UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
(Mark One)
X Annual Report Pursuant To Section 13 Or 15(d) Of The Securities
___ Exchange Act Of 1934
For the Fiscal Year Ended June 30, 1997
---------------
Transition Report Pursuant To Section 13 Or 15(d) Of The Exchange Act
Commission file number 0-27226
-----------
SPINTEK GAMING TECHNOLOGIES, INC.
---------------------------------
(Exact name of small business issuer as specified in its charter)
California 33-0134823
---------- ----------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
901-B Grier Drive, Las Vegas, Nevada 89119 (702) 263-3660
- ------------------------------------------ ------------------------
(Address of priincipal executive offices.) (Issuer's telephone number)
Securities registered under Section 12(b) of the Exchange Act:
(Title of class) Name of exchange on which registered
- ---------------- ------------------------------------
None None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $0.002 par value
------------------------------
(Title of Class)
Indicate by mark whether the issuer (1) filed all reports to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes _X_ No___
Indicate by mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. ____
The issuer's revenues for the fiscal year ended June 30, 1997 were: $0.
There were 15,786,443 outstanding shares of common stock, par value $0.002 per
share, as of August 25, 1997. The aggregate market value of the voting stock of
the Registrant held by non-affiliates of the Registrant, as of August 25, 1997,
was $3,114,034 based on the last sales price on such date.
DOCUMENTS INCORPORATED BY REFERENCE: None
Transitional Small Business Disclosure Format: Yes ___ No _X_
<PAGE>
AMENDMENT TO FORM 10-KSB
------------------------
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
- ----------------------------------------------------------------------
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
- -------------------------------------------------
Directors and Executive Officers
The following table sets forth the names and ages of the directors and
executive officers of the Company, all positions held with the Company and a
description of the business experience of each individual for at least the past
five years.
<TABLE>
<CAPTION>
Name Age Title
- ---- --- -----
<S> <C> <C>
Gary L. Coulter 51 Chairman and Chief Executive Officer
Robert E. Huggins 50 Senior Vice President and Chief Financial Officer
Erik R. Batzloff 44 Vice President Compliance and Administration
Robert G. Guinn, Jr. 31 Vice President Research and Development
Malcolm C. Davenport V 45 Director
</TABLE>
Mr. Coulter has been Chairman of the Board and Chief Executive Officer
of the Company since October 1996; Vice Chairman and Chief Operating Officer of
the Company from April 1996 until October 1996; President, Chief Operating
Officer, and Director from April 1994 until March 1996 of Private Biologicals
Corporation, a developer of biological products and treatments for cancer;
private practice of law from August 1992 until December 1992; Chief Executive
Officer and Director from December 1992 until March 1994 of Omega International,
Inc., developer of natural products for the treatment of autoimmune diseases;
President, Chief Operating Officer, and Director from March 1986 until August 1,
1992 of Woodruff Investment Co., a developer, manager, and financier of real
estate investments; from April 1996 to present, Vice-Chairman of the Board of
Directors of Tapistron International, Inc., a publicly traded company that filed
for protection from creditors under Chapter 11 of the United States Bankruptcy
Code in June 1996 and emerged from bankruptcy August 2, 1997; and from January
1996 until April 1996 he practiced law with Malcolm C. Davenport V, a director
of the Company.
Mr. Davenport has been Director of the Company since September 1995 and
Secretary since October 1996; Mr. Davenport practiced law in Dalton, Georgia
from 1990 through November 1992 as a partner in the firm of Ponder and
Davenport, P. C.; from January 1993 through January 1995, he practiced law in
his own name in Lanett, Alabama and West Point, Georgia; from January 1996 until
April 1996 he engaged in the practice of law from West Point, Georgia with Gary
L. Coulter, Chairman of the Board and Chief Executive Officer of the Company;
and from January 1995 to the present, he has practiced as a certified public
accountant in Roanoke, Alabama, as Davenport & Sikes, Certified Public
Accountants.
