<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 1998
----------------------------
OR
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from: to
------------ ------------
Commission file number:
------------------------------------------
CASINOVATIONS INCORPORATED
- -----------------------------------------------------------------
(Exact name of small business issuer as
specified in its charter)
Washington 91-1696010
- ---------------------------- -----------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
5240 S. Eastern Avenue, First Floor, Las Vegas, Nevada 89119
- -----------------------------------------------------------------
(Address of principal executive offices)
(702) 733-7195
- -----------------------------------------------------------------
(Issuer's telephone number)
- -----------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required 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 NO X
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange
Act after the distribution of securities under a plan confirmed
by court.
YES NO
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest practicable
date:
6,355,942 shares of Common Stock, $.001 par value, as of June 30,
1998
- -----------------------------------------------------------------
Transitional Small Business Disclosure Format (check one);
YES NO X
----- -----
1
<PAGE>
FORM 10-QSB
TABLE OF CONTENTS
PAGE
NUMBER
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 3
Balance Sheet 3
Statement of Operations 4
Statement of Cash Flows 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURE 12
EXHIBIT INDEX 13
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
<TABLE>
<CAPTION>
CASINOVATIONS INCORPORATED
(A Development Stage Company)
Balance Sheet
June 30, 1998
ASSETS June 30, 1998
---------------
<S> <C>
Current assets:
Cash $ 28,294
Accounts receivable, trade 9,927
Accounts receivable - employees 12,285
Inventories 308,411
Prepaid expenses 48,490
---------------
Total current assets 407,407
Property and equipment, at cost, net of
accumulated depreciation of $25,132 266,349
Intangible assets, at cost, net of
accumulated amortization of $18,095 165,080
Deposits 53,361
---------------
$ 892,197
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Note payable - bank $ 197,500
Notes payable - other 605,000
Current portion of leases payable 149,616
Accounts payable 498,095
Accrued wages 34,563
Accrued interest 65,449
Customer deposits 13,374
Shareholder loans 692,357
---------------
Total current liabilities 2,255,954
Leases payable - non-current 223,363
Stockholders' equity:
Common stock, $.001 par value,
20,000,000 shares authorized,
6,355,942 shares issued and outstanding 6,356
Additional paid-in capital 4,399,894
Unpaid subscriptions to common stock -
Deficit accumulated during development stage (5,993,370)
---------------
(1,587,120)
---------------
$ 892,197
===============
</TABLE>
See accompanying notes to unaudited financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
CASINOVATIONS INCORPORATED
(A Development Stage Company)
Statement of Operations
Three Months Ended June 30, 1998 and 1997
Period from
Three Months Ended Six Months Ended Inception
(April 29, 1994)
June 30, 1998 June 30, 1997 June 30, 1998 June 30, 1997 to June 30, 1998
------------- ------------- ------------- ------------- ----------------
<S> <C> <C> <C> <C> <C>
Sales $ 3,943 $ - $ 4,288 $ 632 $ 9,249
Interest income - 900 - 7,074 10,083
Other income - 13,000 - 13,000 3,010
------------- ------------- ------------- ------------- ----------------
3,943 13,900 4,288 20,706 22,342
Other costs and expenses:
General and administrative 580,080 396,708 935,864 717,735 3,977,944
General and administrative - related parties - 203,092 - 203,092 76,768
Research and development 24,487 125,208 126,820 171,814 1,298,080
------------- ------------- ------------- ------------- ----------------
604,567 725,008 1,062,684 1,092,641 5,352,792
------------- ------------- ------------- ------------- ----------------
(Loss) from operations (600,624) (711,108) (1,058,396) (1,071,935) (5,330,450)
Interest expense - - 37,528 - 86,823
Interest expense - related parties 29,256 145,152 54,136 167,143 728,483
------------- ------------- ------------- ------------- ----------------
29,256 145,152 91,664 167,143 815,306
(Loss) before income taxes (629,880) (856,260) (1,150,060) (1,239,078) (6,145,756)
Provision for income taxes - - - - -
------------- ------------- ------------- ------------- ----------------
