SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Fiscal Year Ended June 30, 1996
Commission File Number: 0-9047
GLOBAL GAMING AND TECHNOLOGY, INC.
-----------------------------------------------------
(Exact Name of Registrant as specified in its charter)
Delaware 02-0314487
- ------------------------------- ----------------------------
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) Number)
2575 South Highland Drive, Las Vegas, Nevada 89109
--------------------------------------------------
(Address of principal executive offices)
Registrant's Telephone Number, including Area Code: (702) 732-1414
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common
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.
X YES NO
As of June 30, 1996, there was issued and outstanding 26,378,577 shares
of Common Stock held by non-affiliates (without admitting that any person
whose shares are not included in determining such value as an affiliate was
not available because the prices for such shares are not quoted by the
National Association of Securities Dealers through NASDAQ, its automated
system for reporting quotes).
<PAGE>
Global Gaming and Technology, Inc.
Form 10-K
June 30, 1996
TABLE OF CONTENTS
Page
ITEM 1 - Business 1,2,3
ITEM 2 - Properties 3
ITEM 3 - Legal Proceedings 3,4
ITEM 4 - Submission of Matters to a Vote of Security Holders 5
ITEM 5 - Market for Registrant's Common Stock 5
ITEM 6 - Selected Financial data 6
ITEM 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 6,7
ITEM 8 - Financial Statements 7
ITEM 9 - Disagreements on Accounting and Financial Disclosure 7
ITEM 10 - Directors, Executive Officers, Promoters, and
Control Persons of the Registrant 8,9
ITEM 11 - Executive Compensation 9
ITEM 12 - Security Ownership of Certain Beneficial
Owners and Management 9,10
ITEM 13 - Certain Relationships and Related Transactions 10,11
ITEM 14 - Exhibits, Financial Statement Schedules 11
<PAGE>
PART I
Item 1 - Business:
Global Gaming and Technology, Inc. (hereinafter referred to as the "Company")
was engaged in the design, manufacture, and marketing of electronic Micro-
processor-controlled gaming machines. The Company, which was incorporated in
Delaware in 1973, maintains its principal offices at 2575 S Highland Drive,
Las Vegas, NV 89109. During the past year, the Company has not designed new
equipment, nor is the design of any new equipment contemplated.
General Development of Business
-------------------------------
The Company has been dormant for the past several years.
Licensing Activities
--------------------
During the fiscal year, the Company did not apply for any gaming licenses.
The lack of gaming licenses in Nevada and New Jersy is a severe detriment to
growth. In effect, sales are confined to much smaller and less lucrative
markets.
New Products; Research and Development
--------------------------------------
The Company has not developed any new products during the fiscal year ended
June 30, 1996, nor is the development of new products contemplated in the
future. Since the electronic gaming divice industry is constantly employing
new products, the Company is not competitive in any markets.
Products
--------
No new machines have been manufactured during the year ended June 30, 1996.
Marketing and Service
---------------------
The Company has not been successful in expanding its market or marketing its
products during the fiscal year ended June 30, 1996. The Company does not
contemplate any material marketing activities during the next year ended
June 30, 1997.
- 1 -
<PAGE>
PART I (Continued)
Item 1 - Business: (Continued)
Competition
-----------
The gaming machine industry is a highly competitive industry. Bally
Manufacturing Company (Bally) and International Gaming Technology (IGT) are
principal domestic competitors of the Company. Additionally, Japanese
manufacturing and marketing companies have entered the American market and
have become a significant competitive factor. Additionally, new technology
has made certain products obsolete. Management believes that the success of
a gaming device is based upon player appeal, reliability, product support and
competitive factors. However, the Company lacks the financial strength to
compete in markets available for sales.
Manufacturing
-------------
Manufacture of the Company's products consists of the assembly of machines
from parts and components, some of which are standard and others of which
are made to the company's specifications. These parts and components are
readily obtainable from several sources of supply and the Company does not
rely on any one vendor as a source for the parts and components. No new
machines were manufactured during the year ended June, 30, 1996.
Employees
---------
As of June 30, 1996, the Company employed no personnel.
