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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): December 10, 1998
AMERICAN WAGERING, INC.
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(Exact name of registrant as specified in its charter).
NEVADA 000-20685 88-0344658
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
675 Grier Drive, Las Vegas, Nevada 89119
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number,
including area code: (702) 735-0101
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ITEM 5. OTHER EVENTS
(a) Pursuant to a request by The Nasdaq Stock Market, Inc.,
enclosed herein as Exhibit 99.1 is a Proforma Balance Sheet of the Company as of
October 31, 1998.
(b) On December 9, 1998, the Company amended its Articles of
Incorporation by filing a Certificate of Designations, Preferences and Rights of
Series A Preferred Stock of the Company. On December 9, 1998, the Company sold
9,462 shares of an aggregate of 18,924 shares of Series A Preferred Stock, $.01
par value of the Company (the "Shares") to each of Victor J. Salerno and Judith
Salerno in consideration of the cancellation of indebtedness owed by the Company
to each of Victor J. Salerno and Judith Salerno in an outstanding amount of
$946,212 to each. The Shares entitle the holders to receive cumulative quarterly
cash dividends at the annual rate per share of 10% of the original consideration
price per Share of $100.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) EXHIBITS
3.1.1 Certificate of Designations, Preferences and Rights of
Series A Preferred Stock of American Wagering, Inc.
99.1 Proforma Balance Sheet of American Wagering, Inc. as of
October 31, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
AMERICAN WAGERING, INC.
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(Registrant)
Date: December 10, 1998 By: /s/ Robert D. Ciunci
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Robert D. Ciunci
Executive Vice President
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EXHIBIT 3.1.1
CERTIFICATE OF DESIGNATIONS,
PREFERENCES AND RIGHTS OF SERIES A
PREFERRED STOCK
AMERICAN WAGERING, INC.
American Wagering, Inc., a corporation organized and existing
under the laws of the State of Nevada (the "Corporation"), hereby certifies that
pursuant to the authority contained in Article 4 of its Articles of
Incorporation, and in accordance with Sections 78.195 and 78.1955 of the Nevada
Revised Statutes, the Board of Directors of said Corporation at a meeting
thereof duly called and held on December 7, 1998, at which meeting a quorum was
present and acting throughout, has duly adopted the following resolutions:
"RESOLVED, that pursuant to the authority vested in the Board
of Directors by the Articles of Incorporation a series of Preferred Stock of the
Corporation, to be designated "Series A Preferred Stock" (the "Series A
Preferred Stock") be, and hereby is, created, the said Series A Preferred Stock
to consist of 18,924 shares, of which the preferences and relative
participating, optional and other rights, and the qualifications, limitations,
or restrictions of such preferences and rights, are as set forth herein as
follows, and it was further,
"RESOLVED, that subject to any further necessary Board
approval being given the officers of this Corporation be, and they hereby are,
authorized and empowered to make any changes they may deem necessary or
appropriate in the Certificate of Designations and then to execute and file with
the Secretary of State of the State of Nevada a certificate of designations
setting forth the rights, preferences and privileges of the holders of the
Series A Preferred Stock."
The qualifications, limitations or restrictions of such
preferences and rights of such Series A Preferred Stock are as follows:
Section 1. Series A Preferred Stock.
(a) General Definitions. For purposes of this Section 1:
(i) "Junior Shares" shall mean (A) all common shares of the
Corporation and (B) any other shares of any series or class of the Corporation,
whether now or hereafter issued, that by their express terms are junior, with
respect to both dividends (except as to payments of dividends in additional such
shares) and the distribution of assets upon any liquidation, dissolution or
winding up, voluntary or involuntary, of the Corporation, to any series of
Preferred Stock.
(ii) "Original Consideration Amount" shall mean $100 per
share.
(iii) "Original Issue Date" shall mean the date on which the
first share of Series A Preferred Stock was originally issued.
(b) Number. The total number of shares constituting Series A Preferred
Stock is hereby fixed at 18,924.
