-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, P8ebo9CAU8UHt9wYxnHhnifIakB5p5QuLH9j/t5TuIPO3Gys7zfCH4sKaJ+c9hkg PYTHhYRxORB8EnL3C3SnWA== 0000950134-97-009338.txt : 19971216 0000950134-97-009338.hdr.sgml : 19971216 ACCESSION NUMBER: 0000950134-97-009338 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971031 FILED AS OF DATE: 19971215 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CROWN GROUP INC /TX/ CENTRAL INDEX KEY: 0000799850 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 630851141 STATE OF INCORPORATION: TX FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-14939 FILM NUMBER: 97738469 BUSINESS ADDRESS: STREET 1: 4040 N. MACARTHUR BLVD. STREET 2: SUITE 100 CITY: IRVING STATE: TX ZIP: 75038 BUSINESS PHONE: 9727173423 MAIL ADDRESS: STREET 1: 4040 N. MACARTHUR BLVD. STREET 2: SUITE 100 CITY: IRVING STATE: TX ZIP: 75038 FORMER COMPANY: FORMER CONFORMED NAME: CROWN CASINO CORP DATE OF NAME CHANGE: 19931104 FORMER COMPANY: FORMER CONFORMED NAME: SKYLINK AMERICA INC DATE OF NAME CHANGE: 19920703 10-Q 1 FORM 10-Q FOR QUARTER ENDED OCTOBER 31, 1997 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal quarter ended: Commission file number: OCTOBER 31, 1997 0-14939 CROWN GROUP, INC. (Exact name of registrant as specified in its charter) TEXAS 63-0851141 (State or other jurisdiction (I.R.S. Employer Identification No.) of incorporation or organization) 4040 N. MACARTHUR BLVD., SUITE 100, IRVING, TEXAS (Address of principal executive offices) 75038-6424 (Zip Code) (972) 717-3423 (Registrant's telephone number, including area code) CROWN CASINO CORPORATION (Former name if changed since last report) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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. Yes [X] No [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Outstanding at Title of Each Class December 15, 1997 ------------------- ----------------- Common stock, par value $.01 per share 9,800,285 2 PART I ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS Crown Group, Inc.
October 31, 1997 April 30, (Unaudited) 1997 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 19,128,079 $ 21,117,960 Receivables 764,246 345,780 Loans held for sale 6,204,821 Prepaids and other assets 239,617 37,674 Land held for sale 15,150,000 ------------ ------------ Total current assets 26,336,763 36,651,414 ------------ ------------ Property and equipment: Furniture, fixtures and equipment 2,469,700 1,811,581 Less accumulated depreciation (218,703) (226,404) ------------ ------------ 2,250,997 1,585,177 ------------ ------------ Note receivable from CMN 1,306,000 Investment in CMN and related assets 5,583,011 ------------ ------------ $ 35,476,771 $ 38,236,591 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 61,654 $ 41,284 Accrued liabilities 298,704 422,609 Income taxes payable 780,000 335,000 Deferred income taxes 1,325,000 ------------ ------------ Total current liabilities 1,140,358 2,123,893 ------------ ------------ Deferred income taxes, less current portion 410,000 400,000 Commitments and contingencies Stockholders' equity: Preferred stock, par value $.01 per share, 1,000,000 shares authorized; none issued or outstanding Common stock, par value $.01 per share, 50,000,000 shares authorized 9,826,768 issued and outstanding (10,394,585 at April 30, 1997) 98,268 103,946 Additional paid-in capital 37,076,418 38,496,803 Accumulated deficit (3,248,273) (2,888,051) ------------ ------------ Total stockholders' equity 33,926,413 35,712,698 ------------ ------------ $ 35,476,771 $ 38,236,591 ============ ============
See accompanying notes to consolidated financial statements. 2 3 CONSOLIDATED STATEMENTS OF OPERATIONS Crown Group, Inc. (UNAUDITED)
Three Months Ended October 31, 1997 1996 ------------ ------------ Revenues: Interest income $ 415,299 $ 353,604 Fees and rentals from CMN 126,334 Other income 14,000 500,000 ------------ ------------ 555,633 853,604 ------------ ------------ Costs and expenses: General and administrative 1,017,167 928,535 Depreciation and amortization 127,191 46,939 Gaming development 20,269 ------------ ------------ 1,144,358 995,743 ------------ ------------ Other income (expense): Equity in earnings of CMN 167,806 Interest expense (1,614) (24,656) Gain (loss) on sale of securities 23,674 (526,370) ------------ ------------ 189,866 (551,026) ------------ ------------ Loss before income taxes (398,859) (693,165) Benefit for income taxes (348,030) (225,000) ------------ ------------ Net loss $ (50,829) $ (468,165) ============ ============ Loss per share $ (.01) $ (.04) ============ ============ Weighted average common and common equivalent shares outstanding 9,870,063 11,006,604 ============ ============
See accompanying notes to consolidated financial statements. 3 4 CONSOLIDATED STATEMENTS OF OPERATIONS Crown Group, Inc. (UNAUDITED)