Mr. Huggins has been Senior Vice President for the Company since April 1997
and Chief Financial Officer since November 15, 1995. Mr. Huggins is a Certified
Public Accountant, who from February 1992 until February 1995 served as the
Chief Accounting Officer and Secretary for Elsinore Corporation ("Elsinore"), a
publicly traded company. On November 1, 1995, eight months after his resignation
from Elsinore, the company filed for protection from creditors under Chapter 11
of the United States Bankruptcy Code. Prior to February 1992, Mr. Huggins served
in various capacities with other gaming companies, including: Vice President,
Finance and Chief Financial Officer for United Gaming, Inc. (now Alliance
Gaming, Inc.), as well as President of two of its casino subsidiaries;
Controller for Caesars Palace in Las Vegas; and Controller for M&R Investments,
Inc. (Dunes Hotel & Country Club). In September 1992, Mr. Huggins was nominated
by the bondholders of Gold River Hotel and Casino Corporation ("Gold River") to
serve as a Series B director to represent the bondholders pursuant to a plan of
reorganization under Chapter 11 as Gold River emerged from bankruptcy. On
February 9, 1996, Gold River once again filed for bankruptcy protection under
Chapter 11. Mr. Huggins plans to resign from from Gold River on or about
September 30, 1997. Prior to his experience in industry, Mr. Huggins was a CPA
with the firm of Haskins & Sells (now Deloitte & Touche, LLP) for four years.
<PAGE>
Mr. Batzloff joined the Company in November 1996 and has served as Vice
President - Compliance and Administration since April 1997. From September 1992
until November 1996, he had similar responsibilities with Mikohn, Inc., a
manufacturer of gaming devices and associated equipment. From July 1985 until
September 1992, Mr. Batzloff worked for United Gaming, Inc. (now Alliance Gaming
Corporation) beginning as a technical writer and ending his tenure with United
Gaming, Inc. as the Investor Relations Officer.
Mr. Guinn has been Vice President of Research, Development and
Manufacturing for the Company since April 1997. From January 1992 until joining
the Company, Mr Guinn was Vice President of Engineering for Casino Data Systems,
the manufacturer and developer of an on-line slot information and management
system. He was Southern Region Support Manager for Bally Systems from August
1987 until January 1992.
Compliance with Section 16 of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934 requires
directors, executive officers and 10% or greater shareholders of the Company
("Reporting Persons") to file with the Securities and Exchange Commission
initial reports of ownership (Form 3) and reports of changes in ownership of
equity securities of the Company (Form 4 and Form 5). To the Company's
knowledge, based solely on its review of the copies of such reports furnished to
the Company and written representations that certain reports were not required,
during the fiscal year ended June 30, 1997, the Reporting Persons have complied
with all applicable Section 16(a) filing requirements. The Company has listed
RBB Bank as a beneficial owner of more than ten percent (10%) of a class of
stock, but RBB disputes beneficial ownership. RBB has represented to the Company
that it holds stock for the true beneficial owners and that none of these owners
hold ten percent (10%) or more of the Company's stock.
ITEM 10. EXECUTIVE COMPENSATION
- --------------------------------
Compensation of Directors
For service on the Board of Directors, directors who are not employees
of the Company currently receive no compensation for each meeting of the Board
of Directors other than options to purchase common stock of the Company and
reimbursement for expenses which are related to attending board meetings. During
fiscal 1997 the sole director who is not an employee received options to
purchase 290,544 shares of common stock at the closing market price on the date
of grant. All but 45,272 of the options granted will have vested as of the
Filing Date of the 10-KSB as amended. Directors who are employees of the Company
receive no additional compensation for serving on the Board of Directors.
