could
adversely affect the revenues of the Pigeon Forge theater. See
"Business--Existing Operations--Country Tonite Theatre" and--"Country Tonite
Production Show" and "Marketing and Competition--Branson, Missouri Market--Las
Vegas, Nevada Market."
 
                                       7
<PAGE>
    COMPETITION IN THE HOSPITALITY AND ENTERTAINMENT INDUSTRY.  The Company
believes that the Grand Hinckley Inn may face increasing competition from new
properties, including possible competition from Grand Casinos, the Mille Lacs
Band or others operating under agreements similar to those entered into between
the Company and Grand Casinos. The Company is subject generally to competition
from other developers of hotel and entertainment projects, many of which are
better capitalized and are more experienced than the Company in the hospitality
and entertainment industry. There can be no assurance that the Company will be
successful in maintaining or expanding its hospitality and entertainment
activities. In addition operating income may be adversely impacted by the
opening of a 285-room hotel adjacent to the casino in late 1997. See
"Business--Existing Operations--Marketing and Competition."
 
    DEVELOPMENT OF POKAGON BAND INDIAN CASINO NOT ASSURED.  The development,
construction and opening of a casino on Indian land will require, among other
things, that a compact is entered into by the Pokagon Band with the State of
Indiana or Michigan, all required licenses from and approvals of the National
Indian Gaming Commission (the "NIGC") and other applicable regulatory
authorities are obtained, a site is acquired and, if required, necessary
financing is made available by Harrah's. The satisfaction of these and other
requirements cannot be assured, and, in any event, the opening of a casino by
the Pokagon Band is not anticipated to occur before the end of 1998. In
addition, no assurance can be given that any such casino would be successful
and, accordingly, the level of fees received through the proposed Technical
Assistance and Consulting Agreement with Harrah's may be significantly less than
anticipated. See "Business--Development Activities--Pokagon Consulting
Agreement."
 
   
    RISK ASSOCIATED WITH INTERNATIONAL OPERATION; CURRENCY RISKS.  The Company's
first gaming venture carries on its operations outside the United States
("U.S."), and is located in Sousse, Tunisia. Operations outside the U.S. are
subject to inherent risks, including without limitation, fluctuations in the
value of the U.S. dollar relative to foreign currencies, tariffs, quotas, taxes
and other market barriers, political and economic instability, currency
restrictions, difficulty in staffing and managing international operations,
language barriers, difficulty in obtaining work permits for employees,
limitations on technology transfers, potential adverse tax consequences, and
difficulties in operating in a different cultural and legal system. There can be
no assurance that any of the aforementioned or any unforeseen factors will not
adversely impact the Company's Tunisian operations.
    
 
    NEED FOR ADDITIONAL CAPITAL TO PURSUE GROWTH STRATEGY.  Additional capital
would be required for the Company to pursue the development or acquisition of
any new sizable project, whether in the hospitality and entertainment industry
or the gaming business. There can be no assurance that any such additional
capital will be available when required or, if available, that the same would be
on terms acceptable to the Company. Further, in order to obtain any necessary
additional financing, the Company may be required to pledge a portion of its
future revenues or to dilute the equity investment of its then current
shareholders. If required financing is unavailable for any reason, the Company
may be forced to curtail or delay its marketing, operating and development
plans. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."
 
    LACK OF EXPERIENCE IN GAMING INDUSTRY.  Neither the Company nor any member
of management has any prior direct operating experience in the gaming industry.
The Company has hired experienced gaming management for the Tunisian casino.
However, there is no assurance that the Company will be able to successfully
manage the Tunisian casino operation, or that such operation will be profitable.
 
   
    REGULATION; NO ASSURANCE OF LICENSING.  The ownership and operations of
casinos in Tunisia and other gaming jurisdictions are highly regulated. The
Company obtained its operating and gaming license and opened a casino in Tunisia
on October 18, 1997. The failure of the Company or any required person to
maintain any required licenses will have a material adverse effect on the
Company. Further, changes in Tunisian law or regulations may limit or otherwise
materially affect the types of gaming that may be conducted.
    
 
                                       8
<PAGE>
    COMPETITION AND OTHER FACTORS AFFECTING GAMING INDUSTRY.  The gaming
industry is highly competitive and many operators have extensive experience, are
larger and have significantly greater financial and other resources than the
Company. In addition, many gaming jurisdictions limit the number of licenses for
gaming facilities. There can be no assurance that the Company will be able to
compete with more experienced and stronger operators. In addition, there can be
no assurance that the Company will be able to compete effectively for
experienced gaming management and other key operating personnel. See
"Business--Marketing and Competition" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations."
 
    In addition to competitive factors, adverse changes in general and local and
foreign economic conditions may adversely impact investments in gaming
enterprises, similar to other entertainment investments. These conditions and
other factors beyond the Company's control include: (i) changes in regional and
local population and disposable income levels; (ii) the need for renovations,
refurbishment and improvements; (iii) unanticipated increases in operating
costs; (iv) changes in foreign, federal, state, local and tribal laws and
regulations, including those relating to taxation; (v) restrictive changes in
zoning and similar land use laws and regulations, or in health, safety and
environmental laws and regulations; (vi) the inability to secure sufficient
property and liability insurance to protect against all losses or to obtain such
insurance at reasonable costs; and (vii) changes in travel patterns or
preferences which may be affected by increases in travel costs, changes in
airline schedules, strikes, weather patterns and construction of highways, among
other factors.
 
    POTENTIAL ADVERSE EFFECT OF SECURITIES ELIGIBLE FOR FUTURE SALE.  The sale,
or availability for sale, of substantial amounts of Common Stock in the public
market may adversely affect the prevailing market price of the Common Stock and
may impair the Company's ability to raise additional capital through the sale of
its equity securities. The Company currently has 10,043,364 shares of Common
Stock outstanding. In addition to the shares registered hereby, 8,368,496 shares
are currently held by the public and are freely tradable and 1,674,868 shares
are currently eligible for resale under Rule 144. The Company also has
outstanding Class A Warrants exercisable for an aggregate of 2,760,000 shares of
Common Stock at an exercise price of $6.75 per share; such shares, if issued,
would be freely tradable. Finally, the authorized and unissued capital stock of
the Company includes additional Common Stock, as well as undesignated preferred
shares which the Board of Directors, without any action by the Company's
shareholders, is authorized to designate and issue in such classes or series,
and with such rights, preferences and privileges, as it deems appropriate. No
shares of preferred stock or other senior equity securities are currently
designated, and there is no current plan to designate or issue any such
securities.
 
    TRANSACTIONS WITH OFFICERS AND SHAREHOLDERS.  The Company is involved in
various transactions with its principal shareholders, John J. Pilger and Kevin
M. Kean. The Company has current outstanding loans to Mr. Pilger and Mr. Kean.
The failure of Mr. Pilger and Mr. Kean to repay such loans could have a material
adverse effect on the Company.
 
    CONTROL BY EXISTING MANAGEMENT.  The Company's executive officers, directors
and their affiliates own, or have the right to vote, an aggregate of
approximately 16.7% of the outstanding Common Stock. Accordingly, the Company,
its directors and officers maintain significant voting influence in connection
with the election of the directors of the Company and control the Company's
business and affairs. Grand Casinos has the right to designate two
representatives for election to the Company's Board of Directors, but to date
has not exercised this right. See "Description of Capital Stock."
 
    DEPENDENCE ON KEY PERSONNEL.  The Company is highly dependent upon the
personal efforts and abilities of its Chief Executive Officer, John J. Pilger.
The loss of Mr. Pilger's services could have a material adverse effect on the
Company. The Company has entered into a three-year employment agreement with Mr.
Pilger commencing on May 20, 1996 and has obtained key-person life insurance in
the amount of $1 million on his life, with the proceeds of such insurance
payable to the Company.
 
                                       9
<PAGE>
    ABSENCE OF CASH DIVIDENDS.  The Company has not declared or paid any cash
dividends on its capital stock since its incorporation and does not intend to
pay any cash dividends in the foreseeable future.
 
    STOCK PRICE VOLATILITY.  As a result of potential fluctuations in the
Company's operating results, and other factors, including the general condition
of the economy, stock market conditions, passage or defeat of legislation or
announcements by the Company or its competitors, the market price of the Common
Stock offered hereby may be highly volatile.
 
    FLUCTUATING OPERATING RESULTS.  Due in part to the seasonality of the Grand
Hinckley Inn and the Company's theaters, and the expected seasonality of the
Tunisian casino the Company's future operating results are expected to continue
to vary substantially from quarter to quarter. Because a high percentage of the
Company's operating expenses are fixed, a reduction of revenue could cause
significant fluctuations in the Company's operating results and cash flows from
quarter to quarter. See "--Discussion and Analysis of Financial Condition and
Results of Operations--Seasonality."
 
    POTENTIAL ANTI-TAKEOVER EFFECTS OF CHARTER PROVISIONS AND MINNESOTA
LAW.  The Company's Articles and Bylaws and the Minnesota Business Corporation
Act contain requirements and limitations that may have the effect of
discouraging unsolicited takeover bids from third parties. These include advance
notice requirements for shareholder proposals and director nominations,
limitations on shareholder action by written consent, voting requirements for
amendment of certain provisions of the charter documents, a classified board of
directors, and change of control provisions. See "Description of Capital Stock--
Regulatory Provisions" and "--Classified Board and Related Provisions." As of
this date, the Company is not aware of any current or planned effort on the part
of any party to acquire control over the Company by means of a merger, tender
offer, solicitation in opposition to management or otherwise, or to change the
Company's Board of Directors or management.
 
    RESTRICTIONS ON STOCK OWNERSHIP.  The Articles provide that no investor may
become either a holder of 5% or more of the Company's stock or one of the 10
largest shareholders of the Company without first agreeing to consent to a
background investigation, provide a financial statement and respond to questions
from gaming authorities. Furthermore, all shares of the Company's capital stock
held by a beneficial owner will be subject to redemption if (a) such beneficial
owner refuses upon request of the Board of any gaming authority having
jurisdiction over the Company, to provide any of the foregoing or (b) such
beneficial holder's holdings of capital stock either alone or together with the
capital stock holdings of any other beneficial holder of the Company's capital
stock may, in the judgment of the Board of Directors, result in (i) the
disapproval, modification or non-renewal of any gaming management contract
(whether solely or by shared management) or (ii) the disapproval, loss,
modification, non-renewal or non-reinstatement of any license, franchise,
approval or consent from a gaming authority or other governmental agency with
respect to the conduct of any portion of the business of the Company, where such
license, franchise, approval or consent is conditioned upon holders of capital
stock meeting certain criteria. See "Description of Capital Stock--Regulatory
Provisions." These restrictions may require large institutional investors to
provide information to gaming authorities. As a consequence, those unwilling to
comply may be required to sell their shares or may be unwilling to buy more, or
to invest at all in the Company, thereby resulting in a possible decline in the
price of the Common Stock, which could be material, and having a possible anti-
takeover effect. Additionally, these restrictions could require the Company to
redeem shares of its Common Stock for cash, which could adversely affect its
liquidity. As a result of such restrictions, current or future state or federal
gaming rules or regulations may materially restrict or prohibit certain persons
from owning the Company's securities. Such restrictions could also have the
effect of causing certain holders to liquidate their holdings of the Company's
securities at a time when market conditions are not favorable to such holders,
or at a cost that is not favorable to such holders. In addition, at the election
of the Company, such shareholder may receive redemption securities wholly or
partially in lieu of a cash payment. "Redemption securities" means any debt or
equity securities of the Company, any subsidiary, or any other corporation, or
any combination thereof, having terms and conditions as approved by the Board
 
                                       10
<PAGE>
of Directors which, together with a cash payment, if any, equals the fair market
value of the securities to be redeemed on the date the notice of redemption is
given, as determined by a nationally recognized investment banking firm selected
by the Board of Directors. Furthermore, such redemption securities may be
securities, which have not been registered under the Securities Act and
therefore may not be eligible for trading in the public market, with a
consequent result of illiquidity to the holder. See "Description of Capital
Stock--Regulatory Provisions" and "Business--Regulation and Licensing of Gaming
Activity."
 
    ENVIRONMENTAL RISKS.  Ownership or operation of real estate exposes the
Company to the related risks of compliance with environmental laws, and clean-up
costs and related expenses (which would not be covered by insurance
reimbursement) in the event of environmental contamination, even if such
contamination were not caused by or known to the Company.
 
