<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
OR
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-28294
SILICON GAMING, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 77-0357939
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
(I.R.S. EMPLOYER IDENTIFICATION NUMBER)
2800 W. BAYSHORE ROAD
PALO ALTO, CA 94303
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
TELEPHONE: (415) 842-9000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
10,608,105 shares of Common Stock, $.001 par value, were outstanding as of
October 31, 1996.
This report, including exhibits, consists of 14 pages. The exhibit index
begins on page 11.
<PAGE>
SILICON GAMING, INC.
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED SEPTEMBER 30, 1996
INDEX
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets--December 31, 1995 and September 30,
1996............................................................ 3
Consolidated Statements of Operations--Three Months and Nine
Months Ended December 31, 1995 and September 30, 1996 and
Cumulative...................................................... 4
Consolidated Statements of Cash Flows--Nine Months Ended
December 31, 1995 and September 30, 1996 and Cumulative......... 5
Notes to Consolidated 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............................................... 11
Item 2. Changes in Securities........................................... 11
Item 3. Defaults Upon Senior Securities................................. 11
Item 4. Submission of Matters to a Vote of Security Holders............. 11
Item 5. Other Information............................................... 11
Item 6. Exhibits and Reports on Form 8-K................................ 11
Signature....................................................... 12
</TABLE>
2
<PAGE>
PART I--FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SILICON GAMING, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and equivalents.............................. $ 2,399 $ 39,881
Inventories....................................... -- 424
Prepaids and other................................ 292 546
------- --------
Total current assets............................ 2,691 40,851
PROPERTY AND EQUIPMENT, NET......................... 734 1,811
OTHER ASSETS, NET................................... 61 55
------- --------
$ 3,486 $ 42,717
======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Accounts payable.................................. $ 365 $ 690
Payable to related party.......................... 5 --
Accrued liabilities............................... 239 562
Current portion of capital lease obligations...... 55 184
------- --------
Total current liabilities....................... 664 1,436
------- --------
DEFERRED RENT....................................... -- 100
------- --------
CAPITAL LEASE OBLIGATIONS........................... 272 710
------- --------
REDEEMABLE CONVERTIBLE PREFERRED STOCK--6,884,473
shares authorized at September 30, 1996; shares
outstanding: December 31, 1995--8,534,997;
September 30, 1996--6,384,473...................... 8,496 6,455
------- --------
SHAREHOLDERS' EQUITY (DEFICIENCY)
Common Stock, $.001 par value; 50,000,000 shares
authorized; shares outstanding: December 31,
1995--2,737,989; September 30, 1996--10,647,887.. 109 49,910
Notes receivable from shareholders................ (75) (226)
Deficit accumulated during the development stage.. (5,980) (15,668)
------- --------
Total shareholders' equity (deficiency)......... (5,946) 34,016
------- --------
$ 3,486 $ 42,717
======= ========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
SILICON GAMING, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
CUMULATIVE
FROM INCEPTION
(JULY 27,
THREE MONTHS ENDED NINE MONTHS ENDED 1993)
-------------------------- -------------------------- THROUGH
DECEMBER 31, SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1995 1996 1995 1996 1996
------------ ------------- ------------ ------------- --------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
OPERATING EXPENSES:
Research and
development.......... $1,619 $2,873 $3,137 $ 7,118 $11,873
Selling, general and
administrative....... 347 1,157 922 2,963 4,258
------ ------ ------ ------- -------
Loss from
operations......... 1,966 4,030 4,059 10,081 16,131
Interest income, net.. 48 325 85 393 463
------ ------ ------ ------- -------