Executive Compensation
The following table sets forth information concerning compensation of
the chief executive officer and all other executive officers of the Company
whose salary and bonus exceeded an annual rate of $100,000 during the fiscal
years ended June 30, 1997 and 1996:
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Compensation
Annual Compensation Awards
------------------- ------
Other Annual Securities
Name and Fiscal Compensation($) Underlying
Principal Position Year Salary($)(1) Bonus($)(2) Options
- ------------------ ---- ------------ ----------- -------
<S> <C> <C> <C> <C> <C>
Gary L. Coulter (1)(3) .. 1997 156,000 0 18,206(4) 1,162,176
Chairman of the Board of 1996 28,615 0 0 0
Directors and Chief
Executive Officer
Lanier M. Davenport (5) . 1997 72,923 0 8,432(6) 0
Chairman of the Board ... 1996 65,640 0 68,483(6) 0
of Directors and Chief
Executive Officer until
October 18, 1996
Robert E. Huggins (1) ... 1997 150,000 0 10,015(7) 508,452
Senior Vice President and 1996 72,680 0 21,538(7) 0
Chief Financial Officer
========================= ============ ========= ========= ========= =========
<FN>
- ----------------
(1) Salaries in fiscal 1997 includes $30,000 paid to Mr. Coulter and
$30,000 paid to Mr. Huggins in a lump sum in February 1997 as an
incentive to remain with the Company during a possible change of
control situation. Mr. Coulter and Mr. Huggins will each receive an
additional $30,000 upon certain events occurring on or before December
31, 1997; or, barring the occurrence of such events the $30,000 will be
paid in a lump sum in January 1998.
(2) In June 1997 the Board of Directors approved a bonus plan based on
stock price performance for the executive officers, directors and
advisory directors of the Company. Please refer to the Long-Term
Incentive Plan Table below for a description of the plan.
(3) Mr. Coulter joined the Company as Vice Chairman and Chief Operating
Officer in April 1996 and assumed the positions of Chairman of the
Board and Chief Executive Officer in October 1996.
(4) Represents taxable fringe benefits for a leased car and apartment in
Las Vegas which were provided to Mr. Coulter during fiscal 1997.
(5) In October 1996, Mr. Davenport resigned as Chairman of the Board and
Chief Executive Officer and Mr. Coulter became Chairman and Chief
Executive Officer.
(6) Includes taxable fringe benefits for automobile allowance and health
insurance of $8,432 and $17,504 for fiscal 1997 and 1996, respectively.
In addition fiscal 1996 includes $50,979 of consulting for the
Company's subsidiary, Spintek Gaming, Inc., and the conversion of
options to purchase 4,000 common shares of Spintek Gaming, Inc. into
actual shares of the common stock of the Company in conjunction with
the acquisition of Spintek Gaming, Inc. on September 14, 1995.
(7) Includes taxable fringe benefits for automobile allowance and health
insurance of $10,015 and $6,238 for fiscal 1997 and 1996, respectively.
In addition fiscal 1996 includes $15,300 of consulting fees for
services rendered to the Company prior November 15, 1995, the date he
was hired as Chief Financial Officer by the Company.
</FN>
</TABLE>
<PAGE>
Employment Agreements
Gary L. Coulter was named Chairman of the Board of Directors and Chief
Executive Officer on October 18, 1996. In conjunction with his appointment as
Chairman and CEO, Mr. Coulter's employment agreement was modified and extended
for two years, until October 17, 1998. Mr. Coulter's annual base salary was
$200,000 at July 1, 1997 and pursuant to the terms of his employment agreement,
he is entitled to receive two years' severance pay if there is a change in
control of the Company or if he is terminated for any reason other than for
failure to perform his duties, conviction of a felony, dishonesty or illegal
acts. In addition, the Company pays for a leased automobile and an apartment for
Mr. Coulter. Mr. Coulter is also entitled to options to purchase a minimum of at
least 100,000 shares of common stock at the closing market price on the date(s)
of grant each year of his employment agreement and is eligible to participate in
employee benefit or bonus plan provided by the Company pursuant to the terms of
such agreement.
