UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
_X_ Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended June 30, 1999 or
Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Commission File Number: 0-27226
SPINTEK GAMING TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its Charter)
Nevada 33-0134823
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1857 Helm Drive, Las Vegas, Nevada 89119 (702) 263-3660
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(Address of principal executive offices) (Issuer's telephone number)
Securities registered under Section 12(b) of the Exchange Act:
Title of each class: Name of Exchange on which registered:
-------------------- -------------------------------------
None None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.002 per share
-----------------------------------------
(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, 1999 were: $7,959,249.
There were 142,663,196 outstanding shares of common stock, par value $0.002 per
share, as of August 31, 1999. The aggregate market value of the voting stock of
the Registrant held by non-affiliates of the Registrant, as of August 31, 1999,
was $ 14,976,622 based on the last sales price on such date.
Transitional Small Business Disclosure Format: Yes ___ No _X_
<PAGE>
AMENDMENT TO FORM 10-KSB
PART III
ITEM 9. Directors, executive 0fficers, 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 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.
Name Age Title
- ---- --- -----
Gary L. Coulter 53 Chairman and Chief Executive Officer
Robert E. Huggins 52 President and Chief Operating Officer
Erik R. Batzloff 46 Vice President - Compliance and
Administration, Secretary
George P. Miller 55 Chief Financial Officer, Treasurer
Malcolm C. Davenport V 47 Director
Thomas C. Burns, Ph.D. 60 Director
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 July 1995 of Private Biologicals
Corporation, a developer of biological products and treatments for cancer; 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 January 1998,
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; Director of Tapistron International from April 1996 to present;
private practice of law in the state of Georgia from August 1992 until April
1996 (from January 1996 until April 1996, private practice of law with Malcolm
C. Davenport V, a director of the Company.
Mr. Huggins served as Senior Vice President for the Company since
April, 1997 and Chief Financial Officer since November 1995. As of August 1,
1998, Mr. Huggins yielded his position as Senior Vice President and Chief
Financial Officer, and was named President and Chief Operating Officer. Mr.
Huggins is a Certified Public Accountant ("CPA"), who from February 1992 until
February 1995 served as the Chief Accounting Officer and Secretary for Elsinore
Corporation ("Elsinore"), a publicly traded company. In
22
<PAGE>
November 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). Prior to his experience in industry, Mr. Huggins was a CPA with
the firm of Haskins & Sells (now Deloitte & Touche, LLP) for two years.
On August 5, 1999, Robert E. Huggins resigned from his position as
President and Chief Operating Officer of the Company. Pursuant to the terms of
his employment contract dated June 10, 1999, Mr. Huggins will be a consultant to
the Company commencing on or before July 1, 2000 for which he will be paid a
consulting fee of $10,000 per month through December 21, 2005. See "Employment
Agreements" elsewhere for additional information.
Mr. Batzloff joined the Company in November 1996 and has served as
Vice President - Compliance and Administration since 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, Inc.) beginning as a technical writer and ending his tenure with United
Gaming, Inc. as the investor relations officer.
Mr. Miller joined the Company on August 1, 1998 as Chief Financial
Officer. From July 1996 through July 1998, Mr. Miller was Director of Finance
for Rio Hotel & Casino, Inc., where he was responsible for financial reporting
activities, including SEC filings, and the coordination of internal/external
audit functions. From February 1994 through June 1996, he served as assistant
treasurer and corporate controller for Mikohn Gaming Corporation where he was
responsible for financial reporting and SEC filings for operations that included
multiple manufacturing/distribution facilities in the U.S. and internationally.
From 1991 to 1994, Mr. Miller was vice president and corporate controller of
Sahara Resorts, Inc., a public company that operated four hotel/casino
facilities in Las Vegas and Laughlin, Nevada.
