Current Report Filing (8-k)

Date : 03/15/2019 @ 7:32PM
Source : Edgar (US Regulatory)
Stock : Empire Resorts, Inc. (NYNY)
Quote : 12.89  0.0 (0.00%) @ 1:00AM
Empire Resorts, Inc. share price Chart

Current Report Filing (8-k)

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or Section 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 12, 2019

 

 

EMPIRE RESORTS, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-12522   13-3714474

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

c/o Monticello Casino and Raceway, State Route 17B,

P.O. Box 5013, Monticello, NY

  12701
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (845) 807-0001

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation to the registrant under any of the following provisions:

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.

On March 12, 2019, the audit committee of the board of directors (the “Audit Committee”) and management of Empire Resorts, Inc. (“Empire” and, together with its subsidiaries, the “Company”), after discussions with Ernst & Young LLP (“E&Y”), the Company’s independent registered public accounting firm, concluded that the unaudited consolidated financial statements for the quarterly periods ended March 31, 2018, June 30, 2018, and September 30, 2018 (the “Restated Quarters”), which were issued in the Company’s previously filed Quarterly Reports on Forms 10-Q for such periods, should no longer be relied upon and have been restated in Note P to the audited financial statements contained in the Company’s Annual Report on Form 10-K (the “Form 10-K”) filed with the Securities and Exchange Commission today, March 15, 2019.

On November 1, 2014, Monticello Raceway Management, Inc. (“MRMI”), a wholly-owned subsidiary of Empire, and the Monticello Harness Horsemen’s Association (“MHHA”) entered into an agreement that governs the conduct of MRMI and MHHA relating to horseracing purse payments, the simulcasting of horse races and certain other payments (the “2014 MHHA Agreement”). Pursuant to the 2014 MHHA Agreement and that certain Securities Acquisition Agreement, dated March 3, 2014, between Empire and MHHA (the “MHHA SAA”), on March 16, 2018, Empire issued to MHHA 200,000 shares of common stock (the “MHHA Shares”), and on March 15, 2018, Empire issued to MHHA a warrant to purchase 60,000 shares of common stock at $81.50 per share (the “MHHA Warrants”). The funds generated from the sale of the MHHA Shares or the sale of any shares acquired by MHHA upon the exercise of the MHHA Warrants will be deposited into a purse account for the benefit of MHHA and its members. If, on February 8, 2025, the value of any MHHA Shares previously sold by MHHA and the fair market value of any MHHA Shares not sold by MHHA by February 8, 2025 is less than $5.5 million, then the Company agreed to deposit into the special purse account an amount equal to the difference between $5.5 million and the value of the shares of common stock sold by MHHA and not sold by MHHA.

Upon satisfaction of the conditions contained in the 2014 MHHA Agreement and the MHHA SAA, the Company issued the MHHA Shares and the MHHA Warrants on March 16, 2018 and March 15, 2018, respectively. On the date of issuance, the Company determined that the MHHA Shares had a fair value of $4.7 million, which had been recorded as a long-term asset, net of $1.4 million which was previously expensed through March 2018. In preparing its audited financial statements for the year ended December 31, 2018, the Audit Committee and management of the Company determined that based on further review of applicable technical accounting literature, the value of the MHHA Shares should be recognized as an expense upon issuance and the associated fair value of the guarantee liability of $5.5 million should be recognized as a liability classified guarantee.

The restatement of the Company’s consolidated financial statements for the Restated Quarters is set forth below in the tabular presentation.


The effect of the restatement to relevant financial line items included on the previously issued unaudited interim consolidated financial statements for the quarterly period ended March 31, 2018 was as follows:

 

     At March 31, 2018  
     As Reported     Adjustments     As Restated  
Consolidated Balance Sheet    ($ in thousands)  

Assets

  

Total current assets

   $ 39,458       —       $ 39,458  
  

 

 

   

 

 

   

 

 

 

Other assets

     3,592       (3,358     234  
  

 

 

   

 

 

   

 

 

 

Total assets

   $ 818,552     $ (3,358   $ 815,194  
  

 

 

   

 

 

   

 

 

 

Liabilities and Stockholders’ equity

      