NET LOSS................ $1,918 $3,705 $3,974 $ 9,688 $15,668
====== ====== ====== ======= =======
PRO FORMA NET LOSS PER
SHARE.................. $(0.24) $(0.35) $(0.48) $ (0.99)
====== ====== ====== =======
PRO FORMA SHARES USED IN
COMPUTATION............ 8,136 10,510 8,292 9,821
====== ====== ====== =======
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
SILICON GAMING, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
CUMULATIVE
NINE MONTHS ENDED FROM INCEPTION
-------------------------- (JULY 27, 1993)
DECEMBER 31, SEPTEMBER 30, THROUGH
1995 1996 SEPTEMBER 30, 1996
------------ ------------- ------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net loss....................... $(3,974) $(9,688) $(15,668)
Reconciliation to net cash used
in operating activities:
Depreciation and amortization. 136 400 584
Deferred rent................. -- 100 100
Common and preferred stock
issued for services.......... 4 261 265
Accrued interest exchanged for
preferred stock.............. 10 -- 10
Changes in assets and
liabilities:
Inventories................... -- (424) (424)
Prepaids and other............ (264) (254) (546)
Other assets, net............. (30) 6 (31)
Accounts payable.............. 328 325 690
Accrued liabilities........... 59 318 562
------- ------- --------
Net cash used in operating
activities................... (3,731) (8,956) (14,458)
------- ------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition of property and
equipment..................... (659) (1,477) (2,394)
------- ------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Sale of redeemable convertible
preferred stock, net of
issuance costs................ 5,457 14,457 20,881
Sale of common stock, net of
notes receivable.............. 2 32,891 32,895
Collection of note receivable.. 12 -- 13
Proceeds from notes payable to
shareholders.................. 750 -- 2,186
Payment on notes payable to
shareholders.................. -- -- (136)
Proceeds from sale/leaseback of
property and equipment........ 333 667 1,000
Repayment of capital lease
obligation.................... (6) (100) (106)
------- ------- --------
Net cash provided by financing
activities................... 6,548 47,915 56,733
------- ------- --------
NET INCREASE IN CASH AND
EQUIVALENTS..................... 2,158 37,482 39,881
Beginning of period............ 241 2,399 --
------- ------- --------
End of period.................. $ 2,399 $39,881 $ 39,881
======= ======= ========
SUPPLEMENTARY DISCLOSURES OF CASH
FLOW
INFORMATION:
Cash paid during the period for
interest...................... $ 11 $ 50 $ 62
======= ======= ========
NONCASH INVESTING AND FINANCING
ACTIVITIES:
Issuance of common and
preferred stock for notes
receivable.................... $ 75 $ 151 $ 234
======= ======= ========
Cancellation of preferred stock
and related notes receivable.. $ 12 $ -- $ 12
======= ======= ========
Conversion of note payable to
shareholder to preferred
stock......................... $ 2,050 $ -- $ 2,050
======= ======= ========
Issuance of common warrants.... $ 25 $ -- $ 25
======= ======= ========
Conversion of preferred stock,
net of issuance costs, to
common stock on initial public
offering...................... $ -- $16,748 $ 16,748
======= ======= ========
</TABLE>
See notes to consolidated financial statements
5
<PAGE>
SILICON GAMING, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying balance sheet as of September 30, 1996, the statements of
operations for the three-month periods ended December 31, 1995 and September
30, 1996, the nine-months ended September 30, 1996 and cumulative, and the
statements of cash flows for the nine months ended September 30, 1996 and
cumulative are unaudited. In the opinion of management, these financial
statements have been prepared on the same basis as the audited financial
statements and include all adjustments, consisting only of normal recurring
adjustments and accruals, necessary for the fair presentation of the financial
position and operating results as of such date and for such periods. The
unaudited three- and nine-month information should be read in conjunction with
the audited consolidated financial statements of Silicon Gaming, Inc.
("Silicon Gaming" or the "Company") and the notes thereto included in the
Company's Registration Statement on Form S-1, as amended, filed with the
Securities and Exchange Commission.
