sec document
PROSPECTUS
4,300,000 SHARES OF COMMON STOCK
EMPIRE RESORTS, INC.
This prospectus relates to the offer and sale by the selling
stockholders identified in this prospectus of up to an aggregate 4,300,000
shares of our common stock. We will not receive any proceeds from the sale of
our common stock under this prospectus.
The selling stockholders may offer their shares of common stock at any
of the following prices, which may reflect discounts from the prevailing market
prices at the time of sale:
o Fixed prices that may be changed
o Market prices prevailing at the time of sale
o Prices related to such prevailing market prices
o At negotiated prices
o Varying prices determined at the time of sale
Our common stock is listed on the Nasdaq Small Cap Market under the
symbol "NYNY" and on the Boston Stock Exchange under the symbol "NYN." The last
reported sale price for our common stock on February 12, 2004 was $12.75 per
share.
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THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON
PAGE 4.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is February 13, 2004.
TABLE OF CONTENTS
Page
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Prospectus Summary.............................................................1
The Company....................................................................1
The Offering...................................................................4
Risk Factors...................................................................4
Where You Can Find More Information...........................................12
Special Note Regarding Forward-Looking Statements.............................13
Incorporation By Reference....................................................13
Use of Proceeds...............................................................15
Selling Stockholders..........................................................15
Plan of Distribution..........................................................18
Legal Matters.................................................................20
Experts.......................................................................20
You should rely only on the information contained in this prospectus
or any accompanying supplemental prospectus and the information specifically
incorporated by reference. We have not authorized anyone to provide you with
different information or make any additional representations. This is not an
offer of these securities in any state or other jurisdiction where the offer is
not permitted. You should not assume that the information contained in or
incorporated by reference into this prospectus or any prospectus supplement is
accurate as of any date other than the date on the front of each of such
documents.
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PROSPECTUS SUMMARY
This summary represents a summary of all material terms of the
offering and only highlights the more detailed information that appears
elsewhere, or incorporated by reference, in this prospectus. This prospectus may
not contain all the information important to you as an investor. Accordingly,
you should carefully read this entire prospectus before deciding whether to
invest in our common stock.
Unless the context otherwise requires, all references to "we," "us,"
or "the Company" in this prospectus refer collectively to Empire Resorts, Inc.,
a Delaware corporation, and its subsidiaries.
THE COMPANY
We were incorporated in Delaware in 1993 and our common stock is
traded on the Nasdaq Small Cap Market under the symbol "NYNY" and the Boston
Stock Exchange under the symbol "NYN".
We had no net operating revenue during the fiscal year ended December
31, 2002 and for the nine months ended September 30, 2003 and sustained net
operating losses of approximately $9.5 million and $5.4 million, respectively,
during such periods.
Our principal executive offices are located at Monticello Raceway,
Route 17B, Monticello, New York 12701. Our telephone number is (845) 794-4100,
ext 478.
GENERAL
We operate Monticello Raceway, a harness horse racing facility located
in Monticello, New York located approximately 90 miles northwest of New York
City. There are more than 17.2 million adults residing within 100 miles of
Monticello Raceway and the closest competing racetrack is located approximately
85 miles away from Monticello. We are currently pursuing two significant gaming
development opportunities at Monticello Raceway. First, we plan to install 1,800
video lottery terminals ("VLTs") at Monticello Raceway, creating an exciting
racino destination anticipated to open by July 2004. In addition, we have
entered into agreements with the Cayuga Nation of New York (the "Cayuga Nation")
to develop a Class III Native American casino adjacent to the racino and are
aggressively pursuing acquiring the requisite federal, state and local approvals
required to begin the development of what would be the closest full service Las
Vegas style casino to New York City. We and the Cayuga Nation are targeting the
Indian casino to open by the fourth quarter of 2005.
Monticello Raceway has been in operation since 1958 and is situated on
232 acres in the scenic Catskills Mountains. The Raceway offers pari-mutuel
wagering on live harness horse racing throughout the year, along with year-round
simulcasting from various harness and thoroughbred racetracks across the
country. Monticello Raceway is one of only ten racetracks in New York.
On October 31, 2001, the State of New York enacted a bill granting
seven racetracks across the state, including Monticello Raceway, the right to
have the New York State Lottery install VLTs on their premises. The video
lottery terminal operation will be conducted by the New York State Lottery with
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the racetracks functioning largely as agents for the New York State Lottery.
Under the initial New York video lottery terminal laws, Monticello Raceway would
be permitted to retain 25% of the revenues generated by video lottery terminal
operations after the payout of prizes, but must apply 35% of its revenue from
VLTs in their first year of operation to enhancing purses at the track
(escalating to 45% of revenue in years two and three), and to surrender an
additional 5% of such revenue to a state breeding development fund. Monticello
Raceway, under additional legislation, is authorized to enter into an agreement
with the organizations representing its horsemen to reduce the percentages of
its vendor fees dedicated to enhance purses at such track during the initial
three years, to an amount not less than 25% of any gross revenues received by
Monticello Raceway. The initial law allows Monticello Raceway to operate its
VLTs from 10:00 a.m. to 10:00 p.m. on weekdays and midnight on weekends. Also,
the initial law was set to expire December 31, 2007.
The same bill enabling VLT operations provides for the granting of
three gaming licenses for the development of Native American casinos in the
Catskills region of New York. In pursuing a license, we have entered into a
series of agreements with the Cayuga Nation that provide for the joint
development of a Las Vegas style casino. The executed agreements include, among
others, management, development and construction, land purchase and shared
facilities agreements. For purposes of this development, we applied to have 29
acres of land directly adjacent to Monticello Raceway transferred into a trust
for the Cayuga Nation. The Cayuga Nation has petitioned the State of New York
for a compact and license to operate a casino in the Catskills Mountains and is
currently in active discussions with the State.
THE RACETRACK AND VIDEO LOTTERY INITIATIVE
As a result of our recent consolidation with Monticello Raceway
Management, Inc. ("MRMI"), Monticello Casino Management, LLC ("MCM"), Monticello
Raceway Development, LLC ("MRD"), and Mohawk Management, LLC, we now own all of
the rights to operate Monticello Raceway, a harness horse racing facility
located in Monticello, New York. Recently, Monticello Raceway was granted the
right to install and operate up to 1,800 video lottery terminals on behalf of
the New York State Lottery. Video lottery terminals, or VLTs, are video gaming
devices that appear very similar to traditional slot machines. During the past
decade, a number of racetracks have implemented VLT programs, with the general
result being a significant increase in racetrack revenue. To construct a
facility suitable to house the VLTs at Monticello Raceway will cost
approximately $20 million. The level of net revenues from and Monticello
Raceway's right to install these VLTs remains subject to, among other
uncertainties, reaching an accord with the horsemen at Monticello Raceway over
how the VLT revenues are to be allocated. We cannot assure investors that we
will quickly, if ever, be able to reach an accord with the horsemen at
Monticello Raceway. On January 14, 2004, we were notified by the New York
Lottery that it had completed its initial review of the Company, its officers
and directors respective Video Lottery Agent Applications and have been
temporarily licensed while the New York State Police completes a background
investigation. Such applications were submitted on the basis of the
consolidation of interests between us, Catskill and various affiliates which
closed on January 12, 2004.