Mr. Davenport has been a Director of the Company since September 1995;
Secretary of the Company from October 1996 through February 1999. Mr. Davenport
was a partner in the law firm of Ponder and Davenport, P.C. from 1990 through
November 1992 and has practiced law in West Point, Georgia from December 1992
through the present. From January 1996 until April 1996, he and Mr. Coulter were
partners in the law firm of Coulter & Davenport located in Atlanta, Columbus and
West Point, Georgia. Mr. Davenport is a member of both the Alabama and Georgia
Bar Associations and is a Certified Public Accountant and a member of the
Alabama CPA Society. From January 1995 to June 1998, he was a partner in the
firm of Davenport & Sikes, Certified Public Accountants in Roanoke, Alabama. He
is a director of several companies, including public companies American Artists
Film Corporation, and he is also a director at ITC DeltaCom, Inc., ITC Holdings
Company, Inc. and several of its affiliates. Mr. Davenport earned his Juris
Doctorate from Cumberland School of Law at Sanford University in Birmingham,
Alabama.
Dr. Burns has been a director since December, 1998 when he was
appointed by the remaining two board members to replace Mr. Patrick R. McGrath,
who resigned to pursue his other business interests. Dr. Burns earned his Ph.D.
in biopsychology from the University of Georgia, Athens, Georgia in 1974. From
December 1978 to the present, he has maintained a private practice, initially in
Savannah, Georgia through April 1989 and in Jonesboro and Mableton, Georgia
since April 1989, specializing in individual and group psychotherapy,
psychological assessment, consultation to management, team building, executive
mentoring, and staff development. In addition to his private practice, he has
served as a program director for Meadowbrook Rehabilitation Group of Atlanta,
managing their Subacute Neurological Program from May 1990 to February 1993 and
their Community Re-entry Program from February 1993 to January 1994.
23
<PAGE>
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, 1999, the Reporting Persons have complied
with all applicable Section 16(a) filing requirements. The Company has listed
RBB 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
- -------------------------------
Director Compensation
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
the year ended June 30, 1999, Dr. Thomas C. Burns, Ph.D., a member of the Board
of Directors for the period December 1998 to the current date, received options
to purchase 100,000 shares of the Company's Common Stock based on the closing
price on the date of grant. Pursuant to the anti-dilution provisions of the
option agreement and The 1996 Stock Option Plan, as amended, Dr. Burns and Mr.
Davenport were issued an additional 644,857 and 2,227,311 options to acquire
Common Stock, respectively, in connection with the conversion of the Preferred
Stock and the Notes.
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 $100,000 during the fiscal
years ended June 30, 1999, 1998 and 1997:
24
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
--------------------------
Long Term
Compensation Awards
Annual Compensation
- -------------------------------- ---------- --------------- --------------- ---------------------- --------------------
Name and Fiscal Salary ($) Bonus ($) Other Annual Securities
Principal Position Year (1) (2) Compensation ($) Underlying Options
- -------------------------------- ---------- --------------- --------------- ---------------------- --------------------
<S> <C> <C> <C> <C> <C>
Gary L. Coulter (1) (3)
1999 333,980 10,000 34,500(4) 16,390,320(7)
Chairman of the Board Of 1998 248,067 0 39,346(4) 338,289
Directors and Chief Executive 1997 156,000 0 18,206(4) 1,162,176
Officer
- -------------------------------- ---------- --------------- --------------- ---------------------- --------------------
Robert E. Huggins (1) (6) 1999 178,846 0 15,167(5) 7,179,552(7)
1998 170,670 0 9,000(5) 155,431
President and Chief Operating 1997 150,000 0 10,015(5) 508,452
Officer
- -------------------------------- ---------- --------------- --------------- ---------------------- --------------------
<FN>
- ----------------
(1) Salaries in fiscal 1998 and1997 includes $30,000 for each year paid to
Mr. Coulter and $30,000 each year paid to Mr. Huggins in lump sums in
November 1997 and February 1997, as an incentive to remain with the
Company as a result of a possible change in control situation which
occurred in November 1996.
(2) In June 1997, the Board of Directors approved a bonus plan based on the
total market value of all the issued and outstanding Common Stock of
the Company for the directors, key employees and advisory directors of
the Company. (See "Other Long-Term Incentive Awards" below for a
description of the plan). The $10,000 bonus to Mr. Coulter represents
an accrual of incentive compensation based on cumulative aggregate
sales of the Company's product from inception through June 30, 1999.
(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. He relinquished his
position as President and Chief Operating Officer to Mr. Huggins in
July 1998. He reassumed such positions in August 1999 upon receipt of
Mr. Huggins resignation.