2. INVENTORIES
The components of inventory consist of the following (in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ -------------
<S> <C> <C>
Raw materials..................................... $ -- $298
Work-in-process................................... -- 126
----- ----
$ -- $424
===== ====
</TABLE>
3. PRO FORMA NET LOSS PER SHARE
In connection with the filing by the Company of a Registration Statement on
Form S-1 with the Securities and Exchange Commission for its initial public
offering of Common Stock (Note 4), certain shares of Redeemable Convertible
Preferred Stock automatically converted into 3,528,349 shares of Common Stock.
During the twelve-month period prior to the effectiveness of its Registration
Statement (Note 4), the Company has sold Redeemable Convertible Preferred
Stock and issued options and warrants to purchase Preferred and Common stock
at prices less than the initial offering price. Accordingly, the Company has
included pro forma net loss per share information as it believes this
information is the most meaningful under the circumstances. Pro forma net loss
per share is presented for each of the interim periods reported and is based
on the weighted average number of shares of Common Stock outstanding; and, for
the periods prior to the effective date of the offering, (i) the weighted
average number of shares of Redeemable Convertible Preferred Stock issued more
than one year prior to the effective date on an as-converted basis and (ii)
all Redeemable Convertible Preferred Stock issued, Common Stock issued and
options and warrants to purchase shares of Common and Redeemable Convertible
Preferred Stock granted during the twelve-month period preceding the effective
date which, under the Rules and Regulations of the SEC, must be considered
outstanding (using the treasury stock method at the initial offering price of
$10.50) for all periods presented.
6
<PAGE>
SILICON GAMING, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. SHAREHOLDERS' EQUITY
On July 25, 1996, the Company effected a two-for-three reverse split of the
outstanding shares of common stock. All share and per share amounts in these
financial statements have been adjusted to reflect this split.
On July 31, 1996, the Company effected an initial public offering in which
it issued 3,500,000 shares of its Common Stock at $10.50 per share. Concurrent
with the offering, all outstanding shares of Redeemable Convertible Preferred
Stock, other than Series A1 and B1 Preferred Stock, were automatically
converted into 3,528,349 shares of Common Stock. The number of authorized
shares of Preferred Stock was reduced to 6,884,473 effective with this
offering. At the closing of the offering on August 5, 1996, the Company
received proceeds, net of underwriting discounts and offering expenses, of
$32,889,000.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
THIS DISCUSSION INCLUDES A NUMBER OF FORWARD-LOOKING STATEMENTS WHICH
REFLECT THE COMPANY'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND
FINANCIAL PERFORMANCE. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO CERTAIN
RISKS AND UNCERTAINTIES INCLUDING THOSE REFERRED TO IN THE RISK FACTORS
SECTION BELOW AND ELSEWHERE HEREIN AND CONTAINED IN THE COMPANY'S PREVIOUSLY
FILED FORM 10 AND S-1 REGISTRATION STATEMENT, THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM HISTORICAL RESULTS OR THOSE ANTICIPATED. IN THIS
DISCUSSION, THE WORDS "ANTICIPATES," "BELIEVES," "EXPECTS," "INTENDS,"
"FUTURE" AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS. READERS
ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS,
WHICH SPEAK ONLY AS OF THE DATE HEREOF.
The following discussion should be read in conjunction with the unaudited
consolidated financial statements and notes thereto included in Part I--Item 1
of this Report and the audited consolidated financial statements and notes
thereto included in the Company's Registration Statement on Form S-1, as
amended, filed with the Securities and Exchange Commission.
The Company was incorporated on July 27, 1993 to design, develop,
manufacture, distribute, and market interactive gaming devices that implement
advanced multimedia technologies using state-of-the-art, off-the-shelf
components. Since its formation, the Company has been in the development
stage, and its principal activities have consisted of assembling a technical,
marketing and executive staff, developing its gaming platform, raising
capital, and initiating applications for regulatory approvals in Nevada and
other jurisdictions to manufacture, distribute and sell its gaming devices. To
date, the Company has generated no sales or other revenue and has had negative
cash flow.