Net (loss) $ (629,880) $ (856,260) $ (1,150,060) $ (1,239,078) $ (6,145,756)
============= ============= ============= ============= ================
Basic (loss) per share $ (0.10) $ (0.16) $ (0.18) $ (0.23) $ (1.37)
============= ============= ============= ============= ================
Weighted average shares outstanding 6,283,638 5,481,525 6,231,638 5,393,371 4,471,098
============= ============= ============= ============= ================
</TABLE>
See accompanying notes to unaudited financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
CASINOVATIONS INCORPORATED
(A Development Stage Company)
Statement of Cash Flows
Three Months Ended June 30, 1998 and 1997
Inception
(April 29, 1994)
to
June 30, 1998 June 30, 1997 June 30, 1998
-------------- -------------- ----------------
<S> <C> <C> <C>
Net (loss) $ (1,150,060) $ (1,239,078) $ (6,145,756)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 44,175 11,396 88,664
Stock and options issued for services 66,500 309,999 978,000
Compensation value of cash stock sales - - 177,000
Stock and options issued for additional interest - 59,053 117,332
Equipment exchanged for services - - 2,903
Amortization of deferred interest - 93,000 232,500
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (4,052) (5,591) (22,212)
(Increase) decrease in inventory (126,118) - (308,411)
(Increase) decrease in prepaid expenses (8,490) (4,526) (48,490)
(Increase) decrease in other assets (5,642) (5,201) (53,361)
Increase (decrease) in accounts payable 55,783 (70,672) 498,094
Increase (decrease) in accrued expenses 32,200 (80,170) 116,387
-------------- -------------- ----------------
Total adjustments 54,356 307,288 1,778,406
-------------- -------------- ----------------
Net cash (used in)
operating activities (1,095,704) (931,790) (4,367,350)
-------------- -------------- ----------------
Cash flows from investing activities:
Acquisition of plant and equipment (16,204) (18,996) (331,607)
Increase in patents and trademarks (16,406) (10,949) (191,389)
-------------- -------------- ----------------
Net cash (used in) investing activities (32,610) (29,945) (522,996)
-------------- -------------- ----------------
Cash flows from financing activities:
Common stock sold for cash 430,000 600,010 2,380,569
Capital contributions by partners - - 402,950
Proceeds from long-term debt 430,000 - 1,049,100
Proceeds of shareholder loans 290,000 - 1,060,168
Repayment of shareholder loans (38,660) (20,000) (97,526)
Repayment of leases payable (74,121) (9,155) 123,379
Proceeds from notes payable - - -
-------------- -------------- ----------------
Net cash provided by
financing activities 1,037,219 570,855 4,918,640
-------------- -------------- ----------------
Increase (decrease) in cash (91,095) (390,880) 28,294
Cash and cash equivalents,
beginning of period 119,389 552,878 -
-------------- -------------- ----------------
Cash and cash equivalents,
end of period $ 28,294 $ 161,998 $ 28,294
============== ============== ================
</TABLE>
See accompanying notes to unaudited financial statements.
5
<PAGE>
CASINOVATIONS INCORPORATED
(A Development Stage Company)
Notes to Financial Statements
NOTE 1 - BASIS OF PRESENTATION.
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions incorporated in Regulation 10-SB of the Securities
and Exchange Commission. Accordingly, they do not include all of
the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring adjustments and accruals) considered necessary for a
fair presentation have been included.
The results of operations for the periods presented are not
necessarily indicative of the results to be expected for the full
year. The accompanying financial statements should be read in
conjunction with the Company's audited financial statements for
the year ended December 31, 1997 as included in the Company's
Registration Statement on Form SB-2/A as last filed with
the Securities and Exchange Commission on June 5, 1998
(Commission File No. 333-31373).
Basic loss per share was computed using the weighted average
number of common shares outstanding.
Certain of the shares issued to a consultant during 1997
were for future services to be provided to the Company. The
amounts attributable to unearned services have been accounted for
as unpaid subscriptions to common stock in the accompanying
balance sheet. The Company has amortized $66,500 of the unearned
services to general and administrative expenses during the six
months ended June 30, 1998.
