Organization and Nature of Business

Basis for Presentation

Empire Resorts, Inc. ("Empire," and, together with its subsidiaries, the "Company," "us," "our" "we") was organized as a Delaware corporation on March 19, 1993, and since that time has served as a holding company for various subsidiaries engaged in the hospitality and gaming industries.

The condensed consolidated financial statements and notes as of September 30, 2016 and December 31, 2015 and for the three and nine months ended September 30, 2016 and September 30, 2015 are unaudited and include the accounts of Empire and its subsidiaries. All share and per share information in this quarterly report on Form 10-Q give retroactive effect to a one-for-five reverse stock split effective as of December 23, 2015.

The accompanying unaudited condensed consolidated financial statements of the Company have been prepared under the rules and regulations of the Securities and Exchange Commission ("SEC") applicable for interim periods, and therefore do not include all information necessary for complete financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”). Our financial statements require the use of estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the disclosure of contingent liabilities. Actual amounts could differ from those estimates. These condensed consolidated financial statements reflect all adjustments (consisting primarily of normal recurring accruals) which are, in the Company’s opinion, necessary for a fair presentation of financial position, results of operations and cash flows for the interim periods. These condensed consolidated financial statements and notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015. The results of operations for our interim periods may not be necessarily indicative of the results of operations that may by achieved for the entire year.

Recent Events

On October 13, 2016, Montreign Operating Company, LLC ("Montreign") and Kien Huat Realty III Limited ("Kien Huat"), Empire's largest stockholder, entered into a loan agreement (the "KH Construction Loan Agreement"). Pursuant to the KH Construction Loan Agreement, Kien Huat agreed to loan Montreign (the "KH Construction Loan") up to an aggregate of $50 million for the sole purpose of making payments under the construction contract for the development of Montreign Resort Casino ("Montreign Resort Casino" or the "Casino Project") as they come due. Montreign may request an advance under the KH Construction Loan only in the event Montreign has insufficient other funds available to pay obligations under the construction contract for the Casino Project. The term of the KH Construction Loan Agreement shall expire on the earlier of (i) the consummation of financing in an amount no less than the remaining contract amount under the Casino Project construction contract and (ii) October 13, 2017. Beginning on January 1, 2017, Montreign shall make monthly interest payments of 7.5% of the outstanding principal of the KH Construction Loan. Montreign paid Kien Huat a commitment fee of $500,000 upon execution of the KH Construction Loan.

Monticello Casino & Raceway

Through Empire’s wholly-owned subsidiary, Monticello Raceway Management, Inc. ("MRMI"), the Company currently owns and operates Monticello Casino and Raceway, a 45,000-square foot video gaming machine ("VGM") and harness horseracing facility located in Monticello, New York, approximately 90 miles northwest of New York City. Monticello Casino and Raceway operates 1,110 VGMs, which includes 1,070 video lottery terminals ("VLTs") and 40 electronic table game positions ("ETGs"). VGMs are similar to slot machines, but they are connected to a central system and report financial information to the central system. The Company also generates racing revenues through pari-mutuel wagering on the running of live harness horse races, the import simulcasting of harness and thoroughbred horse races from racetracks across the country and internationally, and the export simulcasting of its races to offsite pari-mutuel wagering facilities.

In a letter dated April 13, 2016, the New York State Gaming Commission (the "NYSGC") approved MRMI's racetrack and simulcast license renewal applications for calendar year 2016. Generally, the annual license renewal process requires the NYSGC to review the financial responsibility, experience, character and general fitness of MRMI and its management.

Adelaar and Montreign Resort Casino

On December 21, 2015, our wholly-owned subsidiary, Montreign, was awarded a gaming license (a “Gaming Facility License”) by the NYSGC to operate the Casino Project to be located at the site of a four-season destination resort planned for the Town of Thompson in Sullivan County, approximately 90 miles from New York City (“Adelaar” or the “Adelaar Project”), which is described below. The Gaming Facility License became effective on March 1, 2016 (the "License Award Effective Date").

