UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-QSB/A
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 or 15(D) OF THE EXCHANGE ACT
Commission file number: 0-22242
CASINO RESOURCE CORPORATION
Minnesota 41-0950482
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
707 Bienville Boulevard
Ocean Springs, Mississippi 39564
(Address of principal executive officers)
601-872-5558
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past
90 days. [X] Yes [ ] No
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. [ ] Yes [ ] No
As of August 1, 1997, 10,043,364 Shares of Common Stock and 2,760,000 of
Redeemable Class A Warrants of the Company were outstanding.
INDEX TO QUARTERLY REPORT ON FORM 10-QSB
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Exhibits and Reports on Form 8-K
SIGNATURES
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CASINO RESOURCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
June 30, September 30,
ASSETS 1997 1996*
(unaudited)
Current Assets
Cash and cash equivalents $ 1,656 $ 1,546
Restricted cash - 339
Accounts receivable, net 506 307
Prepaid expenses 654 438
---------- ----------
Total Current Assets 2,816 2,630
---------- ----------
Property and Equipment 18,389 17,670
Less accumulated depreciation (3,402) (2,587)
---------- ----------
Net Property and Equipment 14,987 15,083
---------- ----------
Other Assets
Due from related parties 553 557
Deferred development cost 2,778 2,201
Intangibles, net 563 599
Other 1,303 715
---------- ----------
Total Other Assets 5,197 4,072
---------- ----------
$23,000 $21,785
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 733 $ 1,173
Accrued expenses 1,030 947
Line-of-credit and current maturities of
long-term debt 1,605 1,138
---------- ----------
Total Current Liabilities 3,368 3,258
---------- ----------
Long-term debt 11,029 10,302
---------- ----------
Total Liabilities 14,397 13,560
Minority Interest in Subsidiary 65 -
Commitments and Contingencies
Stockholders' Equity
Capital shares 100 98
Paid in Capital 23,019 22,671
Deficit (13,349) (13,312)
Note receivable related to common stock (1,232) (1,232)
---------- ----------
Total Stockholders' Equity 8,538 8,225
---------- ----------
$23,000 $21,785
========== ==========
*Condensed from restated audited financial statements
The accompanying notes are an integral part of these condensed financial
statements.
CASINO RESOURCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30
(unaudited)
(In thousands, except per share data)
1997 1996
(as restated)
Entertainment revenues $ 7,722 $ 5,983
Hospitality revenues 2,782 2,776
Operating costs - entertainment 6,188 4,485
Operating costs - hospitality 1,925 1,730
General and administrative expenses 1,452 1,685
Loss on gaming project 404 771
Other expense-net 747 1,454
Minority interest in operations of subsidiary (175) -
---------- ----------
Net Loss $ (37) $ (1,366)
========== ==========
Net Loss per Common Share $(0.00) $ ( 0.16)
========== ==========
Weighted average shares, common stock 10,006,609 8,724,345
========== ==========
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (37) $ (1,366)
Adjustments to reconcile net loss to net
cash provided by operating activities
Depreciation and amortization 851 984
Minority Interest in operations of subsidiary (175) -
Discount upon conversion of debentures - 550
Changes in assets and liabilities
Accounts receivable (199) 71
Prepaid expenses (216) (155)
Other ( 63) 12
Accounts payable (440) (641)
Accrued expenses 83 376
---------- ----------
Net Cash Used In Operating Activities (196) (169)
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in restricted cash 339 ( 8)
Minority Interest in Subsidiary 240 -
Purchase of property and equipment (894) ( 242)
Increase in deferred development costs - net (577) ( 443)
(Increase) decrease in due to/from related
parties-net 4 (95)
----------- ----------
Net Cash Used in Investing Activities ( 888) ( 788)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock
and other equity transactions - 1,002
Issuance of debentures and draws on line
of credit 1,963 1,517
Payments on line-of-credit and long-term
debt (769) (1,153)
---------- ----------
Net Cash Provided by Financing Activities 1,194 1,366
---------- ----------
Net Increase in Cash and Cash Equivalents 110 409
CASH AND CASH EQUIVALENTS
At beginning of period 1,546 1,043
--------- ----------
At end of period $ 1,656 $ 1,452
========== ==========
The accompanying notes are an integral part of these condensed financial
statements.
