As filed with the Securities and Exchange Commission on March 29, 1999
Registration No.: 333-72315
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Amendment No. 2 to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Casino Resource Corporation
(Exact Name of Registrant as specified in its Charter)
Minnesota 7922
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(State or other jurisdiction (Primary standard industrial
of incorporation) Classification code number)
41-0950482
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(I.R.S. Employer
Identification Number)
707 Bienville Boulevard, Ocean Springs, MS 39564
(228) 872-5558
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(Address, including Zip Code, and Telephone Number, including Area Code,
of Registrant's Principal Executive Offices)
John J. Pilger, Chief Executive Officer
Casino Resource Corporation, 707 Bienville Boulevard, Ocean Springs, MS 39564
Telephone: (228) 872-5558
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(Name and Address, including Zip Code and Telephone Number,
including Area Code, of Agent for Service)
Copies of all communications to:
Steven B. King, Esquire
Mesirov Gelman Jaffe Cramer & Jamieson, LLP
1735 Market Street, 38th Floor
Philadelphia, PA 19103-7598
Telephone: (215) 994-1037 Telefax: (215) 994-1111
Approximate Date of Proposed Sale to the Public: As soon as practicable
after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis, pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend interest
reinvestment plans, 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 SEC acting pursuant to said Section 8(a), may
determine.
<TABLE>
<CAPTION>
==================================================================================================================
Proposed Maximum Proposed Maximum
Title of Securities Amount to be Offering price per Aggregate Offering Amount of
To be Registered Registered Share(1) price(1) Registration Fee (2)
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock . . . . .
($.01) par value)) 3,107,360 shares $0.4564 $1,418,199 $394.00
- ------------------------------------------------------------------------------------------------------------------
<FN>
(1) Estimated solely based for purposes of computing the registration fee. In
accordance with Rule 457(c), the price used is the average of the high and low
sales price of the common stock as quoted on the NASD National Market System as
of the close of trading on February 10, 1999.
(2) Calculated by multiplying the aggregate offering amount of $1,418,199 by
.000278.
</FN>
</TABLE>
<PAGE>
Subject to Completion
March __, 1999
PROSPECTUS
3,107,360 SHARES
CASINO RESOURCE CORPORATION
COMMON STOCK
This prospectus relates to the offering for sale of up to 3,107,360 shares
of common stock of Casino Resource Corporation held by four selling
shareholders.
o The selling shareholders may offer their Casino Resource common stock through
public or private transactions, on or off the NASDAQ Stock Market, at prevailing
market prices, or at privately negotiated prices.
o Casino Resource's common stock is currently traded on the NASDAQ National
Market under the symbol CSNR.
--------------
Please see "Risk Factors" beginning on page 5 for a discussion of
certain factors you should consider in connection with any decision to purchase
shares in this offering.
--------------
Casino Resource's principal executive offices are located at 707
Bienville Boulevard, Ocean Springs, Mississippi 39564. Casino Resource's
telephone number is (228) 872-5558.
--------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed on the
adequacy or accuracy of the prospectus. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is March ____, 1999.
<PAGE>
TABLE OF CONTENTS
WHERE YOU CAN FIND MORE INFORMATION...........................................3
INCORPORATION OF DOCUMENTS BY REFERENCE.......................................3
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS...............................4
GENERAL INFORMATION ABOUT CASINO RESOURCE.....................................5
RISK FACTORS..................................................................5
MATERIAL DEVELOPMENTS........................................................10
USE OF PROCEEDS..............................................................12
SELLING SHAREHOLDERS.........................................................12
PLAN OF DISTRIBUTION.........................................................13
DESCRIPTION OF SECURITIES....................................................13
DISCLOSURE OF THE SEC'S POSITION ON INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES.........................................................15
EXPERTS......................................................................16
2
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Casino Resource files annual, quarterly and special reports, proxy
statements and other information with the SEC. You may copy any such documents
which Casino Resource has filed. You may do so at the SEC's public reference
room, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W, Washington, D.C. 20549.
These documents are also available at the following Regional Office: 7 World
Trade Center, Suite 1300, New York, New York 10048. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms.
Casino Resource's SEC filings are also available to the public on the
SEC web site at http://www.sec.gov.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows Casino Resource to "incorporate by reference" into this
registration statement some of the information Casino Resource has already filed
with the SEC. As a result, Casino Resource can disclose important information to
you by referring you to those documents. These incorporated documents contain
important business and financial information about Casino Resource that is not
included in or delivered with this prospectus. The information incorporated by
reference is considered to be part of this prospectus. Moreover, later
information filed with the SEC by Casino Resource in the future will update and
supersede this information and similarly, be considered to be a part of this
prospectus. Casino Resource incorporates by reference the documents listed below
and any future filings made with the SEC under Section 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934:
o Casino Resource's Quarterly Report on Form 10-QSB for the fiscal
quarter ended December 31, 1998;
o Casino Resource's Annual Report on Form 10-KSB for the fiscal year
ended September 30, 1998, as amended;
o Casino Resource's Proxy Statement for its annual shareholder meeting
to be held on April 28, 1999.