Patents
-------
The Company holds one United States Letters Patent issued in fiscal 1979,
relating to the design and operation of its products and their various
components. The Company is of the opinion that this letters patent has
competitive value in that it would require competitors to use non-infringing
designs to achieve the technological advances obtained by use of the designs
covered in the Letters Patent. However, the Company believes that player
appeal, cost of ownership and service, and prices are, and will be, of greater
significance in establishing and maintaining a competitive position in the
industry. United States Letters Patents have a duration of 17 years from the
date of issue and are not renewable. Patents are the subject of current
litigation. (See Litigation - Item 3)
- 2 -
<PAGE>
PART I (Continued)
Item 1 - Business: (Continued)
Government Regulation
---------------------
Manufacturers and distrubutors of gaming devices in the State of Nevada and
in Atlantic City, New Jersey (the primary American markets) are subject to
licensure and extensive regulation. These licenses are issued after extensive
investigations into the moral reputaion and financial background of the
individuals (and entities) applying for a gaming license. The licenses are
revocable, nontransferable and renewable.
The investigative cost of licenses is borne by the person or company applying
for the license. The Nevada Gaming Commission may deny licenses to persons
who are engaged in gaming activities in other states. Because of the sub-
stantial investigative costs of obtaining gaming licenses in the States of
Nevada and New Jersey, the Company has deferred the decision to seek gaming
licenses in these states.
Relationship With Games of Nevada
---------------------------------
The largest stockholder of the Company is Michael Wichinsky, who owns 23% of
the outstanding common stock of the Company. Michael Wichinsky also is the
sole owner of Games of Nevada, a sole proprietorship manufacturing and selling
gaming equipment primarily in the State of Nevada. The Company and Games of
Nevada are not competitors, inasmuch as the Company does not sell gaming
machines in the State of Nevada, and Games of Nevada does not compete with the
Company in the secondary markets.
Item 2 - Properties:
The Company does not own any real or personal property.
Item 3 - Legal Proceedings:
On or about May, 1994, the Company instituted litigation in the United States
District Court for the District of New Jersey for patent infringement against
Bally's Park Place, Inc., Trump Plaza Associates, Trump Taj Mahal Associates,
Trump Castle Associates, The Claridge Hotel and Casino Corporation, Resorts
International Hotel, Atlantic Showboat, Inc., and Greate Bay Hotel and Casino,
Inc. Global was seeking damages to adequately compensate for the past
infringement of the patent in suit by each of the defendants together with
interest and costs.
- 3 -
<PAGE>
PART I (Continued)
Item 3 - Legal Proceedings: (Continued)
As a result of this action, on June 30, 1994, the Company entered into a
license agreement with Bally Gaming, whereby the Company grants a non-
exclusive, personal, non-transferable right and paid-up license to make, have
made, use and sell, test, lease or otherwise dispose of licensed products
under claims of this license patent. The Company will receive a non-
refundable net royalty payment in the amount of one million dollars
($1,000,000). (See Note 2 for details)
In this lawsuit, the Company contends that the defendants infringed upon a
patent owned in connection with the manufacture, use or sale of slot machines
driven by stepper motors. The Company intends to prosecute the matter fully
until such time as the case is either tried or settled to the Company's
satisfaction.
On or about July 6, 1994, IGT North America, Universal Distributing of Nevada,
Inc. and Sigma Game, Inc. filed a civil complaint in the United States
District Court for the District of Nevada against Global gaming and Tech-
nology, Inc. for declaratory judgement of noninfringement, invalidity,
unenforceability and laches.
The Company has settled independently with Sigma Game, Inc. and Universal
Distributing of Nevada, Inc. (See Note 2 for details).
This lawsuit arose as a result of the New Jersey litigation described above,
and was filed for the purpose of having Global's patent declared invalid.
The Company is vigorously contesting the allegations alleged in the complaint
and has filed a counterclaim for infringement against IGT North America,
Universal Distributing of Nevada, In., and Sigma Game, Inc. The Company's
counsel cannot yet render a definitive opinion with respect to this case.
At this time, the Company believes that its only financial exposure in this
case is (i) the financial impact of having its patent declared invalid
(which patent expired at the end of July 1995) and (ii) the payment of any
fees and costs that may be awarded by the court if IGT prevails on its claim,
the amount of which exposure is difficult to predict at present.