    INSURANCE, CALAMITIES AND CONDEMNATION.  The Company maintains insurance
coverage for the Grand Hinckley Inn, the Country Tonite Theatre in Branson and
Pigeon Forge and for its casino in Tunisia, but such coverage is limited. For
example, the Company does not have insurance for losses due to hurricanes, wind,
floods, earthquakes and other catastrophic events because such coverages are
either not available or are cost-prohibitive. In addition, the Company's
properties, or a part thereof, could be taken by governmental authorities acting
under their power of eminent domain. If an uninsured disaster should occur, or
should the actual loss sustained exceed the amount of insurance proceeds, or
should the property be taken by eminent domain, the Company (and, consequently,
its investors) could suffer a material loss.
 
    LITIGATION.  The Company is party to certain litigation which if adversely
determined could have a material adverse effect on the Company.
 
    FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS.  This document contains
forward-looking statements regarding, among other items, the Company's growth
strategy and anticipated trends in the Company's business. These forward-looking
statements are based largely on the Company's expectations and are subject to a
number of risks and uncertainties, certain of which are beyond the Company's
control. Actual results could differ materially from these forward-looking
statements as a result of the factors described under "Risk Factors" and
elsewhere herein, including, among others, economic influences. In light of
these risks and uncertainties, there can be no assurance that the
forward-looking information contained herein will in fact transpire or prove to
be accurate.
 
                                USE OF PROCEEDS
 
    The Company will receive no proceeds from the sale of the Common Stock
offered hereby.
 
                                       11
<PAGE>
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
    The Company opened the Country Tonite Theatre in Branson, Missouri in March
1994 and the Grand Hinckley Inn in Hinckley, Minnesota in May 1994. The Company
had previously purchased the Country Tonite production show in March 1994. In
October 1996 the Company entered into a joint venture to operate another Country
Tonite Theatre in Pigeon Forge, Tennessee which opened in March 1997.
 
    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 (audited) and for the nine months ended
June 30, 1996 and 1997 (unaudited).
<TABLE>
<CAPTION>
                                                                      YEAR ENDED SEPTEMBER    NINE MONTHS ENDED JUNE
                                                                               30,                      30,
                                                                     -----------------------  -----------------------
<S>                                                                  <C>           <C>        <C>        <C>
                                                                         1996        1995       1997         1996
                                                                     ------------  ---------  ---------  ------------
 
<CAPTION>
                                                                         (AS                                 (AS
                                                                      RESTATED)       (IN THOUSANDS)      RESTATED)
<S>                                                                  <C>           <C>        <C>        <C>
INCOME FROM CONTINUING OPERATIONS:
  Entertainment revenues...........................................   $    8,938   $   6,750  $   7,722   $    5,983
  Hospitality revenues.............................................        3,968       3,658      2,782        2,776
  Operating costs--entertainment...................................        6,215       5,743      6,188        4,485
  Operating costs--hospitality.....................................        2,660       2,032      1,925        1,730
  General and administrative expense...............................        2,190       2,006      1,452        1,685
  Other income (expense)*..........................................       (2,368)       (750)      (976)      (2,225)
                                                                     ------------  ---------  ---------  ------------
INCOME (LOSS) FROM CONTINUING OPERATIONS...........................         (527)       (123)       (37)      (1,366)
DISCONTINUED OPERATIONS:
  Income from discontinued operations net of applicable taxes......       --             162     --           --
                                                                     ------------  ---------  ---------  ------------
NET INCOME (LOSS)..................................................   $     (527)  $      39  $     (37)  $   (1,366)
                                                                     ------------  ---------  ---------  ------------
                                                                     ------------  ---------  ---------  ------------
</TABLE>
 
- ------------------------
 
*   Including loss on gaming projects for 1996 and losses on gaming projects and
    minority interest in operations of subsidiary and gain on litigation
    settlement for 1997.
 
    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.
 
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, 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
 
                                       12
<PAGE>
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 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.
 
    In addition operating income may be adversely impacted by the opening of a
285-room hotel adjacent to the casino in late 1997.
 
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.
 
                                       13
<PAGE>
    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 conversation of subordinated debentures.
 
LIQUIDITY AND CAPITAL RESOURCES
 
    Cash and cash equivalents increased $693,000 to $1,656,000 at June 30, 1997
from $963,000 at March 31, 1997. The Company's principal source of funds during
the three months ended June 30, 1997 were funds provided by operations,
$1,013,000 from the sale of its minority interest in New Palace Casino, LLC
received May 1997 and $525,000 of equipment financing in June, 1997.
 
    The Company's principal use of funds during the third quarter of fiscal 1997
consisted of additions to deferred development costs of $123,000, payments of
notes payable and long-term debt totaling $316,000 and capital expenditures of
$638,000.
 
    Collection of notes receivable totaling $1,232,000 related to the warrant
exercise originally due in January and December 1996 was extended by written
agreement to December, 1997. The due date is subject to acceleration if the
Company stock price exceeds certain levels. Litigation filed to collect monies
due under the original agreement was dropped. In addition a note receivable in
the amount of $50,000 due from Willard Smith in May 1997 has not been collected
to date. Mr. Smith also owes the Company approximately $12,400 related to rent,
property taxes, and additional notes receivable.
 
    On September 10, 1997, the Company completed a private placement of $800,000
($707,000 net proceeds) of 13% convertible debentures. The debentures are
convertible into common stock after 90 days at 83% of the average closing bid
price for the preceding five trading days with mandatory conversion at the end
of one year. The debentures can also be redeemed by the Company at 120.48% of
face value.
 
    In addition, the Company completed two debt transactions totalling
$1,800,000. The first note ($800,000) has a one year maturity with interest
payable monthly at the greater of 20% per annum or the equivalent of 5% of the
gross gaming win, as defined, of the Company's Tunisian casino. This loan is
secured by a pledge of the stock of Casino Building Corporation, a wholly owned
subsidiary of the Company.
 
    The second note ($1,000,000) matures in nine years with interest payable
monthly equivalent to 10% of the EBIDTA of the Company's Tunisian casino, as
defined. This debt can be converted by the noteholders into a 10% equity
interest in the Company's Tunisian casino subject to regulatory approvals.
 
    Proceeds from the three transactions totaling $2,307,000 will be utilized to
complete the Tunisian casino project and for general working capital purposes.
All three transactions represent debt of the parent company.
 
    Barring any unforeseen circumstances, cash flow from operations plus
proceeds from the three recent financing transactions, should provide sufficient
working capital to meet the immediate needs of the Company's operations
including the Tunisian Casino.
 
    The Company's contract with the Aladdin Hotel and Casino is being cancelled
effective November 15, 1997. Annual revenues from the Aladdin contract total
approximately $2.1 million. The inability of the Company's management to timely
locate a new venue for the Country Tonite Show could have a material adverse
effect on cash flow from operations.
 
                                       14
<PAGE>
CAPITAL EXPENDITURES
 
    Capital expenditures for the Company were $718,000 for the nine months ended
June 30, 1997 compared to $188,000 for the comparable period of 1996. Capital
expenditures for 1997 period consisted principally of equipment purchases for
the Tunisian Casino project. Project expenditures (including preopening costs
and prepaid rent) to open the Tunisian Casino are anticipated to exceed
$4,000,000
 
SEASONALITY
 
    The Company expects its hotel operations will be affected by seasonal
factors, including holidays, weather and travel conditions. The theater
operations in Branson, Missouri and Pigeon Forge, Tennessee will also be
affected by seasonal factors and in addition will be closed annually from
January through mid-March, a period when theaters normally close in those areas.
The tourist season in Tunisia typically is from May 15 through October.
 
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 its casino 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.
    
 
IMPACT OF NEW ACCOUNTING STANDARDS
 
    In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share". The new standard simplifies the method for computing
earnings per share and requires the presentation of two new amounts, basic and
diluted earnings per share. The Company will be required to adopt SFAS No. 128,
in the quarter ending December 31, 1997. Earlier adoption is not allowed.
 
    In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income". The new standard discusses how to report and
display comprehensive income and its components. The standard is effective for
years beginning after December 15, 1997. When the Company adopts this statement,
it is not expected to have a material impact on the Company.
 
    In June 1997 the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information." This
standard requires enterprises to report certain information about operating
segments, their products and services, geographic areas, and major customers.
This standard is effective for years beginning after December 15, 1997. When the
Company adopts this statement, it is not expected to have a material impact on
the Company.
 
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
hotel, theatres or casino; changes in development and operating costs, including
labor, construction, land,
 
                                       15
<PAGE>
equipment, and capital costs; general business and economic conditions; currency
fluctuations, 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.
 
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, is presently playing at the Aladdin Hotel and
Casino in Las Vegas until November 15, 1997. The Company is seeking to obtain a
new venue for the Country Tonite Show in Las Vegas. CTE Production is pursuing
new endeavors.
 
NINE MONTHS ENDED JUNE 30, 1997 COMPARED TO NINE MONTHS ENDED JUNE 30, 1996
 
CONSOLIDATED
 
    The Company's revenues for the nine months ended June 30, 1997 were
$10,504,000, an increase of $1,745,000 or 20% from $8,759,000 in the prior year
period. The entertainment segment accounted for $1,739,000 or substantially all
of the increase.
 
ENTERTAINMENT
 
    COUNTRY TONITE PRODUCTION SHOW
 
    Country Tonite Production Show revenues totaled $2,562,000 for the nine
months ended June 30, 1997 (including $623,000 eliminated in consolidation), an
increase of $920,000 from the comparable fiscal 1996 period revenues of
$1,642,000. The increase in revenues is due principally to the Country Tonite
Show appearing at the Biloxi Grand Theatre from late December, 1996 to early
March, 1997, and the contract to produce the Country Tonite Show for the
Company's 60% owned joint venture in Pigeon Forge beginning in March, 1997.
Operating income increased to $573,000 for the nine months ended June 30, 1997
(including $623,000 eliminated in consolidation) from $322,000 in the comparable
prior year period due to the aforementioned new venues. Operating expenses
(including project, general and administrative costs) increased to $1,989,000
for the nine months ended June 30, 1997 from $1,320,000 in the prior year period
due principally to the Pigeon Forge and Biloxi show production expenses.
 
    COUNTRY TONITE THEATRE--BRANSON
 
    The Country Tonite Theatre in Branson reopened on March 8, 1997, the
beginning of the Branson tourist season. Paid attendance for the Country Tonite
Show totaled 38% at an average ticket price of $16.87 for the nine months ended
June 30, 1997 compared to paid attendance of 39% at an average ticket price of
$15.24 for the comparable prior year period. The decline in attendance occurred
principally in the third quarter. The Company has refocused its marketing
efforts in order to reverse the decline in attendance. Despite the decline in
attendance, the increase in average ticket price and revenue from a morning show
added in April 1997 resulted in revenues increasing $368,000 or 8% from the
fiscal 1996 nine month total of $4,341,000 to $4,709,000 for the comparable 1997
period. Operating expenses (including project, general and administrative
expenses) increased $166,000 or 5% to $3,311,000 for the first nine months of
fiscal 1997 from $3,165,000 in the first nine months of fiscal 1996 principally
as a result
 
                                       16
<PAGE>
of the new morning show. Operating income increased by $222,000 or 19% to
$1,398,000 in the first nine months of fiscal 1997 from $1,176,000 in the first
nine months of fiscal 1996.
 
    COUNTRY TONITE THEATRE--PIGEON FORGE
 
    The Country Tonite Theatre in Pigeon Forge opened for business on March 21,
1997. Revenues for the nine months ended June 30, 1997 totaled $1,074,000.
Operating expenses for the periods totaled $1,511,000 (including $623,000
eliminated in consolidation) generating an operating loss of $438,000 before a
minority interest allocation of $175,000. The Company anticipated an operating
loss during this start-up period.
 
HOSPITALITY
 
    GRAND HINCKLEY INN
 
    For the nine months ended June 30, 1997, revenues for the Grand Hinckley Inn
totaled $2,782,000, an increase of $6,000 from revenues of $2,776,000 for the
nine months ended June 30, 1996. Average occupancy rate totaled 81% in the first
nine months of fiscal 1997 compared to 84% in the first nine months of fiscal
1996. The decrease in occupancy was more than offset by an increase in the
average daily room rate from $52 in the first nine months of fiscal 1996 to $55
in the first nine months of fiscal 1997. Operating costs totaled $1,925,000 for
the nine months ended June 30, 1997 compared to $1,730,000 for the comparable
1996 period, an increase of $195,000. The increase in operating expenses was due
principally to higher real estate taxes and higher levels of profit sharing with
Grand Casino Hinckley.
 
GENERAL AND ADMINISTRATIVE
 
    The Company's general and administrative expenses aggregated $1,452,000 for
the nine months ended June 30, 1997 compared to $1,685,000 for the comparable
1996 period. The overall decrease was due principally to lower legal and
professional costs partially offset by additional costs related to the Company's
new ventures.
 