CASINO RESOURCE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND CASH FLOWS
FOR THE THREE MONTHS ENDED JUNE 30
(unaudited)
(In thousands, except per share data)
1997 1996
(as restated)
Entertainment revenues $ 3,635 $ 2,716
Hospitality revenues 934 982
Operating costs - entertainment 3,058 1,802
Operating costs - hospitality 739 645
General and administrative expenses 421 504
Loss on gaming projects - -
Other expense-net 224 564
Minority interest in operations of subsidiary (144) -
---------- ----------
NET INCOME $ 271 $ 183
========== ==========
NET INCOME PER COMMON SHARE $ .03 $ .02
========== ==========
Weighted average shares, common stock 10,043,364 9,152,209
========== ==========
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income 271 183
Adjustments to reconcile net loss to net
cash provided by operating activities
Depreciation and amortization 276 372
Minority Interest in Operations of Subsidiary (144) -
Discount upon conversion of debentures - -
Changes in assets and liabilities
Accounts receivable 1,061 146
Prepaid expenses ( 69) ( 25)
Other (408) 3
Accounts payable (148) (212)
Accrued expenses 101 134
---------- ----------
Net Cash Provided by Operating
Activities 940 873
CASH FLOWS FROM INVESTING ACTIVITIES
Increase (decrease) in restricted cash - (3)
Purchase of property and equipment (638) ( 59)
Minority Interest in subsidiary 40
Increase (decrease) in deferred development
costs - net 123 (421)
Decrease (increase) in due to/from related
parties - net 19 ( 35)
---------- ----------
Net Cash Used in Investing Activities (456) (518)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock and
other equity transactions - 60
Issuance of long-term debt and draws on line
of credit 525 -
Payments on line-of-credit and long-term
debt (316) (295)
---------- ----------
Net Cash Provided by (Used in)
Financing Activities 209 (235)
---------- ----------
Net Increase in Cash and Cash
Equivalents 693 120
CASH AND CASH EQUIVALENTS
At beginning of period 963 1,332
---------- ----------
At end of period $ 1,656 $ 1,452
========== ==========
The accompanying notes are an integral part of these condensed financial
statements.
CASINO RESOURCE CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 Basis of Presentation
The financial information included herein is unaudited; however,
such information reflects all adjustments (consisting solely of normal
recurring adjustments) which, in the opinion of management, are necessary
for a fair statement of results for the interim periods. The balance sheet
for September 30, 1996 and the statements of operations and cash flows for
the nine months and three months ended June 30, 1996 have been restated.
Certain reclassifications of prior period amounts have been made to conform
to current period presentation.
The results of operations for the three-month period ended June 30, 1997
are not necessarily indicative of the results to be expected for the full
year.
NOTE 2 Debt
The Company's debt at June 30, 1997 consists primarily of a first lien
mortgage on its Grand Hinckley Inn ($2,583,623); a first lien mortgage on
the Country Tonite Theatre ($7,466,007); and a working capital line-of-credit
owing to Grand Casinos, Inc. of $139,410. The Company also has outstanding
draws totaling $45,000 against a line of credit with a bank.
On January 31, 1997, the Company issued a 6% $1,500,000 debenture maturing
in two years, payable at the Company's option in cash or Casino Resource
Corporation common stock, in connection with the Company's acquisition of
its interest in New Palace Casino, LLC. The note has been discounted to
provide for an effective interest rate of 10%.
On May 16, 1997, the Company issued a note to International Gaming
Technologies for the purchase of casino gaming equipment. The note is
payable in 17 equal monthly installments of $30,800 including interest at
an interest rate of prime plus 2% (currently 10.5%).
NOTE 3 Capital Stock
On April 3, 1997, the shareholders of the Company ratified the 1997
Long-Term Incentive and Stock Option Plan under which 500,000 shares of the
Company's common stock are reserved for issuance.