The Adelaar Project is to be located on approximately 1,700 acres (the “EPT Property”) owned by EPT Concord II, LLC (“EPT”) and EPR Concord II, L.P. (“EPR LP”), two wholly-owned subsidiaries of EPR Properties. Montreign Resort Casino is part of the initial phase of the Adelaar Project, which will also include an Indoor Waterpark Lodge (the “Waterpark”), a Rees Jones redesigned “Monster” Golf Course (the “Golf Course”) and an Entertainment Village, which will include, among other things, retail, restaurant, shopping and entertainment (the “Entertainment Village” and, together with the Casino Project and the Golf Course, the “Development Projects” and the Development Projects together with the Waterpark, the “Initial Projects”).

Montreign Resort Casino

Montreign Resort Casino is designed to meet five-star and five-diamond standards and is expected to include the following:


•	a 90,000-square foot casino floor featuring 2,150 slot machines and 102 table games;


•	designated VIP/high-limit areas;


•	an 18-story hotel tower containing 332 luxury rooms (including eight garden suites, seven two-story townhouse villas, and 12 penthouse-level suites), indoor pools and fitness center;


•	a VIP floor containing six private gaming salons;


•	27,000 square feet of multi-purpose meeting and entertainment space with seating capacity for 1,300 people and a mezzanine level that includes a poker room and approximately 7,000 square feet of meeting room space;


•	a 7,500-square foot spa; and


•	eight restaurants and four bars.

Gaming Facility License

The Gaming Facility License will have an initial duration of 10 years from March 1, 2016. It is renewable thereafter for a period of at least an additional 10 years, as determined by the NYSGC. The Gaming Facility License is also subject to certain conditions established by the NYSGC, including the following: the payment of a license fee of $51 million; causing the investment of not less than approximately $854 million (the “Minimum Capital Investment”) in the development of the initial phase of Adelaar in accordance with the submitted plans for Montreign Resort Casino and Adelaar; deposit of a bond representing 10% of the Minimum Capital Investment (the "Minimum Capital Investment Deposit"); commencement of gaming operations on or before March 1, 2018; compliance with state minority-owned and woman-owned business enterprise requirements; and the creation of a minimum of 1,425 full-time and 96 part-time jobs. The Minimum Capital Investment Deposit was made on March 1, 2016 and the license fee was paid on February 25, 2016.

Golf Course and Entertainment Village

Our subsidiaries are responsible for the development and construction of the Golf Course and the Entertainment Village. The development of the Entertainment Village is expected to be built out in phases. We have agreed to invest a minimum of $15 million in the development and construction of the Golf Course and $25 million in the development and construction of the Entertainment Village. The Company is currently preparing the design plans for the Entertainment Village. The Company, through its wholly-owned subsidiary, Empire Resorts Real Estate I, LLC (“ERREI”), has obtained final site plan approval from the Town of Thompson Planning Board for, and has begun site preparation of, the redesign of the Golf Course.

Master Development Agreement and Completion Guaranties

On December 28, 2015 (the “MDA Effective Date”), Montreign, ERREI and Empire Resorts Real Estate II, LLC ("ERREII" and together with Montreign and ERREI, the “Project Parties”), each a wholly-owned subsidiary of the Company, on the one hand, and EPT, EPR LP and Adelaar Developer, LLC (“Adelaar Developer,” together with EPT and EPR LP collectively, “EPR”), on the other hand, entered into an Amended and Restated Master Development Agreement (as amended, the “MDA”), which amends and restates that certain master development agreement by and between EPT and MRMI originally executed on December 14, 2012. The MDA defines and governs the overall relationship between EPR and the Project Parties with respect to the development, construction, operation, management and disposition of the Initial Projects.

In accordance with the terms of the MDA, the Project Parties shall each be responsible for the development and construction of their portion of the Development Projects. The Project Parties have agreed to invest a minimum of $611 million in the development and construction of the Casino Project, $15 million in the development and construction of the Golf Course and $25 million in the development and construction of the Entertainment Village. On December 28, 2015, Empire entered into a Completion Guaranty, guaranteeing completion of the development and construction obligations of the Project Parties described in this paragraph.