The Company will be incurring legal costs regarding the prosecution of its
infringement claims. Per Counsel for the Company, at present it is very
difficult to determine these future legal costs.
On September 11, 1995, the Court ordered that discovery in this case will
close on May 1, 1996 and set a trial date of September 9, 1996. In connection
with this ruling, the Court also denied IGT's, Sigma Games' and Universal
Distributing's motion to bifurcate the damages a liability phase of this case.
- 4 -
<PAGE>
PART I (Continued)
Item 4 - Submission of Matters to Vote of Security Holders:
No matter was submitted to the vote of security holders during the fiscal
year.
PART II
Item 5 - Market for the Registrant's Common Stock and Related Security
Holder Matters:
The Common Stock of the Company is traded in the over-the-counter market.
The Company had 2,762 shareholders of record on June 30, 1996.
The following table indicates the range of high and low bid prices of the
Company's Common Stock for the quarterly periods starting Septimber 30, 1993,
in the "Pink Sheets." No quotes are available from the National Association
of Securities Dealers through NASDAQ, its automated system for reporting
quotes:
High Low
Bid Ask Bid Ask
Quarter Ending September 30, 1993 1/8 3/8 1/8 3/8
Quarter Ending December 31, 1993 1/8 3/8 1/8 3/8
Quarter Ending March 31, 1994 1/8 3/8 1/8 3/8
Quarter Ending June 30, 1994 1/8 3/8 1/8 3/8
Quarter Ending September 30, 1994 1/8 3/8 1/8 3/8
Quarter Ending December 31, 1994 1/8 3/8 1/8 3/8
Quarter Ending March 31, 1995 1/8 3/8 1/8 3/8
Quarter Ending June 30, 1995 1/8 3/8 1/8 3/8
Quarter Ending September 30, 1995 1/8 3/8 1/8 3/8
Quarter Ending December 31, 1995 1/8 3/8 1/8 3/8
Quarter Ending March 31, 1996 1/8 3/8 1/8 3/8
Quarter Ending June 30, 1996 1/8 3/8 1/8 3/8
The foregoing over-the-counter market quotations reflect inter-dealer prices,
without retail mark-up, mark-down, or commission, and may not necessarily
represent actual transactions.
The Company has not paid any dividends during the foregoing periods, nor does
the Company anticipate paying dividends within the foreseeable future.
However, there are no restrictions on the ability of the Company to declare
dividends on its common stock.
- 5 -
<PAGE>
PART II (Continued)
Item 6 - Selected Financial data:
The following selected financial data of Global Gaming and Technology, Inc.
should be read in conjunction with the financial statements and related notes
appearing elsewhere in this Form 10-K.
<TABLE>
Year Ended June 30
<CAPTION>
1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Total Revenues $245,078 $ 25,230 $918,450 $ 11,819 $ 309
Net Income (Loss) 4,894 (137,633) 788,781 (356,520) (122,207)
Income (Loss) per
Common Share .00 (.01) .03 (.01) (.01)
Cash Dividends per
Common Share -0- -0- -0- -0- -0-
Total Assets 758,084 772,789 919,939 12,561 248,080
Long-Term Debt -0- -0- -0- -0- -0-
</TABLE>
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations:
Some of the principal shareholders of the Company have informally agreed to
participate in the contribution of shares to the Company, which the Company
will have available for acquisitions of assets of other businesses. With the
exception of the program to make acquisitions through use of these shares, the
Company has not yet formulated any specific financing arrangements.
The Company presently lacks financial resources and has no plans which would
establish financial resources. The lack of financial resources has prohibited
the Company from expanding operations. The primary markets of Nevada and New
Jersey cannot be serviced unless the Company obtains gaming licenses in these
states. Because of the prohibitive costs of obtaining these licenses, the
Company has no plans to seek licensing in these states or any other.
- 6 -
<PAGE>
PART II (Continued)
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations:
Total debt of the company aggregated $1,166,668, $1,173,785 and $1,209,162
(exclusive of accounts payable) for the years ended June 30, 1996, 1995 and
1994, respectively. Of these amounts, $837,414, $841,879, and $1,154,342,
was owed to Michael Wichinsky as of June 30, 1996, 1995 and 1994 respectively.