GAMING
 
    On February 5, 1997, the Company sold its interest in the Palace Casino back
to its joint venture partner. A combination of events including cash commitments
to other projects under development and the fact that the Company could not
manage the facility until its corporate officers and board members were found
suitable, a process which could have taken several additional months,
contributed to the Company's decision to sell its interest in the Palace Casino.
 
    In connection with the sale, the Company's escrow deposit of $400,000 was
refunded and, in addition, the Company has received proceeds of $1,000,000 for
the $1,500,000 debenture (issued at closing of the purchase) which was payable
upon transfer of the ownership interest (received May, 1997) and the remaining
$250,000 payable is due without interest in two years. The $250,000 receivable
was discounted to an effective interest rate of 10%. A loss of approximately
$404,000 was recorded in the nine months ended June 30, 1997 relating to the
sale of the Company's interest in the Palace.
 
    The loss of $771,000 for the nine months ended June 30, 1996 relates to the
Company's abandonment of its first attempt to acquire the Palace Casino in
February, 1996.
 
OTHER
 
   
    Interest expense totaled $836,000 for the nine months ended June 30, 1997
compared to $1,429,000 for the 1996 period. The decrease was due to a lower
level of indebtedness and a $550,000 charge in the nine months ended June 30,
1996 representing the discount upon conversion of subordinated debentures.
    
 
                                       17
<PAGE>
                                    BUSINESS
 
GENERAL
 
    The Company was organized in 1969. In 1987, the Company merged into an
inactive public corporation, and in 1993, it changed its name to Casino Resource
Corporation. Prior to 1987, the Company engaged in various business activities
unrelated to its current or proposed businesses. Between 1987 and 1991, the
Company's primary business was owning and managing recreational vehicle resorts,
and providing related direct marketing services. The Company sold its
capital-intensive camp resort properties during 1988 through 1991 and began
offering its direct marketing services to the recreational real estate industry,
primarily focusing on time share and camp resort developments and, eventually,
to the casino industry. The Company sold its time-share and camp resort direct
marketing business in May 1994, and directed its focus to the hospitality and
entertainment industry in both gaming and high-tourist areas, and to the
emerging gaming industry.
 
    The Company entered the hospitality and entertainment industries by
acquiring or developing four businesses, one of which has been sold. In March
1994, the Company purchased a musical production company which stages an
award-winning show at the Aladdin Hotel in Las Vegas, Nevada. Also in March
1994, the Company purchased its "Country Tonite Theatre" in Branson, Missouri,
which was reopened for business in May 1994. In May 1994, the Company completed
construction of and opened its 154-room hotel, the "Grand Hinckley Inn," on 7.5
acres of leased land in northern Minnesota adjacent to the Grand Casino
Hinckley, an Indian gaming facility operated by Grand Casinos, Inc. ("Grand
Casinos"). Also, in May 1994, the Company completed construction of the
1,872-seat "Biloxi Star Theatre" adjacent to the Grand Casino Biloxi on the Gulf
Coast of Mississippi. This facility was subsequently sold to Grand Casinos in
September 1994. In March 1997, a third venue for the Country Tonite Show opened
in Pigeon Forge, Tennessee. The Country Tonite Theatre, LLC, a joint venture
between CRC of Tennessee, Inc., a wholly owned subsidiary and Burkhart Ventures,
LLC, presents the show in a 1,500-seat, state-of-the-art theatre in Pigeon
Forge, Tennessee, formerly the home of country star T.G. Sheppard. CRC of
Tennessee is the manager and owns 60% of the joint venture. In April 1997, the
Branson theatre added a second show, "The Golden Girls", in a joint venture with
Greg Thompson Productions. The Company plans to increase its hospitality and
entertainment businesses as opportunities arise.
 
   
    In addition, the Company, through its subsidiary, Casino Resource
Corporation Tunisia, S.A. ("CRC of Tunisia"), leases and operates a casino and
theater in Sousse, Tunisia. The casino component has over 10,000 square feet of
gaming space, with present plans for up to 350 slot machines and 25 table games.
The casino is located on a site of approximately 1.5 acres in size. The facility
opened on October 18, 1997. The casino is being leased and operated pursuant to
an agreement with Samara Casino Company.
    
 
    The Company had previously entered into a Technical Assistance and
Consulting Agreement with Harrah's Entertainment, Inc. ("Harrah's") who is to
develop and manage one or more casinos to be funded by Harrah's for the Pokagon
Band of Potawatomi Indians in northern Indiana and southwestern Michigan. The
Company will, upon commencement of operations, receive 21.6% of Harrah's
management fee, but is not required to provide any development capital.
 
EXISTING OPERATIONS
 
    GRAND HINCKLEY INN (HINCKLEY, MN)
 
    In May 1994, the Company opened its Grand Hinckley Inn on 7.5 acres of
leased land located adjacent to the Grand Casino Hinckley, a 46,000 square-foot
casino owned by the Mille Lacs Band of Ojibwe Indians and operated by Grand
Casinos near Hinckley, Minnesota. The casino attracts approximately four million
patrons per year. The 154-room hotel is largely occupied by casino patrons.
 
    The hotel is located approximately 90 miles north of Minneapolis near the
intersection of Interstate 35 and State Highway 48. The intersection contains
approximately 250 hotel or motel rooms plus an
 
                                       18
<PAGE>
additional 285 rooms under construction, together with food and retail
establishments. The Commission is the lessor of the Grand Hinckley Inn site.
 
    The hotel is a luxury facility featuring 138 standard rooms and 16 suites.
Amenities include a swimming pool, a whirlpool and sauna, a video arcade, cable
television with video programming and games, and surface parking for 189
vehicles. The hotel features a spacious lobby and library, vaulted fireplace
sitting areas, a conference room, and guest laundry facilities. The hotel
provides complimentary continental breakfasts to all guests and free 24-hour
shuttle service to and from the casino seven days a week.
 
    The hotel has achieved an average occupancy rate of approximately 86% for
the fiscal year ended September 30, 1996, and generally reaches full capacity on
weekends. For the fiscal year ended September 30, 1996, the hotel had an average
room rate of $54.85.
 
    The Company has entered into several beneficial arrangements with Grand
Casinos and the tribe regarding the hotel. The Company leases the land on which
the hotel is situated from the Tribal Commission at the rate of $1 per annum;
the casino arranges room reservations at the hotel for its preferred customers;
and each business highlights the other in its marketing efforts. In addition,
under a Marketing Enhancement Agreement, the Company receives a $20 fee per
night per occupied room from the "Enterprise," (a combination of Grand Casinos
and the Mille Lacs Band of Ojibwe). In return for the marketing enhancement fee,
the hotel has entered into a revenue sharing plan with the Enterprise which
requires that 50% of all room revenues above a defined cumulative threshold be
paid to the Enterprise up to the amount of the marketing enhancement fees
received by the hotel. During the fiscal year ended September 30, 1995, hotel
revenues exceeded the cumulative threshold and the Company was required to pay
approximately $361,000 back to the Enterprise. Payments due to the Enterprise
under this "windfall profit sharing arrangement" for fiscal 1996 totaled
$786,000. Payments in the future will vary based on revenues and increases, if
any, in the hotel's annual 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 Casinos, the Company
has the right to require the Tribal Commission to purchase the hotel at the cost
stated above.
 
    The Company obtained mortgage financing in the amount of $3.3 million for
the development of the hotel in 1994. This debt is collateralized by the hotel,
as well as by certain stock pledged by Grand Casinos. The mortgage note matures
on May 1, 2004 and bears interest at an annual rate equal to the prime rate plus
2%, up to a maximum of 11%. The note is payable in monthly installments of
principal and interest of $44,283. Approximately $2.5 million in principal
amount was outstanding at August 31, 1997. In addition to the mortgage, the
Company secured $900,000 of equipment financing collateralized by the hotel's
furniture, fixtures and equipment and guaranteed by Grand Casinos. This debt was
repaid in full in August 1996. A $1,289,000 line of credit extended by Grand
Casinos to the Company for working capital purposes secured by a second mortgage
on the hotel was paid in full in August, 1997. The stock of Casino Building
Corporation is pledged as collateral for a $800,000 loan obtained by the Company
in September 1997.
 
    COUNTRY TONITE THEATRE (BRANSON, MO)
 
    The Company purchased the former Ray Stevens Theatre, now the Country Tonite
Theatre (the "Theatre"), in Branson, Missouri in March 1994. In May 1994, the
2,000-seat theater began running two shows daily, featuring dancers, singers,
comics and other variety acts. The show is produced by the Company's Las
Vegas-based subsidiary, Country Tonite Enterprises, Inc. ("CTE"). The theater
includes
 
                                       19
<PAGE>
38,000 square feet on two floors with an auditorium, a stage area, control
booths, dressing rooms, upstairs offices, a lounge, a gift shop which offers a
wide variety of souvenirs with the Country Tonite theme, and a concession stand.
In addition, the theater parking lot accommodates 600 cars and 30 buses.
 
    The Country Tonite show has been voted "Best Live Country Music Show in
America" by the Country Music Associations of America for three consecutive
years through 1995. In November 1995, the show was voted "Show of the Year" by
the 1995 Branson Entertainment Awards. Theater revenues increased 54% for fiscal
1996 compared to fiscal 1995, due in part to an increased marketing effort, an
increase in group ticket sales, and product recognition attributable to the
show's quality and longevity. The theater has achieved 40% of capacity during
the fiscal year ended September 1996, with an average ticket price of $15.57,
which is competitive with the average ticket price at other theaters in Branson.
 
    In April, 1997 the Company opened a morning show, "Golden Girls", in the
Branson theater. The show is a joint venture with Greg Thompson Productions. The
Company presented two shows a day, six days a week through June, and reopened on
August 29th.
 
    Branson, Missouri is a popular resort destination for country music lovers
from across the nation. Branson is located at the intersection of U. S. Highway
76 and Interstate Highway 65, which connects Branson and Springfield, Missouri.
With a population of approximately 3,000, Branson is home to over 30 theaters
featuring music stars such as Wayne Newton, Charley Pride and the Osmond family.
In addition to roughly 20,000 hotel rooms, Branson offers diverse eating,
shopping and recreational activities to its approximately 6 million annual
visitors, most of whom visit between the months of March and December. Typical
visitors to Branson are senior citizens participating in bus tours through
Missouri. Families also comprise a large part of Branson's visitors and they are
drawn to Branson not only by the country music, but by the additional activities
offered in the summer months by the many lakes in the Branson area and the
Arkansas Ozarks, another popular tourist destination area only 50 miles from
Branson.
 
    The Company purchased the theater for $2 million in cash and a promissory
note collateralized by the theater for $8 million in principal amount. The note,
with a principal balance of $7.4 million at August 31, 1997, bears interest at
the prime rate plus 1%, with a floor of 7% and a ceiling of 10%, and matures on
April 1, 1999. The note is payable in monthly installments of principal and
interest of $73,035, with a final payment due at maturity of $7,077,978.
 
    COUNTRY TONITE PRODUCTION SHOW (LAS VEGAS, NV)
 
    CTE, the Company's musical production subsidiary based in Las Vegas, Nevada,
was acquired in March 1994. The production show involves a country and western
theme, and has played at the Aladdin Hotel and Casino (Aladdin) in Las Vegas
since 1992. The show is under contract at the Aladdin through November 15, 1997.
The Company is presently looking for a new Las Vegas venue for the show. In
addition to the CMAA award mentioned above, other awards received by the show
include "Best Television Program in Nevada", "Electronic Media Award 1994",
"Recording of the Year--Karen Nelson Bell/ Country Tonite Live!", and a host of
individual awards. A second cast of the Country Tonite show performs at the
Country Tonite Theatre in Branson, Missouri. A third cast performs at the
Country Tonite Theatre in Pigeon Forge Tennessee.
 
   
    COUNTRY TONITE THEATRE (PIGEON FORGE, TN)
    
 
    CRC of Tennessee, Inc. ("CRCT"), a wholly owned subsidiary of the Company
and Burkhart Ventures, LLC formed a joint venture, Country Tonite Theatre, LLC
to present the Country Tonite Show in a 1,500-seat state-of-the-art theater
located in the heart of Pigeon Forge, Tennessee began in March, 1997. CRCT owns
60% of the joint venture and manages the theater. Burkhart Ventures, LLC owns
the remaining 40% of the joint venture and owns the theater. The joint venture
executed a five year lease for the theater beginning on March 1, 1997 with base
rent of $30,000 per month in year one, $40,000 per month in year two and $70,000
per month for the remaining term. The Company has guaranteed $30,000
 
                                       20
<PAGE>
per month of the rental amount due over the five year term. The joint venture
also signed an agreement with Country Tonite Enterprises, Inc., a wholly owned
subsidiary of the Company to provide the Country Tonite Show to the joint
venture for a weekly fee of $42,500. The weekly fee is subject to an annual cost
of living escalation in March of each year.
 