During January 1998, the Company received proceeds from
convertible debentures aggregating $400,000. The debentures bear
interest at 6% per annum and are due on or before January 31,
1999. The principal amount of the debentures is convertible at
the holder's option into shares of the Company's common stock at
a conversion price of $2.13 per share. Of the gross proceeds
received from the convertible debentures, $150,000 was received
from the Company's principal stockholder and has been included in
shareholder loans in the accompanying balance sheet.
Additionally, the principal stockholder made working capital
advances to the Company during the quarters ended March 31, 1998
and June 30, 1998 aggregating $140,000 and $350,000 respectively.
The advances bear interest at 9.5% per annum.
During the quarter ended June 30, 1998, the Company sold an
aggregate of 166,000 shares of its $.001 par value common stock
for cash proceeds of $390,000 and $25,000 in services pursuant to
a public offering of the stock. Additionally, 10,000 shares of
the common stock were sold for services amounting to $15,000 in
connection with the completion of an outstanding contract.
NOTE 2 - STATEMENT REGARDING COMPUTATION OF LOSS PER SHARE.
Fully diluted loss per share excludes any dilutive effects
of options, warrants and convertible securities. Fully diluted
loss per share is not presented because the effect would be
anti-dilutive.
NOTE 3 - SUBSEQUENT EVENTS.
On May 28, 1998, the Company entered into a letter agreement
(the Letter Agreement) with Steven L. Forte and Cheryl Forte with
respect to, among other things, the proposed severance of the
business relationship between the Company and Mr. Forte and the
purchase by the Company of all of the share of Company common
stock held by either Steven L. Forte and Cheryl Forte (the Forte
Shares).
6
<PAGE>
The effectiveness of the Letter Agreement was subject to the
approval of the Nevada State Gaming Control Board. On July 2,
1998, the Nevada State Gaming Control Board approved the terms of
the Letter Agreement and authorized field trials for the
Company's Random Ejection Shuffler. Although the definitive
agreement between the Company and Steven L. Forte and Cheryl
Forte is currently being negotiated, the Company has agreed in
principle to, among other things, (a) terminate the employment
and non-compete agreement between the Company and Mr. Forte; and
(b) purchase (i) certain royalties granted to Mr. Forte from
the sale of the Random Ejection Shuffler; (ii) options to
purchase 20,000 shares of Company common stock, and (iii)
848,682 shares of Company common stock. As part of the
transaction, the Company has agreed to issue a promissory note
in favor of Steven L. Forte and Cheryl Forte in the amount of
$2,351,705. The promissory note shall bear an interest rate
of 6.5% during the first year and 8% thereafter, be amortized
over a ten-year schedule with payments of interest only during
the first year, payable on the six-month and twelve-month
anniversary of the promissory note, and payments of principal and
interest thereafter on a monthly basis. On the fifth anniversary
of the promissory note, the unpaid principal and interest will
become due and payable. The promissory note will be secured
by a security interest in the patents for the Company's Random
Ejection Shuffler and Fantasy 21 table game.
On August 13, 1998, the Company entered into an agreement
with Gaming 2000, L.L.C. (Gaming 2000) for the purchase of all of
the assets of Gaming 2000 in exchange for $75,000, payable by
delivery of 30,000 shares of the Company's common stock. In
addition, the Company has hired the following members of Gaming
2000's management team: William O'Hara - Senior Vice President,
Dean Barnett - Vice President of Sales, John Kenny - Customer
Service Manager, and Tom Gayton - Account Executive. These
individuals were all former employees of Shuffle Master, Inc.
with Mr. O'Hara as a founding member of Shuffle Master, Inc.,
and Mr. Barnett as national sales director for Shuffle Master,
Inc.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.