Total revenues aggregated $245,078, $25,230 and $918,450 for the years ended
June 1996, 1995 and 1994, respectively. Income in 1994 of $918,450 consisted
of $908,450 in settlement income from Bally's Gaming. This income is non-
recurring. Income in 1996 consisted of settlements of $149,505 from Sigma
Game, Inc. and $87,039 from Universal Distributing of Nevada, Inc. This
income is also non-recurring. As of June 30, 1996 and 1995, the Company has
negative working capital of $1,913,823 and $2,085,403, respectively. At the
present time, the Company has not adopted any plan to resume operations. The
Company has been dormant for the past several years. The Company did not
manufacture any gaming devices during the fiscal years ended June 30, 1996 and
1995, and does not anticipate having the necessary resources to manufacture
devices in the future. This fact, combined with the Company's lack of
licenses described above, is anticipated to have a material adverse impact
upon the Company's ability to generate revenues in the future.
Primary costs of the Company include interest and annual administrative costs
of $240,184, $211,260, and $129,669 for the years ended June 30, 1996, 1995
and 1994, respectively.
The rate of inflation has had no impact on the company's operations because
the Company has been dormant for the last several years.
Item 8 - Financial Statements and Supplementary Data:
See Index to Financial Statements.
Item 9 - Disagreements on Accounting and Financial Disclosures:
There have been no disagreements on accounting or financial disclosures with
accountants.
- 7 -
<PAGE>
PART III
Item 10 - Directors and Executive Officers of the Registrant:
Effective May 31, 1996, the following persons were appointed as directors and
officers of the corporation for a term of one year or until the next election
of Directors.
Name Age
---- ---
Mark Sarason: President, Secretary, Treasurer. 49
Wayne D. Umbertis: Director. 58
Constance Koplow: Director. 56
Mark Sarason has 25 years experience in the gaming industry, directed pri-
marily to marketing and marketing operations. The last three years Mr.
Sarason has acted as president of Casino Marketing Services, Ltd., a company
specializing in marketing development programs for secondary gaming destin-
ations. Prior to his activities with CMS, Mr. Sarason has held positions of
Executive Director of Casino Marketing and Director of Customer Development
for Harrah's, Atlantic City, NJ.
Wayne D. Umbertis has a Master's Degree in International Business Administra-
tion. Prior to joining Games of Nevada, he was Vice President of Marketing
at Advanced Telesystems. Since 1990, Wayne D. Umbertis has been acting as a
Marketing Consultant in the communications industry. For the past three
years, he has served as President of "U" Call, a Division of FonExpress, Inc.,
which markets prepaid phone cards and telecommunication promotional and mark-
eting devises.
Constance Koplow has a Bachelor of Arts and Master of Education Administration
degree from the University of Nevada Las Vegas. She has owned and operated
two businesses, one in women's ready to wear retail and one in food service.
She served as an administrator at the Community College of Southern Nevada for
nine years and has fifteen years experience in the gaming industry.
None of the foregoing directors have held directorships in companies with a
class of securities registered pursuant to Section 12 of the Exchange Act or
subject to the requirements of Section 15(d) of such Act or any company reg-
istered as an investment company under the Investment Comapny Act of 1940.
- 8 -
<PAGE>
PART III (Continued)
Item 10 - Directors and Executive Officers of the Registrant: (Continued)
During the past five years, none of the foregoing officers or directors have
been (i) involved in any Federal Bankruptcy proceedings, (ii) convicted in a
criminal proceeding, (iii) the subject of a pending criminal proceeding, (iv)
the subject of any order, judgment, or decree not subsequently reversed,
suspended, or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining such person from, or otherwise limiting activities as
an investment advisor, underwriter, broker, or dealer in securities, or as an
affiliated person, director, or insurance company, or engaging in or contin-
uing in any conduct or practice in connection with such activity, or from
engaging in any type of business practice or engaging in any activity in
connection with the purchase or sale of any security or in connection with any
violation of Federal or state securities laws.