Effective April 1, 1995, the Company changed its fiscal year end from March
31 to December 31.
On July 31, 1996, the Company effected an initial public offering of its
Common Stock which yielded net proceeds, after underwriting discounts and
offering expenses, of $32,889,000. The proceeds from this offering will be
used for the continued development, marketing, introduction and roll-out of
the Company's gaming machine and for general corporate purposes. A portion of
the proceeds may also be used to acquire or invest in complementary businesses
or products or to obtain the right to use complementary technologies.
The Company expects its first commercial product to be approved for product
field testing in the first quarter of 1997. The Company expects to commence
production of commercial products in the fourth quarter of 1996. Following the
completion of field testing, the Company expects to commence customer product
evaluations late in the first quarter of 1997. As is industry practice, gaming
devices are typically installed on a trial basis on casino floors for a period
of 30 to 90 days before a sales decision is made by the customer. In 1997, the
Company intends to transition from the development stage. Future revenue,
profits, and cashflows will depend on market acceptance of the Company's
products, the ability of such products to generate higher revenues for casinos
as compared to competitive products and the technical performance of the
Company's products. Additionally, among other things, the Company must
continue to attract, retain and motivate qualified personnel and meet all the
initial and ongoing licensing requirements in key jurisdictions.
RESULTS OF OPERATIONS
The Company is in the development stage and has not generated any revenue to
date. As of September 30, 1996, the Company had net losses since inception of
$15,668,000. To date, the Company has focused its resources on product
development, including system hardware and software, and game concept
development and software coding. Additionally, the Company has commenced
building its sales, marketing and manufacturing
8
<PAGE>
capabilities to support the 1997 introduction of its product. The Company
expects to complete development of the initial version of its gaming device
and begin production in the fourth quarter of 1996. In addition to continuing
and increasing expenditures in research and development, the Company will need
to incur significant expenses and other costs associated with manufacturing.
During the remainder of 1996, units will be manufactured solely for testing
and engineering, continued game development, licensing approval, regulatory
field trials and customer evaluations. The Company does not expect any product
sales in 1996 and therefore expects to generate no revenue in 1996 and only
limited revenue in 1997. Moreover, the Company expects to incur substantial
losses and negative cash flows at least through the second quarter of 1998.
Amounts for the three- and nine-month periods ended December 31, 1995 and
September 30, 1996 may not be comparable due to the growth of the Company over
the periods and the Company's change in fiscal year. The Company believes that
operating expenses will increase in the future as it continues to develop its
product and emerges from the development stage to begin commercial operations,
including manufacturing, marketing and sales.
Research and Development
Research and development ("R&D") expenses include payroll and related costs
of employees engaged in ongoing design and development activities, fees to
outside contractors, prototype development expenses, overhead costs, equipment
depreciation and supplies. To date, the Company has expensed all costs
associated with the research, design and development of its products. R&D
expenses were $1,619,000 and $2,873,000 for the quarters ended December 31,
1995 and September 30, 1996, respectively, and $3,137,000 and $7,118,000 for
the nine-month periods ended December 31, 1995 and September 30, 1996,
respectively. Increases over the periods result from the incremental hiring of
personnel, increased usage of engineering consultants and fees to acquire
outside technologies. The Company believes that a significant level of R&D
expenses is required due to the technical nature of the product and the
elaborate requirements of the game development process. Accordingly, the
Company anticipates devoting substantial resources, including additional
personnel, to R&D and that these costs will continue to increase in absolute
dollars in future periods.