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(c) Dividends. The holders of Series A Preferred Stock shall be
entitled to receive, and the Board of Directors shall declare and cause to be
paid, out of funds legally available for the payment of dividends, cumulative
cash dividends at the annual rate per share of 10% of the Original Consideration
Amount. Such dividends shall be payable in equal quarterly payments on each
March 31, June 30, September 30, and December 31, commencing with December 31,
1998 (each of such dates being a "Dividend Payment Date"), in preference to
dividends on any Junior Shares. Such dividends shall be paid to the holders of
record at the close of business on the date specified by the Board of Directors
at the time such dividend is declared. Each of such quarterly dividends shall be
fully cumulative and shall accrue (whether or not declared and whether or not
there shall be funds legally available for the payment of dividends) at the
applicable annual rate specified above from the first day of the quarterly
period in which such dividend may be payable as herein provided, except that
with respect to the period prior to the first Dividend Payment Date, dividends
shall accrue from the Original Issue Date. Any dividends paid on the Series A
Preferred Stock shall be deemed to be paid with respect to the earliest Dividend
Payment Dates for which cumulative dividends have not been paid in full. All
references to accrued dividends in this Section 1 shall be calculated in
accordance with this paragraph (c). All dividends paid pursuant to this
paragraph (c) shall be paid pro rata to the holders entitled thereto.
(d) Interest on Unpaid Dividends. If the Company shall have failed to
pay in full accumulated dividends on the Series A Preferred Stock, the Company
shall pay to the holders of the Series A Preferred Stock, interest at the annual
rate of 10% compounded annually on all of the Series A Preferred Stock dividends
that have cumulated and have not been paid in full.
(e) Liquidation Rights of Series A Preferred Stock.
(i) Liquidation. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation (a "Liquidation"), the
holders of each share of Series A Preferred Stock shall be entitled to receive,
prior and in preference to any distribution of any of the assets or surplus
funds of the Corporation to the holders of Junior Shares by reason of their
ownership thereof, an amount equal to $100.00 (One Hundred Dollars) per share,
plus all accumulated and unpaid dividends thereon and any unpaid interest due
under paragraph (d) of this Section 1 (the "Liquidation Preference Amount").
(ii) Insufficient or Remaining Assets. All of the Liquidation
Preference Amount to be paid to the holders of Series A Preferred Stock under
this Section 1 shall be paid or set apart for payment before the payment or
setting apart for payment of any amount for, or the distribution of any assets
of the Corporation to, the holders of any Junior Shares in connection with any
Liquidation. If upon the occurrence of a Liquidation, the assets and surplus
funds to be distributed among the holders of Series A Preferred Stock shall be
insufficient to permit payment to the holders of Series A Preferred Stock of the
full Liquidation Preference Amount, then the entire assets and surplus funds of
the Corporation legally available for distribution shall be distributed ratably
among the holders of Series A Preferred Stock based on the amounts they
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would otherwise be entitled to receive in such liquidation were payment to be
made in full. After payment has been made to the holders of Series A Preferred
Stock of the full amounts to which they shall be entitled as aforesaid, the
holders of any Junior Shares shall be entitled by reason of their ownership
thereof to share in the remaining assets in accordance with their respective
preferences.
(f) Redemption at the Option of the Corporation.
(i) Redemption at the Option of the Corporation. The Series A
Preferred Stock shall be redeemable, in whole or (on a pro rata basis) in part,
at any time at the option of the Corporation, by resolution of the Board of
Directors, at the Liquidation Preference Amount. Notice of Redemption shall be
mailed or delivered by the Corporation to the record holders of Series A
Preferred Stock to be redeemed not less than thirty days prior to the date fixed
for redemption. In the event of any redemption of the Series A Preferred Stock,
the shares redeemed shall be restored to the status of authorized but unissued
Preferred shares, unless the Board of Directors shall at any time adopt a
resolution providing that such shares constitute authorized and issued but not
outstanding shares.