Six Months Ended October 31, 1997 1996 ------------ ------------ Revenues: Interest income $ 794,347 $ 954,699 Fees and rentals from CMN 216,301 Other income 39,195 500,000 ------------ ------------ 1,049,843 1,454,699 ------------ ------------ Costs and expenses: General and administrative 2,127,454 1,530,453 Depreciation and amortization 219,555 91,474 Gaming development 38,825 ------------ ------------ 2,347,009 1,660,752 ------------ ------------ Other income (expense): Equity in earnings of CMN 407,685 Interest expense (1,614) (49,767) Gain (loss) on sale of securities 23,674 (526,370) Gain on sale of SCGC 14,934,543 ------------ ------------ 429,745 14,358,406 ------------ ------------ Income (loss) before income taxes (867,421) 14,152,353 Provision (benefit) for income taxes (507,199) 1,000,000 ------------ ------------ Net income (loss) $ (360,222) $ 13,152,353 ============ ============ Earnings (loss) per share $ (.04) $ 1.15 ============ ============ Weighted average common and common equivalent shares outstanding 10,055,465 11,475,228 ============ ============
See accompanying notes to consolidated financial statements. 4 5 CONSOLIDATED STATEMENTS OF CASH FLOWS Crown Group, Inc. (UNAUDITED)
Six Months Ended October 31, 1997 1996 ------------ ------------ Operating activities: Net income (loss) $ (360,222) $ 13,152,353 Adjustments to reconcile net income (loss) to net cash used by operating activities: Depreciation and amortization 219,555 91,474 Deferred income taxes (1,315,000) (2,700,000) Equity in earnings of CMN (407,685) Gain on sale of SCGC (14,934,543) (Gain) loss on sale of securities (23,674) 526,370 Changes in assets and liabilities: Receivables (318,466) 103,597 Loans originated or acquired (6,204,821) Prepaids and other assets (61,057) (223,615) Accounts payable and accrued liabilities (218,535) (757,477) Income taxes payable 445,000 3,700,000 ------------ ------------ Net cash used by operating activities (8,244,905) (1,041,841) ------------ ------------ Investing activities: Purchase of assets (755,950) (169,564) Deferred transaction costs (161,900) Sale of land 15,250,000 Purchase of securities (339,207) (4,023,118) Sale of securities 221,995 4,090,615 Issuance of note receivable (100,000) Collection of notes receivable 404,250 10,000,000 Purchase of CMN and related assets (7,000,001) ------------ ------------ Net cash provided by investing activities 7,681,087 9,736,033 ------------ ------------ Financing activities: Purchase of common stock (1,426,063) (3,080,485) Payments of capital lease obligations (38,830) ------------ ------------ Net cash used by financing activities (1,426,063) (3,119,315) ------------ ------------ Increase (decrease) in cash and cash equivalents (1,989,881) 5,574,877 Cash and cash equivalents at: Beginning of period 21,117,960 668,853 ------------ ------------ End of period $ 19,128,079 $ 6,243,730 ============ ============
See accompanying notes to consolidated financial statements. 5 6 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Crown Group, Inc. FOR THE SIX MONTHS ENDED OCTOBER 31, 1997 (UNAUDITED) NOTE A - HISTORY AND DESCRIPTION OF BUSINESS Crown Group, Inc., formerly Crown Casino Corporation, ("Crown" or the "Company") is a holding company which presently owns 79% of Concorde Acceptance Corporation ("Concorde"), a sub-prime mortgage lender, and 49% of Casino Magic Neuquen S.A. ("CMN"), a casino operator in the Province of Neuquen, Argentina. Crown also owns 100% of Gaming Entertainment Management Services, Inc. ("GEMS") which owned an 18.6 acre tract of land in the gaming district of Las Vegas, Nevada. In September 1997 GEMS sold the Las Vegas land for $15.25 million. The Company is presently focusing on (i) the acquisition or development of other casino gaming properties in Argentina, (ii) the development and expansion of Concorde's mortgage based lending business, and (iii) the potential acquisition or development of other businesses unrelated to casino gaming or mortgage based lending. From June 1993, with the acquisition of 100% of St. Charles Gaming Company, Inc. ("SCGC"), until November 1996, the Company's primary business focus was that of owning, operating and developing casino gaming properties. SCGC owns and operates a riverboat gaming casino located in Calcasieu Parish, Louisiana, which had been in the development stage until opening in July 1995. In June 1995 the Company sold a 50% interest in SCGC to Louisiana Riverboat Gaming Partnership ("LRGP") and in May 1996 sold its remaining 50% interest in SCGC to Casino America, Inc. ("Casino America") (see Note D). In November 1996 the Company decided to cease pursuing gaming opportunities in the United States and began pursuing business opportunities in fields unrelated to casino gaming. As a result in June 1997 the