    There are currently eight comparable theaters operating in the Pigeon Forge
area. Pigeon Forge is considered an emerging area for theater based
entertainment. The joint venture is currently unprofitable.
 
   
    Pigeon Forge, located at the base of the Smoky Mountains, enjoys twice as
many visitors each year as Branson, Missouri, drawing over 12 million tourists
annually in contrast to the Branson marketplace, which hosts approximately 6
million visitors per year. Country Tonite Enterprises produces and performs its
Country Tonite Show in the Pigeon Forge Theater.
    
 
   
    TUNISIAN CASINO (SOUSSE, TUNISIA)
    
 
   
    The Company, through its subsidiary, CRC of Tunisia, has signed a definitive
agreement in July 1996 with the Samara Casino Company to lease and operate a
casino, and a 500-seat theatre in Sousse, Tunisia. The Company has signed a
three-year lease (with two, three-year renewal options) providing for base rent
of $560,000, plus the value added tax (with a 10% yearly escalation thereafter
plus a scaled percentage rental based on gross gaming revenues of the casino).
The 42,000 square foot casino resort has over 10,000 square feet of gaming space
with present plans to include up to 350 slot machines and 25 table games, and it
opened on October 18, 1997, which is the end of the tourist season in Tunisia.
Project expenditures to open the Tunisia Casino are anticipated to exceed
$4,000,000. The Company paid a broker's fee in connection with the consummation
of the Tunisian casino lease agreement. The fee consists of a one-time fixed
portion totalling $200,000 (with $100,000 payable upon opening of the casino and
$100,000 due at the one year anniversary) and an annual variable portion
consisting of 3.5% of the net income of the casino. The Company has signed a
consulting agreement with an individual for a one year period (with eight
renewable options based on the performance of gaming operations). Consulting
fees are based on the excess cash flow of CRC Tunisia S.A., as defined, with a
minimum payment of $175,000 in the first year, and $25,000 for each of the
remaining years.
    
 
   
    The entertainment complex/casino is a freestanding building which is located
on a triangular piece of property in front of the Hotel Samara. The site is
located on the main street through Sousse in the heart of the tourist center and
directly off the beach. The site is approximately 1.5 acres in size. The casino
is the first in the City of Sousse. No comparable casinos are currently open in
Tunisia, however, at least two other casinos are under development in other
Tunisian municipalities at distances of approximately 50 to 100 miles from
Sousse.
    
 
   
    The Company is negotiating with Samara Casino Company to acquire the rights
to operate the gourmet restaurant, gift shop and additional food and bar service
on the property, in exchange for a minority interest in CRC of Tunisia. This
transaction, which cannot be assured, is subject to the receipt of regulatory
approval. The casino is situated in front of the 425-room Hotel Samara, one of
three hotels that Samara controls. The two other hotels have 125 and 275 rooms,
respectively.
    
 
   
    The Republic of Tunisia is a small country in the northern most part of
North Africa and is bordered on the north and east by the Mediterranean, on the
southeast by Libya, and on the west by Algeria. It is approximately 62,608
square miles in size or relatively the same size as Illinois. Tunisia is a
destination resort for Europeans and known for its beaches. The City of Sousse
borders the Mediterranean. Casinos are a new attraction for the tourist trade in
Tunisia.
    
 
   
    The total number of tourists visiting Tunisia annually is estimated to be
4.5 million. The average length of stay for tourists is approximately six days.
There are approximately 20,000 hotel rooms to rent in the City of Sousse with
many more in the outlying areas. The tourist season is May 15 through October.
During this time the hotel rooms are historically, on average, 80% occupied. The
average occupancy rate
    
 
                                       21
<PAGE>
   
year-round is 53%. The closest airport to Sousse is approximately 30 minutes
away. Tourists take a bus from the airport to Sousse.
    
 
DEVELOPMENT ACTIVITIES
 
    POKAGON CONSULTING AGREEMENT
 
    In January 1995, the Company and Monarch Casinos, Inc. ("Monarch") executed
a Memorandum of Understanding (which was modified in December 1995) whereby the
Company acquired Monarch's rights to potential Indian gaming contracts in
exchange for shares of the Company's Common Stock, certain financial assistance
and a consulting agreement, all as described below. In addition to the Hoh
Indian gaming contract, which was executed by the Company and subsequently
abandoned during the fiscal year ended September 30, 1995, the Company assumed
Monarch's rights with respect to the potential award of a gaming management
contract by the Pokagon Band of Potawatomi Indians, domiciled in northern
Indiana and southwestern Michigan.
 
    Also in January 1995, the Company executed a Memorandum of Understanding
with the Promus Companies Incorporated (now Harrah's Entertainment, Inc.),
whereby Harrah's would act on behalf of itself, and the Company in seeking the
Pokagon award. A Management and Development Agreement was awarded by the Pokagon
band to a subsidiary of Harrah's in September 1995, and final agreements between
Harrah's and the Pokagon band were entered into in November and December 1995.
The agreements call for Harrah's to provide or cause to be provided one or more
loans to finance the construction of one or more casinos in the Pokagon band's
service area of northern Indiana and southwestern Michigan. The band will then
be responsible for repaying the loans and paying to Harrah's a management fee,
as defined for each Pokagon casino.
 
    Under the Technical Assistance and Consulting Agreement with Harrah's, the
Company will receive 21.6% of Harrah's management fee as consulting fees over
the five-year term of Harrah's management contract (and any extensions thereof)
with the Pokagon band. The Company has, in turn, agreed to pay to two
consultants to the Company who assisted in the acquisition of rights from
Monarch (including Kevin M. Kean, a principal stockholder of the Company), an
aggregate of 10% (5% each) of its consulting fee income less the Company's
related direct operating costs, subject to certain limits in the case of Mr.
Kean. (Similar fees may also be payable to Mr. Kean out of revenues, if any,
received by the Company from other Indian businesses, including gaming.)
 
    The Company will have no obligation to provide Harrah's or the Pokagon band
with any funding. However, to the extent not recouped by Harrah's from the
Pokagon band, the Company will reimburse Harrah's for the Company's share
(21.6%) of specified development and licensing costs incurred by Harrah's. The
Management and Development Agreement and related agreements between Harrah's and
the Pokagon band cannot take effect until approved by the National Indian Gaming
Commission ("NIGC"). The Company's obligation to reimburse Harrah's will be
payable in equal installments over 24 months without interest, and will be
subject to reduction for payments due the Company from Harrah's. Under the
Technical Assistance and Consulting Agreement, Harrah's has agreed to pay to the
Company a one-time fee of $250,000 (recognized in fiscal 1995) in connection
with the signing of the Management and Development Agreement with the Pokagon
Band, and a one-time fee of $600,000 as consideration for the relinquishment of
any rights or claims to any other business venture of Harrah's and its
affiliates, which is payable over five years, commencing with the opening of the
first Pokagon casino. In turn, the Company has agreed to pay to Harrah's, $5,000
per month for a period of 40 months for the administration of the Pokagon
contract, commencing with the opening of the first Pokagon casino.
 
    In consideration for the rights acquired from Monarch, the Company issued to
Monarch 100,000 shares of the Company's common stock in May 1995, and has agreed
to issue to Monarch an additional 400,000 shares of common stock upon the ground
breaking for the first Pokagon casino and 1,500,000 shares of common stock upon
commencement of operations of the first Pokagon casino. Additionally, the
 
                                       22
<PAGE>
   
Company has agreed to assume up to $179,000 of Monarch's accounts payable, to
make certain cash advances to Monarch or its principals and to reimburse
Monarch's executives for travel and business development costs related to
certain gaming opportunities. The Company has also executed a Consulting
Agreement with Monarch, which was subsequently assigned by Monarch to Willard E.
Smith, requiring the Company to (i) pay monthly fees commencing (retroactively)
January 1995 at various rates of from $3,000 to $14,250 per month; (ii) loan an
aggregate of $250,000 (all of which has been advanced), which may be forgiven in
part or in whole upon the occurrence of certain events; (iii) reimburse travel
expenses, and (iv) lease to Mr. Smith the Company's Ocean Springs, Mississippi
residence at a below-market lease rate. The Consulting Agreement was cancelled
on September 17, 1997 due to nonperformance.
    
 
MARKETING AND COMPETITION
 
    The entertainment and hospitality businesses of the Company rely on the
attraction of the Grand Casino Hinckley, in the case of the Grand Hinckley Inn;
the national reputation of Las Vegas, Nevada, in the case of the Company's stage
show which is presently located at the Aladdin Hotel in Las Vegas (until
November 15, 1997); and the tourist attractions of Branson, Missouri and Pigeon
Forge, Tennessee, in the case of the Country Tonite Theatre shows in such
venues.
 
    HINCKLEY, MINNESOTA MARKET
 
    The Grand Hinckley Inn is located near the intersection of Interstate
Highway 35 and Minnesota State Highway 48, adjacent to Hinckley, Minnesota.
Hinckley is within ninety miles of Hayward, Wisconsin, and the Minnesota cities
of Minneapolis/St. Paul, Duluth, St. Cloud and Brainerd. Interstate Highway 35
links Minneapolis/St. Paul and Duluth, which are Minnesota's two largest
population centers, and the Highway 48 intersection is a traditional rest stop
for travelers. The intersection contains approximately 250 hotel or motel rooms
plus a number of restaurants and retail outlets. In addition, Grand Casinos owns
or has developed approximately 400 acres of land adjacent to Grand Casino
Hinckley. The Grand Hinckley Inn depends substantially on patronage by visitors
to the neighboring Grand Casino Hinckley, as well as on enhancement payments by
Grand Casinos.
 
    Although the Grand Hinckley Inn has maintained occupancy levels exceeding
82% since opening in May 1994, there is no assurance that the adjacent casino
will continue to attract its historically high levels of patronage. The
Enterprise has begun construction of a 285 room hotel adjacent to the Grand
Casino which is anticipated to open in late 1997. This hotel will directly
compete with the Grand Hinckley Inn and could adversely impact both the
occupancy and room rates. A decrease in casino business or an additional
increase in the number of guestrooms could also adversely impact present
occupancy and room rate levels. The hotel's success has, to a large part, been
attributable to co-marketing activities conducted by both the Company and Grand
Casinos, as operator of the adjacent casino. The hotel has benefited from
referral reservations from the casino; from the purchase by the casino of rooms
to satisfy its obligations under frequent-player programs; joint advertising
themes and programs; and the marketing enhancement fee paid by the casino for
each daily occupied room. Should any of these factors change in a material
manner, the Company's success at the hotel could be adversely impacted.
 
    BRANSON, MISSOURI MARKET
 
    Branson, Missouri is a nationally known destination for country music
lovers. Approximately 6 million tourists visit Branson, Missouri each year,
lured by its attractive geography and climate, as well as by its substantial
number of family-oriented musical and show theaters. The area contains
approximately 33 theaters providing a wide range of family entertainment for all
ages.
 
                                       23
<PAGE>
    The Company attracts "walk up" patrons (approximately 85% of total sales),
both through local media advertising and "word-of-mouth", and markets to
pre-arranged bus tours (approximately 15% of total sales). Although monthly
revenues in fiscal 1996 have increased significantly over comparable periods in
fiscal 1995, the number of competing theaters and number of shows could at some
point attract ticket buyers away from the Company's theater. Also, other area
tourist attractions could limit the growth or even decrease ticket sales. In
addition, other geographic areas such as Myrtle Beach, South Carolina and
Gatlinburg, Tennessee are currently actively seeking to increase their tourist
bases, which could, at some point, negatively impact the number of annual
visitors to Branson. The Country Tonite Show playing at the Company's theater,
while having won major awards could be duplicated by a competing theater with
possible adverse consequences to the Company. Finally, there is no assurance
that the morning show, "Golden Girls", will be successful.
 
    LAS VEGAS, NEVADA MARKET
 
    The Company's Country Tonite stage show presently plays at the Aladdin
Hotel. The Company believes that the show competes effectively in its highly
competitive environment with other similar entertainment in Las Vegas on the
basis of its quality and the popularity of its country theme. To some extent,
the level of show patronage also depends on business levels at the Aladdin. The
Company has received notice that, effective November 15, 1997, the Country
Tonite Show's contract with the Aladdin Hotel has been cancelled due to the
rehabilitation of the Aladdin Hotel. The Company is seeking to obtain a new
venue for the Country Tonite Show in Las Vegas. Failure to locate such a new
venue could have a material adverse effect on the Company's consolidated
operating income. Numerous individual and group acts and production casts
operate in Las Vegas, competing for tourist expenditures.
 