(4) Represents taxable fringe benefits for a leased car and apartment in
Las Vegas that were provided to Mr. Coulter during fiscal 1999, 1998
and 1997.
(5) Represents taxable fringe benefits for automobile allowance provided to
Mr. Huggins during fiscal 1999, 1998 and 1997, and reimbursement of
golf course fees during fiscal 1998.
(6) Mr. Huggins relinquished his roles as Senior Vice President in July
1998 and Chief Financial Officer in August 1998 to become President and
Chief Operating Officer of the Company. In August 1999, Mr. Huggins
resigned from the Company. Commencing on or before July 1, 2000, Mr.
Huggins will be paid a fee of $10,000 per month for consulting services
through December 31, 2005.
(7) Represents stock options issued pursuant to the anti-dilution provision
contained in Stock Option agreement and Plan. In fiscal 1999, prior to
the implementation of the anti-dilution provision, Mr. Coulter and Mr.
Huggins received 700,000 and 300,000 options to acquire the Company's
common stock.
</FN>
</TABLE>
25
<PAGE>
Employment Agreements
- ---------------------
Gary L. Coulter, Chairman of the Board of Directors and Chief Executive
Officer since October 18, 1996, entered into an Employment Agreement with the
Company effective October 18, 1998. Mr. Coulter's employment agreement extends
until June 30, 2005, at which time the agreement will be automatically renewed
for another term of approximately 40 months. Mr. Coulter's base salary from the
effective date is $450,000 through December 31, 2000. Mr. Coulter is also
entitled to additional compensation based upon the cumulative aggregate sales of
the AccuHopper, AccuDrop and/or AccuFill Systems since the Company's inception.
Pursuant to the terms of his agreement, he is entitled to receive in a single
lump sum payment 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. Mr. Coulter is
entitled to six months' severance pay if he resigns. In addition, the Company
pays an automobile allowance, certain personal air travel and life insurance
payable to his designated beneficiary. Mr. Coulter is also entitled to options
to purchase a minimum of at least 1,489,714 shares of Common Stock each year of
his employment agreement at the closing market price on the date(s) of grant. He
is eligible to participate in any employee benefit or bonus plan provided by the
Company pursuant to the terms of such agreement.
Robert E. Huggins was Senior Vice President and Chief Financial Officer
until July 1, 1998 when he was named President and Chief Operating Officer. On
June 10, 1999, Mr. Huggins and the Company entered into an employment agreement
divided into two parts, an Employment Term and a Consulting Term, and which
extends through December 31, 2005. The Employment Term was scheduled to expire
on December 31, 2000 unless terminated prior to that date by either party upon
15 days notice to the other party. Mr. Huggins' terminated the Employment Term
effective August 5, 1999. Mr. Huggins was paid a salary during the Employment
Term of $200,000 per year together with a car allowance of $750 per month.
During the Consulting Term, Mr. Huggins is to be paid a consulting fee of
$10,000 per month for up to 40 hours of monthly service. In addition, Mr.
Huggins is to be reimbursed his country club initiation fee at the rate of
$858.60 per month through July 31,2001 regardless of which contractual term is
in effect. The Consulting Term is scheduled to commence on or before July 1,
2000. In addition, pursuant to the terms of his option agreements, Mr. Huggins
has options to acquire 7,179,552 shares of the Company's common stock at a
weighted average option price of approximately $0.03 per share, with expiration
dates from June 2007 to April 2009.
Change in Control Severance Agreement
- -------------------------------------
For the purpose of Mr. Coulter's Employment Agreement with the Company,
a "Change in Control" generally is deemed to occur if: (i) any person or group
of affiliated persons other than the Company or certain affiliated entities
becomes the owner of 40% or greater of the voting securities of the Company;
(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 Employment Agreement, in the event of a Change in Control, Mr. Coulter
may elect to consider himself 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 in Control and/or the date he elects
termination. No Change in Control has occurred under those agreements.
In addition to the Change in Control provision in Mr. Coulter's
Employment Agreement discussed above, incentives granted to Mr. Coulter pursuant
to the Company's Long-Term Incentive Plan mature immediately upon Change in
Control or termination for any reason.