This prospectus is part of a registration statement Casino Resource
filed with the SEC (Registration No. 333-72315). This prospectus does not
include all information contained in the registration statement. To obtain a
copy of the complete registration statement, see "Where You Can Find More
Information" above.
Casino Resource will provide, without charge to each person to whom a
prospectus is delivered, a copy of the documents which are incorporated by
reference. You may request a copy of these filings by writing or telephoning
Casino Resource at the following address:
Karla Schlett, Controller
707 Bienville Boulevard
Ocean Springs, MS 39564
Telephone number: (228) 872-5558
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<PAGE>
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This document contains forward-looking statements regarding, among
other items, Casino Resource's growth strategy and anticipated trends in Casino
Resource's business. These forward-looking statements are based largely on
Casino Resource's expectations and are subject to a number of risks and
uncertainties, some of which are beyond Casino Resource's control. Such risks
and uncertainties include those set forth below under "Risk Factors" and also
include those matters disclosed in prior filings made by Casino Resource with
the SEC. Actual results could differ materially from these forward-looking
statements as a result of the factors referred to above. In light of these risks
and uncertainties, there can be no assurance that the forward-looking
information contained in this prospectus will in fact transpire or prove to be
accurate.
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GENERAL INFORMATION ABOUT CASINO RESOURCE
Casino Resource was organized in 1969 and merged into an inactive,
publicly held corporation in 1987. In 1993, Casino Resource changed its name to
"Casino Resource Corporation." In the early 1990s, Casino Resource entered the
hospitality and entertainment industries in geographic areas where third parties
were actively engaged in the gaming industry. In 1997, Casino Resource itself
entered the gaming industry when it opened Casino Caraibe, a casino in Tunisia,
North Africa. Casino Caraibe is a 42,000 square foot facility housing an
American-style gambling casino, restaurant, theatre, gift shop and related
facilities. It is located adjacent to a 425 room hotel owned and operated by
Samara Casinos Company which holds a 15% interest in the casino.
In 1998, Casino Resource sold its hospitality assets and left the
hospitality industry. Casino Resource operates and manages the Country Tonite
Theatres in Branson, Missouri and Pigeon Forge, Tennessee. In these locations,
Casino Resource stages a country and western style musical revue which has won
numerous awards. Casino Resource has entered into an asset purchase agreement
with On Stage Entertainment, Inc., which trades on NASDAQ under the symbol
"ONST," to sell substantially all of these entertainment industry assets. See
"Material Developments." If the transaction with On Stage is completed, Casino
Resource's sole operating asset will be its 85% interest in the Tunisian casino
and Casino Resource will operate solely in the gaming industry.
RISK FACTORS
Investment in the common stock of Casino Resource is highly speculative
and involves a high degree of risk. Prospective investors should be aware of the
following risk factors and should review carefully the financial and other
information about Casino Resource provided or incorporated in this prospectus.
Casino Resource May Not Survive Continuing, Significant Financial
Losses. In the recent past, Casino Resource has suffered the following
significant operating losses:
Fiscal Year Ended
September 30 Loss from Continuing Operations
------------- -------------------------------
1998 $ (7,008,284)
1997 (3, 279,240)
Casino Resource had a cumulative operating deficit at December 31, 1998
of $18.5 million. As a result, Casino Resource's total shareholder equity at
December 31, 1998 was only $3.9 million. 1998 losses relate in large part to the
development and pre-opening costs of Casino Resource's gaming casino in Tunisia
and the impairment of assets relating to the Pokagon Gaming Contract. The gaming
segment had operating losses for fiscal 1998 of approximately $4.0 million.
Significant pre-opening and start-up costs, which approximated $1.5 million,
contributed to the loss. However, significant operating overhead expenses also
contributed to the loss.
Seasonality Will Have a Substantial Adverse Effect on Casino Resource's
Earnings and Cash Flow. The casino and theatre in Tunisia are affected by
seasonal factors as the tourist
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<PAGE>
industry is seasonal with heaviest patronage between May and October. Similarly,
the tourist industry in Branson, Missouri and Pigeon Forge, Tennessee is also
seasonal. Casino Resource's entertainment segments in Branson and Pigeon Forge
which are being held for sale are closed from late December until early March.
These seasonal factors adversely affect Casino Resource's earnings and cash flow
in the first half of each fiscal year. In the first quarter of fiscal 1999,
Casino Resource had a loss from continuing operations of $1.0 million.