    PIGEON FORGE, TENNESSEE MARKET
 
    The Company's Country Tonite Show added a venue in Pigeon Forge, Tennessee,
in March 1997. This is a new market for the Company's award winning Country
Tonite Show. Currently, eight family oriented musical and show theaters are
operating in the Pigeon Forge area. It is likely that additional theaters will
open in the future. Although the Pigeon Forge area draws approximately twice the
number of tourists (approximately 12 million annually) as the Branson, Missouri
area, there are no assurances that the Pigeon Forge show will duplicate the
success of the Las Vegas and Branson shows. The theater will compete for the
tourist dollar against other theater venues and other forms of family
entertainment in the Pigeon Forge area.
 
   
    SOUSSE, TUNISIA MARKET
    
 
   
    The Company, through a subsidiary, recently opened a casino and theater in
Sousse, Tunisia. The total number of tourists visiting Tunisia annually is
estimated to be 4.5 million. The average length of stay for tourists is
approximately six days. There are approximately 20,000 hotel rooms to rent in
the City of Sousse, with many more in the outlying areas. The tourist season is
May 15 through October. During this time the hotel rooms are historically, on
average, 80% occupied. The average occupancy rate year-round is 53%. The closest
airport to Sousse is approximately 30 minutes away. Tourists take a bus from the
airport to Sousse. The casino is the first for the city of Sousse. No comparable
casinos are currently open in Tunisia, however, at least two other casinos are
under development in other Tunisian municipalities at distances of approximately
50 to 100 miles from Sousse.
    
 
    POKAGON TRIBAL AREA MARKET
 
    The Pokagon Indian tribe does not have a designated reservation but has been
assigned certain service areas in northern Indiana and southwestern Michigan
within which one or more casinos may be constructed subject to the approval of
various regulatory authorities. In May 1996, the Pokagon Band announced the
selection of a site in the New Buffalo township for its proposed Michigan
service area.
 
                                       24
<PAGE>
Although the Governor of Michigan signed a compact with the Pokagon Tribe in
September 1995, the Michigan legislature failed to approve the compact as of
August 1997. The compact is expected to be resubmitted for legislative approval
in the fall of 1997. Until the compact is approved, no timetable for development
is determinable. The Company expects eventual approval of the compact as
Michigan already has Class III gaming with seven other tribes. Although 13
million people reside within 150 miles of the service areas, the planned
casino(s) could encounter significant competition from existing riverboat
casinos now operating in Illinois and Indiana. Likewise, there is a possibility
that other Native American land-based casinos could be developed, and which
could provide substantial competition to the Pokagon casino(s). In either event,
while the Company will have only a minimal capital investment and related risk
in the Pokagon venture, significant competition could severely reduce the
Company's anticipated future management fee income.
 
    EMPLOYEES
 
    As of August 31, 1997, the Company employed 17 employees at its headquarters
in Ocean Springs, Mississippi; 65 employees at the Grand Hinckley Inn; 104
employees at the Country Tonite Theatre; 40 employees at the Country Tonite
production show in Las Vegas and 94 in Pigeon Forge. None of the Company's
employees are represented by a union, and management considers its labor
relations to be good.
 
    REGULATION AND LICENSING OF GAMING ACTIVITY
 
   
    The Company, acting through its subsidiary, CRC of Tunisia, is actively
engaged in gaming in Tunisia and is subject to Tunisian gaming regulations and
licensing. Also, the Company has negotiated the right to receive fees based on
possible future casino management fees paid to Harrah's by the Pokagon Band. The
Pokagon project has not been developed and is still subject to negotiation and
regulatory approvals. The Company will be required to apply for and obtain
gaming licensing applications with the National Indian Gaming Commission
("NIGC") in connection with the Pokagon project. To date, preliminary background
information has been submitted to the NIGC.
    
 
INDIAN GAMING REGULATION
 
    INDIAN GAMING REGULATORY ACT AND TRIBAL/STATE COMPACTS.  Gaming on Indian
lands within the United States is authorized by the Indian Gaming Regulatory Act
(the "IGRA"), a federal statute enacted in 1988. The IGRA provides for three
classes of gaming. Class I gaming consists of non-commercial social games played
solely for prizes of minimal value or traditional forms of Indian gaming, and is
subject to the exclusive jurisdiction of the applicable Indian tribe. Class II
gaming includes bingo, pulltabs and non-banking card games that are already
permitted in a state, and is subject to the concurrent jurisdiction of the
applicable Indian tribe. Class III gaming is a residual category composed of all
forms of gaming that are not Class I or Class II gaming, including casino style
gaming.
 
    The IGRA provides that before tribes can engage in Class III gaming in a
particular state, the tribe must negotiate a "tribal/state compact" with that
state to regulate such gaming. Under the IGRA, the scope of Class III gaming in
which tribes can engage in a particular state depends on the state's "public
policy" towards such gaming. The courts have developed a shorthand test to
determine a state's public policy, which is expressly incorporated in the IGRA.
If a state permits Class III gaming by any person, organization or entity in the
state, whether or not such gaming is subject to restrictive regulations, then
the state's public policy toward such gaming is deemed permissive and the state
must negotiate a compact with an Indian tribe in good faith at the request of
the tribe. If it does not, the tribe would have the right to file a "bad faith
lawsuit" and ultimately, if the court found that the state had refused to
negotiate in good faith and a compact still could not be negotiated, the
Secretary of the Interior could authorize procedures to conduct Class III gaming
in that state without a state-negotiated compact.
 
                                       25
<PAGE>
    The terms of the tribal/state compacts negotiated pursuant to the IGRA vary
from state to state, and may vary from tribe to tribe within a state. At least
23 states (Arizona, California, Colorado, Connecticut, Idaho, Iowa, Kansas,
Louisiana, Michigan, Minnesota, Mississippi, Montana, Nebraska, Nevada, New
Mexico, New York, North Carolina, North Dakota, Oklahoma, Oregon, South Dakota,
Washington and Wisconsin) have signed tribal/state compacts with Indian tribes
that permit certain types of Class III gaming on Indian land. (A compact has
been reached by the Pokagon Band with the Governor of Michigan, but such compact
has not received the necessary ratification of the State's legislature.) Changes
in state gaming laws may limit the types of gaming that are eligible for
tribal/state compacts. Certain states have resisted entering into or
renegotiating existing tribal/state compacts, and tribal/state compacts have
been the subject of litigation in several states, including Alabama, California,
Florida, Kansas, Louisiana, Michigan, Minnesota, Mississippi, New York, North
Carolina, Rhode Island, Texas, Washington and Wisconsin. The Eleventh Circuit
Court of Appeals and several federal courts have held that the Eleventh
Amendment to the United States Constitution immunizes states from suit by Indian
tribes in federal court without the state's consent. Therefore, in these
jurisdictions, Indian tribes may not have a forum to compel a state to negotiate
a tribal/state compact. Several other Circuit Courts have, however, held
otherwise. The United States Supreme Court has agreed to review the decision of
the Eleventh Circuit Court of Appeals and will likely render a decision in 1997.
The outcome of such decision, and its effect on the Company, is uncertain.
 
    In addition, because portions of the IGRA have been the subject of
controversy between the Indian tribes and governors in a number of states, the
Senate Committee of Native American Affairs proposed amendments to the IGRA in
1994. Those amendments, however, were rejected by tribal leaders and others. In
response, the Senate Committee proposed new amendments to the IGRA in March
1995. In addition, several bills to amend the IGRA have been introduced in the
House. It is unknown whether or when these proposed amendments will be proposed
or enacted and, if enacted, their effects on such activities. Even where tribes
and states have negotiated a compact, any changes in the IGRA may have a
material effect on how gaming on tribal lands will be conducted.
 
    MANAGEMENT CONTRACTS.  The NIGC has adopted regulations pursuant to the IGRA
that govern the submission requirements for and content of management contracts
with Indian tribes. A management contract has no legal effect until it is
approved by the Chairman of the NIGC. The NIGC regulations provide detailed
requirements as to certain provisions which must be included in management
contracts, including a term not to exceed five years, except that upon request
of a tribe, a term of seven years may be allowed by the NIGC Chairman, if the
Chairman is satisfied that the capital investment and income projections for the
gaming facility require the additional time. Further, the fee received by the
manager of a gaming facility may not exceed 30% of the net revenues, except that
a fee in excess of 30% and up to of 40% of net revenues may be approved, if the
NIGC Chairman is satisfied that the capital investment and income projections
for the gaming facility require the additional fee. The NIGC has the power to
require contract modifications under certain circumstances or to void a contract
if the management company fails to comply with applicable laws and regulations.
 
    In addition to ensuring that a management contract contains certain terms,
the Chairman of the NIGC may disapprove a management contract if it is
determined that the management contractor's prior activities, criminal record,
if any, or reputation, habits and associations pose a threat to the public
interest or create a danger of illegal practices, or that such contractor has
interfered with or unduly influenced the tribal governmental decision-making
process. The NIGC also requires that certain information pertaining to persons
and entities with a financial interest in, or having management responsibility
for, a management contract be disclosed for purposes of a suitability review.
This is expected to include the Company by virtue of its percentage consulting
fee. The NIGC regulations provide that each of the 10 persons who have the
greatest direct or indirect financial interest in the management contract must
be found suitable in order for the management contract to be approved by the
NIGC. The NIGC regulations provide that any entity with a financial interest in
a contract must be found suitable, as must the directors and 10 largest
shareholders
 
                                       26
<PAGE>
(or owners of 5% or more of issued and outstanding stock) of such entities in
the case of a corporate entity, or the 10 largest holders of interest in the
case of a trust or partnership. The Chairman of the NIGC may reduce the scope of
information to be provided by institutional investors. Specifically, the
Company, its directors, persons with management responsibilities and certain of
the Company's owners, must provide background information and be investigated by
the NIGC and be found suitable to be affiliated with a gaming operation in order
for the management contract to be approved by the NIGC. At any time, the NIGC
has the power to investigate and require the finding of suitability of any
person with a direct or indirect interest in a management contract, as
determined by the NIGC. The Company must pay all fees associated with background
investigations by the NIGC. The NIGC is responsible for conducting the requisite
background investigation on the foregoing individuals and entities in the case
of Class II gaming operations; the applicable state gaming agency and tribe are
responsible for conducting the background investigation with respect to Class
III gaming operations and then providing its findings to the NIGC. Generally,
the applicable tribal/state compact will delineate responsibilities and issues
relating to background checks for Class III operations.
 
    The NIGC regulations require that background information as described above
must be submitted for approval within 10 days of any proposed change in
financial interest in a management contract. The NIGC regulations do not address
any specialized procedures for investigations and suitability findings in the
context of publicly held corporations. If, subsequent to the approval of a
management contract, the NIGC determines that any of its requirements pertaining
to the management contract have been violated, it may require the management
contract to be modified or voided, subject to rights of appeal. In addition, any
amendments to the management contract must be approved by the NIGC.
 
    The NIGC regulations provide that the management contract must be
disapproved if the NIGC determines that: (a) any person with a direct or
indirect financial interest in, or having management responsibility for, a
management contract (i) has been convicted of a felony or any misdemeanor gaming
offense; (ii) if the person's prior activities make them unsuitable to be
connected with gaming; (iii) is an elected member of the governing body of a
tribe that is party to the management contract; or (iv) has knowingly provided
materially false statements to the NIGC or a tribe or has refused to respond to
questions from the NIGC; (b) the management contractor has attempted to unduly
interfere with or influence tribal decisions relating to the gaming operation or
has deliberately or substantially failed to follow the management contract and
applicable tribal ordinances; or (c) a trustee would not approve the management
contract.
 
    In addition to requirements governing management contracts and submissions,
the regulations require each tribe to enact an ordinance authorizing and setting
out standards for the conduct of gaming on its lands, which must be approved by
the NIGC. The ordinance must mandate the tribe to conduct background
investigations and issue licenses to key employees and primary management
officials employed by the gaming enterprise, submit annual independent audits to
the NIGC, and pay a variable user fee to the NIGC. The NIGC also has extensive
access, investigatory monitoring, compliance and enforcement powers to ensure
that the management contractor, the tribe and the gaming enterprise comply with
its regulations.
 
    The NIGC has only recently been provided the regulatory authority to approve
management contracts. It is not yet clear how this authority interacts with the
statutory rights of approval of the Bureau of Indian Affairs (the "BIA") for
contracts between Indian tribes and non-Indians. Pursuant to BIA regulations,
contracts between non-Indians and Indian tribes, which do not adhere to certain
statutory requirements, are void. At present, it is unclear as to whether and
how the BIA intends to assert jurisdiction to approve collateral agreements
related to management contracts (such as promissory notes) or whether the NIGC
will have approval authority over such collateral agreements. Pursuant to
current procedures, all such documents are to be submitted to the NIGC, which
will then determine whether review and approval resides with the NIGC or the
BIA.
 