26
<PAGE>
Options
- --------
During the fiscal year ended June 30, 1999, the Company issued options
to acquire the Company's Common Stock , at prices based on the closing price on
the issue date of the options, to employees, officers, directors and
consultants, through April 26, 1999, the date the Company received notices of
conversion from the holders of the Preferred Stock and Notes. On April 29, 1999
the Company issued 25,918,667 shares of Common Stock to the holder of the
Preferred Stock and 35,738,975 shares to the holders of the Notes, each issuance
representing one-half of the ultimate number of Common Shares that were to be
issued to such holders based on the conversion formulas. On April 30, 1999, a
majority of the shareholders consented to an increase in the number of
authorized shares of Common Stock from 100,000,000 shares to 500,000,000 shares
to accommodate the number of shares to be issued in the conversions. On May 7,
1999, the holders of the Preferred Stock and Notes were issued 25,918,667 and
35,738,975 Common Shares, respectively, with an additional 104,353 shares to be
issued to the holders of the Notes in the future.
Pursuant to the terms of the Company's Plan, as amended and approved by
the stockholders at the January 21, 1998 annual meeting, an anti-dilution
provision of the Plan was activated whereby the holders of stock options could
not have their equity position diluted or enhanced by the issuance of or
reduction in the number of Common Shares issued. This provision also provided
that the total amount to be paid by an option holder in exercise of the original
options could not be increased or decreased, thereby requiring that the exercise
price be adjusted based on any increase or decrease in the number of options
available to each individual option holder. On May 6, 1999, a majority of the
Common Stock shareholders approved an increase in the number of options under
the Plan from 4,000,000 to 60,000,000.
The tables below set forth certain information regarding stock options
issued to the Named Executive Officers during the year ended June 30, 1999, with
the first table showing new options issued during the year and the second table
showing the options issued pursuant to the anti-dilution formula as described
above:
27
<PAGE>
<TABLE>
<CAPTION>
Option Grants in Last Fiscal Year
Individual Grants
- -------------------------------------------------------------------------------------------------------
Number of Securities Percent of Total
Underlying Options Options Granted to
Granted Employee in Fiscal Exercise or Base Expiration
Name Year Price Per Share Date
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Gary L. Coulter 4,469,143 12.37% 0.0295 12/09/98
744,857 2.06% 0.0295 12/09/08
1,774,913 4.91% 0.0295 12/09/08
744,857 2.06% 0.0269 06/02/07
744,857 2.06% 0.0295 12/09/08
2,697,694 7.46% 0.0269 06/03/07
1,489,714 4.12% 0.0295 12/08/08
1,489,714 4.12% 0.0403 12/31/09
2,234,571 6.18% 0.0252 04/22/09
- -------------------------------------------------------------------------------------------------------
Robert E. Huggins 372,429 1.03% 0.0295 12/09/08
372,429 1.03% 0.0269 06/02/07
372,429 1.03% 0.0295 12/09/08
1,862,143 5.15% 0.0295 12/09/08
1,180,241 3.27% 0.0269 06/03/07
785,310 2.17% 0.0295 12/09/08
1,489,714 4.12% 0.0295 12/09/08
744,857 2.06% 0.0252 04/22/09
- -------------------------------------------------------------------------------------------------------
George P. Miller 744,857 2.06% 0.0295 12/09/08
744,857 2.06% 0.0295 12/09/08
- -------------------------------------------------------------------------------------------------------
Erik R. Batzloff 744,857 2.06% 0.0295 12/09/08
204,285 0.57% 0.0295 12/09/08
337,212 0.93% 0.0269 06/03/07
- -------------------------------------------------------------------------------------------------------
<FN>
- ------------
(1) Represents option grants pursuant to the anti-duration provision of
option agreements and Plan. During fiscal 1999, prior to the issuance
of the anti-dilutive options, Mr. Coulter, Mr. Huggins and Mr. Miller
received 700,000, 300,000 and 200,000 options, respectively, to acquire
the Company's Common Stock.
(2) With the exception on the anti-dilutive options, which retained the
expiration date of the options being replaced, the options reflected
herein have a ten-year term and vest at the discretion of the Board of
Directors. There are three primary vesting schedules including (I) 100%
of the option shares becoming exercisable on the date of grant; (ii)
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; and (iii) 25% of the option shares vesting on
each of the first, second, third and fourth anniversary dates.