Robert E. Huggins, Chief Financial Officer, has an employment agreement
with the Company extending through October 17, 1998. Mr. Huggins' annual base
salary was $140,000 at July 1, 1997 and pursuant to the terms of his employment
agreement, he is entitled to receive two years' severance pay if there is a
change in control of the Company; or, if he is terminated for any reason other
than for failure to perform his duties, conviction of a felony, dishonesty or
illegal acts he is entitled to receive one years pay as severance. In addition,
the Company pays $750 per month to Mr. Huggins for an automobile allowance. Mr.
Huggins is also entitled to options to purchase a minimum of at least 50,000
shares of common stock at the closing market price on the date(s) of grant each
year of his employment agreement and is eligible to participate in employee
benefit or bonus plan provided by the Company pursuant to the terms of such
agreement.
Change-in-Control Severance Agreements
For the purpose of certain employment agreements of the Company, a
"Change in Control" generally is deemed to occur if: (i) any person or group of
affiliated persons (other than the Company, subsidiary of the Company or any
employee benefit plan of the Company) becomes the owner of 40% or greater of the
voting securities of the Company; or (ii) the Company is involved in a merger or
consolidation (with exceptions for certain events) or (iii) the persons who
constituted a majority of the Board of Directors on October 18, 1996 cease to
constitute the majority. As part of Mr. Coulter's and Mr. Huggins' employment
agreements, in the event of a Change of Control, each may elect to consider
themselves immediately terminated and entitled to two years' salary as
severance, to be paid in a lump sum in no less than thirty (30) days from the
earlier of the date of the Change of Control and/or the date either or both of
them elects termination. No change of control has occurred under those
agreements.
In addition to the Change of Control provisions in the respective
employment agreements discussed above, incentives granted to Mr. Coulter and Mr.
Huggins pursuant to the Company's Long- Term Incentive Plan mature immediately
upon Change of Control or termination for any reason.
Options
The tables below set forth certain information regarding options
granted to the Named Officers during fiscal 1997.
<PAGE>
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants
---------------------------------------------------------------------------
Percent of
Number of Total
Securities Options Exercise
Underlying Granted to or Base
Options Employees in Price Expiration
Name Granted (1) Fiscal Year Per Share Date
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gary L. Coulter 600,000 (2) 26.81% $0.50 12/09/06
100,000 4.74% 0.31 2/12/07
100,000 4.74% 0.20 6/02/07
362,176 16.19% 0.20 6/03/07
Robert E. Huggins 250,000 (2) 11.17% 0.50 12/09/06
50,000 2.23% 0.31 2/12/07
50,000 2.23% 0.20 6/02/07
158,452 7.08% 0.20 6/03/07
Erik R. Batzloff 100,000 4.74% 0.50 12/09/06
45,272 2.02% 0.20 6/03/07
Robert G. Guinn, Jr. 100,000 4.74% 0.28 4/08/07
45,272 2.02% 0.20 6/03/07
- --------------------
<FN>
(1) The options have a ten year term and vest at the discretion of the
Board of Directors. Vesting schedules vary from 100% of the option
shares becoming exercisable on the date of grant to 25% of the option
shares becoming exercisable on the date of grant with an additional 25%
of the shares covered thereby becoming exercisable on each successive
anniversary date, with full vesting occurring on the third anniversary
date.
(2) These options were specifically approved by the stockholders of the
Company at the Annual Meeting on December 10, 1996.