In accordance with the terms of the MDA, EPR is responsible for the development and construction of the Waterpark and the common infrastructure-related improvements (such as streets, sidewalks, sanitary and storm sewer lines, water, gas, electric, telephone and other utility lines, systems, conduits and other similar facilities) for Adelaar. EPR has agreed to be responsible for the development and construction of the Waterpark with a minimum capital investment of $120 million, and the infrastructure for Adelaar. On December 28, 2015, EPR Properties, a real estate investment trust and the parent company of EPR, entered into a Completion Guaranty, guaranteeing completion of the development and construction obligations of EPR described in this paragraph.

Neither party has the right to terminate the MDA unless Montreign fails to exercise the Purchase Option (as defined below) prior to its expiration in accordance with the terms and conditions of the Purchase Option Agreement (as defined below).

Empire Project Parcel Leases and Purchase Option Agreement

On September 3, 2015, MRMI and EPT entered into a non-binding term sheet (the “Term Sheet”) which contemplated, among other things, the lease by the Project Parties of parcels containing the Golf Course (the "Golf Course Parcel") and Entertainment Village (the "Entertainment Village Parcel" and, together with the Casino Parcel (defined below) and the Golf Course Parcel, the "Empire Project Parcels") in addition to the Casino Parcel. The Term Sheet also contemplated a separate purchase option agreement granting MRMI and/or its affiliates the right to purchase all three, but not less than all three, of the Empire Project Parcels. On December 28, 2015, the Project Parties entered into the Casino Lease, the Golf Course Lease, the Entertainment Village Lease and the Purchase Option Agreement (each as defined and described below). In addition, option payments made by the Company pursuant to the Original Option Agreement (defined below), which total $8.5 million, are being applied against rent amounts due to EPT as rent under the Casino Lease, as more fully described below.

Casino Lease

On December 28, 2015, Montreign entered into a lease (the “Casino Lease”) with EPT for the lease of the Casino Parcel. The Casino Lease has a term that expires on the earlier of (i) March 31, 2086, and (ii) Montreign giving EPT written notice of its election to terminate the Casino Lease (the “Termination Option”) at least 12 months prior to any one of five Option Dates (as defined below). The option dates (each an "Option Date") under the Casino Lease mean each of the 20th, 30th, 40th, 50th and 60th anniversaries of the commencement of the Casino Lease. Upon Montreign's timely notice of exercise of its Termination Option, the Casino Lease shall be automatically terminated effective as of the applicable Option Date.

The following table represents the annual fixed rent payments under the Casino Lease:



Year ending December 31,	Annual Fixed Rent Payments due by Period
	(in thousands)
2016 (1)	$	1,000
2017 (1) (2)	10,000
2018 (2) (3)	10,500
2019 (3)	7,500
2020 (3)	7,500
2021 to 2056 (3)	362,624

(1)

Until February 29, 2016, the Company continued to make payments of $500,000 per month it would have made under that certain option agreement, originally executed on December 21, 2011 and last amended on June 20, 2014 (the “Original Option Agreement”). The Original Option Agreement, which granted to the Company the right to lease the parcel on which Montreign Resort Casino (the “Casino Parcel”) would be built, was superseded by the leases for the Casino Parcel, the Entertainment Village Parcel and the Golf Course Parcel. From March 1, 2016 until February 28, 2017, option payments made by the Company under the Original Option Agreement, which totaled $8.5 million, shall be applied against annual fixed rent due by the Company under the Casino Lease for such period.


(2)	From March 1, 2017 through August 31, 2018, annual fixed rent shall equal $1 million per month.


(3)	From September 1, 2018 through the remainder of the term of the Casino Lease, annual fixed rent shall equal $7.5 million per year, subject to an eight percent escalation every five years ("Base Amount").

In addition to the annual fixed rent, beginning September 2018 and through the remainder of the term of the Casino Lease (the “Percentage Rent Period”), Montreign is obligated to pay an annual percentage rent equal to five percent of the Eligible Gaming Revenue (as such term is defined in the Casino Lease) in excess of the Base Amount for the Percentage Rent Period. Additionally, the lease is a net lease, and Montreign has an obligation to pay the rent payable under the Casino Lease and other costs related to Montreign's use and operation of the Casino Parcel, including the special district tax assessments allocated to the Casino Parcel, not to exceed the capped dollar amount applicable to the Casino Parcel.