                                       27
<PAGE>
TUNISIA GAMING REGULATION
 
   
    The Company's casino venture in Tunisia is subject to laws and regulations
affecting the ownership and operation of casinos in that country. As is inherent
in international operations, the Company's proposed venture is subject to the
risks of unpredictable and inconsistent regulatory requirements, political and
economic changes and disruptions, tariffs or other restrictions on trade,
transportation and communication delays, currency fluctuations and staffing
difficulties.
    
 
   
PROPERTIES
    
 
    The Company's owned or leased properties include principally the Grand
Hinckley Inn, the Country Tonite Theatres in Branson and Pigeon Forge, the
Company's executive offices and a residential property. The Grand Hinckley Inn
is a 154-room, upscale hotel owned by the Company adjacent to the Grand Casino
Hinckley near Hinckley, Minnesota. It is situated on 7.5 acres of real estate
leased at a cost of $1 per annum from Grand Casinos. The 2,000-seat Country
Tonite Theatre in Branson, Missouri is owned by the Company, including
underlying real estate of 10.7 acres. The 1,500-seat Country Tonite Theatre in
Pigeon Forge, Tennessee is leased by the LLC of which the Company is the
majority partner by virtue of to its 60% investment. The Company leases,
pursuant to a five-year lease, executive office space in Ocean Springs,
Mississippi at a rate of $73,500 per annum. The Company owns a residence in
Ocean Springs, Mississippi which is leased to a principal of Monarch at a
below-market rate. The Company leases a 42,000 square foot casino resort in
Tunisia pursuant to a three-year lease (with two, three-year renewal options)
providing for base rent of $560,000 plus value added taxes (with a 10% yearly
escalation plus a scaled percentage rental based on gross gaming revenues of the
casino).
 
    In addition, the Company owns several small lots and real estate parcels in
Wisconsin, which it is attempting to sell. Proceeds, if any, from the sale are
not expected to be material.
 
    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 Casinos, 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 less
$450,000. 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.
 
    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.
 
   
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, 1996. There have been no
further developments regarding such proceedings during the nine months ended
June 30, 1997, except as described below.
 
                                       28
<PAGE>
    The Company commenced an arbitration action with the Arbitration Association
in Minneapolis, Minnesota against Cunningham, Hamilton and Quiter, PA (CHQ), the
architect it retained in connection with construction of the Biloxi Star
Theater. On December 30, 1994, the architect firm CHQ commenced a suit in a
Mississippi State Court seeking a foreclosure on a mechanics lien it had filed
on the Biloxi Theater project in the amount of $321,000 which sum the Company
escrowed. On December 26, 1996, the Arbitration Association announced the
Company was entitled to an award of approximately $142,000, which sum was a
portion of previously escrowed $321,000. The decision resulted in a gain to the
Company of approximately $117,000.
 
    In 1995, a suit was brought against the Company in Federal District Court of
New Jersey, which venue was later transferred to the Federal District Court for
Southern Mississippi. Plaintiff (Gelb Productions, Inc, a New Jersey
corporation) asserts it had a contract with Company to provide eight
professional boxing events at the Company's former Biloxi Star Theater. The
complaint was thereafter amended by plaintiff to reflect additionally
allegations that defendant tortuously harmed plaintiff's business reputation and
maliciously interfered with existing and prospective economic relationships. The
total claims asserted are for $500,000 in compensatory damages, punitive
damages, and attorney's fees and additional costs and other relief the court may
deem just and proper. The Company's general liability insurance carrier has
taken up the partial defense of the Company.
 
    James and Prudence Barnes, two former officers of a subsidiary of the
Company have brought suit in State District Court, Clark County, Nevada against
the Company in connection with their employment termination in June 1995. No
specific amount of damages has been claimed, however the plaintiffs have
informally indicated recently that they would entertain a settlement offer of
between $250,000 and $350,000. 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, Harrah's Entertainment and Monarch
Casinos, in the Fourth Judicial District Court of Minnesota and Michigan, which
venue was later 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.
Under the Lanham Act, Plaintiffs are claiming a right to treble damages. The
plaintiff seeks compensatory damages and has not claimed a specific amount of
damages, but claim such damages exceed $50,000. The plaintiff also seeks
recovery of their attorney's fees. The Company's general liability carrier has
taken up the defense of the Company. The Company intends to vigorously defend
itself in this matter.
 
    On November 13, 1995, Casino Resorts, Inc., a Minnesota Corporation,
commended an action in the State District Court for the Fourth Judicial District
of Minnesota against Monarch and the Company alleging breach of contract against
Monarch and tortuous interference with a contractual business relationship
against the Company. The plaintiff seeks compensatory damages and has not
claimed a specific amount of damages, but claim such damages exceed $50,000. The
plaintiff also seeks reimbursement of costs and expenses. This matter came
before the Fourth Judicial District Court of Minnesota, on December 9, 1996, for
hearing on motions by the Company and Monarch for summary judgment. On January
22, 1997, the Company's motion for summary judgment on plaintiff's claim of
tortuous interference was granted and plaintiff's claim against the Company was
dismissed. Additionally, Monarch's motion of summary judgment on plaintiff's
claim for breach of contract was granted and plaintiff's claim against it was
dismissed. Casino Resorts, Inc. filed an appeal with the Minnesota Court of
Appeals on May 7, 1997 claiming that there are factual issues, which must be
resolved by a jury. The Company intends to vigorously defend itself in this
matter.
 
    The Company has received notice that the action of Cunningham, Hamilton,
Quiter, P.A. against John J. Pilger (CEO of the Company) in Jackson County
Circuit Court, Mississippi originally set in abeyance
 
                                       29
<PAGE>
pending completion of arbitration proceedings, is now reconstituted. Cunningham
alleges that the Company owes CHQ approximately $40,000 for services rendered in
1994. The Company denies these charges and plans to vigorously defend itself in
this matter.
 
                      SECURITIES ELIGIBLE FOR FUTURE SALE
 
    There are 10,043,364 shares of Common Stock issued and outstanding as of the
date hereof, of which, in addition to the 1,075,500 shares registered hereby,
8,368,496 shares are currently held by the public and are freely tradable and
1,674,868 shares are currently eligible for resale under Rule 144. Sales of
substantial amounts of Common Stock in the public market could adversely affect
the then prevailing market price.
 
    Holders of restricted securities must comply with the requirements of Rule
144 in order to sell their shares in the open market. In general, under Rule
144, as currently in effect, any person (or persons whose sales are aggregated)
who has beneficially owned his or her restricted shares of Common Stock for at
least one year (as of the date of this Prospectus) would be entitled to sell in
the open market, within any three-month period, a number of shares that does not
exceed the greater of (i) 1 % of the then outstanding shares of the Company's
Common Stock or (ii) the average weekly trading volume reported on the Nasdaq
National Market during the four calendar weeks preceding such sale. Sales under
Rule 144 are also subject to certain limitations on manner of sale, notice
requirements and availability of current public information about the Company.
Such volume and other limitations also apply to shares held by affiliates,
whether restricted shares or not. Non-affiliates who have held their restricted
shares for two years are entitled to sell their shares under Rule 144(R) without
regard to any of the above limitations, provided they have not been affiliates
for the three months preceding such sale.
 
                           DESCRIPTION OF SECURITIES
 
COMMON STOCK
 
    The Company is authorized to issue up to 35,000,000 shares of capital stock,
including 30,000,000 shares of Common Stock, of which 10,043,364 shares are
outstanding as of the date hereof and 5,000,000 shares of Preferred Stock, of
which no shares are outstanding as of the date hereof.
 
    Holders of Common Stock are entitled to receive such dividends as are
declared by the Board of Directors of the Company out of funds legally available
therefor. The Company has not declared or paid any cash dividends on its capital
stock since its incorporation and does not intend to pay any cash dividends in
the foreseeable future. In the event of any liquidation, dissolution or
winding-up of the Company, the holders of shares of Common Stock would be
entitled to receive a PRO RATA share of the net assets of the Company remaining
after payment, or provision for payment, of the debts and other liabilities of
the Company. There is no assurance, however, that under such circumstances there
would be any net assets of the Company remaining for such a PRO RATA
distribution to holders of shares of the Common Stock after the payment, or
provision for payment, of the debts and other liabilities of the Company.
 
    Holders of shares of the Common Stock are entitled to one vote per share in
all matters to be voted upon by shareholders. Because there is no cumulative
voting for the election of directors, the holders of shares entitled to exercise
more than 50% of the voting rights in an election of directors are able to elect
all of the directors. Holders of shares of the Common Stock have no preemptive
rights to subscribe for or to purchase any additional shares of Common Stock, or
other obligations convertible into shares of Common Stock, which may hereafter
be issued by the Company.
 
    Federal and various state gaming authorities require certain shareholders of
a company seeking a gaming license to be investigated and to have such
shareholder's suitability determined by the gaming authority. If a gaming
authority has reason to believe that such ownership may be inconsistent with
declared policy of the state, it may deny an application for a license. By way
of illustration, in the State of
 
                                       30
<PAGE>
Nevada, a corporation could be subject to disciplinary action by the Nevada
Gaming Commission if, after it receives notice that a person is unsuitable to be
a shareholder, it (i) pays the unsuitable person any dividends or interest, (ii)
recognizes the exercise, directly or indirectly, of any voting rights in its
securities by the unsuitable person, (iii) pays the unsuitable person any
remuneration in any form for services rendered or (iv) fails to pursue all
lawful efforts to require the unsuitable person to divest the voting securities,
including, if necessary, the immediate purchase of voting securities for cash at
fair market value.
 
PREFERRED STOCK
 
    The Company is authorized to issue 5,000,000 shares of Preferred Stock, $.01
par value, in one or more classes or series. The Board of Directors has the
authority to determine the designation and number of shares in each class or
series, to fix the dividend, redemption, liquidation, retirement, conversion and
voting rights, if any, of each class or series, and to set any other rights and
preferences thereof. No shares of Preferred Stock have been issued by the
Company. If issued, shares of Preferred Stock may (i) have disproportionately
high voting rights or class voting rights compared to shares of Common Stock,
(ii) be convertible into shares of Common Stock and (iii) rank prior to shares
of Common Stock as to the payment of dividends and the distribution of assets
upon liquidation or dissolution. Furthermore, the issuance of Preferred Stock
could have any one or more of the following effects: (i) entrenching the
Company's Board of Directors, (ii) depriving the then current shareholders of a
tender offer to purchase their shares of Common Stock at a premium over the
Common Stock's market price, or (iii) encouraging an attempt, through the
acquisition of a substantial number of shares of Common Stock, to acquire
control of the Company with a view to effecting a merger, sale, exchange of
assets or similar transaction. The Board of Directors, without shareholder
approval, may also issue shares of Preferred Stock with voting or conversion
rights, which could adversely affect the voting power of the Common Stock.
 
REGULATORY PROVISIONS
 
    The Company's Restated Articles of Incorporation, as amended (the
"Articles"), provide that no investor may become either a holder of 5% or more
of the Company's stock or one of the 10 largest shareholders of the Company
without first agreeing to consent to a background investigation, provide a
financial statement and respond to questions from gaming authorities.
Furthermore, all shares of the Company's capital stock held by a beneficial
owner will be subject to redemption if (a) such beneficial owner refuses, upon
request of the Board or any gaming authority having jurisdiction over the
Company, to provide any of the foregoing or a) such beneficial holder's holdings
of capital stock either alone or together with the capital stock holdings of any
other beneficial holder of the Company's capital stock may, in the judgment of
the Board of Directors, result in (i) the disapproval, modification or
non-renewal of any gaming management contract (whether solely or by shared
management) or (ii) the disapproval, loss, modification, non-renewal or
non-reinstatement of any license, franchise, approval or consent from a gaming
authority or other governmental agency with respect to the conduct of any
portion of the business of the Company where such license, franchise approval or
consent is conditioned upon holders of capital stock meeting certain criteria.
 
    The restrictions described immediately above on certain holders of the
Company's Common Stock may discourage the acquisition of large blocks of the
Company's securities, may depress the price of the Common Stock and have an
anti-takeover effect. The Company is not aware of any current or planned effort
on the part of any party to acquire control of the Company by means of a merger,
tender offer, solicitation in opposition to management or otherwise, or to
change the Company's Board of Directors or management. Similar to the
anti-takeover effect described above, it is possible that certain large
institutional investors may be opposed to investing in the Company's stock if
any such investment would subject them to requirements to provide information to
gaming authorities.
 