</FN>
</TABLE>
28
<PAGE>
Repricing of Stock Options
- --------------------------
Certain Stock Options Repriced - Effective December 10, 1998, the non-employee
members of the Board of Directors approved a repricing of all stock options
other than those held by the non-employee directors with prices exceeding the
closing price of Common Stock on that date. The Company's Plan was adopted as an
incentive to all employees to excel in their work effort for the Company which,
as a result, would increase share value to all stockholders. The non-employee
directors noted that although 80% of the outstanding stock options had per share
prices of in excess of $0.40, with 57% of the options having per share prices of
in excess of $0.50, the Common Stock has closed consistently under $0.40 per
share for an extended period. The non-employee directors accordingly concluded
that many of the options outstanding under the Plan were not providing the
employees with the intended incentive, repricing 2,904,934 options at the
closing price on December 10, 1998 of $0.22 per share.
Anti-Dilutive Options Issued in Exchange for Existing Options - Pursuant to the
terms of the Company's Plan and individual stock option agreements, as a result
of the conversions of the Preferred Stock and Notes an anti-dilution provision
was activated whereby the holders of stock options could not have their equity
position diluted or enhanced by the issuance of or reduction in the number of
Common Stock shares issued. This provision also provided that the total amount
to be paid by an option holder in exercise of the original options could not be
increased or decreased, thereby requiring that the exercise price be adjusted
based on any increase or decrease in the number of options available to each
individual option holder. As a result, 5,934,928 pre-conversion options with a
weighted average exercise price of $0.25 per share were exchanged for 44,206,735
post-conversion options with a weighted average exercise price of $0.03 per
share.
The impact of the above two events on Executive Officers and Directors of the
Company is noted below:
<TABLE>
<CAPTION>
Pre-Conversion Options Post-Conversion Options
----------------------------------------- ----------------------------------------
Weighted Average Weighted Average
Number Price Number Price
- -------------------------------- --------------------- ------------------- ------------------ ---------------------
<S> <C> <C> <C> <C>
Gary L. Coulter 2,200,465 $0.22 16,390,320 $0.03
- -------------------------------- --------------------- ------------------- ------------------ ---------------------
Robert E. Huggins 963,883 0.21 7,179,552 0.03
- -------------------------------- --------------------- ------------------- ------------------ ---------------------
Erik R. Batzloff 172,698 0.21 1,286,354 0.03
- -------------------------------- --------------------- ------------------- ------------------ ---------------------
George P. Miller 200,000 0.22 1,489,714 0.03
- -------------------------------- --------------------- ------------------- ------------------ ---------------------
Malcolm C. Davenport V 345,396 0.27 2,572,706 0.04
- -------------------------------- --------------------- ------------------- ------------------ ---------------------
Dr. Thomas C. Burns 100,000 0.31 744,857 0.04
- -------------------------------- --------------------- ------------------- ------------------ ---------------------
</TABLE>
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year End Option
Values
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-The-Money Options
Options at June 30, 1999 at June 39, 1999
- ----------------------- ------------ ----------- -------------- ----------------- --------------- -----------------
Name Shares Value
Acquired Realized Exercisable Unexercisable Exercisable Unexercisable
- ----------------------- ------------ ----------- -------------- ----------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Gary L. Coulter - $ - 16,390,320 - 3,288,730 -
- ----------------------- ------------ ----------- -------------- ----------------- --------------- -----------------
Robert E. Huggins - - 7,179,552 - 1,446,740 -
- ----------------------- ------------ ----------- -------------- ----------------- --------------- -----------------
Erik R. Batzloff - - 964,766 321,589 184,825 64,698
- ----------------------- ------------ ----------- -------------- ----------------- --------------- -----------------
George P. Miller - - 186,214 1,303,500 37,336 261,352
- ----------------------- ------------ ----------- -------------- ----------------- --------------- -----------------
</TABLE>
29
<PAGE>
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. On May 4, 1999, the Board of Directors of
the Company determined that the increase in the number of Common Stock shares
related to the conversions of the Preferred Stock and Notes were not to be taken
into consideration in determining 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.