Casino Resource May Not Be Capable of Repaying Its Outstanding Debts.
Casino Resource owes approximately $7.0 million on a note which comes due on
October 31, 1999. The note is secured by Casino Resource's Branson, Missouri
theatre. If Casino Resource does not close its proposed sale transaction with On
Stage Entertainment, Inc. with respect to Casino Resource's entertainment
segment, Casino Resource will not have the cash resources necessary to repay the
mortgage loan on the Branson property. The "Material Developments" section of
this prospectus describes the proposed transaction with On Stage. In such a
circumstance, Casino Resource would be required to seek refinancing of the loan.
Casino Resource may not be able to obtain such a refinancing. If Casino Resource
is unable to refinance the mortgage loan with a third party, it will be required
to seek a refinancing from the current mortgage holder. If the current mortgage
holder is unable or unwilling to refinance the mortgage, Casino Resource could
offer the theatre for outright sale or for sale and leaseback. In the unlikely
event that none of these strategies is successful, Casino Resource could lose
the Branson theatre through foreclosure. The sale to On Stage is subject to the
buyer's obtaining adequate financing to complete the transaction. However, On
Stage has thus far been unable to do so, and there is no assurance that it will
be able to do so.
Under the terms of an Amended and Restated Debenture dated as of
February 1, 1999 held by Roy Anderson Holding Corp., Casino Resource is
obligated to repay in cash approximately $0.8 million in 18 monthly installments
beginning on June 1, 1999. See "Material Developments." There are no assurances
that Casino Resource will be able to do so.
Casino Resource May Be Unable to Compete Effectively in the Gaming
Industry. The gaming industry is highly competitive. Most operators have more
extensive experience, are larger and have significantly greater financial and
other resources than Casino Resource does. There are no assurances that Casino
Resource will be able to compete with more experienced and stronger operators.
In addition, there are no assurances that Casino Resource will be able to
compete effectively for experienced gaming management and other key operating
personnel.
Many gaming jurisdictions limit the number of licenses which they
permit for gaming facilities. In such jurisdictions where Casino Resource is not
currently engaged in the gaming business, such limitations may make it difficult
or impossible for Casino Resource to enter the industry because the licenses are
more likely to be awarded to those companies which are better capitalized and
more experienced than is Casino Resource. Consequently, Casino Resource has
adopted the strategy of forming partnerships with such companies. For example,
Casino Resource has entered into a Memorandum of Understanding to form a joint
venture with Lakes Gaming Company to pursue gaming opportunities with the
Pokagon Band. However, there is no assurance that this strategy will succeed, or
in particular, that the joint venture with Lakes Gaming Company will succeed in
obtaining the rights which it seeks.
6
<PAGE>
Failure To Obtain Financing Would Prevent Casino Resource's Entrance
Into Bottled Water Business. Casino Resource is attempting to enter the bottled
water business. See "Material Developments." Casino Resource has thus far not
obtained the financing for the proposed business and there are no assurances
that it will succeed in doing so. Casino Resource's inability to obtain this
financing could result in abandonment of this project. Additionally, Casino
Resource may be required to pledge a portion of its future revenues or to dilute
the equity investment of its shareholders to accomplish its goals with respect
to this proposed business. If Casino Resource is unable to enter the bottled
water business, management's plans for changing the industries in which Casino
Resource operates could be frustrated and delayed.
Casino Resource has attempted to secure financing for the proposed
bottled water business through the issuance of equity and a combination of
equity and debt. Casino Resource interviewed various investment banking houses
and venture capitalists in an effort to do so. Although Casino Resource received
some encouragement from one investment bank, financing was always contingent
upon the closing of the On Stage transaction. Because that transaction has not
closed, Casino Resource has been unable to provide its share of capital
investment, and therefore, the investment bank's interest in providing or
seeking financing for the bottled water business has declined.
Slow Down in the Demand for Bottled Water, Brand Competition Quality of
Product, or Inadequate Supplies Could Result in Low Profits. The bottled water
industry is subject to the risk of a slow down in demand for bottled water and
the risk inherent in competition from brand name competitors which are better
capitalized, experienced, and known than the proposed bottling venture will be.
In addition to these risks, the proposed bottling venture also faces
the two other specific risks. First, possible impurities in the water source
could affect its desirability to the consumer because most consumers prefer
water with low total dissoluted solids and contaminants. Chemical or filtration
treatment systems are available to treat any such impurities which may be found,
but these treatments may affect the taste of the water thus affecting its
salability, and would also adversely affect the cost of production.
Second, a reduction in volume of the water source could prove to be
prohibitively costly. If the spring source were insufficient to meet the demand
either because of increase in demand or a decrease in available water in the
spring source, alternative water sources would have to be obtained. Although
such alternatives may be available there are no assurances that the price would
be such as to make their use financially feasible. Additionally, the cost to
freight water to the plant could so increase the cost of production as to make
it financially unfeasible.