Selling, General and Administrative
Selling, general and administrative ("SG&A") expenses include payroll and
related costs for administrative and executive personnel, overhead costs,
legal and associated costs, corporate and product licensing costs in various
jurisdictions and fees for professional services. SG&A expenses were $347,000
and $1,157,000 for the quarters ended December 31, 1995 and September 30,
1996, respectively, and $922,000 and $2,963,000 for the nine-month periods
ended December 31, 1995 and September 30, 1996, respectively. Increases over
the periods result from the incremental hiring of personnel and expenses
associated with applying for corporate and product licensing in various
jurisdictions. SG&A expenses are expected to increase substantially in
absolute dollars in future periods as the Company invests in sales and
marketing activities to launch its products and in administrative personnel to
support its growing infrastructure and comply with regulatory requirements.
Income Taxes
The Company has had net losses since inception and therefore the income tax
benefit is the result of its loss and credit carryforwards. A valuation
allowance has been recorded for any deferred tax assets due to uncertainties
regarding the realization of these assets resulting from the lack of earnings
history of the Company. Due to changes in ownership, as defined by Section 382
of the Internal Revenue Code, resulting from the sale of Series B and Series C
Redeemable Convertible Preferred Stock and Common Stock in the Company's
initial public offering, the annual deductibility of a substantial portion of
the federal net operating loss and tax carryforwards may be limited.
9
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
From inception to the time of the Company's initial public offering, the
Company financed its operations primarily through the private placements of
Redeemable Convertible Preferred Stock and loans from shareholders which were
subsequently converted to Redeemable Convertible Preferred Stock. As of
September 30, 1996, the amounts raised in the private placements of Redeemable
Convertible Preferred Stock, net of issuance costs, totaled approximately
$23,203,000. In August 1996, the Company consummated an initial public
offering of its Common Stock, through which it raised $32,889,000, net of
underwriting discounts and issuance costs. As of September 30, 1996, the
Company had $39,881,000 in cash on hand to fund operations.
The Company's operating activities used cash of $3,731,000 and $8,956,000
for the nine months ended December 31, 1995 and September 30, 1996,
respectively. Cash used in operating activities primarily reflected net
losses, partially offset by depreciation and amortization, stock issued for
services and changes to working capital.
From inception through September 30, 1996, the Company has acquired a total
of approximately $2,394,000 in fixed assets, primarily computer equipment. The
Company has a $1,000,000 lease line to finance the acquisition of fixed
assets, which has been fully drawn upon as of the date of this Report.
The Company believes that its cash, including the proceeds from its initial
public offering, is sufficient to meet its anticipated cash needs for working
capital, capital expenditures and business expansion through the middle of
1998.
RISK FACTORS
The Company's success depends on the success of a single product. The
Company's product, while in the final stages of development, has not been
licensed for manufacture, distribution or sale in any jurisdiction nor has it
been beta tested since such testing requires prior regulatory approval in the
test jurisdiction. Accordingly, there can be no assurance that production
delays will not result from unknown technical difficulties or delays in the
regulatory approval process. Furthermore, no assurance can be given regarding
the Company's commercial success because the gaming platform must receive
acceptance from both casino operators and, ultimately, gaming patrons.
The Company operates in a highly regulated industry which requires licensing
and approvals for the Company and its products in all jurisdictions in which
it intends to distribute its products. These licensing and approval processes
can involve extensive investigations into the Company, its products, officers,
directors, employees and principal shareholders. Such processes can require
significant expenditures of time and resources by the Company and are subject
to the interpretation of regulations and technical standards by the officials
in each jurisdiction. While the Company has received approvals to manufacture
and distribute gaming machines in Nevada and Mississippi, has applied for the
requisite corporate and individual approvals in Missouri and Colorado and has
submitted its product for approval in Nevada and Missouri, the Company can
give no assurances that it will receive the applied for licenses and approvals
nor can it predict the nature and impact of potential regulatory changes which
may occur in the future.
In addition to the aforementioned risks, the Company also faces the risks
associated with a development stage company, intense competition from
established companies with greater resources, the management of growth,
dependence on key personnel, limited protection of intellectual property
rights and the risk of litigation, rapidly changing technology, the ability to
obtain additional capital resources, limited manufacturing experience,
dependence on single-source suppliers and a slowing in the trend to legalize
gaming. As a result, the Company's operating results may fluctuate
significantly, especially when measured on a quarterly basis.