STATEMENT ON FORWARD-LOOKING INFORMATION. Certain
information included herein contains statements that may be
considered forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934, such as statements relating to
plans for future operations, capital spending and financing
sources. Such forward-looking information involves important
risks and uncertainties that could significantly affect
anticipated results in the future and, accordingly, such results
may differ from those expressed in any forward-looking statements
made herein. These risks and uncertainties include, but are not
limited to, those relating to adequate sources of cash,
manufacturing and supply issues, marketing of and acceptance of
the Company's products, dependence on existing management, gaming
regulations (including actions affecting licensing), leverage and
debt service (including sensitivity to fluctuations in interest
rates), issues related to the Year 2000, domestic or global
economic conditions and changes in federal or state tax laws or
the administration of such laws.
PLAN OF OPERATIONS. The Company has substantially completed
its research and development stage of the Random Ejection
Shuffler(TM) (the Shuffler), the Fantasy 21 table game and the
SecureDrop Coin Bucket System (SecureDrop). In July 1998, the
Company established a manufacturing facility in Boise, Idaho for
the purposes of producing the Random Ejection Shuffler and
Fantasy 21 and has hired a production manager to oversee the
production process. The Company has 50 completed Fantasy 21 units
in the quality assurance process which, upon assurance, will be
shipped to the Company's offices in Las Vegas, Nevada, by the end
of August 1998. The Company will employ a combination of
employees and contract laborers in the manufacturing process. The
Company expects to produce 85 units of the Random Ejection
Shuffler by the end of August 1998 and has ordered components
that will enable its manufacturing facility to produce an
additional 250 units by the end of October 1998. The demand for
the Company's products will be dependent on general economic
conditions, economic conditions in the gaming industry and
acceptance of new products in the marketplace.
The Company is developing business plans that are
anticipated to allow the Company to be self-supportive within the
first five to six months from the beginning of sales. Should the
Company be able to complete the successful offering of 1,500,000
shares of Common Stock presently pending pursuant to that certain
Registration Statement on Form SB-2/A (Commission File No. 333-
31373) (the Offering), the Company expects that the Shuffler and
the Fantasy 21(TM) table game will be brought to market and that
the SecureDrop(TM) coin box system development will be completed
and brought to market as well. The Company expects that the net
proceeds from the Offering and cash flow from operations will be
sufficient to meet the Company's liquidity requirements
throughout the remainder of the year. In the event that either
the Offering is not completed or that sales are inadequate to
generate sufficient cash flow from operations, the Company
will have to locate alternative sources of funds.
At June 30, 1998, the Company's working capital deficit was
$1,848,947 compared to $1,031,024 at December 31, 1997. The
current ratio (the ratio of current assets to current
liabilities) as of June 30, 1998 was 0.18:1, compared to
0.26:1 at December 31, 1998. The Company is presently dependent
on the success of the Offering to fund its current liquidity
needs or it will need to locate alternative sources of funding
for which there may not be sources available. The Company has
also relied on working capital advances from its principal
shareholder of $490,000 in the first six months of 1998 (in
addition to a $150,000 convertible debenture purchase) for
liquidity requirements, without which the Company would not have
been able to operate. Since June 30, 1998, the Company has
received proceeds of $165,000 from the sale of shares pursuant
to the Offering and has received and additional $250,000 loan
from the principal shareholder. Although the Company is
currently negotiating with certain lenders for additional
sources of
8
<PAGE>
funds and anticipates receiving such additional sources of funds,
the Company may not be able to locate alternative liquidity
sources in the event that the principal shareholder ceases
to make advances to the Company and the Offering is not
successful.
The ability of the Company to obtain any necessary gaming
licenses, authorizations and approvals in certain key
jurisdictions, such as Nevada and New Jersey, may materially
impact the Company's ability to market its products.
Additional new products are in conceptual design stages and,
with adequate funding, are expected to be brought to market
within the next 12 months. With respect to the Nevada gaming
authorities, the Company has received approval for the
distribution of Fantasy 21 and approval to begin field trials
for the Shuffler. Final approval of the Shuffler is dependent
upon, INTER ALIA, the completion of the Forte transaction
described in Part II, Item 5. Other Information.
For the three months ended March 31, 1998 and the six months
ended June 30, 1998, the Company did not make any significant
acquisitions of plant and equipment. Inventory for parts to
assemble product increased $79,162 at the end of the second
quarter. There are no expectations for the purchase of
significant equipment or plant. Management of the manufacturing
process for the Shuffler has been re-located to the Company's
manufacturing facility in Boise, Idaho.