                                       31
<PAGE>
    Any required redemption by the Company of shares of its Common Stock held by
a shareholder who violates the foregoing restrictions on ownership may require a
cash payment to such shareholder, which payment may have a negative effect on
the liquidity of the Company. Furthermore, such redemption requirement could (i)
cause current or future state or federal gaming authorities to materially
restrict or prohibit certain persons from owning the Company's securities; (ii)
require certain holders of the Company's securities to liquidate their holdings
at a time when market conditions are not favorable or at a cost that is not
favorable, to such holders; or (iii) due to the potential volume of such
dispositions, materially depress the market value of the Company's securities.
 
    In addition, at the election of the Company, any shareholder who is required
to redeem its securities may receive redemption securities wholly or partially
in lieu of a cash payment. "Redemption Securities" are any debt or equity
securities of the Company, any subsidiary, any other corporation or any
combination thereof, having terms and conditions approved by the Board of
Directors which, together with any cash payment to be paid as part thereof,
equal the fair market value of the securities to be redeemed on the date the
notice of redemption is given, as determined by a nationally recognized
investment banking firm selected by the Board of Directors. Such redemption
securities may be securities, which have not been registered under the
Securities Act and therefore may not be eligible for trading in the public
market. See "Risk Factors--Potential Anti-Takeover Effects of Charter Provisions
and Minnesota Law" and "--Restrictions on Stock Ownership" and
"Business--Regulation and Licensing of Gaming Activity."
 
CLASSIFIED BOARD AND RELATED PROVISIONS
 
    The Articles and Bylaws contain provisions which divide the Board of
Directors into three classes and provide certain procedures for the removal of
directors, the filling of vacancies on the Board and amending the Articles and
Bylaws.
 
    The Articles provide that the Board of Directors be divided into three
classes of directors serving staggered three-year terms, with each class being
as nearly equal in number as possible. As a result, approximately one-third of
the members of the Board of Directors will be elected each year. Initially,
members of all three classes were elected at the annual meeting of shareholders
in 1996. Commencing with the election of directors at the annual meeting of
shareholders in April, 1997, each class of directors will be elected to a
three-year term.
 
    The Articles also provide that directors may be removed for cause by vote of
the holders of a majority of the outstanding shares entitled to vote or, other
than for cause, by an 80% shareholder vote. Generally, Minnesota law provides
that, unless otherwise provided in a corporation's articles of incorporation or
bylaws, directors may be removed, with or without cause by the vote of the
holders of the proportion or number of outstanding shares that would be
sufficient to elect them. In addition, Minnesota law provides that a director
may be removed, with or without cause, by vote of the majority of the remaining
directors present.
 
    Under the Articles and Bylaws, a director elected to fill a vacancy on the
Board of Directors shall serve until a successor is elected at the next
regularly scheduled election for the class of directors in which the vacancy
occurred. Vacancies on the Board of Directors may not be both created and filled
by shareholder action at the same shareholder meeting and no decrease in the
number of directors shall shorten the term of any incumbent director.
 
    Finally, an 80% shareholder vote is required to amend, alter or adopt any
provision inconsistent with, or repeal, the classified board and related
provisions.
 
    While the classified board and related provisions may discourage or make
more difficult a proxy contest, the removal of an incumbent board or the
assumption of control of the Company by tender offer or otherwise by a third
party, even under circumstances when such action might be beneficial to the
Company and its shareholders, the Board believes that protecting its ability to
negotiate with the
 
                                       32
<PAGE>
proponent of an unfriendly or unsolicited attempt to gain management control of
the Company outweighs the disadvantages of discouraging such overtures. See
"Risk Factors--Potential Anti-Takeover Effects of Charter Provisions and
Minnesota Law."
 
MINNESOTA ANTI-TAKEOVER LAW
 
    The Company is governed by the provisions of Sections 302A.671 and 302A.673
of the Minnesota Business Corporation Act. In general, Section 302A.671 provides
that the shares of a corporation acquired in a "control share acquisition" have
no voting rights unless voting rights are approved in a prescribed manner. A
"control share acquisition" is an acquisition, directly or indirectly, of
beneficial ownership of shares that would, when added to all other shares
beneficially owned by the acquiring person, entitle the acquiring person to have
voting power of 20% or more in the election of directors. In general, Section
302A. 673 prohibits a publicly held Minnesota corporation from engaging in a
"business combination" with an "interested shareholder" for a period of four
years after the date of the transaction in which the person became an interested
shareholder, unless the business combination is approved in a prescribed manner.
"Business combination" includes mergers, asset sales and other transactions
resulting in a financial benefit to the interested shareholder. An "interested
shareholder" is a person who is the beneficial owner, directly or indirectly, of
10% or more of the corporation's voting stock or who is an affiliate or
associate of the corporation and at any time within four years prior to the date
in question was the beneficial owner, directly or indirectly, of 10% or more of
the corporation's voting stock.
 
TRANSFER AGENT AND REGISTRAR
 
    Norwest Bank Minnesota, N.A. is the transfer agent and registrar for the
Common Stock.
 
INDEMNIFICATION AND WAIVER OF DIRECTOR LIABILITY
 
    The Minnesota Business Corporation Act provides that officers and directors
of the Company have the right to indemnification by the Company for liability
arising out of certain actions. Such indemnification may be available for
liabilities arising in connection with this Offering. Insofar as indemnification
for liabilities arising under the Securities Act may be permitted to directors,
officers or persons controlling the Company, pursuant to such indemnification
provisions, the Company has been advised that, in the opinion of the Commission,
such indemnification is against public policy, as expressed in the Acts, and is
therefore, unenforceable.
 
    The Company has adopted in its Articles a provision which limits personal
liability for breach of the fiduciary duty of its directors, to the extent
provided by Section 302A.521 of the Minnesota Business Corporation Act. Such
provision eliminates the personal liability of directors for damages occasioned
by breach of fiduciary duty, except based on the director's duty of loyalty to
the Company, liability for acts or omissions not made in good faith, liability
for acts or omissions involving intentional misconduct, liability based on
payments of improper dividends, liability based on violations of state
securities laws and liability for acts occurring prior to the date such
provision was added.
 
                                       33
<PAGE>
   
                              SELLING SHAREHOLDERS
    
 
    The following table sets forth certain information with respect to each
Selling Shareholder for whom the Company is registering shares of Common Stock
for resale to the public. Except as indicated, no material relationships exist
between any of the Selling Shareholders and the Company nor have any such
material relationships existed within the past three years, except as set forth
below.
 
    The sale of the Selling Shareholders' Common Stock may be effected from time
to time in transactions (which may include block transactions by or for the
account of the Selling Shareholders) in the over-the-counter market or in
negotiated transactions, a combination of such methods of sale or otherwise.
Sales may be made at fixed prices which may be changed at market prices
prevailing at the time of sale or at negotiated prices.
 
<TABLE>
<CAPTION>
                                                                                  NUMBER
                                                                                    OF       PERCENTAGE
                                                                                 SHARES(1)   OF CLASS(2)
                                                                                -----------  -----------
<S>                                                                             <C>          <C>
The Gifford Fund, Ltd.(3).....................................................     626,250        *
GPS Fund, Ltd.(3).............................................................     383,750        *
MIT Fund Management, Ltd......................................................       7,500        *
Joseph B. LaRocco.............................................................       7,500        *
John N. Ferrucci..............................................................      30,000        *
Alan R. Woinski...............................................................      20,000        *
Robert L. Finical.............................................................         500        *
                                                                                -----------
Total Shares to Register......................................................   1,075,500
                                                                                -----------
                                                                                -----------
</TABLE>
 
- ------------------------
 
*   less than 1%.
 
(1) The share amounts set forth reflect shares owned prior to the Offering. For
    purposes hereof, unless otherwise noted, it is assumed that the Selling
    Shareholders will sell all the stock described in this table. However, there
    is no assurance that any of the Selling Shareholders will offer for sale or
    sell any or all of the Common Stock listed.
 
(2) Represents the percentage of the outstanding Common Stock owned before the
    Offering. As noted above, it is assumed that all of such stock will be sold
    by the Selling Shareholders, and as a result, each Selling Shareholder will
    hold 0% of the outstanding Common Stock after the Offering.
 
(3) This represents an estimate of the number of shares which may be obtained by
    the selling shareholder pursuant to the conversion terms of the respective
    convertible debentures of such selling shareholders.
 
    Selling Shareholders may effect such transactions by selling their Common
Stock directly to purchasers, through broker/dealers acting as agents for the
Selling Shareholders or to broker/dealers who may purchase Common Stock as
principals and thereafter resell the Common Stock from time to time in the
over-the-counter market, in negotiated transactions or otherwise. Such
broker/dealers, if any, may receive compensation in the form of discounts,
concessions or commissions from the Selling Shareholders and/or the purchasers
for whom such broker/dealers may act as agents or to whom they may sell as
principals or otherwise (which compensation as to a particular broker/dealer may
exceed customary commissions).
 
    The Selling Shareholders and broker/dealers, if any, acting in connection
with such sales might be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act and any commission received by them or any
profit on the resale of the Common Stock might be deemed to be underwriting
discounts and commissions under the Securities Act.
 
                                       34
<PAGE>
                              PLAN OF DISTRIBUTION
 
    The shares offered by the Selling Shareholders may be sold from time to time
by the Selling Shareholders, or by pledgees, donees, transferees or other
successors in interest of the Selling Shareholders, at their sole discretion.
Such sales may be made in the over-the-counter market or otherwise at prices and
at terms then prevailing or at prices related to the then current market price,
or in negotiated transactions. The shares of Common Stock offered by the Selling
Shareholders are not being underwritten. The Company will not receive any
proceeds from the sale of any Common Stock by the Selling Shareholders. In
general, the shares may be sold by one or more of the following means: (a) a
block trade in which the broker or dealer so engaged will attempt to sell the
securities as agent but may position and resell a portion of the block as
principal to facilitate the transaction; (b) purchases by a broker or dealer as
principal and resale by such broker or dealer for its account pursuant to this
Prospectus; (c) an exchange distribution in accordance with the rules of such
exchange (if the securities are then listed on an exchange); and (d) ordinary
brokerage transactions and transactions in which the broker solicits purchasers.
In effecting sales, broker or dealers engaged by the Selling Shareholders may
arrange for other brokers or dealers to participate. Brokers or dealers will
receive commissions or discounts from the Selling Shareholders in amounts to be
negotiated immediately prior to the sale. Such brokers or dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In addition, any
securities covered by this Prospectus, which qualify for sale pursuant to Rule
144 may be sold under Rule 144 rather than pursuant to this Prospectus.
 
                                 LEGAL MATTERS
 
    The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Doherty Rumble & Butler, P. A., Minneapolis, Minnesota.
 
                                    EXPERTS
 
    The Consolidated Financial Statements of the Company incorporated by
reference in this Prospectus have been audited by BDO Seidman, LLP, independent
certified public accountants, to the extent and for the periods set forth in
their report thereon incorporated herein by reference. The financial statements
are incorporated in reliance upon such report given upon the authority of such
firm as experts in accounting and auditing.
 
                                       35
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
 
    NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR SOLICITATION BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED
OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO
SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
 
                            ------------------------
 
                               TABLE OF CONTENTS
 
   
<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
Available Information.....................................................    2
 
Prospectus Summary........................................................    4
 
Risk Factors..............................................................    6
 
Use of Proceeds...........................................................   11
 
Management's Discussion and Analysis of Financial Condition and Results of
  Operations..............................................................   12
 
Business..................................................................   18
 
Securities Eligible for Future Sale.......................................   30
 
Description of Securities.................................................   30
 
Selling Shareholders......................................................   34
 
Plan of Distribution......................................................   35
 
Legal Matters.............................................................   35
 
Experts...................................................................   35
</TABLE>
    
 
                          CASINO RESOURCE CORPORATION
                              1,075,000 SHARES OF
                                  COMMON STOCK
 
                             ---------------------
 
                                   PROSPECTUS
 
                             ---------------------
 
   
                               NOVEMBER   , 1997
    
 
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
                                    PART II
 
                     INFORMATION NOT REQUIRED IN PROSPECTUS
 
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION*
 
    The expenses of the offering, which are to be borne by the Company, are
estimated as follows:
 
<TABLE>
<S>                                                               <C>
Securities and Exchange Commission registration fee.............  $  590.71
NASD registration fee...........................................     605.20
Legal services..................................................     10,000
Accounting services.............................................      5,000
Blue Sky fees and expenses......................................     500.00
Transfer Agent Fees.............................................     --
Printing........................................................      5,000
Miscellaneous...................................................   3,304.09
                                                                  ---------
    Total.......................................................  $25,000.00
                                                                  ---------
                                                                  ---------
</TABLE>
 
- ------------------------
 
*   All of the above expenses except the registration fee are estimated.
 