Total current liabilities

   $ 93,299       —       $ 93,299  
  

 

 

   

 

 

   

 

 

 

Other long-term liabilities

     7,905       1,964       9,869  
  

 

 

   

 

 

   

 

 

 

Total liabilities

     564,251       1,964       566,215  
  

 

 

   

 

 

   

 

 

 

Stockholders’ equity:

      

Accumulated deficit

     (322,029     (5,322     (327,351
  

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     254,301       (5,322     248,979  
  

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 818,552     $ (3,358   $ 815,194  
  

 

 

   

 

 

   

 

 

 

 

     For the three months ended March 31, 2018  
     As Reported     Adjustments     As Restated  
Consolidated Statement of Operations and Comprehensive Loss    ($ in thousands)  

Net revenues:

   $ 33,522       —       $ 33,522  

Costs and expenses:

      

Selling, general and administrative

     8,084       5,097       13,181  
  

 

 

   

 

 

   

 

 

 

Total costs and expenses

     52,413       5,097       57,510  
  

 

 

   

 

 

   

 

 

 

Loss from operations

     (18,891     (5,097     (23,988

Other income (expense)

           (225     (225
  

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (20,911     (5,322     (26,233
  

 

 

   

 

 

   

 

 

 

Net loss

     (20,911     (5,322     (26,233
  

 

 

   

 

 

   

 

 

 

Net loss applicable to common stockholders

   $ (20,943   $ (5,322   $ (26,265
  

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding

      

Basic

     32,538       —         32,538  

Diluted

     32,538       —         32,538  

Loss per common share

      

Basic

   $ (0.64   $ (0.16   $ (0.80

Diluted

   $ (0.64   $ (0.16   $ (0.80

Comprehensive loss:

      

Net loss

   $ (20,911   $ (5,322   $ (26,233

Unrealized income on Interest Rate Cap

     115       —         115  
  

 

 

   

 

 

   

 

 

 

Comprehensive loss

   $ (20,796   $ (5,322   $ (26,118
  

 

 

   

 

 

   

 

 

 


     For the three months ended March 31, 2018  
     As Reported     Adjustments     As Restated  
Consolidated Statement of Cash Flows    ($ in thousands)  

Cash flows provided by (used in) operating activities:

      

Net loss

   $ (20,911   $ (5,322   $ (26,233

Adjustments to reconcile net loss to net cash used in operating activities:

      

Stock-based compensation

     697       5,097       5,794  

Changes in operating assets and liabilities:

      

Accrued expenses and other current liabilities

     10,174       225       10,399  
  

 

 

   

 

 

   

 

 

 

Net cash used in operating activities

     1,866       —         1,866  
  

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (1,201     —         (1,201
  

 

 

   

 

 

   

 

 

 

Cash flows provided by (used in) financing activities:

      

Net cash provided by financing activities

     10,923       —         10,923  
  

 

 

   

 

 

   

 

 

 

Net increase/(decrease) in cash, cash equivalents and restricted cash

     11,588       —         11,588  

Cash, cash equivalents and restricted cash, beginning of year

     53,055       —         53,055  
  

 

 

   

 

 

   

 

 

 

Cash, cash equivalents and restricted cash, end of year

   $ 64,643     $ —       $ 64,643  
  

 

 

   

 

 

   

 

 

 

The effect of the restatement to relevant financial line items included on the previously issued unaudited interim consolidated financial statements for the quarterly period ended June 30, 2018 was as follows:

 

     At June 30, 2018  
     As Reported     Adjustments     As Restated  
Consolidated Balance Sheet    ($ in thousands)  

Assets

  

Total current assets

   $ 29,828       —       $ 29,828  
  

 

 

   

 

 

   

 

 

 

Other assets

     3,471       (3,189     282  
  

 

 

   

 

 

   

 

 

 

Total assets

   $ 781,715     $ (3,189   $ 778,526  
  

 

 

   

 

 

   

 

 

 

Liabilities and Stockholders’ equity

      

Total current liabilities

   $ 93,817       —       $ 93,817  
  

 

 

   

 

 

   

 

 

 

Other long-term liabilities

     7,540       1,832       9,372  
  

 

 

   

 

 

   

 

 

 