Company, along with certain newly hired management personnel, formed Concorde. Concorde is in the business of originating, purchasing, servicing and selling sub-prime mortgage loans which are secured primarily by first or second liens on residential properties. These loans are expected to be sold in privately negotiated transactions as well as to institutional investors in the secondary market through securitization programs. Also in June 1997 the Company acquired a 49% interest in CMN and related assets from Casino Magic Corp. ("Casino Magic"). CMN operates casinos in the cities of Neuquen and San Martin de los Andes in the Province of Neuquen, Argentina under an exclusive concession contract (see Note C). In October 1997, upon receiving shareholder approval, the Company changed its name from Crown Casino Corporation to Crown Group, Inc. to more accurately reflect the diversified nature of the Company's business. NOTE B - BASIS OF PRESENTATION General The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the six month period ended October 31, 1997 are not necessarily indicative of the results that may be expected for the year ended April 30, 1998. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended April 30, 1997. Loans Held for Sale Loans held for sale are carried at the lower of aggregate cost or market value. Market value is determined by current investor yield requirements. 6 7 Origination Fees and Costs The Company earns various fees and incurs certain costs in connection with the origination of loans. Such loan origination fees, net of direct loan costs, are deferred until such time as the related loan is sold, whereupon such net fees are recognized as a component in the calculation of the gain on sale of loans. Investment in CMN The Company accounts for its 49% interest in CMN using the equity method of accounting. The Company's investment in CMN is translated into U.S. Dollars from Argentine Pesos based upon the exchange rate in effect on the balance sheet date. CMN's net operating results are translated into U.S. Dollars based upon the average exchange rate during the period. Amortization of CMN Related Assets As discussed in Note C the Company acquired interests in certain agreements and other assets in connection with its purchase of 49% of CMN. The management and royalty agreements are being amortized over 9 1/2 years which represents the remaining term of the concession contract. The slot equipment and lease are being amortized over five years. Accumulated amortization of such agreements and equipment amounted to $129,425 as of October 31, 1997. Income Taxes The provision for income taxes differs from the amount by applying the statutory federal income tax rate primarily as a result of available foreign tax credits on the Company's portion of earnings generated by CMN. Reclassifications Certain prior year amounts in the accompanying financial statements have been reclassified to conform to the fiscal 1998 presentation. NOTE C - ACQUISITION OF 49% OF CMN On June 2, 1997 the Company acquired 49% of the capital stock of CMN, as well as interests in certain other assets and contracts related to CMN, from Casino Magic for a purchase price of $7 million. CMN operates casinos in the cities of Neuquen and San Martin de los Andes in the Province of Neuquen, Argentina under an exclusive concession contract that expires in 2007, but can be extended by CMN for an additional five years under certain circumstances. The interests in certain other assets and contracts included (i) a demand promissory note in the amount of $4,226,743 issued by CMN, (ii) a 16.4% interest in a certain management agreement relating to CMN, and (iii) a 49% interest in (a) slot machines and a related lease agreement, and (b) a certain royalty agreement relating to CMN. Pursuant to the various CMN agreements, the Company receives its respective share of fees and rental payments due under such agreements. The Company has allocated the purchase price as follows (in thousands): Purchase price: Cash $ 7,000 Transaction costs 15 ------- $ 7,015 ======= Purchase price allocation: Note receivable $ 4,226 Management and royalty agreements 504 Slot equipment and lease 1,290 Stock of CMN 995 ------- $ 7,015 =======
7 8 In October 1997, each of the Company and Casino Magic converted approximately $2.5 million of principal due on certain notes receivable from CMN into shares of CMN capital stock such that each party retained the same ownership percentage of CMN as previously held. At October 31, 1997 CMN had assets, liabilities and stockholders' equity of approximately $12.3 million, $4.5 million, and $7.8 million, respectively. For the six months ended October 31, 1997 CMN's summarized unaudited results of operations were as follows (in thousands): Revenues $ 8,821 Costs and expenses 7,434 Provision for income taxes 413 ------- Net income $ 974 =======