Additionally, none of such persons were the subject of any order, judgment,
or decree, not subsequently reversed, suspended or vacted, or any Federal or
state authority barring, suspending, or otherwise limiting for more than sixty
(60) days the right of such person to engage in any activity referred to
above, or to be associated with any person engaged in any such activity, nor
was any such person found by a court of competent jurisdiction in a civil
action or by the Securities & Exchange Commission to have violated any Federal
or state securities law.
Item 11- Executive Compensation:
The Company paid $2,000 to Constance Koplow and $2,500 to Wayne d. Umbertis
in the fiscal year ended June 30, 1996. None of the officers or directors
were indebted to the Company during the fiscal year. The Company does not
contemplate the payment of salaries to officers or directors in the near
future. During the fiscal years ended June 30, 1996, 1995 and 1994, no
Officer or Director of the Company received cash remuneration in excess of
$60,000. There are no standard arrangements for the compensation of
directors.
Item 12 - Security Ownership of Certain Beneficial Owners and Management:
The following table sets forth as of June 30, 1996, the number of shares of
common stock beneficially owned by each person known by the Company to own
more than 5% of the common stock and the percentage of common stock represent-
ed thereby.
- 9 -
<PAGE>
PART III (Continued)
Item 12 - Security Ownership of Certain Beneficial Owners and Management:
(Continued)
<TABLE>
<CAPTION>
Name and Address of Title of Number of % of
Beneficial Owner Class Shares Owned Class
- ------------------ ------- ------------ -----
<S> <C> <C> <C>
Michael Wichinsky
2575 Highland Drive
Las Vegas, NV 89109 Common Stock 6,131,165* 23%
Estate of
W.T. O'Donnell, Sr.
4200 W Peterson #106
Chicago, IL 60646 Common Stock 2,758,836* 10%
Glenn E Wichinsky
1200 W Federal Hwy
Boca Raton, FL 33432 Common Stock 3,126,085* 12%
Nessa Alice Mary Charleton
5 Crowe Street
Dundalk Company
Louth, Rep of Ireland Common Stock 1,404,127* 5%
CEDE & Co.
Box 20 Bowling Green Station
New York, NY 10004 Common Stock 5,603,825 21%
<FN>
* The foregoing shares include the following number of shares held by Michael
Wichinsky in trust on behalf of the persons named herein:
Michael Wichinsky 42.50% 3,234,499
Estate of W.T. O'Donnell, Sr. 36.25% 2,758,836
Nessa Alice Mary Charleton 7.50% 570,794
Glenn Wichinsky 13.75% 1,046,455
------- ---------
Total Shares in Trust 100.00% 7,610,584
</TABLE>
Item 13 - Certain Relationships and Related Transactions:
(A) Transactions with Management and Related Parties
------------------------------------------------
During the year ended June 30, 1996, Michael Wichinsky (a 23%
stockholder) was repaid $79,525 from the Company as interest and
principal payments on his note to the Company.
- 10 -
<PAGE>
PART III (Continued)
Item 13 - Certain Relationships and Related Transactions: (Continued)
(B) Certain Business Relationships
------------------------------
The existing business and personal relationships between the Directors
and Officers are as follows:
Mark Sarason was appointed as President, Secretary and Treasurer
effective May 31, 1996 until the next annual election of the Board
of Directors.
PART IV
Item 14 - Exhibits, Financial Statement Schedules
Attached hereto as EXHIBIT A are the financial statements and additional
financial statement schedules required by Item 8 of this form.
SIGNATURES
----------
Pursuant to the requirements of Sectin 13 or Section 15(d) 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.
DATED: 09/26/96
--------------------
GLOBAL GAMING & TECHNOLOGY, INC.
By: Mark Sarason
---------------------------
Mark Sarason
President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons as a majority of the
members of the Board of Directors of the registrant and in the capacities
and on the dates indicated.
DATED: 09/26/96
--------------------
Mark Sarason
--------------------------
Mark Sarason
Chief Financial Officer
Mark Sarason
--------------------------
Mark Sarason
Secretary/Treasurer
- 11 -
<PAGE>
EXHIBIT A
FINANCIAL STATEMENTS
<PAGE>
Global Gaming and Technology, Inc.