</FN>
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year End Option Values
Number of Securities Value of
Underlying Unexercised In-The-Money Options
Options at June 30, 1997 atJune 30, 1997
Shares Value ------------------------- --------------
Name Acquired Realized Exercisable Unexercisable Unexercisable Exercisable
- ---- -------- -------- ----------- ------------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Gary L. Coulter . __ $__ 1,016,904 145,272 $ 164,666 $ 50,845
Robert E. Huggins __ __ 435,816 72,636 71,911 25,423
Erik R. Batzloff __ __ 36,318 108,954 5,211 15,634
Robert G. Guinn . __ __ 36,318 108,954 10,711 32,134
</TABLE>
Other Long-Term Incentive Awards
Effective June 1, 1997, the Company adopted a bonus plan to provide
incentive compensation to certain key employees, directors and advisory
directors. The plan provides for stock appreciation rights to employees covered
by the plan. Compensation under the plan is based on the award of performance
units, which are defined as a percentage of the total market value of the
Company and which have a value related to the appreciation in the value of the
Company's common stock. The maximum number of performance units that may be
issued under the plan shall not exceed an aggregate of twelve percent (12%) of
the total market value of the Company.
Performance units generally are vested upon issuance and mature at a rate
of 25% per year over a four year period from the date granted, but the schedule
may be varied by the terms of the specific grant. After the first anniversary of
any grant of performance units, or earlier maturity, participants may elect to
receive payments which represent the appreciation in value of the performance
unit from the date granted through the date such payment is elected. A
participant is entitled to receive payments following termination if an election
to receive such payments is made prior to the third anniversary of termination;
or, at the Company's discretion following the third anniversary of termination
if no such election is made by the participant.
The following table sets forth the number of performance units granted to
each of the named executives in fiscal 1997 under the Company's Bonus Plan which
was adopted by the Board of Directors in June 1997.
Long-Term Incentive Plans -- Awards in Last Fiscal Year (1)
<TABLE>
<CAPTION>
Number of Performance or
Shares, Units Other Period
Or Other Until Maturation
Name Rights # Or Payout
- ---- -------- ---------------
<S> <C> <C>
Gary L. Coulter 46.93 6/3/97 - 6/3/01
Robert E. Huggins 20.53 6/3/97 - 6/3/01
Erik R. Batzloff 5.87 6/3/97 - 6/3/01
Robert G. Guinn, Jr. 5.87 6/3/97 - 6/3/01
<FN>
(1) Units so awarded are exercisable commencing 12 months after the grant
date (or upon earlier maturity) with 25% of the units covered thereby
becoming exercisable at that time with an additional 25% of the units
becoming exercisable on each successive anniversary date, with full
maturity occurring on the fourth anniversary date. However, the units
granted to Mr. Coulter and Mr. Huggins are subject to accelerated
maturity in the event of termination of employment with the Company
for any reason. The value of each unit is evidenced by a percentage
(1/10th of 1%) of the increase in the market value of all of the
common stock of the Company from the date of grant to each annual
measurement date; or, the date on which an individual terminates based
on his then mature units.
</FN>
</TABLE>
<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ------------------------------------------------------------------------
The following table sets forth certain information with respect to the
beneficial ownership of the Company's common stock as of the Filing Date of the
10-KSB as to (a) each director, (b) each executive officer identified in the
Summary Compensation Table below, (c) all officers and directors of the Company
as a group, and (d) each person known to the Company to beneficially own five
percent or more of the outstanding shares of common stock.
<TABLE>
<CAPTION>
Name and Address of Amount of Percent of
Title of Class Beneficial Owner (1) Shares Class (2)(3)
- -------------- ----------------------------------- --------- ------------
Directors and Executive Officers:
<S> <C> <C>
Common .......... Malcolm C. Davenp V(1) 1,392,219(4) 8.7%
Common .......... Gary L. Coulter(1) 1,027,904(5) 6.1%
Common ............Robert E. Huggins(1) 558,452(6) 3.4%
Common ............All directors and executive officers
as a group(6 persons)(1) 3,137,029(7) 17.7%
Five Percent (5%) or Greater Shareholders:
Common ......... RBB Bank Aktiengesellschaft
Burgring 16, 8010 Graz, Austria 20,303,482(3) 65.7%
Common ........ Lanier M. Davenport, Sr.