(ii) Redemption Procedures. The Corporation shall notify in
writing the holders of record of the Series A Preferred Stock of any redemption
pursuant to this paragraph (f) at least 30 days but not more than 60 days prior
to the date specified therein for such redemption. Any notice of redemption
shall be mailed, postage prepaid, to each holder at the address shown in the
Corporation's records, and in addition to specifying the date of redemption
shall specify the number of shares owned by the holder to be redeemed, the total
number of shares being redeemed, the redemption price and the manner and the
place to which the certificate(s) representing the Series A Preferred Stock to
be redeemed are to be surrendered. On or prior to the redemption date (but in no
event earlier than two days before such redemption date), the Corporation shall
deposit with a bank or trust company having aggregate capital and surplus in
excess of $10,000,000 as a trust fund for the benefit of the holders of the
shares to be redeemed, a sum, in cash, from any source of funds legally
available therefor, equal to the redemption price for all the Series A Preferred
Stock to be redeemed. Such funds shall be deposited by the Corporation with
irrevocable instructions and authority to such bank or trust company to pay, on
or after the redemption date, the redemption price to the respective holders
whose shares are being redeemed, upon the surrender of their share certificates
for the Series A Preferred Stock. All rights with respect to the Series A
Preferred Stock so redeemed shall, after the specified redemption date,
terminate, whether or not the certificate(s) have been surrendered, excepting
only in the latter instance the right of the holder to receive the redemption
price thereof, without interest, upon such surrender; provided that (A) notice
of redemption is duly given in accordance with this paragraph (f) and (B) on the
redemption date specified there shall be a source of funds legally available for
such redemption and such funds shall have been deposited as provided above. In
the event of any redemption of the Series A Preferred Stock, the shares redeemed
shall be restored to the status of authorized but unissued Preferred shares,
unless the Board of
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Directors shall at any time adopt a resolution providing that such shares
constitute authorized and issued but not outstanding shares.
(iii) Restrictions Upon a Failure Optionally to Redeem. If and
so long as any redemption obligation pursuant to this paragraph (f) shall not be
fully discharged, the Corporation shall not declare or pay any dividend or make
any distributions on, or directly or indirectly purchase, redeem or satisfy any
optional or mandatory redemption, sinking fund or other similar obligation in
respect of any Junior Shares (other than in Junior Shares) or any warrants,
rights, calls or options exercisable for or convertible or exchangeable into
Junior Shares.
(g) Voting Rights. The holders of Series A Preferred Stock shall not be
entitled to notice of any shareholders' meeting or solicitation of consents in
the same manner as provided for holders of Common Stock, and shall not be
entitled to vote (on a cumulative basis or otherwise) as a class or with the
Common Stock upon any matter submitted to shareholders for a vote, except as
otherwise mandated under Nevada law.
(h) Merger or Consolidation. In the event of a merger or consolidation
of the Corporation with or into any person pursuant to which the Corporation
shall not be the continuing person, the Series A Preferred Stock shall become
preferred shares of such successor or resulting company having in respect of
such successor or resulting company, as nearly as practicable, substantially the
same power; preferences and relative, participating, optional or other special
rights, and the qualifications, limitations or restrictions thereon, that the
Series A Preferred Stock had immediately prior to such transaction.
(i) Certain Restrictions. So long as any Series A Preferred Stock
remains outstanding, the Corporation shall not:
(1) declare or pay any dividend on, make any payment on
account of, or set apart money for, a sinking or other similar fund for the
purchase, redemption or other retirement of, or make any distribution in respect
of, any Junior Shares, either directly or indirectly and whether in cash or
property or in obligations or shares of the Corporation or any subsidiary
thereof, other than (in each case) in such Junior Shares;
(2) purchase or redeem (except for a consideration payable in
Junior Shares) any Junior Shares;
(3) permit any subsidiary of the Corporation to purchase
any Junior Shares; or
(4) issue to any person any shares of the Corporation of any
series or class other than Junior Shares without the prior written consent of
the holders of a majority (based on Liquidation Preference Amount) of the Series
A Preferred Stock.
