SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934
|_| Preliminary Information Statement
|_| Confidential, for Use of the Commission Only
(as permitted by Rule 14c-5(d)(2))
|X| Definitive Information Statement
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DUNES HOTELS AND CASINOS, INC.
(Name of Registrant As Specified In Charter)
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Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
1) Title of each class of securities to which transaction applies:
__________________________
2) Aggregate number of securities to which transaction applies:____
__________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how it
was determined):______________________________
4) Proposed maximum aggregate value of transaction:_______________
5) Total fee paid:___________________________
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid: ____________________________________
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(3) Filing Party: ______________________________________
(4) Date Filed: _______________________________________
DUNES HOTELS AND CASINOS, INC.
46735 County Road 32B, P.O. Box 130,
Davis, California 95617
Telephone: (530) 753-4890
NOTICE OF
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 8, 2001
-----------------------------------
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED
NOT TO SEND US A PROXY.
-----------------------------------
To Shareholders:
You are cordially invited to attend the 2001 Annual Meeting of the Shareholders
of Dunes Hotels and Casinos, Inc. ("Dunes") to be held on October 8, 2001,
11:00 A.M. Central Time, at 8441 E. 32nd Street N., Suite 200, Wichita, Kansas
67226 to consider and act upon the following proposals, as described in the
accompanying Information Statement:
To elect five directors to serve until the next Annual Meeting of Shareholders
and thereafter until their successors are elected and qualified.
1. To transact such other business as may properly come before the meeting
or any adjournments thereof.
2. Only holders of stock of record at the close of business on August 17,
2001 (the "Record Date") are entitled to receive this notice and to vote
at this meeting and any adjournments thereof.
By Order of the Board of Directors
Davis, California
September 17, 2001
INFORMATION STATEMENT
INTRODUCTION
This information statement is being mailed or otherwise furnished to
shareholders of Dunes Hotels and Casinos, Inc., a New York corporation
("Dunes"), in connection with the upcoming annual meeting of its shareholders to
be held at 8441 E. 32nd Street N., Suite 200, Wichita, Kansas 67226 on October
8, 2001, 11:00 A.M. Central Time. This information statement is being first
sent to shareholders on or about September 17, 2001.
Proposals
The following proposals are being presented at the meeting (the "Proposals"):
1. To elect five directors to serve until the next Annual Meeting of
Shareholders and thereafter until their successors are elected and
qualified.
2. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Vote Required
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of common stock and preferred stock, considered as a single
class, is necessary to constitute a quorum at the Annual Meeting of
Shareholders. Each holder of common stock and preferred stock is entitled to one
vote for each share held. Voting for the election of directors is
non-cumulative, which means that a simple majority of the shares voting may
elect all of the directors. Directors will be elected from the nominees
receiving the plurality of the votes of the shares of common stock and preferred
stock present and voting together as a class at the meeting. Each share of
common stock and preferred stock which is represented, in person or by proxy, at
the meeting will be accorded one vote on each of the five director seats up for
election. The vote which is required to approve any other business as may
properly come before the meeting is the affirmative vote of the holders of a
majority of the Dunes' common stock and preferred stock voting together as a
single class.
A shareholder who is present, in person or by proxy, and who withholds his vote
in the election of directors, will be counted for purposes of determining
whether a quorum exists, but the withholding of his vote will not affect the
election of directors. A shareholder who is present, in person or by proxy, and
who abstains from voting on other proposals, will be counted for purposes of a
quorum, and the abstention will have the same effect as a vote against the
proposals. Broker non-votes will be considered shares not present and will have
no effect on the outcome of the vote. If a quorum is not present, in person or
by proxy, the meeting may adjourn from time to time until a quorum is obtained.
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
The record date for purposes of determining the number of outstanding shares of
common stock and preferred stock of the Dunes, and for determining shareholders
entitled to vote, is the close of business on August 17, 2001 (the "Record
Date"). As of the Record Date, the Dunes had outstanding 4,470,619 shares of
common stock and 5,898 shares of preferred stock. Holders of the shares have no
preemptive rights. All outstanding shares are fully paid and non-assessable.
General Financial Services directly owns 3,000,000 shares of common stock and
indirectly owns 1,004,094 shares of common stock through its wholly owned
subsidiary, GFS Acquisition Company, Inc. Steve Miller is the sole shareholder
of General Financial Services. The shares of common stock directly and
indirectly owned by General Financial Services represent over 89% of the votes
eligible to be cast at the meeting. As a result, General Financial
Services will be able to approve by itself any matters that are voted on at the
meeting. General Financial Services has indicated its intention to vote for the
election of the persons nominated for election to the Board of Directors.