P.O. Box 178
Lookout Mountain, TN 37350...... 1,220,776 7.7%
Common ........ Starr S. Davenport
P.O. Box 187
Lookout Mountain, TN 37350 ..... 1,096,953(8) 6.9%
- -----------------
<FN>
(1) The address of all directors and executive officers is c/o the
Company, 901-B Grier Drive, Las Vegas, Nevada 89119.
(2) Percent of class is based on the number of shares outstanding as of
September 15, 1997. Percent of class for RBB Bank Aktiengesellschaft
("RBB") includes approximately 15,065,000 additional shares. RBB has
the right to acquire common stock through conversion privileges
attached to the Company's preferred stock held by RBB (See (3) below
regarding RBB's conversion rights) plus, with respect to each named
person, the number of shares of common stock, if any, which the
stockholder has the right to acquire within 60 days of such date. RBB
disputes its designation as a beneficial owner. RBB takes the position
that it does not control or direct the distribution or voting of the
shares and that RBB only holds the shares for the true beneficial
owners. RBB has represented to the Company that none of the beneficial
owners it holds shares for has beneficial ownership of five percent
(5%) or greater of the class.
(3) The percentage for RBB has been computed after giving effect to certain
rights to acquire common stock arising out of the Company's issuance of
its Series A 4% Convertible Preferred Stock. At September 15, 1997, RBB
Bank was the holder of all of the Company's 7,313 outstanding preferred
shares. Had RBB converted its preferred shares as of September 15,
1997, there would have been a substantial dilution of the percentage of
class held by the named shareholder. RBB would have received an
additional approximate 15,065,000 shares based on the five day average
of the closing bid price of the Company's common stock. (The five days
used for this calculation for computational purposes only was the five
days ended September 15, 1997. Changes in the Company's closing bid
price of its common stock will effect the number of shares subject to
conversion.) Such a conversion, had it occurred as of September 15,
1997, would have given RBB control of approximately
<PAGE>
66% of the outstanding common stock. See Footnote 2 for RBB
representations that its does not beneficially own the above stock.
(4) Includes 313,416 shares owned and 290,544 shares subject to options
that are currently exercisable or will become exercisable within 60
days, 313,416 shares held by Mr. M. Davenport's spouse, and 474,843
shares by the Malcolm C. Davenport V Family Trust in which Mr. M.
Davenport has beneficial control, though no economic interest.
(5) Includes 11,000 shares owned and 1,016,904 shares subject to options
that are currently exercisable or will become exercisable within 60
days.
(6) Includes 50,000 shares owned and 508,452 shares subject to options that
are currently exercisable or will become exercisable within 60 days.
(7) Includes 1,949,854 shares subject to options that are currently
exercisable or will become exercisable within 60 days.
(8) Includes 470,121, shares held by the miner children of Lanier M.
Davenport and Starr S. Davenport, with respect to which each disclaims
any beneficial ownership. As custodial parent, Ms Davenport has the
authority to vote the miner children's shares on their behalf.
</FN>
</TABLE>
Changes in Control
On August 6, 1996 the Board of Directors was granted authority by a
consent of a majority of the stockholders of the Company to issue up to 100,000
shares of preferred stock, without nominal or par value per share. Pursuant to
the provisions of the terms of a $7,143,000, 4% Convertible Debenture with RBB
Bank Aktiengesellschaft (RBB), the Board of Directors issued shares of preferred
stock to satisfy the underlying debt of said Debenture while incorporating
certain rights of the Debenture holder into the preferred stock. RBB currently
holds 7,313 shares of preferred stock. All such preferred stock issued to the
Debenture holder plus any accrued and unpaid dividends thereon will be converted
to common stock of the Company on or before December 31, 1999 pursuant to the
terms of the Debenture.