Operating in Tunisia Poses Special Risks for Casino Resource. Casino
Resource's Casino Caraibe is located in Sousse, Tunisia, North Africa.
Operations outside the U.S. are subject to many inherent risks. In addition, the
operation of Casino Caraibe poses several additional, specific risks for Casino
Resource.
Imposition of Tariffs on Imports. Tunisia imposes substantial
tariffs on imports. As many operational supplies for the casino are not
manufactured in Tunisia, the casino must import these supplies and is therefore
adversely affected by the tariffs.
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<PAGE>
Tunisian Law Prohibits Local Residents from Gambling. Tunisia is a
Moslem nation whose laws dictate that only foreign tourists are permitted to
gamble. Local residents, including foreign nationals, are prohibited from
gambling at the casino. This law dramatically reduces, especially in the
off-season, a consistent source of patrons. To enforce this rule, local law
requires that all casino patrons present a passport or other identification and
register for entry into the casino.
Operating Revenues in Dinars is Subject to Currency Fluctuation
Risks. Gaming is only conducted in Tunisian currency, the dinar. All casino
guests must exchange their national currency into dinars to be able to gamble.
As Casino Resource does not hedge its currency operations, it may be adversely
affected by the currently exchange rate changes between receipt of the dinars
and conversion to dollars.
Repatriation of Funds is Time Consuming. The Tunisian government and
national bank permit Casino Resource to withdraw capital contributions and
profits in U.S. funds. However, doing so is an extremely cumbersome and lengthy
process. The casino's operating profits may only be released 90 days after each
year end. Thus removing operating income from Tunisia may only occur after a
substantial time period has elapsed
All Tunisian operating debt is currently incurred in the country of
Tunisia and paid from casino revenue. While foreign debt, of which there is
currently only $66,000 US outstanding, may be paid by the casino it must first
be approved by the Tunisian Central Bank, which approval can take anywhere from
three to six weeks.
Regional Conflicts and Tensions May Adversely Affect Tunisia's
Desirability as a Tourist Destination. Tunisia's location in North Africa may
make it unattractive as a tourist location because of its proximity to
potentially volatile countries such as Algeria and Libya, and thus Casino
Resource is at the risk of rising international tensions which could not only
affect Tunisia directly, but other countries in the region as well.
Casino Resource's Casualty Insurance May Be Inadequate. Casino Resource
maintains insurance coverage for the casino in Tunisia, but such coverage is
limited. Casino Resource does not have insurance against a number of risks
including: hurricanes, wind, floods, earthquakes and other catastrophic events
because such coverages are either not available or are cost-prohibitive. If an
uninsured disaster should occur, or should the actual loss sustained exceed the
amount of insurance proceeds, Casino Resource could suffer a material loss.
NASD Delisting of Common Stock Could Substantially Reduce Marketability
of Casino Resource Shares. Casino Resource has received notice from NASD warning
that if Casino Resource does not achieve minimum maintenance requirements under
NASD rules, Casino Resource's common stock will be delisted from the NASDAQ
National Market System. Currently Casino Resource's shares do not meet the
requirements of
o $1.00 per share minimum bid price
o $5,000,000 minimum market capitalization for shares owned by
persons who are not officers, directors, or 10 percent
shareholders of Casino Resource
o $4,000,000 minimum tangible net worth
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Delisting of the common stock would probably have an adverse effect on the
marketability of the common stock. As a result of any such delisting, an
investor could find it more difficult to dispose of or to obtain accurate
quotations as to the market value of the common stock. Moreover loss of a NASDAQ
National Market listing could adversely affect Casino Resource's ability to
offer new shares for sale because of the resulting loss of state "Blue Sky"
exemptions which are based on such listing.
To satisfy the minimum per share bid price requirement, Casino Resource
is considering a reverse stock split of its shares. To satisfy the minimum
market capitalization requirement, Casino Resource is considering a sale of
shares, or an acquisition or merger which would increase the amount of assets
represented by the shares with an expected concomitant increase in market
capitalization. There is no assurance that Casino Resource will be able to sell
such shares in light of its low share price and poor earnings history.
Similarly, there is no assurance that Casino Resource will be able to identify
an acquisition or merger candidate and successfully complete such a transaction.
Finally, there is no assurance that any of these actions, even if successful,
will prevent NASD from delisting the common stock.
NASD has scheduled a hearing on the delisting matter on April 15, 1999,
after which NASD will further consider the matter of delisting.