Total liabilities

     564,101       1,832       565,933  
  

 

 

   

 

 

   

 

 

 

Stockholders’ equity:

      

Accumulated deficit

     (359,357     (5,021     (364,378
  

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     217,614       (5,021     212,593  
  

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 781,715     $ (3,189   $ 778,526  
  

 

 

   

 

 

   

 

 

 


     For the three months ended June 30, 2018  
     As Reported     Adjustments     As Restated  
Consolidated Statement of Operations and Comprehensive Loss          ($ in thousands)        

Net revenues:

   $ 49,136       —       $ 49,136  

Costs and expenses:

      

Selling, general and administrative

     16,949       (169     16,780  
  

 

 

   

 

 

   

 

 

 

Total costs and expenses

     71,530       (169     71,361  
  

 

 

   

 

 

   

 

 

 

Loss from operations

     (22,394     169       (22,225

Other income (expense)

     —         132       132  
  

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (37,298     301       (36,997
  

 

 

   

 

 

   

 

 

 

Net loss

     (37,298     301       (36,997
  

 

 

   

 

 

   

 

 

 

Net loss applicable to common stockholders

   $ (37,330   $ 301     $ (37,029
  

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding

      

Basic

     32,663       —         32,663  

Diluted

     32,663       —         32,663  

Loss per common share

      

Basic

   $ (1.14   $ 0.01     $ (1.13

Diluted

   $ (1.14   $ 0.01     $ (1.13

Comprehensive loss:

      

Net loss

   $ (37,298   $ 301     $ (36,997

Unrealized income on Interest Rate Cap

     72       —         72  
  

 

 

   

 

 

   

 

 

 

Comprehensive loss

   $ (37,226   $ 301     $ (36,925
  

 

 

   

 

 

   

 

 

 

 

     For the six months ended June 30, 2018  
     As Reported     Adjustments     As Restated  
Consolidated Statement of Operations and Comprehensive Loss          ($ in thousands)        

Net revenues:

   $ 82,658       —       $ 82,658  

Costs and expenses:

      

Selling, general and administrative

     25,033       4,928       29,961  
  

 

 

   

 

 

   

 

 

 

Total costs and expenses

     123,943       4,928       128,871  
  

 

 

   

 

 

   

 

 

 

Loss from operations

     (41,285     (4,928     (46,213

Other income (expense)

     —         (93     (93
  

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (58,209     (5,021     (63,230
  

 

 

   

 

 

   

 

 

 

Net loss

     (58,209     (5,021     (63,230
  

 

 

   

 

 

   

 

 

 

Net loss applicable to common stockholders

   $ (58,273   $ (5,021   $ (63,294
  

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding

      

Basic

     32,601       —         32,601  

Diluted

     32,601       —         32,601  

Loss per common share

      

Basic

   $ (1.79   $ (0.15   $ (1.94

Diluted

   $ (1.79   $ (0.15   $ (1.94

Comprehensive loss:

      

Net loss

   $ (58,209   $ (5,021   $ (63,230

Unrealized income on Interest Rate Cap

     187       —         187  
  

 

 

   

 

 

   

 

 

 

Comprehensive loss

   $ (58,022   $ (5,021   $ (63,043
  

 

 

   

 

 

   

 

 

 


     For the six months ended June 30, 2018  
     As Reported     Adjustments     As Restated  
Consolidated Statement of Cash Flows          ($ in thousands)        

Cash flows provided by (used in) operating activities:

      

Net loss

   $ (58,209   $ (5,021   $ (63,230

Adjustments to reconcile net loss to net cash used in operating activities:

      

Stock-based compensation

     1,449       4,928       6,377  

Changes in operating assets and liabilities:

      

Accrued expenses and other current liabilities

     12,996       93       13,089  
  

 

 

   

 

 

   

 

 

 

Net cash used in operating activities

     (27,624     —         (27,624
  

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (1,257     —         (1,257
  

 

 

   

 

 

   

 

 

 

Cash flows provided by (used in) financing activities:

      

Net cash provided by financing activities

     15,967       —         15,967  
  

 

 

   

 

 

   

 

 

 