Golf Course Lease

On December 28, 2015, ERREI entered into a sublease (the “Golf Course Lease”) with Adelaar Developer for the lease of the Golf Course Parcel. The terms of the Golf Course Lease are substantially similar to the Casino Lease, subject to the material differences described below. Under the Golf Course Lease, there is no percentage rent due. Annual fixed rent payments under the Golf Course Lease are represented in the table below:



Year ending December 31,	Annual Fixed Rent Payments due by Period
	(in thousands)
2016 (1)	$	—
2017 (1)	0
2018 (1) (2)	125
2019 (2)	150
2020 (2)	150
2021 to 2056 (2) (3)	7,825


(1)	From the date the Golf Course Lease commenced (the “Golf Course Lease Commencement Date”) and until the date on which the Golf Course opens for business, which is expected to be in Spring 2018 (the “Golf Course Opening Date”), annual fixed rent payments shall equal $0.


(2)	From the Golf Course Opening Date and continuing for the 10 years thereafter, annual fixed rent shall equal $150,000.


(3)	From December 2028 through the remainder of the term of the Golf Course Lease, annual fixed rent shall equal $250,000.

The Golf Course Lease is a net lease and ERREI is obligated to pay the rent payable under the Golf Course Lease and other costs related to ERREI's use and operation of the Golf Course Parcel, including the special district tax assessments allocated to the Golf Course Parcel, not to exceed the capped dollar amount applicable to the Golf Course Parcel. This obligation shall not be assessed against ERREI prior to 60 months following the Golf Course Lease Commencement Date.

Entertainment Village Lease

On December 28, 2015, ERREII entered into a sublease (the “Entertainment Village Lease”) with Adelaar Developer, for the lease of the Entertainment Village Parcel. The terms of the Entertainment Village Lease are substantially similar to the Casino Lease, subject to the material differences described below. Under the Entertainment Village Lease, there is no percentage rent due. Annual fixed rent payments under the Entertainment Village Lease are represented in the table below:



Year ending December 31,	Annual Fixed Rent Payments due by Period
	(in thousands)
2016 (1)	$	—
2017 (1)	0
2018 (1) (2)	50
2019 (2)	150
2020 (2)	150
2021 to 2056 (2) (3)	7,900


(1)	From the date the Entertainment Village Lease commenced (the “Entertainment Village Lease Commencement Date”) and until the date on which the Entertainment Village opens for business, which is expected to be September 2018 (the “Entertainment Village Opening Date”), annual fixed rent payments shall equal $0.


(2)	From the Entertainment Village Opening Date and continuing for the 10 years thereafter, annual fixed rent shall equal $150,000.


(3)	From December 2028 through the remainder of the term of the Entertainment Village Lease, annual fixed rent shall equal $250,000.

The Entertainment Village Lease is a net lease and ERREII is obligated to pay the rent payable under the Entertainment Village Lease and other costs related to ERREII's use and operation of the Entertainment Village Parcel, including the special district tax assessments allocated to the Entertainment Village Parcel, not to exceed the capped dollar amount applicable to the Entertainment Village Parcel. This obligation shall not be assessed against ERREII prior to 60 months following the Entertainment Village Lease Commencement Date.

Regulation

VGM and Racing Operations

Our VGM, harness horseracing and simulcast activities in the State of New York are overseen by the NYSGC, Division of Lottery and Division of Horse Racing and Pari-Mutuel Wagering, respectively. The NYSGC has the authority and responsibility to promulgate rules and regulations that affect the operations of our business. In addition to receiving 41% of our VGM revenue from our operations at Monticello Casino and Raceway through March 31, 2017, the law provides for a subsidized free play allowance of 15%.

Casino Gaming

The Upstate New York Gaming and Economic Development Act ("Gaming Act") provides, among other things, the statutory framework for the regulation of full-scale casino gaming. The Gaming Act authorizes the NYSGC to award up to four Gaming Facility Licenses. The Gaming Act provides that no gaming facilities shall be authorized in Bronx, Kings, New York, Queens or Richmond counties. The state may, however, legislatively authorize additional Gaming Facility Licenses.