Also on January 14, 2004, the New York State Racing and Wagering Board
(the "Board") advised MRMI that it had approved the Monticello Raceway track and
simulcast applications for 2004. The Board also reviewed information concerning
the consolidation transaction prior to the approval. The Board assigned 224
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programs for specified dates, with a maximum of twelve races per day. Additional
races are to be approved by the Board on a case by case basis. The track and
simulcast licenses are conditioned upon compliance with all applicable
provisions of the Racing, Pari-Mutuel Wagering and Breeding Law, Board Rules and
regulations and the requirements set forth in the track and simulcast
applications.
ANCILLARY GAMING AGREEMENTS
On April 3, 2003, we, the Cayuga Nation of New York, the Cayuga
Catskill Gaming Authority, Catskill Development, LLC ("Catskill Development"),
MRD and MCM, the latter two of which are owned by us, entered into a series of
agreements that provide for the joint development of a resort-style tribal
gaming facility on land adjacent to Monticello Raceway. All of Catskill
Development's rights under these agreements were transferred to us in our recent
consolidation. The principal agreements include: (i) a Land Purchase Agreement,
(ii) a Gaming Facility Management Agreement, (iii) a Gaming Facility Development
and Construction Agreement and (iv) a Special Letter Agreement.
o Under the Land Purchase Agreement, Catskill Development has
agreed to convey fee simple title to approximately 29 acres of
land adjacent to Monticello Raceway to the United States, in
trust, for the benefit of the Cayuga Nation of New York, in
exchange for $10,000,000 to be paid by the Cayuga Catskill Gaming
Authority.
o Under the Gaming Facility Management Agreement, the Cayuga
Catskill Gaming Authority has agreed to retain MCM to manage the
development of the proposed tribal gaming facility for a monthly
management fee of 35% of the facility's net revenues, as
determined in accordance with the rules prescribed by the
National Indian Gaming Commission.
o Under the Gaming Facility Development and Construction Agreement,
the Cayuga Catskill Gaming Authority has agreed to appoint MRD as
its agent with the exclusive right to design, engineer, develop,
construct, and furnish the proposed tribal gaming facility until
the expiration or termination of the Gaming Facility Management
Agreement. For these services, MRD is to be paid a fee equal to
5% of the total project costs, which costs may not exceed
$505,000,000.
o Under the Special Letter Agreement, we and the Cayuga Nation of
New York have agreed to work exclusively with each other to
develop the proposed tribal gaming facility and to issue to the
Cayuga Nation of New York 300,000 shares of our common stock,
vesting over a twelve month period, as consideration for this
exclusive arrangement. This letter agreement also obligates us to
fund the Cayuga Nation of New York's development costs with
respect to the proposed tribal gaming facility and for the Cayuga
Nation of New York to participate with us and our affiliates in
the ownership of a to-be-developed hotel that will be designated
as the gaming facility's preferred provider. The letter agreement
further provides for a reciprocal ten-year option to acquire up
to a 33.33% ownership interest in other lodging, entertainment,
sports and/or retail facilities which may be developed or
operated within a 15 mile radius of the gaming facility.
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In order for both of MCM and MRD to carry out their obligations under
these agreements, we will likely need to raise significant financing from
outside investors. However, such financing is not likely to be available on
reasonable terms, or at all, until the Gaming Facility Management Agreement has
been approved by the National Indian Gaming Commission and the Land Purchase
Agreement has been approved by the Bureau of Indian Affairs. Specifically, the
Indian Gaming Regulatory Act requires that all agreements relating to the
management of tribal casinos first be approved by the National Indian Gaming
Commission before they can become effective. In addition, the Indian Gaming
Regulatory Act further requires that the Bureau of Indian Affairs pre-approve
all arrangements to transfer land to the United States in trust for a Native
American tribe, as is being proposed in the Land Purchase Agreement. Obtaining
such approvals, however, can take years and no assurance can be given that these
approvals will be obtained. While we expect these agreements will receive an
expedited review from the National Indian Gaming Commission and Bureau of Indian
Affairs, as the Bureau of Indian Affairs has previously approved a similar
arrangement with respect to the same site, prompt approval cannot be assured.
Moreover, the ability to proceed after receipt of these regulatory approvals
will be subject to current market conditions and the fact that neither we nor
any of our partners have had significant casino gaming experience. As a result,
we can provide no assurance that we will ever be able to secure these needed
funds on reasonable terms or at all.
Our ability to participate in New York's VLT program or to help
develop and manage a Native American casino in conjunction with the Cayuga
Nation of New York could also be hampered by the outcome of two pending lawsuits
that seek to enjoin the State of New York from proceeding with the VLT program
or permitting the construction of any new Native American casinos within the
State of New York's borders. While the trial court recently dismissed both of
these cases, the plaintiffs have filed appeals which are currently pending.
Should an appellate court overrule the trial court and reinstate these lawsuits,
and should the plaintiffs ultimately prevail on all or part of their claims, our
business strategy could be seriously adversely affected.
THE OFFERING
This prospectus relates to the offer and sale, from time to time, of
up to 4,300,000 shares of our common stock by the selling stockholders listed
below. The shares of common stock being offered under this prospectus were
acquired from us by the selling stockholders pursuant to a private placement and
in the case of Jefferies & Company, Inc., upon the exercise of warrants. We
agreed to register the resale of such common stock with the Securities and
Exchange Commission.
Our registration of the resale of our common stock does not
necessarily mean that all or any portion of such common stock will be offered
for resale by the selling stockholders. We will not receive any proceeds from
the sale of our common stock under this prospectus, but we may receive proceeds
from the exercise of warrants held by Jefferies & Company, Inc., one of the
selling stockholders. We will apply such proceeds, if any, toward general
corporate purposes. We have agreed to bear the expenses of registering the
shares under all federal and state securities laws.