For the three months ended June 30, 1998 and the six months
ended June 30, 1998, the Company has a net loss of $629,880 and
$1,150,060, respectively. For the three months ended June 30,
1998 and the six months ended June 30, 1998, the Company had
depreciation and amortization of $37,210 and $44,175,
respectively.
For the three months ended June 30, 1998 and the six months
ended June 30, 1998, the Company had general and administrative
expenses of $580,080 and $935,867. For these time periods, these
expenses consisted of salaries and related costs of $96,110 and
$203,383 respectively, consulting services of $98,741 and
$177,243 respectively, cost of gaming industry shows of $7,754
and $17,117 respectively, travel and entertainment costs of
$47,455 and $109,118 respectively, printing and office expense,
including rent of $36,532 and $70,642 respectively, and legal
expenses of $92,350 and $106,930 respectively.
YEAR 2000. During 1998, the Company undertook an assessment
of the information systems and software used in its operations to
determine whether or not those systems were Year 2000 compliant,
and assessed plans to upgrade systems and/or software that was
determined to not be Year 2000 compliant. The Company has begun
and is continuing to assess potential issues related to the
approach of the Year 2000 other than those relating to the
Company's internal information systems, such as critical supplier
readiness and potential problems associated with embedded
technologies, and will develop and implement plans to correct any
deficiencies found.
Based upon the Company's efforts to date, the Company
believes that the costs of addressing the Company's Year 2000
issues have not been and are not currently expected to be
material to the Company's results of operations or financial
position; however, should the Company and/or its critical
suppliers fail to identify and/or correct material Year 2000
issues, such failure could impact the Company's ability to
operate as it did before the Year 2000, and subsequently have a
material impact on the Company's results of operations or
financial position. In such an event, the Company will address
issues as they arise and strive to minimize any impact on the
Company's operations. The impact on the Company's operating
results of such failures and of any contingency plans to be
designed to address such events cannot be determined at this
time.
9
<PAGE>
RISK FACTORS THAT MAY AFFECT FUTURE RESULTS. The Company
operates in the highly competitive gaming industry that involves
a number of risks, some of which are beyond the Company's
control. For a complete discussion of these risks, see the
section entitled, Risk Factors, included in the Company's
Registration Statement on Form SB-2/A, as last filed with the
Commission on June 5, 1998 (Commission File No. 333-31373).
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
On April 24, 1998, a complaint was filed in District Court,
Clark County, Nevada on behalf of the Company against Western
Electronics, Inc. (Western) and its Chief Executive Officer, John
Wasden. The Complaint alleges causes of action for breach of
contract, declaratory relief, unjust enrichment, interference
with contractual relations, conversion and fraud--intentional
misrepresentation, all stemming from purchase orders between the
Company and Western for the Shuffler. The Complaint was served
upon Western on April 27, 1998, and service upon Mr. Wasden is
pending. Through this litigation, the Company seeks to recover
component parts purchased for the assembly of the Shuffler
or in the alternative to recover the monies expended for their
purchase as well as other money damages. Subsequent to the
filing of its answer, Western filed an amended answer and
counterclaim in which Western alleged breach of contract and
payment of amount.
On July 28, 1998, the Company and Western entered into
an agreement to settle all claims between the two parties.
Pursuant to the terms of the settlement, the parties agreed to
dismiss the aforementioned matters with prejudice and agreed to
mutually release and indemnify each other with respect to the
issues that were the subject matter of this litigation. Further,
in exchange for certain component parts and equipment used for
the assembly of the Company's products, the Company executed a
demand note in the amount of $325,000 in favor of Western which
note the Company (i) has already paid $50,000, and (ii) will be
able to satisfy in full at a discount if the Company pays an
additional $150,000 to Western by October 1, 1998. In the event
that the Company is unable to pay the $150,000 by October 1,
1998, the Company will be obligated to pay an additional $125,000
thus reflecting the full amount of the demand note.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On May 27, 1998, the Company held its annual meeting of
shareholders (the Annual Meeting). The purpose of the Annual
Meeting was for the election of Steven J. Blad, Richard S. Huson,
Jamie McKee, David E. Sampson, and Bob L. Smith (the Nominees) as
directors of the Company for a term of one year. The
shareholders of the Company voted in favor of the Nominees.