In accordance with the Gaming Act, the New York State Gaming Facility Location Board ("Siting Board") was charged with selecting applicants qualified to receive a Gaming Facility License and determining the location of such gaming facilities. The Gaming Act provides a seven-year exclusivity period for holders of Gaming Facility Licenses, commencing March 1, 2016, during which no further gaming facilities will be licensed by the NYSGC. If the Legislature authorizes additional Gaming Facility Licenses within this period, holders of the original four Gaming Facility Licenses shall have the right to recover a pro-rata portion of the license fee paid.

In connection with the Company's application for a Gaming Facility License in response to the Siting Board's Request for Applications (the "RFA"), we paid to the NYSGC an application fee of $1 million ("Application Fee") to help defray the costs associated with the processing and investigation of our application. We were notified that the investigation costs were below the amount of the Application Fee paid, and the unexpended portion, in the amount of approximately $189,000, was returned to us.

On March 1, 2016, the Minimum Capital Investment Deposit was made in the amount of $85.4 million. The Project Parties' portion of the Minimum Capital Investment Deposit was made in the form of a deposit bond representing approximately $65 million, which is 10% of the Company's Minimum Capital Investment in the Development Projects, and EPR's portion was made in the form of a deposit bond representing approximately $20 million, which is 10% of its Minimum Capital Investment in the infrastructure for Adelaar and the Waterpark. In addition, on February 25, 2016, we paid the license fee of $51 million, which is reflected on the accompanying consolidated balance sheet as an intangible asset as of September 30, 2016.

Our casino gaming activities in the State of New York are overseen by the NYSGC, Division of Gaming. The tax rate on slot machines at Montreign Resort Casino will be 39% and the tax rate on table games will be 10%. The tax rate on VGM operations at Monticello Casino and Raceway will remain at the existing NYSGC commission rate and is expected to include an additional commission from NYSGC based on a rate related to the effective tax rate on all gross gaming revenue at Montreign Resort Casino. Existing payments to the racing industry for purses and breeding will be maintained. However, the Gaming Act requires the maintenance of the horsemen and breeder payments at the 2013 dollar level to be adjusted annually pursuant to changes in the consumer price index.

The Gaming Act imposes a $500 annual fee on each slot machine and table game. In addition, the Gaming Act provides that the minimum gambling age for Montreign Resort Casino will be 21, and no smoking will be authorized.

County of Sullivan Industrial Development Agency

Montreign received approval from the County of Sullivan Industrial Development Agency ("IDA") for benefits including an exemption from New York State ("State") and local sales and use taxes with respect to certain items used in, or for the acquisition, construction and equipping of the Casino Project, an exemption from all mortgage recording taxes imposed in the State, and a partial (or full) real property tax abatement over 16 years. Montreign has begun to receive the benefit of exemption from the local sales and use taxes and the real property tax abatement.

In addition, on June 20, 2016, ERREI obtained approval from the IDA for benefits including an exemption from State and local sales and use taxes with respect to certain items used in, or for, the acquisition, construction and equipping of the Golf Course, an exemption from all mortgage recording taxes imposed in the State, and a partial (or full) real property tax abatement over 16 years.

Liquidity

The accompanying condensed consolidated financial statements have been prepared on a basis that contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company anticipates that its current cash and cash equivalents balances and cash generated from operations will be sufficient to meet working capital requirements, excluding expenditures on the Development Projects, for at least the next 12 months. To finance a portion of the Development Projects expenses, the Company consummated the January 2016 Rights Offering, from which the Company received net proceeds of $286.0 million. The Company will need to raise additional funds to complete the Development Projects. Whether these resources are adequate to meet the Company’s liquidity needs beyond that period will depend on the Company’s growth and operating results and the progress of the Development Projects. To raise the additional capital necessary for the Development Projects, we may seek to enter into strategic agreements, joint ventures or similar agreements or we may sell additional debt or equity in public or private transactions, including as set forth in the Kien Huat Equity Commitment Letter and the Kien Huat Financing Commitment (each as defined below). The sale of additional equity could result in additional dilution to the Company’s existing stockholders and financing arrangements may not be available to us, or may not be available in amounts or on acceptable terms.