PROPOSAL ONE
ELECTION OF DIRECTORS
Directors are elected by the shareholders at each Annual Meeting of Shareholders
to hold office until their respective successors are elected and qualified, and
need not be shareholders of the Dunes or residents of the State of New York.
Directors may receive compensation for their services as determined by the Board
of Directors. See "Compensation of Directors and Executive Officers." The
By-laws of the Company provide that the number of directors constituting the
entire Board shall be five. Presently, the Board consists of Steve K. Miller, D.
Cary Peaden, James R. Herfurth, James G. Steckart and Paul H. Viets. All of the
above-mentioned directors have chosen to stand for re-election and have been
nominated for re-election by the Board.
Although management of the Company expects that each of the following nominees
will be available to serve as a director, in the event that any of them should
become unavailable prior to the shareholders meeting, a replacement will be
appointed by a majority of the then-existing Board of Directors. Management has
no reason to believe that any of its nominees, if elected, will be unavailable
to serve. All nominees are expected to serve until the 2002 Annual Meeting of
Shareholders or until their successors are duly elected and qualified.
Information about each nominee is contained in the section entitled "Directors
and Executive Officers."
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information concerning the Dunes'
directors and executive officers:
Date First
Position Held with Elected or
Name Age the Dunes Appointed
---- --- ------------------ ----------
Steve K. Miller 52 Director and President April 2000
D. Cary Peaden 46 Director, Treasurer and Secretary April 2000
James Herfurth 60 Director April 2000
James G. Steckart 53 Director April 2000
Paul H. Viets 68 Director April 2000
The following is a brief account of the business experience during the past five
years of each director and executive officer of the Dunes, including principal
occupations and employment during that period and the name and principal
business of any corporation or other organization in which such occupation and
employment were carried on.
Mr. Miller was elected a Director and President of the Dunes in April 2000. Mr.
Miller has been employed by General Financial Services, Inc. since 1988 and
served as President since 1995. He earlier served as President and has
continually served as Chairman of the Board of Directors since its founding.
General Financial Services, Inc. is primarily engaged in the investment and
redevelopment of distressed real estate assets. He also owns several companies
operated in conjunction with General Financial engaged in real estate
investment, agricultural, hotel ownership and aviation. Mr. Miller is President
and owns fifty percent (50%) of the stock of Milmo, Inc. which invests in real
estate, and owns a hotel in Branson, Missouri. Prior to founding General
Financial, Mr. Miller owned and operated John Deere agricultural equipment
dealerships. Mr. Miller received his BA in Accounting and Finance from
Southwestern Oklahoma State University.
Mr. Peaden was elected a Director, Secretary and Treasurer of the Dunes in April
2000. Mr. Peaden has been special assistant to the President of Rich-Mix, Inc.,
a construction and garden materials distribution company, since 1999.
Previously, Mr. Peaden was employed by General Financial Services, Inc. from
1989 through 1999. Mr. Peaden continues to be employed by General Financial
Services on a part-time basis and has been a Vice President of General Financial
Services since 1995. Mr. Peaden attended and studied Business Administration at
Wichita State University.
2
Mr. Herfurth was elected a Director of the Dunes in April 2000. Mr. Herfurth
has practiced law in California since 1977. He is a member of the Board of
Directors of Valley Solar Systems, Inc., a corporation doing business in
energy conservation, and is the President and a Director of FCW, Inc., a
corporation engaged in the purchase of consumer loans. Mr. Herfurth owns and
operates commercial, industrial and residential properties. He is a graduate
of the College of the Sequoias and Humphreys College of Law.
Mr. Steckart was elected a Director of the Dunes in April 2000. Mr. Steckart is
currently self-employed. From January 1999 until 2001, Mr. Steckart was the
President of PXC, LLC, a Washington State based financial services company.
Prior to joining PXC, Mr. Steckart served as Chief Executive Officer and
President of Home Choice, Inc., Dallas, Texas, a publicly traded home
furnishings and electronics leasing company from May 1998 to January 1999 and
Chief Operating Officer from February 1998 to January 1999. From 1996 to October
1997, he was the President of Alameda Management Company, a business engaged in
the development, management and ownership of inn-type motels. Mr. Steckart was
employed by Advantage Companies, Inc., a publicly traded franchisee of
Rent-A-Center, first as Vice President of Operations from 1991 to 1993 and then
as President from 1993 to 1996.
Mr. Viets was elected a Director of the Dunes in April 2000. Mr. Viets is
Chairman of the Board of Directors of Commerce Bank of Independence, Kansas.