RISK FACTORS
AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. THE
RISK FACTORS LISTED BELOW ARE THOSE THAT WE CONSIDER TO BE MATERIAL TO AN
INVESTMENT IN OUR COMMON STOCK AND THOSE WHICH, IF REALIZED, COULD HAVE MATERIAL
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ADVERSE EFFECTS ON OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS AS
SPECIFICALLY DISCUSSED BELOW. IF SUCH AN ADVERSE EVENT OCCURS , THE TRADING
PRICE OF OUR COMMON STOCK COULD DECLINE, AND YOU COULD LOSE ALL OR PART OF YOUR
INVESTMENT. BEFORE YOU INVEST IN OUR COMMON STOCK, YOU SHOULD BE AWARE OF
VARIOUS RISKS, INCLUDING THOSE DESCRIBED BELOW. YOU SHOULD CAREFULLY CONSIDER
THESE RISK FACTORS, TOGETHER WITH ALL OF THE OTHER INFORMATION INCLUDED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, BEFORE YOU DECIDE WHETHER TO
PURCHASE OUR COMMON STOCK. THIS SECTION INCLUDES OR REFERS TO CERTAIN
FORWARD-LOOKING STATEMENTS. YOU SHOULD REFER TO THE EXPLANATION OF THE
QUALIFICATIONS AND LIMITATIONS ON SUCH FORWARD-LOOKING STATEMENTS DISCUSSED ON
PAGE 13.
AS A HOLDING COMPANY, EMPIRE RESORTS IS DEPENDENT ON THE OPERATIONS OF MRMI,
MCM, MRD AND MOHAWK MANAGEMENT, AND THEIR ABILITY TO PAY DIVIDENDS OR MAKE
DISTRIBUTIONS, IN ORDER TO GENERATE INTERNAL CASH FLOW.
Empire Resorts is a holding company, owning all the capital stock or
membership interests, as the case may be, of MRMI, MCM, MRD and Mohawk
Management. Empire Resorts is therefore dependent on these companies to pay
dividends or make distributions in order to generate internal cash flow and to
satisfy its obligations. There can be no assurance, however, that these
subsidiaries will generate enough revenue to pay cash dividends or make cash
distributions. In addition, these subsidiaries may enter into contracts that
limit or prohibit their ability to pay dividends or make distributions.
THE ABILITY OF EMPIRE RESORTS TO SUCCESSFULLY MANAGE AND DEVELOP A NATIVE
AMERICAN CASINO IS UNCERTAIN GIVEN EMPIRE RESORTS' LACK OF EXPERIENCE WITH
NATIVE AMERICAN CASINOS.
Empire Resorts has no experience in managing or developing Native
American casinos. Native American casinos are unique gaming ventures that
require highly skilled and knowledgeable managers given the complexity of
regulation governing their operation. In addition, as the respective interests
of the Native American tribe and the casino's management company are not always
aligned, avoiding disputes can sometimes prove difficult. As a result of these
special features, several companies with gaming experience that have tried to
become involved in the management and/or development of Native American casinos
have been unsuccessful. No assurance can be given that Empire Resorts, given its
lack of Native American gaming experience, will be able to avoid the pitfalls
that have befallen other companies in order to create a successful gaming
enterprise in conjunction with the Cayuga Nation of New York.
GENERAL ECONOMIC CONDITIONS MAY ADVERSELY AFFECT OUR RESULTS.
The business operations of MRMI are affected by economic conditions. A
recession or downturn in the general economy, or in the Catskill's region, could
result in fewer customers visiting Monticello Raceway or wagering on its races
at an off-track location, which would consequently adversely affect our results
as well.
THE CONTINUING DECLINE IN THE POPULARITY OF HORSE RACING AND INCREASING
COMPETITION IN SIMULCASTING COULD ADVERSELY IMPACT THE BUSINESS OF THE
RACETRACK.
There has been a general decline in the number of people attending and
wagering at live horse races at North American racetracks due to a number of
factors, including increased competition from other forms of gaming,
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unwillingness of customers to travel a significant distance to racetracks and
the increasing availability of off-track wagering. The declining attendance at
live horse racing events has prompted racetracks to rely increasingly on
revenues from inter-track, off-track and account wagering markets. The
industry-wide focus on inter-track, off-track and account wagering markets has
increased competition among racetracks for outlets to simulcast their live
races. A continued decrease in attendance at live events and in on-track
wagering, as well as increased competition in the inter-track, off-track and
account wagering markets, could lead to a decrease in the amount wagered at
Monticello Raceway. The Company's business plan anticipates the possibility of
Monticello Raceway attracting new customers to its racetrack wagering operations
through potential casino development or video lottery operations in order to
offset the general decline in raceway attendance. However, even if the numerous
arrangements, approvals and legislative changes necessary for casino development
or video lottery operations occur, Monticello Raceway may not be able to
maintain profitable operations. Public tastes are unpredictable and subject to
change. Any decline in interest in horse racing or any change in public tastes
may adversely affect Monticello Raceway's revenues and, therefore, limit its
ability to make a positive contribution to our results.
GAMING ACTIVITIES ARE DEPENDENT ON GOVERNMENTAL REGULATION AND APPROVALS.
CHANGES IN SUCH REGULATION OR THE FAILURE TO OBTAIN OR MAINTAIN SUCH APPROVALS
COULD ADVERSELY AFFECT US.
The current or future gaming operations of the Company are contingent
upon continued governmental approval of these operations as forms of legalized
gaming and are subject to extensive governmental regulation and could be
subjected at any time to additional or more restrictive regulation, or banned
entirely. We may be unable to obtain, maintain or renew all governmental
licenses, registrations, permits and approvals necessary for the operation of
our pari-mutuel wagering and other gaming facilities. Licenses to conduct live
horse racing and simulcast wagering by the Company must be obtained annually
from New York State's regulatory authority. A significant change to current
racing law, or the loss, or non-renewal, of licenses, registrations, permits or
approvals may materially impact on our revenue share allocations, limit the
number of races it can conduct or the form or types of pari-mutuel wagering it
offers, and could have a material adverse effect on its business. In addition,
we currently devote significant financial and management resources to complying
with the various governmental regulations to which its operations are subject.
Any significant increase in governmental regulation would increase the amount of
its resources devoted to governmental compliance, could substantially restrict
its business, and could consequently materially adversely affect our results.
THE GAMING INDUSTRY IN THE NORTHEASTERN UNITED STATES IS HIGHLY COMPETITIVE,
WITH MANY OF OUR COMPETITORS BETTER KNOWN AND MORE WELL FINANCED THAN US.
The gaming industry in the Northeastern United Stated is highly
competitive and increasingly run by multinational corporations that enjoy
widespread name recognition, established brand loyalty, decades of casino
operation experience and a diverse portfolio of gaming assets. This is
particularly true in Atlantic City. In contrast, the Company has limited
financial resources and is currently limited to the operation of a harness horse
racetrack in Monticello, New York. Moreover, even if we are successful in
installing video lottery terminals at Monticello Raceway and/or developing a
Native American casino on our property, we would still face competitive
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disadvantages if Caesar's Entertainment Corporation, the world's largest gaming
conglomerate, and/or Trading Cove Associates, the developers of the hugely
successful Mohegan Sun casino in Connecticut, are successful on building a
Native American casino on neighboring properties.