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 October 22, 1999 as to
(a) each director, (b) each executive officer identified in the Summary
Compensation Table below, (c) all directors and officers 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
Beneficial Owner Shares Class (2)
- ---------------------------------------------- ----------------- -----------
Directors and Executive Officers(1):
<S> <C> <C>
Malcolm C. Davenport V 68,981,670(4) 46.5%
Gary L. Coulter 16,879,164(5) 10.4%
Thomas C. Burns, Ph.D. 744,857(6) .5%
Erik R. Batzloff 1,286,353(7) .9%
George P. Miller 558,642(8) .4%
Robert E. Huggins(9) 7,209,551(10) 4.7%
All directors and executive officers
As a group (6 persons) 95,655,237(11) 54.8%
Five Percent (5%) or Greater Stockholders:
- ----------------------------------------------
RBB Bank Aktiengesellschaft
Burgring 16, 8010 Graz, Austria 52,288,224(3) 36.1%
Malcolm C. Davenport V Family Trust
409 10th Street
West Point, Georgia 31833 62,961,661 42.4%
- -----------------
30
<PAGE>
<FN>
(1) The address of all directors and executive officers is c/o the
Company, 1857 Helm Drive, Las Vegas, Nevada 89119.
(2) Percent of class is based on the number of shares outstanding on
October 22, 1999. Percent of class includes 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.
(3) RBB disputes its designation as a beneficial owner. RBB takes the
position that it does not control or direct the disposition 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.
(4) Includes 3,133,886 shares owned and 2,572,707 shares subject to options
that are currently exercisable or will become exercisable within 60
days, including 2,227,309 options that were issued in connection with
the conversions of the Preferred Stock and the Notes pursuant to the
anti-dilution provisions of option agreements under The 1996 Stock
Option Plan (the "Plan"), in connection with the conversion of the
Preferred Stock and the Notes into Common Stock, 313,416 shares held by
Mr. Davenport's spouse and 62,961,661 shares held by The Malcolm C.
Davenport V Family Trust (the "Trust").
(5) Includes 488,843 owned shares and 16,390,321 shares subject to options
that are currently exercisable or will become exercisable within 60
days, 14,189,856 of which were issued pursuant to the anti-dilution
provisions of option agreements under the Plan in connection with the
conversion of the Preferred Stock and the Notes into Common Stock.
(6) Represents 744,857 shares subject to options that are currently
exercisable or will become exercisable within 60 days, including
644,857 of which were issued pursuant to the anti-dilution provisions
of option agreements under the Plan in connection with the conversion
of the Preferred Stock and Notes into Common Stock.
(7) Represents 1,286,354 shares subject to options that are currently
exercisable or will become exercisable within 60 days, including
1,113,656 of which were issued pursuant to the anti-dilution provisions
of option agreements under the Plan in connection with the conversion
of the Preferred Stock and Notes into Common Stock.
(8) Represents 558,642 shares subject to options that are currently
exercisable or will become exercisable within 60 days, including
1,289,714 of which were issued pursuant to the anti-dilution provisions
of option agreements under the Plan in connection with the conversion
of the Preferred Stock and Notes into Common Stock.
(9) Mr. Huggins resigned following the close of the fiscal year by letter
dated August 5, 1999.
(10) Includes 50,000 shares owned and 7,159,551 shares subject to options
that are currently exercisable or will become exercisable within 60
days, 6,215,668 of which were issued pursuant to the anti-dilution
provisions of option agreements under the Plan in connection with the
conversion of the Preferred Stock and Notes into Common Stock.
(11) Includes 28,712,431 shares subject to options that are currently
exercisable or will become exercisable within 60 days.
</FN>
</TABLE>
31
<PAGE>
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- -------- ----------------------------------------------
The Lanier M. Davenport, Sr. Family Trust and the Trust, a trustee of
which is Malcolm C. Davenport V, a Director of the Company, made advances in the
amount of $1,920,000 during the year ended June 30, 1996. Of the $1,920,000,
$1,440,000 was converted into 855,686 shares of Common Stock of the Company. All
of the shares of common stock issued in satisfaction of this debt have not been
registered and were issued with restrictive legends. The remaining $480,000,
plus accrued interest of $15,542, was converted to demand notes with an interest
rate of 10% per annum. These notes were repaid in monthly installments of
$20,000, including interest, with the balance being repaid in full in July 1998.