Net increase/(decrease) in cash, cash equivalents and restricted cash

     (12,914     —         (12,914

Cash, cash equivalents and restricted cash, beginning of year

     53,055       —         53,055  
  

 

 

   

 

 

   

 

 

 

Cash, cash equivalents and restricted cash, end of year

   $ 40,141     $ —       $ 40,141  
  

 

 

   

 

 

   

 

 

 

The effect of the restatement to relevant financial line items on the previously issued unaudited interim consolidated financial statements for the quarterly period ended September 30, 2018 was as follows:

 

     September 30, 2018  
     As Reported     Adjustments     As Restated  
Consolidated Balance Sheet          ($ in thousands)        

Assets

      

Total current assets

   $ 37,772       —       $ 37,772  
  

 

 

   

 

 

   

 

 

 

Other assets

     3,307       (3,020     287  
  

 

 

   

 

 

   

 

 

 

Total assets

   $ 831,332     $ (3,020   $ 828,312  
  

 

 

   

 

 

   

 

 

 

Liabilities and Stockholders’ equity

      

Total current liabilities

   $ 100,199       —       $ 100,199  
  

 

 

   

 

 

   

 

 

 

Other long-term liabilities

     7,555       2,177       9,732  
  

 

 

   

 

 

   

 

 

 

Total liabilities

     646,463       2,177       648,640  
  

 

 

   

 

 

   

 

 

 

Stockholders’ equity:

      

Accumulated deficit

     (393,105     (5,197     (398,302
  

 

 

   

 

 

   

 

 

 

Total stockholders’ equity

     184,869       (5,197     179,672  
  

 

 

   

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 831,332     $ (3,020   $ 828,312  
  

 

 

   

 

 

   

 

 

 


     For the three months ended September 30, 2018  
     As Reported     Adjustments     As Restated  
Consolidated Statement of Operations and Comprehensive Loss          (dollars in thousands)        

Net revenues:

   $ 59,948       —       $ 59,948  

Costs and expenses:

      

Selling, general and administrative

     19,754       (169     19,585  
  

 

 

   

 

 

   

 

 

 

Total costs and expenses

     77,838       (169     77,669  
  

 

 

   

 

 

   

 

 

 

Loss from operations

     (17,890     169       (17,721

Other income (expense)

     —         (345     (345
  

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (33,716     (176     (33,892
  

 

 

   

 

 

   

 

 

 

Net loss

     (33,716     (176     (33,892
  

 

 

   

 

 

   

 

 

 

Net loss applicable to common stockholders

   $ (33,748   $ (176   $ (33,924
  

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding

      

Basic

     32,689       —         32,689  

Diluted

     32,689       —         32,689  

Loss per common share

      

Basic

   $ (1.03   $ (0.01   $ (1.04

Diluted

   $ (1.03   $ (0.01   $ (1.04

Comprehensive loss:

      

Net loss

   $ (33,716   $ (176   $ (33,892

Unrealized income on Interest Rate Cap

     39       —         39  
  

 

 

   

 

 

   

 

 

 

Comprehensive loss

   $ (33,677   $ (176   $ (33,853
  

 

 

   

 

 

   

 

 

 


     For the nine months ended September 30, 2018  
     As Reported     Adjustments     As Restated  
Consolidated Statement of Operations and Comprehensive Loss          ($ in thousands)        

Net revenues:

   $ 142,606       —       $ 142,606  

Costs and expenses:

      

Selling, general and administrative

     44,787       4,759       49,546  
  

 

 

   

 

 

   

 

 

 

Total costs and expenses

     201,781       4,759       206,540  
  

 

 

   

 

 

   

 

 

 

Loss from operations

     (59,175     (4,759     (63,934

Other income (expense)

     —         (438     (438
  

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (91,925     (5,197     (97,122
  

 

 

   

 

 

   

 

 

 

Net loss

     (91,925     (5,197     (97,122
  

 

 

   

 

 

   

 

 

 

Net loss applicable to common stockholders

   $ (92,021   $ (5,197   $ (97,218
  

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding

      

Basic

     32,653       —         32,653  

Diluted

     32,653       —         32,653  

Loss per common share

      