WE, AND CERTAIN OF OUR AFFILIATES, ARE REQUIRED TO BE APPROVED BY VARIOUS
GOVERNMENTAL AGENCIES IN ORDER TO OWN AN INTEREST, OR PARTICIPATE IN, GAMING
ACTIVITIES.
As part of gaming regulation, we and our affiliates are generally
required to be licensed or otherwise approved in each jurisdiction, which
generally involves a determination of suitability with respect to us and our
affiliates, and our and their officers, directors and significant investors. For
example, the New York Racing & Wagering Board upon a determination that it is
inconsistent with the public interest, convenience or necessity or with the best
interests or racing generally that any person continue to be a shareholder (of
record or beneficially) in any entity that is licensed to engage in racing
activities or that owns 25% or more of such licensed entity, may direct such
shareholder to dispose of its interest in such entity.
IF WE DO NOT MEET CERTAIN REGULATORY SUITABILITY REQUIREMENTS, WE MAY BE FORCED
TO SELL OUR OWNERSHIP INTEREST IN CERTAIN GAMING ACTIVITIES AT A DISCOUNT.
The company is required to be licensed or otherwise approved in each
jurisdiction where a gaming entity in which it has a significant ownership
interest operates. Obtaining such a license normally involves receiving a
determination of "suitability." Consequently, should we ever be found to be
unsuitable by the State of New York to participate in gaming operations, we
would be forced to liquidate all of its interests in MRMI, MCM and MRD in a
prescribed period of time, as each of these entities is either involved in, or
plans to be involved in, gaming activities in the State of New York. Moreover,
should we ever be ordered by the State of New York to sell all of its interests
in MRMI, MCM and MRD within a relatively short period of time, we would likely
be forced to sell these interests at a discount, thus causing the value of its
stock to diminish.
SEVERAL OF EMPIRE RESORTS' FORMER OFFICERS AND DIRECTORS HAVE BEEN INDICTED ON
FRAUD CHARGES, AND EMPIRE RESORTS' SUITABILITY DETERMINATION TO PARTICIPATE IN
GAMING ACTIVITIES COULD ACCORDINGLY BE ADVERSELY AFFECTED.
During 2002, certain affiliates of The Bryanston Group, our former
largest stockholder, and six of our former officers and directors were indicted
for various counts of tax and bank fraud. Moreover, on September 5, 2003, one of
these former directors who is also an affiliate of The Bryanston Group, Brett
Tollman, pleaded guilty to felony tax fraud. In December 2002, we entered into
an agreement with The Bryanston Group and certain of these individuals pursuant
to which we acquired a three year option to repurchase most of their interests
in the company. This option was exercised on January 9, 2004. While none of the
acts these individuals have been charged with relate to their former positions
with or ownership interests in Empire Resorts, there can be no assurance that
none of the various governmental agencies that now, or in the future may,
regulate and license our gaming related activities will factor in these
indictments in evaluating our suitability. Should a regulatory agency fail to
acknowledge that these indictments are not related to our operations, we could
lose our gaming licenses or be forced to liquidate certain or all of our gaming
interests.
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AS A RESULT OF THE RECENT CONSOLIDATION TRANSACTION THE COMPANY REDEEMED
2,392,857 SHARES OF ITS COMMON STOCK, CAUSING THE ASSUMPTION OF LIABILITIES.
One of the conditions to the closing of our recent consolidation was
to redeem from The Bryanston Group and Beatrice Tollman an aggregate of
2,392,857 shares of common stock at $2.12 per share. The total cost of this
redemption was $5,072,284, which Empire Resorts paid by issuing a note. The
terms of this note require approximately 13% of the principal to be paid on the
first anniversary of issuance and for the whole note to be repaid within three
years. No assurance can be given that Empire Resorts will have enough revenue or
cash on hand to repay this indebtedness when it becomes due.
AS A RESULT OF THE RECENT CONSOLIDATION TRANSACTION, EMPIRE RESORTS' USE FOR
FEDERAL INCOME TAX PURPOSES OF ITS ACCUMULATED NET OPERATING LOSSES TO OFFSET
FUTURE INCOME WILL BE LIMITED.
As of September 30, 2003, the Company had net operating loss
carryforwards of approximately $59,000,000 set to expire between 2008 and 2022.
Our recent consolidation, however, triggered certain provisions of the Internal
Revenue Code that will limit the future use of the Company's' net operating loss
carryforwards to offset its future federal taxable income. Generally speaking,
following the consolidation, we will only be permitted to use that portion of
our net operating loss carryforwards per year (subject to certain carryforward
rules) equal to the fair market value of our stock immediately prior to the
consolidation, multiplied by the federal long-term tax exempt rate on such date
(currently 4.58% for the month of February, 2004).
OUR BUSINESS PLAN INVOLVES ENTERING INTO AN AGREEMENT WITH A NATIVE AMERICAN
TRIBE FOR THE PURPOSE OF JOINTLY DEVELOPING A CASINO IN MONTICELLO, NEW YORK.
THE ENFORCEMENT OF CONTRACTUAL RIGHTS AGAINST NATIVE AMERICAN TRIBES, HOWEVER,
IS DIFFICULT.
Federally recognized Native American tribes are independent
governments, subordinate to the United States, with sovereign powers, except as
those powers may have been limited by treaty or the United States Congress. Such
tribes maintain their own governmental systems and often their own judicial
systems and have the right to tax, and to require licenses and to impose other
forms of regulation and regulatory fees, on persons and businesses operating on
their lands. As sovereign nations, federally recognized Native American tribes
are generally subject only to federal regulation. States do not have the
authority to regulate them, unless such authority has been specifically granted
by Congress, and state laws generally do not directly apply to them and to
activities taking place on their lands, unless they have a specific agreement or
compact with the state or federal government allowing for the application of
state law. Any contract we enter into with a federally recognized Native
American tribe or nation to jointly develop a casino will likely provide that
the law of the State of New York will be the governing law of such contract. We
cannot assure you, however, that these choice of law clauses would be
enforceable, leading to uncertain interpretation of our rights and remedies
under such contracts.
Federally recognized Native American tribes also generally enjoy
sovereign immunity from suit similar to that of the states and the United States
federal government. In order to sue a Native American tribe (or an agency or
instrumentality of a Native American tribe), the Native American tribe must have
effectively waived its sovereign immunity with respect to the matter in dispute.