If the Casino Resource common stock is delisted from the NASDAQ
National Market System, management will seek to list the shares on the NASDAQ
Small Cap Market. Requirements for such a listing are:
Initial Requirement Maintenance Requirement
Minimum Bid Price per Share $4.00 $1.00
Minimum Net Tangible Assets $4 million $2 million
Casino Resource does not currently satisfy any of these requirements, other than
the $2 million Minimum Tangible Net Assets Maintenance Requirement. However,
following a reverse stock split and issuance of the shares referred to in this
prospectus, management believes all such requirements will be satisfied.
Penny Stock Rules May Reduce Marketability of Casino Resource's Stock
Because of Increased Responsibility Imposed on Broker-Dealers. The SEC has
adopted rules that regulate broker-dealer practices in connection with
transactions in "penny stocks." Penny stocks are defined generally as equity
securities with a price of less than $5.00 per share. The penny stock rules,
however, do not apply to securities quoted on the NASDAQ system, provided that
current price and volume information with respect to transactions in such
securities is provided by the system. The penny stock rules place additional
responsibilities on broker-dealers effecting transactions in such securities.
The requirements may have the effect of reducing the level of trading activity
in the secondary markets for a stock that becomes subject to the penny stock
rules. If the Casino Resource common stock is delisted from the NASDAQ National
Market System, and management is incorrect in believing that the shares will
qualify for listing under the NASDAQ Small Cap market, the penny stock rules may
apply. If the Casino Resource common stock becomes subject to the penny stock
rules, investors in this offering may find it more
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difficult to resell their common stock.
Current Management`s Control of Casino Resource Might Render
Shareholders Impotent to Effect Changes in the Business. According to the Casino
Resource's 1999 Annual Meeting Proxy Statement, Casino Resource's executive
officers, directors and their affiliates currently own, or have the right to
vote, approximately 45% of the outstanding shares of common stock. Accordingly,
Casino Resource directors and officers have significant voting influence in
connection with the election of the directors of Casino Resource and control
Casino Resource's business and affairs. Consequently, other shareholders are
subject to the risk that existing management will have the power to direct
Casino Resource to take actions which such other shareholders would view as
disadvantageous to Casino Resource.
Loss of John J. Pilger Could Adversely Affect Casino Resource. Casino
Resource is highly dependent on the personal efforts and abilities of its Chief
Executive Officer, John J. Pilger. Mr. Pilger is the Casino Resource executive
most knowledgeable about Casino Resource's business and most conversant with
executives in other companies with which Casino Resource deals Accordingly, the
loss of Mr. Pilger's services could have a material adverse effect on Casino
Resource. Casino Resource has entered into an employment agreement with Mr.
Pilger commencing on May 20, 1996, and amended February 1998. Casino Resource
has obtained key-person life insurance in the amount of $1 million on Mr.
Pilger's life, with the proceeds of such insurance payable to Casino Resource.
Potential Anti-Takeover Effects of Charter Provisions and Minnesota Law
May Make Casino Resource Less Attractive to Potential Investors.. Casino
Resource'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:
o advance notice requirements for shareholder proposals and
director nominations
o limitations on shareholder action by written consent
o voting requirements for amendment of certain provisions of the
charter documents
o a classified board of directors
o change of control provisions
These provisions could discourage a takeover bid or proposal for the common
stock of Casino Resource that might have benefited company shareholders.
MATERIAL DEVELOPMENTS
On Stage Entertainment, Inc. On September 21, 1998, Casino Resource
entered into an agreement to sell substantially all of the assets of its
entertainment segment to On Stage Entertainment, Inc. The purchase price is
$13.8 million, payable $12.5 million, in cash and $1.3 million by delivery of a
purchase money note. The note will bear interest at 9.5% per year and will be
due two years after issuance. The sale includes operations and assets from
Casino Resource of Branson, Country Tonite Theater, d/b/a Country Tonite
Theatre, and Country Tonite Enterprises. The sale is subject to On Stage's
obtaining financing in the amount of $13 million. Thus far On Stage has not
obtained financing and there is no assurance that it will do so.
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Accordingly, Casino Resource is continuing to operate the Country Tonite Theatre
in Branson, Missouri and to produce the Country Tonite Show in Branson, Missouri
and Pigcon Forge, Tennessee.
Burkhart Ventures. On November 4, 1998, Casino Resource and Burkhart
Venture, LLC entered into an agreement whereby Burkhart would acquire Casino
Resource's 60% ownership in Country Tonite Theatre, LLC for $20,000. Pursuant to
the agreement, which was effective December 31, 1998, Casino Resource continues
to manage Country Tonite Theatre for a fee of $2,000 per week in season and
$1,000 per week in the off-season. The agreement also provides that Country
Tonite Enterprises, Inc. will produce shows for the 1999 calendar season for a
fee of $36,000 per week.