10
<PAGE>
PART II--OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Inapplicable.
ITEM 2. CHANGES IN SECURITIES
In July 1996, the Company effected a two-for-three reverse split of the
outstanding shares of common stock.
In July 1996, the Company effected an initial public offering in which it
issued 3,500,000 shares of its Common Stock at $10.50 per share. Upon the
closing of the offering on August 5, 1996, all outstanding shares of
Redeemable Convertible Preferred Stock, other than the Series A1 and B1
Preferred Stock, were automatically converted into 3,528,349 shares of Common
Stock.
In August 1996, following the closing of its initial public offering, the
Company amended its Articles of Incorporation (i) to reduce the number of
authorized shares of Preferred Stock to 6,884,473, which eliminated the shares
of Preferred Stock that had been converted to Common Stock as of such closing
and added 500,000 shares of undesignated Preferred Stock whose rights and
preferences may be fixed by the Board of Directors, and (ii) to eliminate
cumulative voting in the elections of directors, effective at such time as the
Company has at least 800 shareholders as of the record date for its annual
meeting of shareholders.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Inapplicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Inapplicable.
ITEM 5. OTHER INFORMATION
Inapplicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
<TABLE>
<CAPTION>
NUMBER EXHIBIT DESCRIPTION
------ -------------------
<C> <S>
11.1 Statement Regarding Computation of Pro Forma Loss Per Share
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K.
None.
11
<PAGE>
SIGNATURE
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 thereunto duly authorized.
Silicon Gaming, Inc.
/s/ Thomas E. Carlson
By __________________________________
THOMAS E. CARLSON VICE PRESIDENT--
CHIEF FINANCIAL OFFICER (PRINCIPAL
FINANCIAL AND CHIEF ACCOUNTING
OFFICER)
Date: November 12, 1996
12
<PAGE>
EXHIBIT 11.1
SILICON GAMING, INC.
STATEMENT REGARDING COMPUTATION OF PRO FORMA LOSS PER SHARE
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------- --------------------------
DECEMBER 31, SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
1995 1996 1995 1996
------------ ------------- ------------ -------------
<S> <C> <C> <C> <C>
Net loss................ $(1,918) $(3,705) $(3,974) $(9,688)
======= ======= ======= =======
Weighted average common
shares outstanding..... 2,164 8,272 2,065 5,038
Weighted average
preferred shares
outstanding, as if
converted.............. 679 226 679 528
Common shares,
redeemable convertible
preferred shares and
options and warrants to
purchase shares of
common and redeemable
convertible preferred
shares granted (using
the treasury stock
method assuming an
initial public offering
price of $10.50) since
July 31, 1995 included
pursuant to Securities
and Exchange Commission
Rules.................. 5,293 2,012 5,548 4,255
------- ------- ------- -------
Weighted average pro
forma common and
equivalent shares.... 8,136 10,510 8,292 9,821
======= ======= ======= =======
Pro forma net loss per
share................ $ (0.24) $ (0.35) $ (0.48) $ (0.99)
======= ======= ======= =======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 39,881
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 424
<CURRENT-ASSETS> 40,851
<PP&E> 1,811
<DEPRECIATION> 400
<TOTAL-ASSETS> 42,717
<CURRENT-LIABILITIES> 1,436
<BONDS> 0
0
6,455
<COMMON> 49,684
<OTHER-SE> (15,668)
<TOTAL-LIABILITY-AND-EQUITY> 42,717
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 10,081
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 50
<INCOME-PRETAX> (9,688)
<INCOME-TAX> 0
<INCOME-CONTINUING> (10,081)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (9,688)
<EPS-PRIMARY> (0.99)
<EPS-DILUTED> (0.99)
</TABLE>