On August 14, 1997, Spinteknology, Inc., ("Spinteknology") a wholly
owned subsidiary of the Company, entered into a $500,000, 12% promissory note
agreement with the Trust. On October 1, 1997, the Trust elected to convert the
note plus accrued interest of approximately $4,000 thereon, into 1,400,880
shares of the Company's Common Stock. The conversion price of $0.36 per share
reflects a 32% discount from the closing price of $0.53 per share on October 1,
1997. The shares were issued as a result of the conversion on or about November
30, 1997. The shares issued as a result of the conversion have not been
registered and bear a restrictive legend.
On February 27, 1998, the Company initiated the private placement of
$5,000,000 in 6% Secured Convertible Notes. The Trust purchased $4,300,000 of
the Notes, including purchases of $1,000,000 in March 1998, $900,000 in April
1998, $2,100,000 in July 1998, and $300,000 in October 1998. In April 1999, the
Trust converted all of the Notes into 61,560,781 shares of the Company's Common
Stock, with 30,735,518 shares and 30,735,519 shares being issued on April 29,
1999 and May 6, 1999, respectively, with an additional 89,744 shares to be
issued upon instructions from the Board of Directors. A total of $197,566 in
accrued interest was due the Trust on February 28, 1999, the first annual
interest payment date on the Notes, which was not paid on that date pursuant to
an agreement between the Trust and the Company. An additional $42,283 in
interest accrued through the date of conversion, April 29, 1999. In March 1999,
the Company paid the Trust $75,000 of this interest, and in May 1999 entered
into an agreement to pay the Trust in monthly installments of $50,000 including
interest at the rate of 10% per annum.
On October 20, 1999, the Board of Directors of the Company, with
Malcolm C. Davenport V abstaining from the vote, approved the conversion of
$493,582 in open accounts payable into 2,820,470 shares of the Company's Common
Stock based on the closing price of $0.175 per share on October 19, 1999.
Malcolm C. Davenport V loaned Spinteknology $350,000 in January 1999,
evidenced by a 10% note and secured by a pledge of the Company's patents,
copyrights and other intellectual property rights. At the time, the security
position was subordinate to the position of the holders of the Notes. In
addition, Mr. Davenport loaned Spinteknology $500,000 in February 1999. The two
loans were rewritten in May 1999 in the form of two notes, one in the amount of
$450,000 and one in the amount of $400,000, each of which bear interest at the
rate of 10% per annum and are secured by the Company's intellectual property
rights. The Company made a payment of $50,000 on the $450,000 note in May 1999,
including interest. The two loans, together with the interest due the Trust as
noted in the above paragraph, are to be repaid in a monthly installment of
$50,000, with the first such monthly payments being applied against the
obligation to the Trust, then to the $450,000 loan, and finally to the $400,000
loan. Based on this schedule, the Trust will be paid off at the end of August
1999, the $450,000 loan at the end of May 2000, and the $400,000 loan on
February 28, 2001.
Sarah L. Davenport, mother of 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. On October 1, 1998, the note plus accrued
interest in the amount of $6,606 was converted into 120,938 shares of the
Company's common stock. The conversion price of $0.22 per share reflects a 32%
discount from the closing price of $0.33.
32
<PAGE>
Dr. Thomas C. Burns, a member of the Board of Directors, provides
certain employee relations services to the Company. During the year ended June
30, 1999, Dr. Burns was compensated in the amount of $3,352 for these services.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following exhibits are submitted herewith:
No.