Certain mandatory and optional redemption provisions apply to the
preferred stock. The Company has the right to redeem some or all of the
preferred stock in the event that the shareholder's optional conversion rights
are exercised. The Company has the obligation to redeem the preferred stock in
the event that the Company has transfers substantially all of its assets or if a
change in control occurs (i.e. (i) anyone other than the Company or certain
affiliates owns a majority of the voting stock of the Company, (ii) the Company
is involved in certain merger or consolidations, or (iii) the persons who
constituted the majority of the Board of Directors of the Company on July 10,
1996 cease to constitute a majority).
In addition, the Company has issued Warrants to Third World
Investments, Ltd. to acquire 250,000 shares of common stock of the Company at an
exercise price that ranges from $1 to $2 per share exercisable in the whole or
part between October 1, 1996 and September 30, 2001. The exercise price is
subject to reduction under certain circumstances.
The effect of the preferred stock issued to satisfy the indebtedness of
the Debenture and the outstanding Warrants is to create the possibility of a
change in control of the majority of the majority of the common stock of the
Company.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- --------------------------------------------------------
The Lanier M. Davenport, Sr. Family Trust and the Malcolm C. Davenport V
Family Trust, the trustees of which are Malcolm C. Davenport V, Director of the
Company and brother of Lanier M. Davenport, former Chairman and Chief Executive
Officer of the Company and current shareholder, and Malcolm C. Davenport, Jr., a
stockholder of the Company and father of Lanier M. Davenport and Malcolm
<PAGE>
C. Davenport V, made advances in the amount of $70,000 during fiscal 1997 and
$1,920,000 during the year ended June 30, 1996. The $70,000 advanced in fiscal
1997 was received on July 12, 1996 and was repaid with interest on July 31,
1996. $1,000,000 of the $1,920,000 advanced in fiscal 1996 was converted into
454,545 shares of common stock of the Company on April 14, 1996 and an
additional $440,000 was converted into 401,141 shares of common stock of the
Company on July 16, 1996. All of the shares of common stock issued in
satisfaction of this debt were issued with restrictive legends.
The remaining $480,000 plus accrued interest of $15,542 was converted
to demand notes which bear an interest rate of 10% per annum and are to be
repaid at $20,000 per month including interest. The unpaid principal balance on
the notes at September 30, 1997 was approximately $279,000 plus accrued
interest.
On August 14, 1997, Spinteknology, Inc., a wholly-owned subsidiary of
the Company, entered into a $500,000, 12% promissory note agreement with the
Malcolm C. Davenport V Family Trust, a stockholder. The note matures on the
earliest of September 14, 1998, or upon receipt by Spintek Gaming Technologies,
Inc. of $500,000 or more in net proceeds from the issuance of its common stock
and is secured by certain intellectual property including patent applications
and designations of rights to file patent applications owned by the subsidiary.
On October 18, 1996, Mr. Lanier M. Davenport resigned as Chairman of
the Board of Directors and as Chief Executive Officer of the Company. Mr.
Davenport, in conjunction with his resignation, contributed 1,300,000 of the
shares of common stock he owned in the Company back to the Company in an effort
to enhance shareholder value. Such contribution of shares was recorded as
treasury stock on December 31, 1996 with a basis at par value, or $2,600. Prior
to July 1, 1996, Mr. Lanier M. Davenport, or companies with which he was
affiliated, made loans and advances to the Company in the aggregate amount of
$356,000 at an annual interest rate of 10% in the form of demand notes, of which
$145,108, plus accrued and unpaid interest of $10,951, remained outstanding as
of June 30, 1996. During fiscal 1997, the Company accrued additional interest in
the amount of $2,964 and repaid $123,694 and $10,612 for principal and interest,
respectively. The remaining $21,414 of principal and $3,304 of interest were
contributed back to the Company in an effort to enhance shareholder value. Such
contribution was recorded as additional paid in capital by the Company on
December 31, 1996. At June 30, 1997 the Company did not owe any monies to Mr.
Lanier M. Davenport.