The following unaudited condensed pro forma results of operations of the Company for the six months ended October 31, 1997 and 1996 were prepared as if the acquisition of 49% of CMN and related assets had occurred on May 1, 1997 and May 1, 1996, respectively (in thousands, except per share amounts). The adjustments to the historical financial statements principally consist of (i) recognizing the Company's pro-rata share of CMN earnings and contractual fees, (ii) recording interest income on the note receivable from CMN, (iii) eliminating interest income on the $7 million used to acquire 49% of CMN and related assets, and (iv) amortizing the CMN related agreements and equipment.
Six Months Ended October 31, 1997 1996 ------- ------- Revenue $ 1,092 $ 1,698 Net income (loss) (280) 13,533 Income (loss) per share $ (.03) $ 1.18
The unaudited condensed pro forma results of operations are not necessarily indicative of future results or the results that would have occurred had the acquisition of 49% of CMN and related assets taken place on the dates indicated. NOTE D - SALE OF SCGC INTEREST On May 3, 1996 the Company sold its remaining 50% interest in SCGC to Casino America for (i) 1,850,000 shares of Casino America common stock, which the Company valued at $6.50 per share, (ii) the exchange of the $20 million LRGP Note for LRGP Note A and LRGP Note B, each in the principal amount of $10 million and bearing interest at 11.5% per annum, and (iii) an additional non-detachable five-year warrant to purchase up to another 416,667 shares of Casino America common stock at an exercise price of $12 per share. In connection with this transaction, in May 1996, the Company recorded a gain before income taxes of approximately $14.9 million. Other than a guarantee of certain leases, for which the Company has been indemnified by LRGP, the Company is not liable for any obligations of SCGC. NOTE E - WAREHOUSE LINE OF CREDIT In December 1997 the Company entered into a $20 million warehouse line of credit with a bank. Borrowings under the warehouse line may be used for the origination or purchase of mortgage loans. The warehouse line matures in December 1998 and borrowings under such facility bear interest principally at the U.S. Federal Funds rate plus 2.25%. The warehouse line is secured by certain mortgage loans. 8 9 NOTE F - STOCK REPURCHASE PROGRAM In March 1996 the Company's Board of Directors approved a program, as amended, to repurchase up to 2,000,000 shares of the Company's common stock from time to time in the open market. At October 31, 1997 the Company had repurchased 1,848,791 shares pursuant to this program. The timing and amount of future share repurchases, if any, will depend on various factors including market conditions, available alternative investments and the Company's financial position. NOTE G - COMMITMENTS AND CONTINGENCIES The Company has entered into severance agreements with its three executive officers which provide for payments to the executives in the event of their termination after a change in control, as defined, of the Company. The agreements provide, among other things, for a compensation payment equal to 2.99 times the annual compensation paid to the executive, as well as accelerated vesting of options under the Company's incentive stock option plan, in the event of such executive's termination in connection with a change in control. NOTE H - SUPPLEMENTAL CASH FLOW INFORMATION Supplemental cash flow disclosures are as follows for the six months ended October 31, 1997 and 1996:
Six Months Ended October 31, 1997 1996 ----------- ----------- Conversion of a portion of CMN note to equity $ 2,516,493 Stock received for sale of second 50% interest in SCGC $12,025,000 Income taxes paid 300,000 Interest paid 1,614 49,767
9 10 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the Company's consolidated financial statements appearing elsewhere in this report. OVERVIEW Crown Group, Inc., formerly Crown Casino Corporation, ("Crown" or the "Company") is a holding company which presently owns 79% of Concorde Acceptance Corporation ("Concorde"), a sub-prime mortgage lender, and 49% of Casino Magic Neuquen S.A. ("CMN"), a casino operator in the Province of Neuquen, Argentina. Crown also owns 100% of Gaming Entertainment Management Services, Inc. ("GEMS") which owned an 18.6 acre tract of land in the gaming district of Las Vegas, Nevada. In September 1997 GEMS sold the Las Vegas land for $15.25 million. The Company is presently focusing on (i) the acquisition or development of other casino gaming properties in Argentina, (ii) the development and expansion of Concorde's mortgage based lending business, and (iii) the potential acquisition or development of other businesses unrelated to casino gaming or