ITEM 5. OTHER INFORMATION.
On May 28, 1998, the Company entered into a letter
agreement (the Letter Agreement) with Steven L. Forte and Cheryl
Forte with respect to, among other things, the proposed severance
of the business relationship between the Company and Mr. Forte
and the purchase by the Company of all of the share of Company
common stock held by either Steven L. Forte and Cheryl Forte (the
Forte Shares).
10
<PAGE>
The effectiveness of the Letter Agreement was subject to the
approval of the Nevada State Gaming Control Board. On July 2,
1998, the Nevada State Gaming Control Board approved the terms of
the Letter Agreement and authorized field trials for the
Company's Random Ejection Shuffler.
Although the definitive agreement between the
Company and Steven L. Forte and Cheryl Forte is currently being
negotiated, the Company has agreed in principle to, among other
things, (a) terminate the employment and non-compete agreement
between the Company and Mr. Forte; and (b) purchase (i) certain
royalties granted to Mr. Forte from the sale of the Random
Ejection Shuffler; (ii) options to purchase 20,000 shares of
Company common stock, and (iii) 848,682 shares of Company common
stock. As part of the transaction, the Company has agreed to
issue a promissory note in favor of Steven L. Forte and Cheryl
Forte in the amount of $2,351,705.00. The promissory note shall
bear an interest rate of 6.5% during the first year and 8%
thereafter, be amortized over a ten-year schedule with payments
of interest only during the first year, payable on the six-month
and twelve-month anniversary of the promissory note, and
payments of principal and interest thereafter on a monthly
basis. On the fifth anniversary of the promissory note, the
unpaid principal and interest will become due and payable.
The promissory note will be secured by a security interest in
the patents for the Company's Random Ejection Shuffler and
Fantasy 21 table game.
On August 13, 1998, the Company entered into an agreement
with Gaming 2000, L.L.C. (Gaming 2000) for the purchase of all of
the assets of Gaming 2000 in exchange for $75,000, payable by
delivery of 30,000 shares of the Company's common stock. In
addition, the Company has hired the following members of Gaming
2000's management team: William O'Hara - Senior Vice President,
Dean Barnett - Vice President of Sales, John Kenny - Customer
Service Manager, and Tom Gayton - Account Executive. These
individuals were all former employees of Shuffle Master, Inc.
with Mr. O'Hara as a founding member of Shuffle Master, Inc.,
and Mr. Barnett as national sales director for Shuffle Master,
Inc.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS.
--------
EXHIBIT NUMBER DESCRIPTION
-------------- -----------
27.01 Financial Data Schedule
(B) REPORT ON FORM 8-K.
------------------
None.
11
<PAGE>
SIGNATURE
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
CASINOVATIONS INCORPORATED
--------------------------------
(Registrant)
Date: August 14, 1998 By: /s/ Jay L. King
--------------------------------
Jay L. King
Its: Chief Financial Officer and Secretary
12
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION PAGE NUMBER
- -------------- ----------- -----------
27.01 Financial Data Schedule 14
13
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 28,294
<SECURITIES> 0
<RECEIVABLES> 22,212
<ALLOWANCES> 0
<INVENTORY> 308,411
<CURRENT-ASSETS> 407,407
<PP&E> 326,163
<DEPRECIATION> 59,814
<TOTAL-ASSETS> 892,198
<CURRENT-LIABILITIES> 2,255,954
<BONDS> 0
0
0
<COMMON> 6,356
<OTHER-SE> 4,399,894
<TOTAL-LIABILITY-AND-EQUITY> 892,198
<SALES> 4,280
<TOTAL-REVENUES> 3,940
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,062,683
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 91,664
<INCOME-PRETAX> (1,150,060)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,150,060)
<EPS-PRIMARY> 0
<EPS-DILUTED> (.18)
</TABLE>