There can be no assurance that any Native American tribe we jointly develop a
casino with will be willing to waive its rights to sovereign immunity, thus
undermining our ability to enforce our rights under any contract with such
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tribe. Moreover, even if a Native American tribe effectively waives its
sovereign immunity, there exists an issue as to the forum in which a lawsuit can
be brought against the tribe. Federal courts are courts of limited jurisdiction
and generally do not have jurisdiction to hear civil cases relating to matters
concerning Native American lands or the internal affairs of Native American
governments. Federal courts may have jurisdiction if a federal question is
raised by the lawsuit, but that is unlikely in a typical contract dispute.
Diversity of citizenship, another common basis for federal court jurisdiction,
is not generally present in a suit against a tribe because a Native American
tribe is not considered a citizen of any state. Accordingly, in most commercial
disputes with tribes, the jurisdiction of the federal courts, may be difficult
or impossible to obtain.
MCM AND MRD HAVE ENTERED INTO AGREEMENTS WITH THE CAYUGA NATION OF NEW YORK
WHICH MAY NOT BE FINANCEABLE UNTIL SOME OF THEM ARE APPROVED BY THE NATIONAL
INDIAN GAMING COMMISSION AND/OR THE BUREAU OF INDIAN AFFAIRS, A PROCESS THAT
COULD TAKE YEARS.
MCM and MRD have entered into a management and development agreement
with the Cayuga Nation of New York, giving MCM and MRD exclusive management and
development rights over any gaming enterprise on 29 acres of land adjacent to
Monticello Raceway that is developed by the Cayuga Nation of New York. In order
for MCM and MRD to carry out their obligations under these agreements, Empire
Resorts will likely need to raise financing from outside investors. However,
such financing is not likely to be available on reasonable terms, or at all,
until the management agreement has been approved by the National Indian Gaming
Commission and the Bureau of Indian Affairs has approved the transfer of those
29 acres of land to the United States of America in trust for the Cayuga Nation
of New York. Obtaining such approvals, however, can take several years and no
assurance can be given that these approvals will be obtained at all. While
Empire Resorts expects these agreements to receive an expedited review from the
National Indian Gaming Commission and Bureau of Indian Affairs, as the Bureau of
Indian Affairs has previously approved a similar arrangement with respect to the
same site, prompt approval cannot be assured.
CATSKILL DEVELOPMENT AND/OR MRMI MAY NOT BE ABLE TO TRANSFER LAND TO THE UNITED
STATES OF AMERICA IN TRUST FOR THE CAYUGA NATION OF NEW YORK FOR THE PURPOSE OF
DEVELOPING A NATIVE AMERICAN CASINO.
The Indian Gaming Regulatory Act provides that all "off-reservation"
gambling projects on lands to be transferred and held in trust by the United
States of America for the benefit of a Native American tribe must be expressly
authorized by the Bureau of Indian Affairs. Specifically, the statute states
that gaming may not be conducted on lands acquired by the United States of
America in trust for the benefit of a Native American tribe after October 17,
1988, unless the Bureau of Indian Affairs, after consultation with the tribe and
appropriate state and local officials, determines that a gaming establishment on
newly acquired lands would be in the best interest of the tribe and its members,
would not be detrimental to the surrounding community, and the governor of the
state in which the gaming activity is to be conducted concurs with the Bureau of
Indian Affair's determination. While in 2000, the Bureau of Indian Affairs
approved an application to transfer the same 29 acres of land subject to the
Land Purchase Agreement to the United States of America in trust for the benefit
of the St. Regis Mohawk Tribe, no assurance can be given that the Bureau of
Indian Affairs will again approve such a transfer. Absent this approval, it
9
would be very difficult for Empire Resorts to execute its current business plan
of jointly developing a Native American casino with the Cayuga Nation of New
York.
PENDING LAWSUITS COULD THREATEN THE VIABILITY OF OUR BUSINESS PLAN.
Empire Resorts' ability to help develop and manage a Native American
casino in conjunction with the Cayuga Nation of New York could be hampered by
the outcome of two pending lawsuits that seek to enjoin the State of New York
from permitting the construction of any new Native American casinos within the
State of New York's borders. While the trial court recently dismissed both of
these cases, the plaintiffs have appealed this decision. Should an appellate
court overrule the trial court and reinstate these lawsuits, and should the
plaintiffs ultimately prevail, Empire Resorts' business would be restricted to
the operation of Monticello Raceway and video lottery terminals. Moreover, a
reinstatement of these lawsuits, even prior to a definitive ruling on the merits
of the cases, would hamper fundraising efforts and adversely affect the
implementation of Empire Resorts' business plan, as the Cayuga Nation of New
York and investors might abandon the Native American casino project or be
reluctant to invest given the uncertainty that such a holding would create.
CERTAIN STOCKHOLDERS OF THE COMPANY MAY BE ENTITLED TO CERTAIN RESCISSION
RIGHTS.
There is a possibility that the company may have offered and sold
certain shares of common stock in violation of Section 5 of the Securities Act
of 1933, as amended. As a result, the purchasers of such shares may be entitled
to a number of remedies, including a one year rescission right with respect to
any shares of common stock which have been improperly sold to them.
Specifically, the transactions in question relate to the sale of 579,149 shares
of common stock from April 15, 2003 through September 2003, that had an
aggregate purchase price of $4,632,649. Such purchasers could be entitled to
have the aggregate purchase price of such shares refunded by Empire Resorts,
plus interest. Empire Resorts cannot assure investors that it has, or will be
able to obtain, capital sufficient to fund any such repurchases, if required.
Currently, Empire Resorts has reported this risk of rescission as a
contingent liability in the notes to its financial statement. However, if it
becomes likely that a rescission offer will have to be made, Empire Resorts will
have to adjust its financial statements to reclassify up to $4,632,649 from
stockholders' equity to a liability.
WE DEPEND ON OUR KEY PERSONNEL AND THE LOSS OF THEIR SERVICES WOULD ADVERSELY
AFFECT OUR OPERATIONS.
If we are unable to maintain our key personnel and attract new
employees, the execution of our business strategy may be hindered and our growth
limited. We believe that our success is largely dependent on the continued
employment of our senior management and other key personnel. If one or more of
these individuals were unable or unwilling to continue in their present
positions, our business could be seriously harmed.
FUTURE SALES OF OUR COMMON STOCK MAY ADVERSELY AFFECT ITS PRICE.