Prior to that, he served as Chairman, President and Director of Citizens
National Bank, which he and his partners sold to Commerce Bancshares, Inc.,
St. Louis, Missouri. Mr. Viets is also a partner in Vico Rentals, L.C., a
real estate development company unrelated to General Financial. Mr. Viets is
a business graduate of the University of Kansas.
Mr. Miller and Mr. Peaden are the only executive officers of the Dunes.
All directors serve until the Dunes' next Annual Meeting of Shareholders and
until their successors are elected and qualified. The Dunes' officers serve at
the pleasure of the Board of Directors. The Board generally considers the status
of the officers at the meeting of the Board following each Annual Meeting of
Shareholders.
The Dunes has maintained an Audit Committee of the Board of Directors (Audit
Committee) since 1978. The Audit Committee currently consists of Messrs.
Herfurth, Steckart and Viets, all of which are independent directors as defined
in Rule 4200(a)(14) of the NASD's listing standards.
The Board does not have a nominating committee or compensation committee.
The Board and Audit Committee jointly met 3 times during 2000, and 2 times
during 2001 to date. Each director attended at least 75% of the aggregate
meetings of the Board and of the committees upon which he served.
There are no family relationships between any of the directors and executive
officers of Dunes.
AUDIT COMMITTEE REPORT
The primary functions of the Audit Committee are to review the scope and results
of audits by the Dunes' independent auditors, the Dunes' internal accounting
controls, the non-audit services performed by the independent accountants, and
the cost of accounting services. The Board of Directors has not adopted a
written charter for the Audit Committee.
In addition to the duties discussed above, the Audit Committee is required to
(a) review any and all proposed transaction of any kind or nature to which the
Dunes and any of its subsidiaries is to be a party provided that such
transaction is (i) in excess of $20,000 in the aggregate per year and (ii) one
or more of the following is to have a direct or indirect interest in such
transaction: (1) any director or officer of the Dunes; (2) any director or
officer of any subsidiary or affiliate of the Dunes; (3) any security holder who
to the Dunes' knowledge directly or indirectly owns or controls more than 5% of
the outstanding shares of any class of stock of the Dunes; (4) any employee of
or consultant to the Dunes or any of its subsidiaries or affiliates whose annual
compensation from the Dunes and its subsidiaries and affiliates exceeds $75,000
in the aggregate; or (5) any relative or spouse of any of the foregoing persons
or any relative or spouse who has the same home as such person; and (b) review
the aforesaid proposed
3
transaction for fairness and business purpose and shall by majority vote of the
Audit Committee approve such transaction.
The Audit Committee has (1) reviewed and discussed the audited financial
statements with management, (2) discussed with the Dunes' independent auditors
the matters required to be discussed by SAS 61, and (3) received the written
disclosures and the letter from the Dunes' independent accountants required by
Independence Standards Board Standard No. 1 ("Independence Discussions with
Audit Committees") and has discussed with the Dunes' independent accountants the
independent accountants' independence.
The Audit Committee is responsible for recommending to the Board that the Dunes'
financial statements be included in the Dunes' annual report. Based on the
discussions with the independent accountants concerning the audit, the financial
statement review, and other such matters deemed relevant and appropriate by the
Audit Committee, the Audit Committee recommended to the Board that these
financial statements to be included in the Dunes' 2000 Annual Report on Form
10-KSB.
Submitted by the Audit Committee of the Dunes' Board of Directors
James Herfurth
James Steckart
Paul Viets
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Based solely upon a review of the Commission's Forms 3, 4 and 5 received
by the Dunes during the last fiscal year and written representations solicited
by the Dunes, no Officer, Director, beneficial owner of more than 10% of any
class of the Dunes' equity securities or any other person subject to Section 16
of the Exchange Act failed to file on a timely basis as disclosed in the above
forms, reports required by Section 16(a) of the Exchange Act during the year
ended December 31, 2000, except as follows: (1) the initial Form 3's for Paul
Viets, James Steckart and James Herfurth were each filed one day late and the
initial Form 3's for Fadi Mashnouk, Thomas Steele and Cary Peaden were each
filed two days late (each of these forms reported that the reporting person did
not own any shares of common or preferred stock in the Dunes) and (2) the Form 5
for General Financial Services, Inc. and Mr. Steve Miller for the year ended
December 31, 2000, reporting the acquisition of 120 shares of preferred stock
was filed one day late. On April 6, 2001, General Financial Services, Inc., GFS
Acquisition Company, Inc. and Mr. Miller amended their Form 5 to report the
acquisition of 18,000 shares of common stock that had previously not been
reported on Form 4.