As of September 30, 2016, we had total current assets of approximately $15.9 million and total current liabilities of approximately $50.1 million, which includes approximately $41.8 million in accrued Development Project costs. As of September 30, 2016, our total assets included approximately $82.2 million of remaining net proceeds from the January 2016 Rights Offering (as defined and discussed below), which will be used to pay the accrued Development Projects costs included in our current liabilities. The net proceeds from the January 2016 Rights Offering, which are being used to pay the expenses of the Development Projects, are presented on the balance sheet as a non-current asset as required by GAAP because they will be used for the construction of a long-term asset.

We have had continuing net losses and negative cash flow from operating activities, including a loss from operations of $17.2 million for the nine months ended September 30, 2016. The net loss for the nine months ended September 30, 2016 was primarily related to the development expenses in the amount of $9.4 million, that could not be capitalized, increased professional fees of approximately $5.4 million and increased stock compensation expense of $2.0 million. The $9.4 million of development expenses consisted of $7.8 million in accrued land lease expense, $$0.4million in property tax expense and $1.2 million in payroll and related benefits, insurance, legal, consultants, professional services and other expense. Additionally, $141.0 million of the costs incurred for the Development Projects was eligible to be capitalized for the nine months ended September 30, 2016.

For the nine months ended September 30, 2015, the development expenses for the Casino Project were approximately $22.8 million and consisted of $15.9 million in architectural, engineering fees and construction manager costs, $3.4 million of non-refundable payments pertaining to the Original Option Agreement with EPR and $2.5 million legal, consultants and other professional services, as well as a $975,000 payment to Kien Huat for a commitment fee pursuant to the Kien Huat Equity Commitment Letter (defined below). None of these costs incurred for the Casino Project was eligible to be capitalized for the nine months ended September 30, 2015.

As a condition of the Gaming Facility License, the Company is required to invest, or cause to be invested, the Minimum Capital Investment in the development of the Initial Projects. The Company's portion of the Minimum Capital Investment is approximately $651.4 million for the Development Projects. On March 1, 2016, the Minimum Capital Investment Deposit was made in the amount of $85.4 million. The Project Parties' portion of the Minimum Capital Investment Deposit was made in the form of a deposit bond representing approximately $65 million, which is 10% of the Company's Minimum Capital Investment in the Development Projects. In addition, on February 25, 2016, the Company paid the license fee of $51 million, which is reflected on the September 30, 2016 consolidated balance sheet as an intangible asset.

Montreign entered into a security agreement with the entity that posted the bond, pursuant to which Montreign is required to deposit cash as collateral security in the amount of $65 million. The NYSGC will release the Minimum Capital Investment Deposit upon confirmation that 85% of the Company's proposed Minimum Capital Investment has been expended. The cash collateral will be deposited into an account in installments of which approximately $15 million has been paid during the first quarter of 2016 and is reflected on the accompanying Consolidated Balance Sheet as Cash collateral for deposit bonds, as of September 30, 2016. Montreign shall be required to deposit additional collateral security installments on July 1, 2017, in the amount of $20 million, and on January 15, 2018, in the amount of approximately $30 million.

To support the expenses related to the Development Projects, the Company entered into amendments to the debt and equity financing commitments initially obtained in June 2014 in support of Montreign’s application for a Gaming Facility License. In June 2014, for the debt portion of the Company’s financing, Credit Suisse AG (“Credit Suisse”) committed to provide a senior secured credit facility (the "CS Credit Commitment") of up to a maximum amount of $478 million. On September 22, 2015, Credit Suisse and the Company entered into a further amendment to the CS Credit Commitment increasing the financing commitment Credit Suisse provided up to a maximum of $545 million. The CS Credit Facility was subject to various conditions precedent, including evidence of an equity investment in Company of not less than $301 million, all of which equity has been raised by the Company.