Bottled Water Business. On August 25, 1998, Casino Resource executed a
Letter of Intent with Mark McKinney, a Bentonville, Arkansas businessman, to
build a spring water bottling plant in Bentonville, Arkansas. The estimated cost
of the facility is $27 million. Casino Resource is attempting to secure debt and
equity financing of $25 million for the project but thus far has been
unsuccessful. There is no assurance that Casino Resource will obtain such
financing.
Roy Anderson Holding Corp. Debenture. Roy Anderson Corp. was the holder
of a Casino Resource debenture in the principal amount of $1.5 million which was
due January 31, 1999. Casino Resource and the debenture holder exchanged the
existing debenture for an Amended and Restated Debenture dated as of February 1,
1999. The Amended and Restated Debenture, which will be held by Roy Anderson
Holding Corp., an affiliate of the original debenture holder, contains the
following material terms:
o Accrued interest of $360,000 as of January 31, 1999 was paid by the
delivery of 352,250 shares of Casino Resource common stock;
o Interest on the debenture at 6% per year, from February 1, 1999, to and
including May 31, 1999 is to be capitalized and added to the principal
balance of the debenture;
o Principal and interest at 6% per year, is being amortized in 18 equal
monthly installments of $88,651.29 each beginning June 1, 1999;
o Casino Resource is required to pay the first 50% of each amortization
payment in cash;
o Casino Resource may pay the remaining 50% of each amortization payment
in cash or in common stock valued at the average of the closing prices
on the last 10 trading days in May, 1999;
o The then remaining balance of the debenture is accelerated and repaid
in full in cash if the On Stage transaction closes, or to the extent of
$750,000 if the Tunisia casino is sold, and in certain other
circumstances.
1.8 million shares of common stock, an amount anticipated to be sufficient to
satisfy the monthly amortization requirement, has been issued and is being held
in escrow until paid out in the manner described above. Any unused shares will
be canceled. Roy Anderson Holding Corp. has
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given a proxy to Robert Allen and John Pilger to vote all such shares until they
are released from escrow.
Development of Pokagon Band of Potawatomi Indians Casino. Casino
Resource has entered into a Memorandum of Understanding to form a joint venture
with Lakes Gaming Company to pursue an agreement with the Pokagon Band to
develop and operate a casino in the Pokagon Band's Service Area. To do so the
joint venture must respond to a Request for Proposal by 5 p.m. on April 5, 1999.
Casino Resource had asserted to the Pokagon Band that it had a Right of First
Refusal in regards to a gaming management contract with the Pokagon Band. The
Pokagon Band has advised Casino Resource that, for it to participate in the
Request for Proposal process it must sign a release, termination and waiver
agreement, with the Pokagon Band, which will release the Pokagon Band from any
asserted rights. Casino Resource is currently negotiating such an agreement.
USE OF PROCEEDS
Casino Resource will receive no proceeds from the sale of the common
stock offered by this prospectus because all of the shares are being offered for
the account of the selling shareholders.
SELLING SHAREHOLDERS
Three of the selling shareholders acquired, or will acquire, their
shares of Casino Resource common stock as repayment for and pursuant to the
terms of debentures. The Gifford Fund, Ltd., and GPS Fund, Ltd. acquired their
debentures, which were issued on September 10, 1997 and September 9, 1997,
respectively, as part of an exempt offering by Casino Resource pursuant to
Regulation D. Roy Anderson Holding Corp. obtained 350,250 shares as payment for
accrued interest on a debenture which matured on January 31, 1999, and will
obtain up to 1.8 million additional shares as partial payment of an Amended and
Restated Debenture dated as of February 1, 1999. Gaming Venture Corp., U.S.A.,
obtained its shares under an agreement dated February 9, 1999, in which it
agreed to take payment of $35,000 owed to it under a consulting agreement dated
July 21, 1997 in the form of 70,000 shares of Casino Resource common stock. Each
of the selling shareholders, other than Gaming Venture, is a party to an
agreement by which Casino Resource agreed to register its shares of Casino
Resource common stock. Registration of these shares does not necessarily mean
that the selling shareholders will sell all or any of the shares.
The shares listed in the table below represent all of the shares
covered by this prospectus. Except for the relationship of creditors and debtor,
no material relationships exist between any of the selling shareholders and
Casino Resource, nor has any such material relationship existed within the past
three years.
12
<PAGE>
Number of Percentage of
Shares Class
The Gifford Fund, Ltd. 150,050 1.2%
GPS Fund, Ltd. (1) 735,060 5.8%
Roy Anderson Holding Corp. (2) 2,152,250 17.1%
Gaming Venture Corp. U.S.A 70,000 *
Total Shares to Register (2) 3,107,360 24.7%
* less than 1%
(1) This number represents an estimate of the number of shares which will be
obtained by the selling shareholder pursuant to the terms of the debentures held
by such selling shareholder.