Description
2.1* Agreement of Merger and Plan of Reorganization, effective August 24,
1998 (1)
3.1* Certificate of Amendment of Articles of Incorporation
3.2* By laws of the Registrant, adopted August 24, 1998 (1)
4.1* Certificate of Designations, Numbers, Powers, Preferences and
Relative, Participating, Optional, and Other Special Rights and the
Qualifications, Limitations, Restrictions, and Other Distinguishing
Characteristics of Series A Preferred Stock dated July 16, 1997,
restated effective __________, 1998 (1)
4.2* 6% Secured Convertible Notes (1)
4.3* Notices of Exercise of 6% Secured Convertible Notes dated April 26,
1999 (8)
4.4* Notices of Conversion of Preferred Stock dated April 26, 1999 (8)
10.1* Premise Lease dated June 9, 1998 (1)
10.2* Premise Lease dated May 19, 1999
10.3* Amendment to Premise Lease dated May 19, 1999
10.4* Employment Agreement with Gary L. Coulter dated December 10, 1998 (2)
10.5* Employment Agreement with Robert E. Huggins dated June 10, 1999
10.6* License Agreement between Spinteknology, Inc. and SUZO International
(N.L.) B.V. (3)
10.7* Warrant Agreement, dated as of July 16, 1996, relating to warrants to
purchase 250,000 shares of common stock (4)
10.8* Registrant's 1996 Stock Option Plan, as amended (5)
10.9* Agreement dated February 5, 1997 by and between Registrant and Gary L.
Coulter and Robert E. Huggins (6)
10.10* 1997 Incentive Bonus Plan of Spintek Gaming Technologies, Inc.
effective June 1, 1997 (6)
10.11* Promissory Note, dated August 14, 1997, to Malcolm C. Davenport V
Family Trust (6)
10.12* Regulation S Securities Subscription Agreement dated October 22, 1997(7)
10.13* Loan Commitment letter dated August 31, 1999 from Malcolm C. Davenport V
10.14* Promissory Note dated May 1, 1999 to Malcolm C. Davenport V in the
amount of $450,000
10.15* Promissory Note dated May 1, 1999 to Malcolm C. Davenport V in the
amount of $400,000
10.16* Patent Collateral Assignment dated December 20, 1998
10.17* Collateral Assignment and Security Agreement dated December 20, 1998
10.18* Amendment to Patent Collateral Assignment and Collateral Assignment
and Security Agreement dated May 1, 1999
21.1* List of Subsidiaries of the Registrant
27.1* Financial Data Schedule
* Previously filed
- ----------------
33
<PAGE>
(1) Incorporated by reference to the Form 10-KSB for the period ended June 30,
1998.
(2) Incorporated by reference to the Form 10-QSB for the period ended December
31, 1998.
(3) Incorporated by reference to the specific exhibit to the Form 10-QSB for
the period ended March 31, 1996.
(4) Incorporated by reference to the specific exhibit to the Form 8-K, filed
August 12, 1996.
(5) Incorporated by reference to the Form S-8 filed June 18, 1999.
(6) Incorporated by reference to the Form 10-KSB for the period ended June 30,
1997.
(7) Incorporated by reference to the Form 10-QSB for the period ended September
30, 1997.
(8) Incorporated by reference to the Form 8-K dated April 26, 1999.
(b) Reports on Form 8-K
On April 26, 1999, a Current Report on Form 8-K was filed with the
Securities and Exchange Commission reporting that all of the outstanding shares
of the Preferred Stock, together with the accrued interest, and the Notes had
been converted into the Company's Common Stock. Each of these events was
transacted through the issuance of one-half of the shares on April 29, 1999 and
the balance of the shares on May 7, 1999. The holders of the Preferred Stock and
the Notes received a total of 51,837,334 and 71,477,950 shares of the Company's
Common Stock, respectively, increasing the Company's issued and outstanding
Common Stock to 142,554,846 shares.
On April 30, 1999, the Board of Directors, with the written consent of the
shareholders holding a majority of the Company's Common Stock, authorized an
increase in the number of shares of Common Stock to 500,000,000. On May 7, 1999,
the Board of Directors, with the written consent of the shareholders holding a
majority of the Company's common stock, authorized an increase in the number of
shares authorized under the 1996 Stock Option Plan to 60,000,000.
<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
President, Chairman of the Board and
Chief Executive Officer
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 November 12, 1999
- -------------------
Gary L. Coulter
President, Chairman of the Board, Chief Executive
Officer, and Director (Principal
Executive Officer)
/s/ GEORGE P. MILLER November 12, 1999
- ------------------------------------
George P. Miller
Chief Financial Officers, Treasurer
(Principal Financial and
Accounting Officer)
/s/ MALCOLM C. DAVENPORT V November 12, 1999
- --------------------------
Malcolm C. Davenport V
Director
/s/ DR. THOMAS C. BURNS, Ph.D November 12, 1999
- -----------------------------
Thomas C. Burns
Director