Basic

   $ (2.82   $ (0.16   $ (2.98

Diluted

   $ (2.82   $ (0.16   $ (2.98

Comprehensive loss:

      

Net loss

   $ (91,925   $ (5,197   $ (97,122

Unrealized income on Interest Rate Cap

     226       —         226  
  

 

 

   

 

 

   

 

 

 

Comprehensive loss

   $ (91,699   $ (5,197   $ (96,896
  

 

 

   

 

 

   

 

 

 

 

     For the nine months ended September 30, 2018  
     As Reported     Adjustments     As Restated  
Consolidated Statement of Cash Flows          ($ in thousands)        

Cash flows provided by (used in) operating activities:

      

Net loss

   $ (91,925   $ (5,197   $ (97,122

Adjustments to reconcile net loss to net cash used in operating activities:

      

Stock-based compensation

     2,042       4,759       6,801  

Changes in operating assets and liabilities:

      

Accrued expenses and other current liabilities

     26,087       438       26,525  
  

 

 

   

 

 

   

 

 

 

Net cash used in operating activities

     (42,335     —         (42,335
  

 

 

   

 

 

   

 

 

 

Net cash used in investing activities

     (20,252     —         (20,252
  

 

 

   

 

 

   

 

 

 

Cash flows provided by (used in) financing activities:

      

Net cash provided by financing activities

     92,602       —         92,602  
  

 

 

   

 

 

   

 

 

 

Net increase/(decrease) in cash, cash equivalents and restricted cash

     30,015       —         30,015  

Cash, cash equivalents and restricted cash, beginning of year

     53,055       —         53,055  
  

 

 

   

 

 

   

 

 

 

Cash, cash equivalents and restricted cash, end of year

   $ 83,070     $ —       $ 83,070  
  

 

 

   

 

 

   

 

 

 


Our principal executive officer and principal financial officer reevaluated the effectiveness of our disclosure controls and procedures and our internal controls over financial reporting as of March 31, 2018, June 30, 2018 and September 30, 2018. In connection with the restatement, our principal executive officer and principal financial officer have determined that a material weakness existed in the Company’s internal control over financial reporting solely with respect to the recognition of expenses associated with the Company’s issuance of the MHHA Shares on its unaudited consolidated interim financial statements. The Company’s principal executive officer and principal financial officer have also concluded that, as a result, the Company’s disclosure controls and procedures were not effective at the reasonable assurance level as of March 31, 2018, June 30, 2018 and September 30, 2018.

In 2018, in connection with the opening of Resorts World Catskills, the internal control policies and procedures of the Company were expanded to address the increased scope of the Company’s operations. To remediate the material weakness surrounding the presentation of the recognition of expenses associated with the issuance of the MHHA Shares, the Company has reviewed these internal controls and enhanced the supervisory review of accounting processes in this financial reporting area.

The Audit Committee has discussed the matters disclosed in this Item 4.02 with E&Y and the management of the Company and has authorized and directed the Company to restate the financial information for the Restated Quarters. All such corrections were properly accounted for in the Form 10-K.

This Current Report on Form 8-K may contain “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Statements preceded by, followed by, or that include the words “may,” “could,” “should,” “pro forma,” “looking forward,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” or similar expressions generally indicate a forward-looking statement. These forward-looking statements involve risks and uncertainties that are subject to change based on various important factors (some of which, in whole or in part, are beyond the Company’s control). These risks and uncertainties include, but are not limited to, the risk that additional information may arise during the course of the Company’s ongoing accounting review that would require the Company to make additional adjustments or revisions or to restate further the financial statements and other financial data for the Restated Quarters and/or additional historical periods. All forward-looking statements and information set forth herein are based on management’s current beliefs and assumptions as of the date hereof and speak only as of the date they are made. For a more complete discussion of the assumptions, risks and uncertainties related to our business, you are encouraged to review the Company’s filings with the Securities and Exchange Commission. The Company does not undertake to update any forward-looking statement whether written or oral, that may be made from time to time by the Company.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: March 15, 2019

 

EMPIRE RESORTS, INC.
By:  

/s/ Ryan Eller

  Name: Ryan Eller
  Title: President and Chief Executive Officer

Empire Resorts, Inc. (NASDAQ:NYNY)
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