Recently 18,219,075 shares of our common stock were issued pursuant to
our consolidation with Catskill Development; 204,965 of such shares may be
resold in the public markets without restriction. 18,014,110 of those shares may
be sold in the public markets pursuant to volume restrictions of Rule 144 of the
10
Rules and Regulations of the Securities Act of 1933, as amended. In addition, we
are obligated to issue an additional 100,000 shares of common stock to the
Cayuga Nation of New York under the Special Letter Agreement discussed above. If
the holders of these shares were to attempt to sell a substantial amount of
their holdings at once, the market price of our common stock would likely
decline. We also have outstanding options to purchase an aggregate of 821,528
shares of common stock at an average exercise price of $2.66 per share. As the
exercise price for many of these options is well below the current market price
of our common stock, these options are likely to be exercised, causing existing
stockholders to experience substantial dilution, and, most likely, a
consequential drop in the common stock's market price. Moreover, the perceived
risk of this potential dilution could cause stockholders to attempt to sell
their shares and investors to "short" the stock, a practice in which an investor
sells shares that he or she does not own at prevailing market prices, hoping to
purchase shares later at a lower price to cover the sale. As each of these
events would cause the number of shares of our common stock being offered for
sale to increase, the common stock's market price would likely further decline.
All of these events could combine to make it very difficult for us to sell
equity or equity-related securities in the future at a time and price that we
deem appropriate.
THE MARKET PRICE OF OUR COMMON STOCK IS VOLATILE, LEADING TO THE POSSIBILITY OF
ITS VALUE BEING DEPRESSED AT A TIME WHEN STOCKHOLDERS WANT TO SELL THEIR
HOLDINGS.
The market price of our common stock has in the past been, and may in
the future continue to be, volatile. For instance, between January 1, 2002 and
February 12, 2004, the closing price of our common stock has ranged between $.95
and $18.05. A variety of events may cause the market price of our common stock
to fluctuate significantly, including but not necessarily limited to:
o quarter to quarter variations in operating results;
o adverse news announcements; and
o market conditions for the gaming industry.
In addition, the stock market in recent years has experienced
significant price and volume fluctuations for reasons unrelated to operating
performance. These market fluctuations may adversely affect the price of our
common stock at a time when an investor wants to sell its interest in us.
CERTAIN PROVISIONS OF EMPIRE RESORTS' CERTIFICATE OF INCORPORATION AND BYLAWS
DISCOURAGE UNSOLICITED TAKEOVER PROPOSALS AND COULD PREVENT YOU FROM REALIZING A
PREMIUM RETURN ON YOUR INVESTMENT IN EMPIRE RESORTS' COMMON STOCK.
Concurrently with the closing of the consolidation, Empire Resorts
amended its certificate of incorporation and bylaws in order to divide its board
of directors into three classes of directors, with each class constituting
one-third of the total number of directors and the members of each class serving
staggered three-year terms. The classification of the board of directors will
make it more difficult for stockholders to change the composition of the board
of directors because only a minority of the directors can be elected at once.
The classification provisions could also discourage a third party from
accumulating Empire Resorts' stock or attempting to obtain control of Empire
11
Resorts, even though this attempt might be beneficial to Empire Resorts and
some, or a majority, of its stockholders. Accordingly, under certain
circumstances Empire Resorts' stockholders could be deprived of opportunities to
sell their shares of common stock at a higher price than might otherwise be
available.
In addition, pursuant to Empire Resorts' certificate of incorporation,
Empire Resorts' board of directors has the authority, without further action by
the stockholders, to issue up to 3,269,304 shares of preferred stock on such
terms and with such rights, preferences and designations, including, without
limitation, restricting dividends on Empire Resorts' common stock, dilution of
the common stock's voting power and impairing the liquidation rights of the
holders of Empire Resorts' common stock, as its board of directors may
determine. Issuance of such preferred stock, depending upon its rights,
preferences and designations may also have the effect of delaying, deterring or
preventing a change in control.
OUR LARGE AMOUNT OF UNISSUED PREFERRED STOCK MAY DETER POTENTIAL ACQUIRERS.
Our Board of Directors has the authority, without further action by
the stockholders, to issue up to 3,269,304 shares of preferred stock on such
terms and with such rights, preferences and designations, including, without
limitation restricting dividends on our common stock, dilution of the common
stock's voting power and impairing the liquidation rights of the holders of our
common stock, as the Board may determine without any vote of the stockholders.
Issuance of such preferred stock, depending upon the rights, preferences and
designations thereof may have the effect of delaying, deterring or preventing a
change in control. In addition, certain "anti-takeover" provisions of the
Delaware General Corporation Law, among other things, may restrict the ability
of stockholders to authorize a merger, business combination or change of
control. Failure to consummate such a proposed merger, business combination or
change in control could result in investors missing an opportunity to sell their
interests in us at a significant premium over the market price.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-3 with the Securities
and Exchange Commission for the resale of the common stock being offered under
this prospectus. This prospectus does not contain all the information set forth
in the registration statement. You should refer to the registration statement
and its exhibits for additional information. Whenever we make references in this
prospectus to any of our contracts, agreements or other documents, the
references are not necessarily complete and you should refer to the exhibits
attached to the registration statement for the copies of the actual contract,
agreement or other document.
You should rely only on the information and representations provided
or incorporated by reference in this prospectus or any related supplement. We
have not authorized anyone else to provide you with different information. The
selling stockholders will not make an offer to sell these shares in any state
where the offer is not permitted. You should not assume that the information in
this prospectus or any supplement is accurate as of any date other than the date
on the front of each such document.
The Securities and Exchange Commission maintains an Internet site at
http://www.sec.gov, which contains reports, proxy and information statements,
and other information regarding us. You may also read and copy any document we
12
file with the Securities and Exchange Commission at its Public Reference Room,
450 Fifth Street, N.W., Washington, D.C. 20549. Please call the Securities and
Exchange Commission at 1-800-SEC-0330 for further information on the operation
of the Public Reference Room.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated by reference into this
prospectus contain forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended, that are not historical facts but rather are
based on current expectations, estimates and projections about our business and
industry, our beliefs and assumptions. Words such as "anticipates", "expects",
"intends", "plans", "believes", "seeks", "estimates" and variations of these
words and similar expressions are intended to identify forward-looking
statements. These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and other factors, some of which are
beyond our control, are difficult to predict and could cause actual results to
differ materially from those expressed or forecasted in the forward-looking
statements. These risks and uncertainties include those described in "Risk
Factors" beginning on page 4 and elsewhere in this prospectus and documents
incorporated by reference into this prospectus. You are cautioned not to place
undue reliance on these forward-looking statements, which reflect our
management's view only as of the date of this prospectus or as of the date of
any document incorporated by reference into this prospectus. We undertake no
obligation to update these statements or publicly release the results of any
revisions to the forward-looking statements that we may make to reflect events
or circumstances after the date of this prospectus or the date of any document
incorporated into this prospectus or to reflect the occurrence of unanticipated
events.