On June 7, 2016, to give the Company greater flexibility in assessing alternatives for debt financing for the Development Projects, the Company and Kien Huat entered into a letter agreement (the “Kien Huat Financing Commitment”) concerning the additional financing of the Casino Project. Pursuant to the Kien Huat Financing Commitment, Kien Huat committed to provide the Company with up to $525 million of financing in the event that the Company cannot obtain financing from third-party sources, in the form of debt and/or equity investment, necessary to complete the construction of the Casino Project. The Company agreed to use commercially reasonable efforts to obtain third-party financing to complete the Casino Project. In the event Kien Huat provides any financing to support the construction of the Casino Project pursuant to the Kien Huat Financing Commitment, Kien Huat shall be entitled to receive a funding fee of 1.75% of the amount so funded, or such other amount as may be mutually agreeable to the parties. Following the execution of the Kien Huat Financing Commitment, the CS Credit Commitment expired on June 24, 2016.

For the equity investment portion of the Company’s financing for the Development Projects and to redeem the outstanding Series E preferred stock of the Company (the "Series E Preferred Stock") in accordance with an existing settlement agreement, in June 2014, the Company and Kien Huat entered into a letter agreement, pursuant to which Kien Huat committed to support the Company's equity financing needs with respect to the Casino Project and Adelaar (the "Original Equity Commitment Letter"). Pursuant to the Original Equity Commitment Letter, Kien Huat initially agreed to participate in and backstop a rights offering in an amount up to $150 million plus the amount needed to redeem the Series E Preferred Stock if the Company commenced a rights offering on the terms described in the Original Commitment Letter in support of the Casino Project. For such commitment, the Company agreed to pay Kien Huat a fee of 1.0% of the maximum amount raised, of which 0.5% was paid upon execution of the Original Commitment Letter and the remaining 0.5% being due if a rights offering was launched. In addition, the Company agreed to pay for or reimburse Kien Huat for all of its out-of-pocket expenses in connection with the negotiation, execution and delivery of the Original Commitment Letter and the consummation of the transactions contemplated thereby.

The Company and Kien Huat entered into a second amendment to the Original Commitment Letter (the “Second Amendment” and together with the Original Equity Commitment Letter, the “Kien Huat Equity Commitment Letter”) on September 22, 2015. Pursuant to the Second Amendment, Kien Huat increased its overall equity investment commitment to the Company from $150 million, plus the amount necessary to redeem the Series E Preferred Stock, to an aggregate total of $375 million, which amounts include the $50 million invested in the January 2015 Rights Offering (which is defined and discussed below). In particular, Kien Huat agreed to participate in and backstop two additional rights offerings, the first of which is the January 2016 Rights Offering (which is defined and discussed below), which Kien Huat agreed to backstop in an amount not to exceed $290 million. Kien Huat also agreed to participate in and backstop a follow-on rights offering on the same terms and conditions and at the same subscription price as the January 2016 Rights Offering, in an amount not to exceed $35 million (the "Follow-On Rights Offering"). Except for the increase in the overall commitment amount, the terms and conditions of the Kien Huat Equity Commitment Letter remain unchanged.

On January 4, 2016, the Company commenced a rights offering (the "January 2016 Rights Offering") for aggregate gross proceeds of $290 million. On December 31, 2015, in connection with the January 2016 Rights Offering, the Company and Kien Huat entered into a standby purchase agreement (the “January 2016 Standby Purchase Agreement”). Pursuant to the January 2016 Standby Purchase Agreement, Kien Huat agreed to exercise its basic subscription rights and to exercise all rights not otherwise exercised by the other holders in an aggregate amount not to exceed $290 million. Under the January 2016 Standby Purchase Agreement, the Company paid Kien Huat a portion of the commitment fee described in the Kien Huat Equity Commitment Letter in the amount of approximately $1.5 million and reimbursed Kien Huat for its expenses in an amount not exceeding $50,000. The January 2016 Rights Offering closed on February 17, 2016. The Company issued a total of 20,138,888 shares of common stock at $14.40 per share. This includes 176,086 shares issued to holders upon exercise of their basic subscription and over-subscription rights and 13,136,817 shares issued to Kien Huat upon exercise of its basic subscription rights. Kien Huat also acquired the remaining 6,825,985 shares not sold in the January 2016 Rights Offering pursuant to the January 2016 Standby Purchase Agreement.