NOTE 4 Deferred Development Costs
Deferred development costs consist principally of externally incurred
charges principally related to a casino project in Tunisia and the Pokagon
Indian Gaming award in Indiana and Michigan.
NOTE 5 Supplemental Disclosure of Cash Flow Information
Cash expended during the nine months ended June 30, 1997 and 1996 for
interest was $837,000 and $913,000, respectively. The Company has federal
and state tax loss carryforwards of approximately $11.0 million.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following is management's discussion and analysis of certain significant
factors which have affected the Company's financial position and operating
results during the periods included in the accompanying condensed
consolidated financial statements.
NINE MONTHS ENDED JUNE 30, 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 revenues totalled $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 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 provide the Country Tonite Show to the
Company's 60% owned joint venture in Pigeon Forge, Tennessee beginning in
March, 1997. Operating income increased to $573,000( including $623,000
eliminated in consolidation) from $322,000 principally as a result of
the aforementioned new venues. Operating expenses(including project, general
and administrative costs) increased to $1,988,000 for the nine months ended
June 30, 1997 from $1,320,000 in the prior year period due principally to
the Biloxi and Pigeon Forge show production expenses.
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
the minority interest share of the loss($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 levels of profit sharing
with Grand Casino Hinckley and higher real estate taxes.
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, an earlier season start date, 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 period total of $4,341,000 to $4,709,000 for the 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 due
principally to an earlier season start date for the Country Tonite Show in
1997.
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.
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 by the Mississippi Gaming Commission, 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 will receive proceeds of $1,250,000
for the $1,500,000 debenture (issued at closing of the purchase) with
$1,000,000 payable upon transfer of the ownership interest (received May,
1997) and $250,000 payable 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 it's 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 increase 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.
THREE MONTHS ENDED JUNE 30,1997 COMPARED TO THREE MONTHS ENDED JUNE 30, 1996
CONSOLIDATED
The Company's revenues for the three months ended June 30, 1997 were
$4,569,000, an increase of $871,000 or 24% from revenues of $3,698,000
recorded in the prior year period. The entertainment segment accounted for
all of this increase.
ENTERTAINMENT
Country Tonite Production Show
Country Tonite Production Show revenues totaled $1,110,000 for the quarter
ended June 30, 1997 (including $552,000 eliminated in consolidation), an
increase of $565,000 from the comparable 1996 period revenues of $545,000.
Operating costs (including project, general and administrative) increased to
$868,000 for the quarter ended June 30, 1997 from $427,000 in the prior year
period. Operating income increased from $119,000 in the quarter ended June
30,1996 to $242,000 for the 1997 quarter (including $552,000 eliminated in
consolidation) principally as a result of the contract to provide the Country
Tonite Show to the Company's 60% owned joint venture in Pigeon Forge.
Country Tonite Theatre - Branson
The Country Tonite Theatre in Branson revenues for the quarter ended June 30,
1997 totaled $2,084,000 a decrease of $86,000 from the comparable 1996
quarter total of $2,170,000 due to a decline in attendance at the Country
Tonite Show from 37% occupancy in the third quarter of fiscal 1996 to 34%
occupancy in the comparable 1997 quarter offset by an increase in the
average ticket price from $16.21 in the third quarter of fiscal 1996 to
$17.38 in the comparable 1997 period and the addition of revenues from a
morning show added in April 1997. Operating costs for the quarter ended
June 30, 1997 totalled $1,359,000, a decrease of $16,000 from the comparable
1996 period total of $1,375,000. The Company was able to keep operating costs
flat despite the addition of a morning show beginning April 1997.
Country Tonite Theatre-Pigeon Forge
Revenues for the three months ended June 30, 1997 totaled $993,000.
Operating expenses totaled $1,383,000(including $552,000 eliminated in
consolidation) resulting in an operating loss of $390,000 before the minority
interest share of the loss($144,000). The Company anticipated an operating
loss during the start up period.