INCORPORATION BY REFERENCE
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with them, which means that we can disclose
important information to you by referring to those documents. The information we
incorporate by reference is considered to be a part of this prospectus and
information that we file later with the SEC will automatically update and
replace this information. We incorporate by reference the documents listed below
and any future filings we make with the Securities and Exchange Commission under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as
amended prior to the termination of this offering:
(1) Our Amendment No. 1 to Quarterly Report on Form 10-QSB for the fiscal
quarter ended September 30, 2003;
(2) Our Quarterly Report on Form 10-QSB for the fiscal quarter ended September
30, 2003;
(3) Our Quarterly Report on Form 10-QSB for the fiscal quarter ended June 30,
2003;
13
(4) Our Amendment No. 1 to Quarterly Report on Form 10-QSB for the fiscal
quarter ended March 31, 2003;
(5) Our Quarterly Report on Form 10-QSB for the fiscal quarter ended March 31,
2003;
(6) Our Amendment No. 1 to our Annual Report on Form 10-KSB for the fiscal year
ended December 31, 2002;
(7) Our Annual Report on Form 10-KSB for the fiscal year ended December 31,
2002;
(8) Our Current Report on Form 8-K filed on February 2, 2004;
(9) Our Current Report on Form 8-K filed on January 15, 2004;
(10) Our Current Report on Form 8-K filed on January 13, 2004;
(11) Our Current Report on Form 8-K/A filed on November 3, 2003;
(12) Our Current Report on Form 8-K filed on October 31, 2003;
(13) Our Current Report on Form 8-K filed on October 8, 2003;
(14) Our Current Report on Form 8-K filed on July 30, 2003;
(15) Our Current Report on Form 8-K filed on July 10, 2003;
(16) Our Current Report on Form 8-K filed on June 24, 2003;
(17) Our Current Report on Form 8-K filed on May 16, 2003;
(18) Our Current Report on Form 8-K filed on April 21, 2003;
(19) Our Current Report on Form 8-K filed on April 14, 2003;
(20) Our Current Report on Form 8-K filed on April 11, 2003;
(21) Our Current Report on Form 8-K filed on April 7, 2003;
(22) Our Current Report on Form 8-K filed on March 24, 2003;
(23) Our Current Report on Form 8-K filed on March 18, 2003;
(24) Our Current Report on Form 8-K/A filed on February 21, 2003;
(25) Our Current Report on Form 8-K filed on February 21, 2003;
(26) Our Current Report on Form 8-K filed on February 13, 2003;
14
(27) Our Current Report on Form 8-K/A filed on February 10, 2003;
(28) Our Current Report on Form 8-K filed on February 4, 2003;
(29) Our Current Report on Form 8-K filed on January 17, 2003;
(30) Our Current Report on Form 8-K/A filed on January 16, 2003; and
(31) The description of our common stock contained in our Registration Statement
on Form 8-A12B, as filed with the Securities and Exchange Commission on
June 20, 2001.
You may request a copy of these filings (excluding the exhibits to
such filings which we have not specifically incorporated by reference in such
filings) at no cost, by writing or telephoning us at:
Empire Resorts, Inc.
707 Skokie Boulevard, Suite 600
Northbrook, Illinois 60062
Attention: Comptroller
(847) 418-3804
USE OF PROCEEDS
The selling stockholders will receive all the proceeds from the sale
of our common stock under this prospectus. However, we may receive proceeds from
the exercise of warrants held by Jefferies & Company, Inc., one of the selling
stockholders. We will apply such proceeds, if any, toward general corporate
purposes.
SELLING STOCKHOLDERS
The following table sets forth the name of each of the selling
stockholders, the number of shares beneficially owned by each of the selling
stockholders, the number of shares that may be offered under this prospectus and
the number of shares of common stock owned by each of the selling stockholders
after the offering is completed. None of the selling stockholders has been an
officer, director or had any material relationship with us within the past three
years.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. In computing the number of shares beneficially
owned by a person and the percentage of ownership of that person, shares of
common stock issuable on the exercise of warrants that are currently exercisable
or exercisable within 60 days of February 12, 2004 are deemed to be outstanding
and beneficially owned by the person holding the warrants, but are not treated
as outstanding for the purpose of computing the percentage ownership of any
other person.
Number of Common
Number of Shares/Percentage of
Common Shares Number of Class to Be Owned
Owned Prior to Common Shares After Completion of
Name the Offering to be Offered the Offering
---- ------------ ------------- ------------
The Lincoln Fund, LP 30,000 30,000 0/0.0%
O33 Growth Partners I, LP 248,900 248,900 0/0.0%
O33 Growth Partners II, L.P. 76,350 76,350 0/0.0%
Oyster Pond Partners, LP 54,705 54,705 0/0.0%
O33 Growth International Fund, Ltd. 120,045 120,045 0/0.0%
Ltd
The Animi Master Fund, Ltd. 300,000 300,000 0/0.0%
15
Number of Common
Number of Shares/Percentage of
Common Shares Number of Class to Be Owned
Owned Prior to Common Shares After Completion of
Name the Offering to be Offered the Offering
---- ------------ ------------- ------------
The Burroughs Wellcome Fund 66,325 66,325 0/0.0%
Marshall Small-Cap Growth Fund 229,000 229,000 0/0.0%
Stephen & Elaine Hathaway 340 340 0/0.0%
Daniel Doerr Irrevocable Trust 2,560 2,560 0/0.0%
David Doerr Irrevocable Trust 900 900 0/0.0%
Virgil & Angela Colbert 200 200 0/0.0%
University of Wisconsin-LaCrosse Foundation 675 675 0/0.0%
Crestview Capital Master, LLC 300,000 300,000 0/0.0%
PAR Investment Partners, LP 700,000 700,000 0/0.0%
Senvest Master Fund LP 45,000 45,000 0/0.0%
Senvest International LLC 45,000 45,000 0/0.0%
Perfect World Partners LLC 700,000 700,000 0/0.0%
JB Partners LP 250,000 250,000 0/0.0%
AS Capital Partners, LLC 5,000 5,000 0/0.0%
Forest Multi Strategy Master 25,000 25,000 0/0.0%
Fund SPC on behalf of its
Multi Strategy Segregated Portfolio
Presidio Partners L.P. 135,000 135,000 0/0.0%
Geary Partners L.P. 95,000 95,000 0/0.0%
Brady Retirement Fund LP 18,700 18,700 0/0.0%
Presidio Offshore Ltd. 1,300 1,300 0/0.0%
Lagunitas Partners LP 25,000 25,000 0/0.0%
Sam Berlzberg 30,000 30,000 0/0.0%
North Pole Capital Master Fund 35,000 35,000 0/0.0%
Allied Funding, Inc. 5,000 5,000 0/0.0%
RAM Trading, Ltd. 425,000 425,000 0/0.0%
JMB Capital Partners, LP 50,000 50,000 0/0.0%
Schottenfeld Qualified Associates, LP 20,000 20,000 0/0.0%
Infineon Financial Corp. 10,000 10,000 0/0.0%
Jefferies & Company, Inc. (1) 250,000 250,000 0/0.0%
(1) In connection with the private placement letter agreement with
Jefferies & Company, Inc. dated October 30, 2003, Jefferies & Company, Inc. was
issued warrants to purchase 250,000 shares of our common stock for general
financial advisory services rendered relating to the consummation of the private
placement.