4
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Executive Compensation
The following table sets forth the annual compensation paid to the
Dunes' President for each of the last three fiscal years. No executive officer
of the Dunes received compensation in excess of $100,000 for the 3 years ended
December 31, 2000.
(a) (b) (c) (d) (e) (i)
Name and principal Other annual All other
position Year Salary($) Bonus($) compensation($) compensation($)(1)
--------- ---- --------- -------- --------------- ------------------
Steve K. Miller, President 2000 (2) $71,381 -- -- $11,067
Edward Pasquale, President 2000 (3) -- -- -- $22,267
1999 -- -- -- $62,568
1998 -- -- -- $36,862
(1) All other compensation for Mr. Miller consists
of the following:
Directors fees $10,667
Consulting fees 400
-------
$11,067
=======
All other compensation for Mr. Pasquale
consists of the following:
Year Ended December 31,
---------------------------
1998 1999 2000
---- ---- ----
Directors fees $15,000 $15,000 $ 4,333
Audit Committee fees 12,000 12,000 3,467
Consulting fees 9,862 35,568 14,467
------- ------- -------
$36,862 $62,568 $22,267
======= ======= =======
(2) Mr. Miller was elected President of the Dunes on April
14, 2000.
(3) Mr. Pasquale was President of the Dunes from December
1997 to April 14, 2000.
The Dunes does not have a plan, pursuant to which cash or non-cash
compensation is paid or distributed, or is proposed to be paid or distributed in
the future. The Dunes does not have any pension or other benefit plans. Further,
the Dunes has no stock option plans and has not granted any stock options to its
officers or directors.
Compensation of Directors
The Dunes pays each director an annual fee of $15,000 payable monthly. In
addition to their regular director's fees, board members and audit committee
members are paid $200 per half-day and $400 per full day for special projects
considered to be outside the scope of their duties as board and audit committee
members. In addition, they receive a travel fee of $300 for each meeting
attended.
Messrs. Herfurth, Steckart and Viets are all members of the Dunes' Audit
Committee. For services rendered as Audit Committee members and consultants
during the fiscal year 2000, Messrs. Herfurth, Steckart and Viets were paid
$17,500, $400 and $400, respectively.
5
MARKET FOR COMMON EQUITY
The principal United States market in which the Dunes' common stock is
traded is the over-the-counter market. The Dunes' symbol for its common stock is
"DUNE". There is no established public trading market for the Dunes' preferred
stock. Neither the Dunes' common stock nor the Dunes' preferred stock is listed
for trading on an exchange.
The following table sets forth for the periods indicating the range of the
high and low bid quotations for the Dunes' common stock as quoted on the OTC
Bulletin Board. The reported bid quotations reflect inter-dealer prices, without
retail markup, markdown or commissions, and may not necessarily represent actual
transactions.
2001 HIGH LOW
---- ---- ---
1st Quarter $1.25 $0.83
2nd Quarter $1.12 $0.95
3rd Quarter $1.25 $1.01
2000 HIGH LOW
---- ---- ---
1st Quarter $1.31 $0.75
2nd Quarter $0.75 $0.59
3rd Quarter $0.75 $0.62
4th Quarter $0.88 $0.50
1999 HIGH LOW
---- ---- ---
1st Quarter $0.25 $0.19
2nd Quarter $0.83 $0.21
3rd Quarter $0.89 $0.50
4th Quarter $0.78 $0.68
On August 17, 2001, the Dunes' transfer agent reported that there were
approximately 577 holders of record of the Dunes' common stock, and
approximately 175 holders of record of the Dunes' Series B $7.50 cumulative,
voting and non-convertible preferred stock.
Dividends on the Dunes' common stock have not been paid since the second
quarter of 1979. Dividends on the Dunes' preferred stock have not been paid
since the first quarter of 1982. The Dunes is in arrears on dividends on the
preferred stock in the amount of approximately $1.6 million as of June 30, 2001.
The Dunes has no present intention to pay dividends on either its common or
preferred shares in the near future.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table shown below contains certain information as of August 17, 2001
with respect to (1) any person (including any "group" as that term is used in
Section 13(d)(3) of the Exchange Act), who is known to the Dunes to be
beneficial owner (as that term is defined in rules and regulations of the
Commission under the federal securities laws) of more than 5% of the Dunes'
common stock, (2) each director and each executive officer named in the summary
compensation table and (3) certain information with respect to the Dunes' common
stock beneficially owned (as that term is defined in rules and regulations of
the Commission under the federal security laws) by all directors, and executive
officers of the Dunes as a group.