HOSPITALITY
Grand Hinckley Inn
For the three months ended June 30, 1997, revenues for the Grand Hinckley
Inn totaled $934,000, a decrease of $48,000 from revenues of $982,000 for the
comparable 1996 quarter. Average occupancy fell from 84% in the third fiscal
quarter of 1996 to 82% for the third quarter of fiscal 1997 while the daily
room rate remained unchanged at $56. Operating costs totaled $739,000 for the
three months ended June 30, 1997 compared to $645,000 for the comparable
1996 period, an increase of $94,000. The increase in operating expenses was
due principally to higher levels of profit sharing with Grand Casino Hinckley
and higher property taxes.
GENERAL AND ADMINISTRATIVE
The Company's general and administrative expenses totaled $421,000 for the
three months ended June 30, 1997 compared to $504,000 for the three months
ended June 30, 1996. The decrease is due principally to lower professional
and legal costs.
OTHER
Interest expense for the three months ended June 30, 1997 totaled $291,000
compared to $583,000 for the 1996 quarter. The decrease is due to lower
levels of indebtedness and a $278,000 charge in the 1996 quarter for discount
upon conversion of subordinated debentures.
RECENT ACCOUNTING PRONOUNCEMENTS
The FASB has issued SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets Being Disposed of," which provides
guidance on how and when impairment losses are recognized on long-lived
assets. This statement, when adopted, is not expected to have a material
impact on the Company.
The FASB has issued SFAS No. 123, "Accounting for Stock-Based Compensation,
" which establishes a fair value based method of accounting for stock-based
compensation plans. This statement provides a choice to either adopt the
fair value based method of accounting or continue to apply APB Opinion No.
25, which would require only disclosure of the pro forma net income and
earnings per share, determined as if the fair value based method has been
applied. The Company plans to continue to apply APB Opinion No.25 and will
provide the necessary footnote disclosure required by SFAS No.123.
In February, 1997, the Financial Accounting Standards Board issued SFAS No.
129, "Earnings per Share". The new method simplifies the methods for
computing earnings per share and requires presentation of two new amounts,
basic and diluted earnings per share. The Company will be required to adopt
this pronouncement beginning with the quarter ending December 31, 1997.
Earlier adoption is not permitted.
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income (SFAS
130), which establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensinve income is
defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures,
SFAS 130 requires that all items that are required to be recognized under
current accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence
as other financial statements. SFAS 130 is effective for financial
statements for periods beginning after December 15, 1997 and requires
comparative information for earlier years to be restated. Because of the
recent issuance of this standard, management has been unable to fully
evaluate the impact, if any, the standard may have on future financial
statement disclosures. Results of operations and financial position,
however, will be unaffected by implementation of this standard.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information, (SFAS
131) which supersedes SFAS No. 14, Financial Reporting for Segments of a
Business Enterprise. SFAS 131 establishes standards for the way that public
companies report information about operating segments in annual financial
statements and requires reporting of selected information about operating
segments in interim financial statements issued to the public. It also
establishes standards for disclosures regarding products and services,
geographic areas and major customers. SFAS 131 defines operating segments
as components of a company about which separate financial information is
available that is evaluated regularly by the chief operating decision maker
in deciding how to allocate resources and in assessing performance.
SFAS 131 is effective for financial statements for periods beginning after
December 15, 1997 and requires comparative information for earlier years to
be restated. Because of the recent issuance of this standard, management
has been unable to fully evaluate the impact, if any, it may have on future
financial statement disclosures. Results of operation and financial position,
however, will be unaffected by implementation of this standard.
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 following: the availability of sufficient capital to finance
the Company's business plan on terms satisfactory to the Company: competitive
factors, such as the introduction of new hotels or renovation of existing
hotels in the same markets; changes in travel patterns which could affect
demand for the Company's hotels; changes in development and operating costs,
including labor, construction, land, equipment, and capital costs; general
business and economic conditions; and other risk factors described from time
to time in the Company's reports filed with 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.
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.
The Company expects that available cash and cash from future operations
will be sufficient to meet the capital expenditures, debt service and working
capital requirements of its existing businesses. The Company will need to
raise at least $1,000,000 to meet the near term capital requirements of the
Tunisian Casino. The sources of such funding have not yet been identified and
cannot be assured.