On January 5, 2015, the Company commenced a rights offering (the “January 2015 Rights Offering”) for aggregate gross proceeds of $50 million to raise a portion of the equity financing necessary to develop the Casino Project. In partial satisfaction of Kien Huat's obligations pursuant to the Original Equity Commitment Letter, in connection with the January 2015 Rights Offering, on January 2, 2015, the Company and Kien Huat entered into a standby purchase agreement (the “January 2015 Standby Purchase Agreement”). Pursuant to the January 2015 Standby Purchase Agreement, Kien Huat agreed to exercise in full its basic subscription rights granted in the January 2015 Rights Offering within 10 days of its grant. In addition, Kien Huat agreed to exercise all rights not otherwise exercised by the other holders in an aggregate amount not to exceed $50 million. Under the January 2015 Standby Purchase Agreement, the Company paid Kien Huat a portion of the commitment fee described in the Original Equity Commitment Letter in the amount of $250,000 and reimbursed Kien Huat for its expenses in an amount not exceeding $40,000. The January 2015 Rights Offering closed on February 6, 2015. The Company issued a total of 1,408,451 shares of common stock at $35.50 per share. This includes 10,658 shares issued to holders upon exercise of their basic subscription and over-subscription rights and 864,360 shares issued to Kien Huat upon exercise of its basic subscription rights. Kien Huat also acquired the remaining 533,433 shares not sold in the January 2015 Rights Offering pursuant to the January 2015 Standby Purchase Agreement. The Company received net proceeds of approximately $49.5 million, which were used for the expenses relating to its application for and receipt of the Gaming Facility License and for development purposes relating to the Casino Project.

The Company believes it has sufficient cash on hand to finance the construction of the Casino Project through December 2016. To ensure progress on the Casino Project continues without interruption while the Company evaluates its financing alternatives, Montreign and Kien Huat entered into a loan agreement, dated October 13, 2016 (the "KH Construction Loan Agreement"). Pursuant to the KH Construction Loan Agreement, Kien Huat agreed to loan Montreign (the "KH Construction Loan") up to an aggregate of $50 million for the sole purpose of making payments under the construction contract for the Casino Project as they come due. Montreign may request an advance under the KH Construction Loan only in the event Montreign has insufficient other funds available to pay obligations under the construction contract for the Casino Project . The term of the KH Construction Loan Agreement shall expire on the earlier of (i) the consummation of financing in an amount no less than the remaining contract amount under the Casino Project construction contract and (ii) October 13, 2017. Beginning on January 1, 2017, Montreign shall make monthly interest payments of 7.5% of the outstanding principal of the KH Construction Loan. Montreign paid Kien Huat a commitment fee of $500,000 upon execution of the KH Construction Loan. With the availability of the KH Construction Loan, the Company believes it has sufficient resources to finance the construction of the Casino Project through February 2017.

We may also seek to enter into other strategic agreements, joint ventures or similar agreements or we may sell additional debt or equity in public or private transactions in support of the Development Projects and our ongoing operations. On January 3, 2014, we filed a universal shelf registration statement on Form S-3 (the "Existing Shelf Registration Statement"), which was declared effective on February 12, 2014, covering the offer and sale of up to $250 million of our securities. As of November 3, 2016, we had up to approximately $83.7 million available for future issuances under the Existing Shelf Registration Statement. However, because the Company's public float is less than $75 million as of the date of this filing, we will be limited in the amount of securities we may sell under the Existing Shelf Registration Statement to an amount no greater than one-third of our public float. This amount of availability would be sufficient to complete the Follow-On Rights Offering. In addition, because the Existing Shelf Registration Statement will expire in February 2017, the Company filed a new universal shelf registration statement on Form S-3 (the "New Shelf Registration Statement") covering the offer and sale of up to $250 million of our securities on October 14, 2016. The New Shelf Registration Statement is pending review by the SEC. Upon the effectiveness of the New Shelf Registration Statement, the Company will have an aggregate capacity of $333.7 million available, which amount may be limited in the event that the Company's public float is less than $75 million at the time the New Shelf Registration Statement becomes effective. The sale of additional equity will result in additional dilution to the Company’s existing stockholders and financing arrangements may not be available to the Company, or may not be available in amounts or on terms acceptable to the Company.