Our registration of the shares included in this prospectus does not
necessarily mean that each of the selling stockholders will opt to sell any of
the shares offered hereby. The shares covered by this prospectus may be sold
from time to time by the selling stockholders so long as this prospectus remains
in effect.
The following table lists the names of the people who have voting and
investment control of the shares of our common stock for those selling
stockholders that are not individuals.
16
Name of the Entity Name of the Person
------------------ ------------------
The Lincoln Fund, LP Neil Matlins
O33 Growth Partners I, LP Lawrence C. Longo, Jr. (Voting)
Michael T. Vigo (Investment)
O33 Growth Partners II, L.P. Lawrence C. Longo, Jr. (Voting)
Michael T. Vigo (Investment)
Oyster Pond Partners, LP Lawrence C. Longo, Jr. (Voting)
Michael T. Vigo (Investment)
O33 Growth International Fund, Ltd. Lawrence C. Longo, Jr. (Voting)
Michael T. Vigo (Investment)
The Animi Master Fund, Ltd. Peter Hirsch
The Burroughs Wellcome Fund Sean McLeod, Jim Hildebrandt, Christine Mieritz
Marshall Small-Cap Growth Fund Sean McLeod, Jim Hildebrandt, Christine Mieritz
Stephen & Elaine Hathaway Sean McLeod, Jim Hildebrandt, Christine Mieritz
Daniel Doerr Irrevocable Trust Sean McLeod, Jim Hildebrandt, Christine Mieritz
David Doerr Irrevocable Trust Sean McLeod, Jim Hildebrandt, Christine Mieritz
Virgil & Angela Colbert Sean McLeod, Jim Hildebrandt, Christine Mieritz
University of Wisconsin-LaCrosse Foundation Sean McLeod, Jim Hildebrandt, Christine Mieritz
Crestview Capital Master, LLC Richard Levy, Stewart Flink
PAR Investment Partners, LP Frederick S. Downs, Jr.
Senvest Master Fund LP Richard Marshaal
Senvest International LLC Richard Marshaal
Perfect World Partners LLC David H. Brooks
JB Partners LP Jeffrey Brooks
AS Capital Partners, LLC Andrew Smukler
Forest Multi Strategy Master Fund SPC Michael A. Boyd, Jr., Stephen J. DeVoe III, David Tualis, John McDonald
on behalf of its Multi Strategy
Segregated Portfolio
Presidio Partners L.P. William J. Brady
Geary Partners L.P. William J. Brady
Brady Retirement Fund LP William J. Brady
Presidio Offshore Ltd. William J. Brady
Lagunitas Partners LP Jon D. Gruber, J. Patterson
17
North Pole Capital Master Fund Phil Schmitt
Allied Funding, Inc. Ken S. Perry
RAM Trading, Ltd. A.R. Thane Ritchie
JMB Capital Partners, LP Jonathan Brooks
Schottenfeld Qualified Associates, LP Richard Schottenfeld
Infineon Financial Corp. Edward J. Lorch
Jefferies & Company, Inc. Steve Croxton
Based on information provided by each of the selling stockholders,
Senvest Master Fund, LP, Senvest International, LLC, Schottenfeld Qualified
Associates, LP and Jefferies & Company, Inc., are the only selling stockholders
that are either broker-dealers or affiliates of broker-dealers within the
meaning of Rule 405 of the Securities Act of 1933, as amended. Each of the
selling stockholders purchased or received shares of our common stock in the
ordinary course of business and at the time of their purchase or receipt of our
common stock, none of the selling stockholders had any agreements or
understandings directly or indirectly with any person to distribute our common
stock.
PLAN OF DISTRIBUTION
The Selling Stockholders and any of their pledgees, donees, assignees
and successors-in-interest may, from time to time, sell any or all of their
shares of Common Stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. Subject to compliance with applicable law, the
Selling Stockholders may use any one or more of the following methods when
selling shares:
o ordinary brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
o an exchange distribution in accordance with the rules of the applicable
exchange;
o privately negotiated transactions;
o short sales;
o broker-dealers may agree with the Selling Stockholders to sell a specified
number of such shares at a stipulated price per share;
18
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
Broker-dealers engaged by the Selling Stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The Selling Stockholders may from time to time pledge or grant a
security interest in some or all of the Shares owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell shares of Common Stock from time to time under this
prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933 amending the list of
selling stockholders to include the pledgee, transferee or other successors in
interest as selling stockholders under this prospectus.
Upon the Company being notified in writing by a Selling Stockholder
that any material arrangement has been entered into with a broker-dealer for the
sale of Common Stock through a block trade, special offering, exchange
distribution or secondary distribution or a purchase by a broker or dealer, a
supplement to this prospectus will be filed, if required, pursuant to Rule
424(b) under the Securities Act, disclosing (i) the name of each such Selling
Stockholder and of the participating broker-dealer(s), (ii) the number of shares
involved, (iii) the price at which such the shares of Common Stock were sold,
(iv)the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not
conduct any investigation to verify the information set out or incorporated by
reference in this prospectus, and (vi) other facts material to the transaction.
In addition, upon the Company being notified in writing by a Selling Stockholder
that a donee or pledge intends to sell more than 500 shares of Common Stock, a
supplement to this prospectus will be filed if then required in accordance with
applicable securities law.
The Selling Stockholders also may transfer the shares of common stock
in other circumstances, in which case the transferees, pledgees or other
successors in interest will be the selling beneficial owners for purposes of
this prospectus.
The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. Each Selling Stockholders has
represented and warranted to the Company that it does not have any agreement or
understanding, directly or indirectly, with any person to distribute the Common
Stock.
19
The Company is required to pay all fees and expenses incident to the
registration of the shares. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
LEGAL MATTERS
The validity of the shares of common stock offered hereby have been
passed upon by Olshan Grundman Frome Rosenzweig & Wolosky LLP, Park Avenue
Tower, 65 East 55th Street, New York, New York 10022.
EXPERTS
The consolidated financial statements of Empire Resorts, Inc.
incorporated in this prospectus by reference to our Annual Report on Form 10-KSB
for the fiscal year ended December 31, 2002 have been so incorporated in
reliance on the report of Friedman Alpren & Green LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
20