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IN WITNESS WHEREOF, the undersigned officers have executed and subscribed this
Certificate and do affirm the foregoing as true under the penalties of perjury
as of this 8th day of December, 1998.
By: /s/ Victor J. Salerno
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Name: Victor J. Salerno
Title: President
By: /s/ Michael S. Merillat
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Name: Michael S. Merillat
Title: Vice President/Secretary
STATE OF NEVADA )
) ss:
COUNTY OF CLARK )
On this 8th day of December, 1998, before me, the undersigned,
a Notary Public in and for the County of Clark, State of Nevada, duly
commissioned and sworn, personally appeared Victor J. Salerno known to me to be
the President of American Wagering, Inc., each of whose name is subscribed to
the within instrument, and who each acknowledged to me that he executed the same
freely and voluntarily and for the use and purposes therein mentioned.
/s/ Dixie L. Davis
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Notary Public
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EXHIBIT 99.1
AMERICAN WAGERING, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
PRO FORMA UNAUDITED
UNAUDITED ADJUSTMENTS PRO FORMA
October 31, 1998 (SEE NOTES) October 31, 1998
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<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 2,060,615 $ (24)(2) $ 2,060,591
Short-term investments 547,640 -- 547,640
Accounts receivable, net of allowance for doubtful
accounts of $56,311. 358,346 -- 358,346
Inventories, net of obsolescence reserve
of 188,225. 488,036 -- 488,036
Prepaid expenses and other current assets 568,348 -- 568,348
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TOTAL CURRENT ASSETS 4,022,985 (24) 4,022,961
PROPERTY AND EQUIPMENT, net 3,995,395 -- 3,995,395
INTANGIBLE ASSETS, net 1,285,736 -- 1,285,736
DEPOSITS AND OTHER ASSETS 341,100 -- 341,100
NET LONG-TERM ASSETS OF DISCONTINUED OPERATIONS 1,139,874 -- 1,139,874
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TOTAL ASSETS $ 10,785,090 $ (24) $ 10,785,066
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 56,760 $ -- $ 56,760
Accounts payable 839,949 -- 839,949
Accrued expenses 610,678 -- 610,678
Unpaid winning tickets 1,126,314 1,126,314
Shareholder notes payable 1,892,424 (1,892,424)(1,2) --
Other current liabilities 1,427,255 -- 1,427,255
Net current liabilities of discontinued
operations 612,884 -- 612,884
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TOTAL CURRENT LIABILITIES 6,566,264 (1,892,424) 4,673,840
LONG-TERM DEBT, less current portion 1,894,180 -- 1,894,180
MINORITY INTEREST 4,018 -- 4,018
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Series A Preferred stock -- 10% cumulative;
$.01 par value; authorized 25,000,000 shares;
issued and outstanding: 18,924. -- 1,892,400 (1) 1,892,400
Common stock -- $.01 par value; authorized
25,000,000 shares; issued and
outstanding: 7,841,033. 78,410 -- 78,410
Additional paid-in capital 14,047,296 -- 14,047,296
Accumulated deficit (11,477,585) -- (11,477,585)
less: treasury stock, at cost: 61,100 shares (327,493) -- (327,493)
------------ ------------ ------------
TOTAL STOCKHOLDERS' EQUITY 2,320,628 1,892,400 4,213,028
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 10,785,090 $ (24) $ 10,785,066
============ ============ ============
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(1) THE COMPANY SOLD 18,924 SHARES AT $100 PER SHARE OF SERIES A PREFERRED
STOCK, $.01 PAR VALUE, OF THE COMPANY IN CONSIDERATION OF THE CANCELLATION
OF INDEBTEDNESS OWED BY THE COMPANY.
(2) THE COMPANY DISBURSED CASH OF $24 TO SETTLE THE REMAINING INDEBTEDNESS OWED
BY THE COMPANY.