(2) Any shares which are not issued pursuant to the terms of the debentures will
be canceled, and withdrawn from registration under the Securities Act.
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.
These sales may be made in the over-the-counter market or in private
transactions at prices and on 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. Casino
Resource 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:
o a block trade in which the broker or dealer engaged attempts
to sell the securities as agent, but may position and resell a
portion of the block as principal to facilitate the
transaction
o purchases by a broker or dealer as principal and resale by the
same broker or dealer for its account under this prospectus
o an exchange distribution under the rules of the exchange, if
the securities are then listed on an exchange
o 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 also qualify
for sale pursuant to Rule 144 may be sold under Rule 144 rather than pursuant to
this prospectus.
DESCRIPTION OF SECURITIES
Casino Resource is authorized to issue up to 35,000,000 shares of
capital stock, including 30,000,000 shares of common stock and 5,000,000 shares
of preferred stock. 12,589,760, including the shares covered by this prospectus,
shares of common stock and no shares of preferred stock are outstanding, or will
be outstanding after the transactions described in this prospectus.
13
<PAGE>
Holders of common stock are entitled to receive dividends as they are
declared by the board of directors of Casino Resource out of legally available
funds for that purpose. Casino Resource 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 Casino Resource, the holders of shares
of common stock would be entitled to receive a pro rata share of the net assets
of Casino Resource remaining after payment, or provision for payment, of the
debts and other liabilities of Casino Resource. There is no assurance, however,
that under such circumstances there would be any net assets of Casino Resource
remaining for such a pro rata distribution.
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 be issued by Casino Resource after the date of this prospectus.
Federal and state gaming authorities require that certain shareholders
of a company which is seeking a gaming license be investigated and be found
suitable by the gaming authority. If a gaming authority has reason to believe
that such ownership may be inconsistent with its policy, it may deny an
application for a license.
Casino Resource's Restated Articles of Incorporation, provide that no
investor may become either a holder of 5% or more of Casino Resource's stock or
one of the 10 largest shareholders of Casino Resource without first agreeing to
consent to a background investigation, provide a financial statement and respond
to questions from gaming authorities. Furthermore, all shares of Casino
Resource'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
directors or any gaming authority having jurisdiction over Casino Resource, to
provide any of the foregoing or such beneficial holder's holdings of capital
stock either alone or together with the capital stock holdings of any other
beneficial holder of Casino Resource'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 Casino Resource where such license, franchise approval or consent is
conditioned upon holders of capital stock meeting certain criteria.
These restrictions may require some 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
Casino Resource, 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 Casino Resource 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 Casino Resource's securities. Such restrictions could also have the
effect of requiring certain holders to liquidate their holdings of
14
<PAGE>
Casino Resource'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 Casino Resource, such shareholder may receive
redemption securities wholly or partially in lieu of a cash payment. "Redemption
securities" means any debt or equity securities of Casino Resource, any
subsidiary, or any other corporation, or any combination thereof, having terms
and conditions as approved by the board 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.
Any required redemption by Casino Resource 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 Casino Resource.
Casino Resource's Articles of Incorporation 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.
Also, an 80% shareholder vote is required to amend, alter or adopt any provision
inconsistent with, or repeal, the classified board and related provisions.
A 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 Casino Resource by tender offer or otherwise by a third party,
even under circumstances when such action might be beneficial to Casino Resource
and its shareholders.
DISCLOSURE OF THE SEC'S POSITION
ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
The Minnesota Business Corporation Act provides that officers and
directors of Casino Resource have the right to indemnification by Casino
Resource 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 and controlling persons of Casino Resource
pursuant to the foregoing provisions, or otherwise, Casino Resource has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
In ss.3.02, of its Articles of Incorporation, Casino Resource limits
personal liability for breach of the fiduciary duty of its directors, to the
extent required 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 Casino Resource, 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.
15
<PAGE>
As permitted under Minnesota Statutes, the Articles of Incorporation of
Casino Resource provide that directors shall have no personal liability to
Casino Resource or its shareholders for monetary damages arising from breach of
the director's duty of care in the affairs of Casino Resource.
Minnesota Statutes do not permit elimination of liability for breach of
a director's duty of loyalty to Casino Resource 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.
EXPERTS
The financial statements 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 incorporated herein
by reference, and are incorporated herein in reliance upon such report given
upon the authority of said firm as experts in auditing and accounting.
16
<PAGE>
Dealer Prospectus Delivery Obligation
Until April __, 1999, all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the dealers' obligation to deliver
the prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
17
<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 Casino Resource,
are estimated as follows:
SEC registration fee $ 370
NASD registration fee 17,500
Legal services and expenses 12,500
Accounting services 6,000
Transfer Agent Fees 2,000
Printing 2,000
Total $40,370
_________
* All of the above expenses except for registration fee are estimated.