mortgage based lending. From June 1993, with the acquisition of 100% of St. Charles Gaming Company, Inc. ("SCGC"), until November 1996, the Company's primary business focus was that of owning, operating and developing casino gaming properties. SCGC owns and operates a riverboat gaming casino located in Calcasieu Parish, Louisiana, which had been in the development stage until opening in July 1995. In June 1995 the Company sold a 50% interest in SCGC to Louisiana Riverboat Gaming Partnership ("LRGP") and in May 1996 sold its remaining 50% interest in SCGC to Casino America, Inc. In November 1996 the Company decided to cease pursuing gaming opportunities in the United States and began pursuing business opportunities in fields unrelated to casino gaming. As a result in June 1997 the Company, along with certain newly hired management personnel, formed Concorde. Concorde is in the business of originating, purchasing, servicing and selling sub-prime mortgage loans which are secured primarily by first or second liens on residential properties. These loans are expected to be sold in privately negotiated transactions as well as to institutional investors in the secondary market through securitization programs. Also in June 1997 the Company acquired a 49% interest in CMN and related assets from Casino Magic Corp. for a purchase price of $7 million. CMN operates casinos in the cities of Neuquen and San Martin de los Andes in the Province of Neuquen, Argentina under an exclusive concession contract. RESULTS OF OPERATIONS Three months ended October 31, 1997 compared to the three months ended October 31, 1996 Interest income for the three months ended October 31, 1997 increased $61,695 compared to the same period in the prior fiscal year. The increase was principally the result of an increase in the amount of mortgage loans outstanding during the current fiscal period and the prepayment of LRGP Note A in the amount $10 million in August 1996 that had been earning interest at 11.5% per annum. General and administrative expenses for the three months ended October 31, 1997 increased $88,632 compared to the same period in the prior fiscal year. The increase was principally the result of approximately $380,000 of expenses associated with operating Concorde's mortgage based lending business, partially offset by decreases in consulting and travel expenses. Depreciation and amortization for the three months ended October 31, 1997 increased $80,252 compared to the same period in the prior fiscal year. The increase was the result of amortizing certain CMN related assets and agreements. Gaming development costs for the three months ended October 31, 1997 decreased $20,269 compared to the same period in the prior fiscal year as a result of the Company's decision to cease pursuing gaming opportunities in the United States. Six months ended October 31, 1997 compared to the six months ended October 31, 1996 Interest income for the six months ended October 31, 1997 decreased $160,352 compared to the same period in the prior fiscal year. The decrease was principally the result of earning 11.5% per annum on the $20 million of notes due from LRGP during most of the prior fiscal period, as compared to earning from 5.3% to approximately 17.0% on monies invested in certain money market funds, residential mortgage notes and certain other notes held during the current fiscal period. Other income in the prior fiscal period pertains to a fee earned by the Company in assisting another company complete an acquisition. General and administrative expenses for the six months ended October 31, 1997 increased $597,001 compared to the same period 10 11 in the prior fiscal year. The increase was principally the result of (i) approximately $453,000 of expenses associated with the operation of Concorde's mortgage based lending business and (ii) approximately $520,000 of costs associated with defending and settling certain lawsuits, partially offset by (iii) decreases in compensation, consulting and travel expenses. Depreciation and amortization for the six months ended October 31, 1997 increased $128,081 compared to the same period in the prior fiscal year. The increase was the result of amortizing certain CMN related assets and agreements. Gaming development costs for the six months ended October 31, 1997 decreased $38,825 compared to the same period in the prior fiscal year as a result of the Company's decision to cease pursuing gaming opportunities in the United States. LIQUIDITY AND CAPITAL RESOURCES As of December 8, 1997 the Company's sources of liquidity included (i) approximately $15 million cash on hand, (ii) approximately $11 million of mortgage and other notes receivable, (iii) a $20 million warehouse line of credit with a bank, and (iv) the issuance of debt and/or equity. While the Company is focusing on (i) the acquisition or development of other casino gaming properties in Argentina, (ii) the development and expansion of Concorde's mortgage based lending business, and (iii) the potential acquisition or development of other businesses unrelated to casino gaming or mortgage based lending, the Company has made no definitive plans for the utilization of the Company's capital resources. Presently management believes that the Company's capital resources are sufficient to satisfy its identified capital needs for the next twelve months. In March 1996 the Company's Board of Directors approved a program, as amended, to repurchase up to 2,000,000 shares of the Company's common stock from time to time in the open market. As of October 31, 1997 the Company had repurchased 1,848,791 shares pursuant to this program. The timing and amount of future share repurchases, if any, will depend on various factors including market conditions, available alternative investments and the Company's financial position. FORWARD-LOOKING INFORMATION The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for certain forward-looking statements. Certain information included in this Quarterly Report on Form 10-Q contains, and other materials filed or to be filed by the Company with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by the Company or its management) contain or will contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Such forward-looking statements address, among other things, the Company's current focus on (i) the acquisition or development of other casino gaming properties in Argentina, (ii) the development and expansion of Concorde's mortgage based lending business, and (iii) the potential acquisition or development of other businesses unrelated to casino gaming or mortgage based lending. Such forward-looking statements are based upon management's current plans or expectations and are subject to a number of uncertainties and risks that could significantly affect current plans, anticipated actions and the Company's future financial condition and results. As a consequence, actual results may differ materially from those expressed in any forward-looking statements made by or on behalf of the Company as a result of various factors. Uncertainties and risks related to such forward-looking statements include, but are not limited to, the risk that the Company may not (i) acquire or develop other casino gaming properties in Argentina, (ii) expand Concorde's mortgage based lending business, or (iii) acquire or develop other businesses unrelated to casino gaming or mortgage based lending, or if so acquired or developed, operate such businesses profitably. Any forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995 and, as such, speak only as of the date made. 11 12 PART II ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Crown Group, Inc. The Company's 1997 annual meeting of shareholders was held on October 1, 1997. The record date for such meeting was August 15, 1997 on which date there were a total of 9,935,785 shares of common stock outstanding and entitled to vote. At such meeting the following proposals were approved by the Company's shareholders: 1. Election of Directors.
Votes Votes Votes For Against Abstained ---------- -------- ---------- Edward R. McMurphy 9,073,576 104,734 50,342 T.J. Falgout, III 9,072,276 103,234 50,342 David J. Douglas 9,075,276 103,034 50,342 J. David Simmons 9,075,476 102,834 50,342 Gerald L. Adams 9,075,276 103,034 50,342 Robert J. Kehl 9,072,276 106,034 50,342 Gerard M. Jacobs 8,895,223 283,087 50,342
2. Proposal to change the name of the Company from Crown Casino Corporation to Crown Group, Inc. Votes for 9,177,150 Votes against 37,567 Votes abstained 13,935
3. Proposal to adopt the Company's 1997 Stock Option Plan. Votes for 4,843,676 Votes against 665,414 Votes abstained 112,668 Broker non-votes 3,606,894
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits: 27 Financial data schedule (1). (b) Reports on Form 8-K: There were no reports on Form 8-K filed in the second fiscal quarter of the current year. - ----------------------- (1) Filed herewith. 12 13 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CROWN GROUP, INC. By: \s\ Mark D. Slusser ------------------------------------ Mark D. Slusser Chief Financial Officer, Vice President Finance and Secretary (Principal Financial and Accounting Officer) Dated: December 15, 1997 13 14 INDEX TO EXHIBITS EXHIBIT NUMBER DESCRIPTION - ------- ----------- 27 Financial Data Schedule EX-27 2 FINANCIAL DATA SCHEDULE
5 6-MOS APR-30-1998 OCT-31-1997 19,128,079 140,886 8,275,067 0 0 26,336,763 2,469,700 (218,703) 35,476,771 1,140,358 0 0 0 98,268 33,828,145 35,476,771 0 1,049,843 0 0 2,347,009 0 1,614 (867,421) (507,199) (360,222) 0 0 0 (360,222) (.04) (.04)
-----END PRIVACY-ENHANCED MESSAGE-----