INDEMNIFICATION OF DIRECTORS AND OFFICERS
 
    Under Section 302A.521, Minnesota Statutes, the Company is required to
indemnify its directors, officers, employees and agents against liability under
certain circumstances, including liability under the Securities Act of 1933, as
amended (the "Act"). Section 3.02 of the Company's Articles of Incorporation
contains substantially similar provisions. The general effect of such provisions
is to relieve the directors and officers of the Company from personal liability
which may be imposed for certain acts performed in their capacity as directors
or officers of the Company, except where such persons have not acted in good
faith.
 
    As permitted under Minnesota Statutes, the Articles of Incorporation of the
Company provide that directors shall have no personal liability to the Company
or its shareholders for monetary damages arising from breach of the director's
duty of care in the affairs of the Company. Minnesota Statutes do not permit
elimination of liability for breach of a director's duty of loyalty to the
Company or with respect to certain enumerated matters, including payment of
illegal dividends, acts not in good faith and acts resulting in an improper
personal benefit to the director.
 
                                      II-1
<PAGE>
                                    EXHIBITS
 
   
<TABLE>
<CAPTION>
EXHIBIT NO.                                           DESCRIPTION                                             PAGE
- -----------  ---------------------------------------------------------------------------------------------  ---------
<C>          <S>                                                                                            <C>
     4.1*    $300,000 Convertible Debenture...............................................................
 
     4.2*    $500,000 Convertible Debenture...............................................................
 
     4.3*    Form of Registration Rights Agreement........................................................
 
     4.4*    Form of Debenture Subscription Agreement.....................................................
 
     4.5*    Common Stock Purchase Warrant (The Gifford Fund, Ltd.).......................................
 
     4.6*    Common Stock Purchase Warrant (G.P.S. Fund, Ltd.)............................................
 
     4.7*    Common Stock Purchase Warrant (Joseph B. LaRocco)............................................
 
     4.8*    Common Stock Purchase Warrant (Intercontinental Holding Company, Ltd.).......................
 
     5.1*    Opinion and Consent of Counsel...............................................................
 
    10.1*    $800,000 Lyle Berman Family General Partnership Loan Agreement...............................
 
    10.2*    $800,000 Promissory Note.....................................................................
 
    10.3*    Stock Pledge Agreement.......................................................................
 
    10.4*    Mutual Release Agreement.....................................................................
 
    10.5*    $1,000,000 SeuMar Ventures, L.L.C. Loan Agreement............................................
 
    10.6*    $1,000,000 Term Note.........................................................................
 
    10.7*    Guaranty Agreement...........................................................................
 
    10.8*    Matt Walker Consulting Agreement.............................................................
 
    10.9     Tunisia Casino License.......................................................................
 
    23.1     Consent of BDO Seidman, LLP..................................................................
 
    23.2*    Consent of Counsel (contained in Exhibit 5.1)................................................
 
   24*       Power of Attorney (included in the signature page to this Registration Statement)............
</TABLE>
    
 
- ------------------------
 
   
* Previously filed on October 6, 1997.
    
 
                                      II-2
<PAGE>
                                  UNDERTAKINGS
 
    (a) RULE 415 OFFERING.
 
The undersigned Registrant hereby undertakes:
 
        (1) To file, during any period in which offers or sales are being made,
    a post-effective amendment to this Registration Statement:
 
            (i) To include any prospectus required by Section 10(a)(3) of the
       Securities Act of 1933;
 
            (ii) To reflect in the prospectus any facts or events arising after
       the effective date of the Registration Statement (or the most recent
       post-effective amendment thereof) which, individually or in the
       aggregate, represent a fundamental change in the information set forth in
       the Registration Statement;
 
           (iii) To include any material information with respect to the plan of
       distribution not previously disclosed in the Registration or any material
       change to such information in the Registration Statement;
 
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in the post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
 
        (2) That, for the purpose of determining any liability under the
    Securities Act of 1933, each such post-effective amendment shall be deemed
    to be a new registration statement relating to the securities offered
    therein, and the offering of such securities at that time shall be deemed to
    be the initial BONA FIDE offering thereof.
 
        (3) To remove from registration by means of a post-effective amendment
    any of the securities being registered which remain unsold at the
    termination of the offering.
 
    (b) FILINGS INCORPORATING SUBSEQUENT EXCHANGE ACT DOCUMENTS BY REFERENCE.
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the registrant's
annual report pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial BONA FIDE offering thereof.
 
                                      II-3
<PAGE>
                               POWER OF ATTORNEY
 
    KNOW ALL BY THESE PRESENTS, that each person whose signature appears below
hereby constitutes and appoints John J. Pilger and Maurice P. Gaudet, each or
either of them, his or her true and lawful attorney-in-fact and agents, with
full power of substitution and resubstitution for him or her and in his or her
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this Registration Statement and to file
the same with all exhibits thereto, and other documents in connection therewith
with the Securities and Exchange Commission, granting unto said attorney-in-fact
and agents, and each of them, full power and authority to do and perform each
and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitutes, may lawfully do or cause to
be done by virtue thereof.
 
                                   SIGNATURES
 
   
    Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that is has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Ocean Springs, State of Mississippi on November 18,
1997.
    
 
   
<TABLE>
<S>                                           <C>                                             <C>
                                              CASINO RESOURCE CORPORATION
 
Date: November 18, 1997                                         By:            /s/ JOHN J. PILGER
                                                                -------------------------------------------
                                                                John J. Pilger, Chief Executive Officer
</TABLE>
    
 
    Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
 
<TABLE>
<CAPTION>
                                                           SIGNATURE AND TITLE
                                                           ------------------------------------------------------
 
<S>                                                        <C>
                                                           /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 and   Chief
                                                           Accounting Officer
 
                                                           /s/ NOREEN POLLMAN
                                                           -------------------------------------------
                                                           Noreen Pollman, Vice President of Operations   and
                                                           Director
 
                                                           /s/ ROBERT J. ALLEN
                                                           -------------------------------------------
                                                           Robert J. Allen, Vice President of Entertainment   and
                                                           Director
</TABLE>
 
                                      II-4
<PAGE>
<TABLE>
<CAPTION>
                                                           SIGNATURE AND TITLE
                                                           ------------------------------------------------------
 
<S>                                                        <C>
                                                           /s/ WILLIAM S. LUND
                                                           -------------------------------------------
                                                           William S. Lund, Director
 
                                                           /s/ JOHN W. STEINER
                                                           -------------------------------------------
                                                           John W. Steiner, Director
 
                                                           /s/ DENNIS EVANS
                                                           -------------------------------------------
                                                           Dennis Evans, Director
 
                                                           /s/ DR. TIMOTHY MURPHY
                                                           -------------------------------------------
                                                           Dr. Timothy Murphy, Director
</TABLE>
 
                                      II-5
<PAGE>
                               INDEX TO EXHIBITS
                                  TO FORM S-3
 
   
<TABLE>
<CAPTION>
EXHIBIT NO.                                               DESCRIPTION
- -----------  -----------------------------------------------------------------------------------------------------
<C>          <S>
     4.1*    $300,000 Convertible Debenture
 
     4.2*    $500,000 Convertible Debenture
 
     4.3*    Form of Registration Rights Agreement
 
     4.4*    Form of Debenture Subscription Agreement
 
     4.5*    Common Stock Purchase Warrant (The Gifford Fund, Ltd.)
 
     4.6*    Common Stock Purchase Warrant (G.P.S. Fund, Ltd.)
 
     4.7*    Common Stock Purchase Warrant (Joseph B. LaRocco)
 
     4.8*    Common Stock Purchase Warrant (Intercontinental Holding Company, Ltd.)
 
     5.1*    Opinion and Consent of Counsel
 
    10.1*    $800,000 Lyle Berman Family General Partnership Loan Agreement
 
    10.2*    $800,000 Promissory Note
 
    10.3*    Stock Pledge Agreement
 
    10.4*    Mutual Release Agreement
 
    10.5*    $1,000,000 SeuMar Ventures, L.L.C. Loan Agreement
 
    10.6*    $1,000,000 Term Note
 
    10.7*    Guaranty Agreement
 
    10.8*    Matt Walker Consulting Agreement
 
    10.9     Tunisia Casino License
 
    23.1     Consent of BDO Seidman, LLP
 
    23.2*    Consent of Counsel (contained in Exhibit 5.1)
 
   24*       Power of Attorney (included in the signature page to this Registration Statement)
</TABLE>
    
 
- ------------------------
 
   
* Previously filed on October 6, 1997
    

<PAGE>
          CONJOINED DECREE OF INTERIOR MINISTER AND TOURISM MINISTER 
          RELATED TO THE CONCESSION OF CASINO GAMBLING AUTHORIZATION



The interior and tourism Ministers,

According to the decree N DEG. 74-21 of October 24(th), 1974 related to 
casino gambling ratified by decree N DEG. 76-97 dated Dec. 11(th), 1974.

According to the decree N DEG. 76-114 dated Feb. 14(th), 1976 related to the 
casino games regulation.

According to the decree N DEG. 76-115 dated Feb. 14(th), 1976 related to the 
composition and running clauses of the casino games commission.

According to the decree N DEG. 90-315 dated Feb. 8(th), 1990 modifying and 
completed the decree N DEG. 76-114 dated Feb. 14 related to casino games 
regulation.

According to the decree of Finance Minister dated Sept. 19(th) 1977 which 
fixed the setting apart rate effected by the government on the gross product 
of the casino games and methods of payment and allowance.

According to the decree of Finance Minister dated Jun. 9(th), 1987 which 
modify the decree dated Sept. 19(th), 1977 fixing the setting apart rate 
effected by the government on the casino games gross product and the methods 
of payment and allowance.

According to circular of Interior Minister, Transport Minister and Tourism 
Minister N DEG. 1515 dated Jul. 6(th), 1988 related to casino games and to 
the authorization requests in this concern.

According to the favorable decision expressed by the games commissioner on 
Aug. 20(th), 1997, Sept. 22nd, 1997, Sept. 27(th), 1997 and Oct. 9(th), 1997.

DECIDE

CLAUSE 1:   A casino games authorization is given to Casino Resource 
Corporation Tunisia, S.A., represented by its manager, Mr. John Joseph 
Pilger, for casino exploration in the entertainment center Samara located in 
Av. 7 Novembre, Sousse.

CLAUSE 2:   The authorized games are concerned by the decree N DEG. 90-315 
dated Feb. 8(th), 1990, above mentioned.

CLAUSE 3:   The authorization is agreed for a period of 3 years.

CLAUSE 4:   The games floors access depends on a payable admission card which 
allows the control of personal identity at the entrance.

The admission card's rate is fixed at one Dinar for the daily card and 5 
Dinars for the weekly card and 10 Dinars for seasonal card.

<PAGE>

CLAUSE 5:   The control and surveillance measures and the admission into the 
games room are those concerned by the decree N DEG. 76-114 dated Feb. 14(th), 
1976 and the circular N DEG. 1515 dated July 6(th), 1988 above mentioned.

CLAUSE 6:   The games room opening time is fixed from 12:00 noon to 5:30 a.m.

In this timing limit, the manager responsible has full discretion to fix the 
opening and closing times of each gaming session and each table.  This timing 
must be posted in the games room entrance.

When the slot machine are in different place, the opening time will be 12:00 
noon, the closing time is that fixed for the other games.

CLAUSE 7:   A gaming settlement must be established for each game in the 
casino and put at gamblers disposal.

CLAUSE 8:   The placing are exclusively represented by chips and token 
supplied by the establishment against foreign currency.

The value unit of those instruments is the Tunisian Dinar.  The games should 
be put in practice in case of each payment.  The word gaming is restricted.

CLAUSE 9:   The casino has to hold special books for:

      - Accounting
      - Advances
      - Registration
      - Control
      - Setting aparts

And all other documents which could be necessary for all departments 
concerned by the casino running.

CLAUSE 10:   The beneficiary must comply with the regulation in effect 
especially the circular N DEG. 1515 dated Jul. 6(th), 1988.

CLAUSE 11:   The chief sectors of the National Security of Sousse, the Local 
Commissary of Tourism are charged, each one on his concern, of the present 
decree execution.

<PAGE>

                           CONSENT OF INDEPENDENT
                       CERTIFIED PUBLIC ACCOUNTANTS


Casino Resource Corporation
Ocean Springs, Mississippi

We hereby consent to the incorporation by reference in the Prospectus 
constituting a part of this Registration Statement 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 and 
Subsidiaries appearing in the Company's Annual Report on Form 10-KSB and as 
amended on Form 10-KSB/A for the year ended September 30, 1996.

We also consent to the reference to us under the caption "Experts" in the 
Prospectus.


Chicago, Illinois                               BDO SEIDMAN, LLP
November 17, 1997



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