18
<PAGE>
Indemnification of Directors and Officers
Under Section 302A.521, Minnesota Statutes, Casino Resource 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 Casino Resource's Articles of
Incorporation contains substantially similar provisions. The general effect of
such provisions is to relieve the directors and officers of Casino Resource from
personal liability which may be imposed for certain acts performed in the
capacity as directors or officers of Casino Resource, except where such persons
have not acted in good faith.
EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description Page
<S> <C> <C>
4.1 $500,000 13% Cumulative Convertible Debenture, dated September 10, 1997
between Casino Resource and Gifford Fund, Ltd., (a)
4.2 $300,000, 13% Cumulative Convertible Debenture, dated September 9, 1997,
between Casino Resource and GPS Fund, Ltd. (a)
4.3 Amendment to the 13% Cumulative Convertible Debentures, dated August 11,
1998, between Casino Resource, The Gifford Fund, Ltd., and GPS Fund, Ltd. (b)
4.4 Amended and Restated Debenture dated as of February 1, 1999 (b)
5. Opinion Regarding Legality 33
23. Consent of Independent Certified Public Accountants 34
24. Power of Attorney (b)
<FN>
(a) Incorporated by reference to Casino Resource's Registration Statement on
Form S-3, File No. 333-37267, originally declared effective November 19, 1997
(b) Filed with original filing of registration statement 333-72315
</FN>
</TABLE>
19
<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 paragraph (a)(1)(i) do 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 post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of those 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 At 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.
(c) Request for Acceleration of Effective Date.
Insofar as indemnification for liabilities arising
under the Securities Act of 1933 (the "Act") may be permitted
to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the
Securities and Exchange Commission,
20
<PAGE>
such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against
such liabilities, other than the payment by the Registrant of
expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense
of any action, suit, or proceeding, is asserted by such
director, officer, or controlling person in connection with
the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it
is against public policy, as expressed in the Act and will be
governed by the final adjudication of such issue.
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it 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 March 29,
1999.
Casino Resource Corporation
Date: March 29, 1999 By: /s/ John J. Pilger
--------------------------------
John J. Pilger, Chief Executive
Officer
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.
Date: Signature and Title
March 29, 1999 /s/ JOHN J. PILGER
----------------------------------------
John J. Pilger, Chief Executive Officer,
Chairman of the Board of Directors, and
Principal Financial and Accounting
Officer
March 29, 1999 /s/ NOREEN POLLMAN
----------------------------------------
Noreen Pollman, Secretary and Director
March 29, 1999 /s/ ROBERT J. ALLEN
----------------------------------------
Robert J. Allen, Vice President of
Entertainment and Director
March 29, 1999 /s/ JOHN W. STEINER
----------------------------------------
By: John J. Pilger, Attorney-in-Fact
John W. Steiner, Director
March 29, 1999 /s/ DENNIS EVANS
----------------------------------------
By: John J. Pilger, Attorney-in-Fact
Dennis Evans, Director
March 29, 1999 /s/ DR. TIMOTHY MURPHY
----------------------------------------
By: John J. Pilger, Attorney-in-Fact
Dr. Timothy Murphy, Director
22
EXHIBIT 5
MESIROV GELMAN JAFFE CRAMER & JAMIESON, LLP
(215) 994-1000
March 29, 1999
Casino Resource Corporation
707 Bienville Blvd.
Ocean Springs, Mississippi 39564
Re: Casino Resource Corporation Registration Statement on Form S-3
No. 333-72315 (the "Registration Statement")
Ladies and Gentlemen:
As counsel to Casino Resource Corporation, a Minnesota corporation (the
"Company"), we are familiar with the corporate proceedings relating to the
proposed registration on Form S-3 of 3,107,360 shares of the Company's common
stock, $.01 par value, (the "Shares") to be offered and sold by the Selling
Shareholders named in the Registration Statement.
We have examined the Company's Certificate of Incorporation and By-Laws, as
amended, and such other documents and corporate records relating to the Company
and the issuance and sale of the Shares as we deemed appropriate for purposes of
rendering this opinion. Based on the foregoing, it is our opinion that the
Shares, when issued by the Company and released from escrow according to the
terms of the governing documents, will be validly issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the Registration
Statement.
Very truly yours,
Mesirov Gelman Jaffe Cramer & Jamieson, LLP
33
EXHIBIT 23
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 December
17, 1998, relating to the consolidated financial statements of Casino Resource
Corporation appearing in the Company's Annual Report on Form 10-KSB for the year
ended September 30, 1998.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
BDO SEIDMAN, LLP
Chicago, Illinois
March 29, 1999