Amount and
Nature of Percent of
Name and Address Beneficial Common Stock
of Beneficial Owner Ownership(1) Outstanding
------------------- ------------ ------------
General Financial Services, Inc. (2)
8441 E. 32nd Street N 4,004,094 89.6%
Wichita, KS 67226
Steve K. Miller (2) 4,004,094 89.6%
James R. Herfurth -- --
James G. Steckart -- --
Paul H. Viets -- --
D. Cary Peaden 3,100 *
All Directors and Officers 4,007,194 89.6%
as a Group (5 Persons)
-------------------------------
* less than 1%
1) In furnishing this information, the Dunes is relying upon the contents of
statements filed with the Commission pursuant to Section 13(d) and Section
13(g) of the Exchange Act.
2) Consists of 3,000,000 shares owned directly by General Financial
Services, Inc. and 1,004,094 shares owned indirectly through its wholly
owned subsidiary GFS Acquisition Company, Inc. Mr. Miller is the sole
stockholder, sole director and the President of General Financial
Services, Inc. and as a result may be deemed to be the beneficial owner
of the shares owned directly and indirectly by General Financial
Services, Inc.
The following table sets forth, as of August 17, 2001, the number and percentage
of shares of the Dunes' Series B preferred stock which are beneficially owned,
directly or indirectly, by (1) any person (including any "group" as that term is
used in Section 13(d)(3) of the Exchange Act), who is known to the Dunes to be
beneficial owner (as that term is defined in rules and regulations of the
Commission under the federal securities laws) of more than 5% of the Dunes'
preferred stock, (2) each director and each executive officer named in the
summary compensation table and (3) certain information with respect to the
Dunes' preferred stock beneficially owned (as that term is defined in rules and
regulations of the Commission under the federal security laws) by all directors,
and executive officers of the Dunes as a group.
7
Amount and
Nature of Percent of
Name and Address Beneficial Preferred Stock
of Beneficial Owner Ownership(1) Outstanding
------------------- ------------ ------------
USI Corp(2)
1040 Lawrence Court
Wichita, KS 67206 2,399 40.7%
Steve K. Miller(3) 2,093 35.5%
James R. Herfurth -- --
James G. Steckart -- --
Paul H. Viets -- --
D. Cary Peaden -- --
All Directors and Officers
as a Group (5 Persons) 2,093 35.5%
1. In furnishing this information, the Dunes is relying upon the contents of
statements filed with the Commission pursuant to Section 13(d) and Section
13(g) of the Exchange Act.
2. USI Corp claims that it owns or has rights to approximately 3,000 shares of
preferred stock. Pursuant to an order by the United States District Court for
Kansas, USI Corp has agreed not to transfer these shares. See Note 10 to the
Consolidated Financial Statements of the Dunes included in its report on Form
10-KSB for the year ended December 31, 2000.
3. Consists of 2,093 shares owned by General Financial Services, Inc. Mr.
Miller is the sole stockholder, sole Director and the President of General
Financial Services, Inc. and as a result may be deemed to be the beneficial
owner of the shares owned by General Financial Services, Inc.
INDEPENDENT AUDITORS
The Audit Committee has selected BKD, LLP certified public accountants as
the independent auditors of the Dunes for fiscal year 2001. A representative of
BKD, LLP will be present at the Annual Meeting of Shareholders, will be
available to respond to appropriate questions, and will have an opportunity to
make a statement.
The Dunes has retained BKD as its independent public accountants since
July 31, 2000. On that same date, the Dunes terminated the engagement of Piercy,
Bowler, Taylor & Kern, as its independent public accountants ("Piercy"). The
engagement of BKD was recommended by the Audit Committee of the Dunes' Board of
Directors and approved by the Board.
The audit report of Piercy on the Dunes' financial statements for the
fiscal year ended December 31, 1999 did not contain an adverse opinion or a
disclaimer of opinion and was not qualified or modified as to uncertainty, audit
scope, or accounting principles.
In connection with the audit of the Dunes' financial statements for the
fiscal year ended December 31, 1999 and in the subsequent interim period, there
were no disagreements between the Dunes and Piercy on any matters of accounting
principles or practices, financial statement disclosure, or auditing scope and
procedures which, if not resolved to the satisfaction of Piercy would have
caused it to make reference to the subject matter of the disagreement in
connection with its report on the audited financial statements.
8
FINANCIAL AND OTHER INFORMATION
Enclosed with this information statement is a copy of the Dunes' annual
report to the Securities and Exchange Commission on Form 10-KSB for the fiscal
year ended December 31, 2000, the Dunes' Form 10-QSB for the period ended March
31, 2001 and the Dunes' Form 10-QSB for the period ended June 30, 2001.
By Order of the Board of Directors
9