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.
CAPITAL EXPENDITURES
Capital expenditures by the Company were $638,000 for the three months ended
June 30, 1997 compared to $30,000 for the comparable period in the prior
year. The increase was principally attributable to purchases of gaming
equipment for the Company's casino in Tunisia.
SEASONALITY
The Company expects its hotel operations will be affected by seasonal
factors, including holidays, weather and travel conditions. The theatre
operations in Branson, Missouri and Pigeon Forge, Tennessee, will also be
affected by seasonal factors and, in addition, will be closed from
mid-December through mid-March. This period is historically when theatres
like the Company's normally close in Branson and Pigeon Forge.
IMPACT OF INFLATION
Management does not believe that inflation has had any significant adverse
impact on the Company's financial condition or results of operations for the
periods presented. An increase in the rate of inflation could adversely
affect the Company's future operations and expansion plans.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is party to various legal proceedings as described in its Annual
Report on Form 10-KSB for the year ended September 30, 1996. There have
been no further developments regarding such proceedings during the three
months ended June 30, 1997, except as described below.
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 that the Company was entitled to an award of approximately $142,000,
which sum was a portion of the 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 tortiously harmed plaintiff's business repututation
and maliciously intefered with existing and prospective economic relationships.
The total claims asserted are for $500,000 in compensatory damages, punitive
damages and attorneys 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 defense of the Company.
James and Prudence Barnes, two former officers of a subsidiary of the
Company brought suit on January 31, 1996 in State District Court,
Clark County, Nevada against the Company in connection with their employment
termination in June 1995. No specific amount of damages have 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 this matter.
In March 1996, PDC, a Minnesota limited liability company, and two of its
officers filed suit against the Company and Harrah's Entertainment, in the
Fourth Judicial District Court of Minnesota and Michigan, which Michigan
venue was later dropped, alleging defamation, violation of the Lanham Act,
violation of the Michigan Consumer Protection Act, tortious interference
with its business relations and prospective economic advantage, as well as
false light invasion of privacy in connection with the Pokagon Indian Gaming
Award. Under the Landham 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.
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 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 tortious 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.The matter came before the Fourth Judicial District of Minnesota,
on December 9, 1996, for hearing on motions by the Company and Monarch for
summary judgement. On January 22, 1997, the Company's motion for summary
judgement on plaintiffs claim of tortious interference was granted and
plaintiff's clain 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 vigourously 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 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.
<PAGE>
Item 2. Exhibits and Reports on Form 8-K
A) Exhibits
Exhibit 27 - Financial Data Schedule
B) The following Forms 8-K have been filed during the three months ended
June 30, 1997:
NONE
SIGNATURES
In accordance with requirements of the Exchange Act, the registrant caused this
report to be signed on behalf by the undersigned, hereunto duly authorized.
CASINO RESOURCE CORPORATION
Date: September 12, 1997 s/ John J. Pilger
John J. Pilger, President & CEO
Date: September 12, 1997 s/ Maurice P. Gaudet
Maurice P. Gaudet, Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Casino
Resource Corporation financial statements for the period ended June 30,1997
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER>1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> SEP-30-1997 SEP-30-1997
<PERIOD-END> JUN-30-1997 JUN-30-1997
<CASH> 1656 1656
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 2816 2816
<PP&E> 18389 18389
<DEPRECIATION> 3402 3402
<TOTAL-ASSETS> 23000 23000
<CURRENT-LIABILITIES> 3368 3368
<BONDS> 0 0
0 0
0 0
<COMMON> 100 100
<OTHER-SE> 8438 8438
<TOTAL-LIABILITY-AND-EQUITY> 23000 23000
<SALES> 4569 10504
<TOTAL-REVENUES> 4569 10504
<CGS> 0 0
<TOTAL-COSTS> 3939 9794
<OTHER-EXPENSES> 68 (89)
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 291 836
<INCOME-PRETAX> 271 (37)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 271 (37)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 271 (37)
<EPS-PRIMARY> 0.03 0
<EPS-DILUTED> 0.03 0
</TABLE>