Malcolm C. Davenport, Jr., stockholder of the Company and father of
both Lanier M. Davenport and Malcolm C. Davenport V, made loans to the Company
during fiscal 1996 in the aggregate amount of $418,500 at an annual interest
rate of 10% in the form of demand notes. At June 30, 1996, the balance payable
for principal and accrued interest on the notes was $323,000 and $21,850,
respectively. During fiscal 1997, the Company accrued additional interest in the
amount of $15,866 and paid $50,000 to Mr. Malcolm C. Davenport, Jr., of which
$30,000 was applied to principal with the remaining $20,000 applied to interest
payable on the notes. On December 31, 1996 the unpaid principal and interest in
the amount of $303,000 and $7,717 were contributed back to the Company in an
effort to enhance shareholder value. Such contribution was recorded as
additional paid in capital by the Company. At June 30, 1997 the Company did not
owe any monies to Mr. Malcolm C. Davenport, Jr.
Sarah L. Davenport, stockholder of the Company and mother of both
Lanier M. Davenport and Malcolm C. Davenport V made loans in the aggregate
amount of $20,000 in the form of demand notes with an annual interest rate of
10% during fiscal 1996. At June 30, 1997 none of the principal or interest
accrued on the notes had been repaid. During fiscal 1997, an additional $2,200
of interest was accrued on the debt. At June 30, 1997 the unpaid principal
balance on the notes remained at $20,000, plus accrued of $4,042.
Davenport Investments, Inc., a corporation controlled by Lanier M.
Davenport was party to an agreement whereby it received lease payments for
office space used by the Company for its corporate offices in Chattanooga,
Tennessee. Such agreement terminated September 30, 1996. During the years ended
June 30, 1997 and June 30, 1996, the Company made lease payments to Davenport
Investments, Inc. in the amount of $3,655 and $19,346, respectively.
During April 1997, Mr. Malcolm C. Davenport V made loans in the
aggregate amount of $150,000 in the form of demand notes with an annual interest
rate of 9.5%. On May 7, 1997 the principal and accrued interest of $1,015 on the
notes was repaid.
<PAGE>
Coulter & Davenport, Attorneys-at-Law, whose partners were Gary L.
Coulter, Esquire, Chairman and Chief Executive Officer of the Company, and
Malcolm C. Davenport V, Esquire, Director of the Company, billed the Company for
legal fees and expenses in fiscal 1996 in the aggregate amount of $162,754 of
which $117,754 remained outstanding as of June 30, 1996. On April 1, 1996, Mr.
Coulter resigned from the partnership to devote full time to his duties with the
Company. During fiscal 1997 the balance owed at June 30, 1996 was repaid.
Interest expense to all related parties was $51,584, $65,418 and
$117,002 for the periods March 31, 1995(Inception) to June 30, 1996, the year
ended June 30, 1997, and March 31, 1995 (Inception) to June 30, 1997,
respectively.
The Company has made loans as part of an agreement dated April 13, 1995
to Spintek International, Inc., a corporation controlled by Lanier M. Davenport,
former Chairman and Chief Executive Officer of the Company and current
shareholder, in the aggregate amount of approximately $186,000 at an annual
interest rate of 10% in the form of demand notes, of which $159,910 plus accrued
and unpaid interest of $17,366 remained outstanding as of June 30, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
SPINTEK GAMING TECHNOLOGIES, INC.
By: /s/ GARY L. COULTER
--------------------
Gary L. Coulter
Chairman of the Board
Pursuant to requirements of the Securities Exchange Act of 1934, this
report has been duly signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature
/s/ GARY L. COULTER October 24, 1997
- -------------------
Gary L. Coulter
Chairman of the Board, Chief Executive
Officer, and Director (Principal
Executive Officer)
/s/ ROBERT E. HUGGINS October 24, 1997
- ----------------------
Robert E. Huggins
Senior Vice President, Chief Financial
Officer (Principal Financial and
Accounting Officer)
/s/ MALCOLM C. DAENPORT, V October 24, 1997
--------------------------
Malcolm C. Davenport, V
Secretary and Director