Financial Statements
June 30, 1996, 1995 and 1994
<PAGE>
Global Gaming and Technology, Inc.
Financial Statements
June 30, 1996, 1995 and 1994
TABLE OF CONTENTS
-----------------
PAGE
----
Accountant's Opinion 1
Balance Sheets 2
Statement of Operations and Deficit 3
Statement of Cash Flows 4
Summary of Significant Accounting Policies 5 - 7
Notes to Financial Statements 7 - 9
<PAGE>
JOSEPH F ZERGA, LTD
CERTIFIED PUBLIC ACCOUNTANTS
2950 E FLAMINGO RD, STE L
LAS VEGAS, NV 89121
(702) 732-2775
To the Board of Directors
Global Gaming and Technology, Inc.
Las Vegas, Nevada
INDEPENDENT AUDITOR'S REPORT
----------------------------
We have audited the accompanying balance sheets of Global Gaming and Technol-
ogoy, inc. as of June 30, 1996 and 1995 and the related statements of income,
retained earnings (deficit), and cash flows for each of the years in the three
year period ended June 30, 1996. These financial statements are the respon-
sibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for our opinion.
In our opinion, the financial statements indicated above present fairly in all
material respects the financial position of Global Gaming and Technology, Inc.
at June 30, 1996 and 1995, and the results of its operations and cash flows
for each of the years in the three-year period ended June 30, 1996, in con-
formity with generally accepted accounting principles.
Las Vegas, Nevada Joseph F. Zerga
September 11, 1996
<PAGE>
<TABLE>
Global Gaming and Technology, Inc.
Balance Sheet
June 30, 1996 and June 30, 1995
<CAPTION>
June 30, June 30,
1996 1996
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 10,157 $ 24,081
Inventories -0- -0-
Notes Receivable-Current (Note 2) 272,250 106,345
----------- -----------
Total Other Assets 282,407 130,426
----------- -----------
PROPERTY AND EQUIPMENT - At Cost
Net of Depreciation (Note 3) -0- -0-
----------- -----------
OTHER ASSETS
Deposits 300 300
Notes Receivable (Note 2) 475,377 642,063
----------- -----------
Total Other Assets 475,677 642,363
----------- -----------
TOTAL ASSETS $ 758,084 $ 772,789
=========== ===========
LIABILITIES AND STOCKHOLDER'S DEFICIENCY
CURRENT LIABILITIES
Accounts Payable & Accrued Expenses $ 1,029,562 $ 1,042,044
Notes Payable (Note 4) 1,166,668 1,173,785
----------- -----------
Total Current Liabilities 2,196,230 2,215,829
----------- -----------
LONG-TERM LIABILITIES
Notes Payable (Note 4) -0- -0-
----------- -----------
STOCKHOLDER'S DEFICIENCY (Note 5)
Preferred Stock, $.01 par value
1,000,000 Shares authorized,
none issued.
Common Stock, $.01 par value,
27,000,000 Shares authorized,
26,378,577 Shares issued for
1995 and 1994 (Including
51,382 held in the company
name at no cost) 263,786 263,786
Paid in Capital in Excess of par 3,395,062 3,395,062
Retained Deficit ( 5,096,994) ( 5,101,888)
----------- -----------
Total Stockholder's Deficiency ( 1,438,146) ( 1,443,040)
----------- -----------
TOTAL LIABILITIS AND
STOCKHOLDER'S DEFICIENCY $ 758,084 $ 772,789
=========== ===========
<FN>
The accompanying Summary of Significant Accounting Policies and Notes
are an integral part of these financial statements.
- 2 -
</TABLE>
<PAGE>
<TABLE>
Global Gaming and Technology, Inc.
Statement of Operations and Accumulated Deficit
For the Years Ended June 30, 1996, 1995 and 1994
<CAPTION>
June 30, June 30, June 30,
1996 1995 1994
----------- ----------- -----------
<S> <C> <C> <C>
REVENUE AND INCOME
Royalty Income $ -0- $ 3,120 $ 908,450
Other Income (Note 8) 236,544 163 10,000
Machine & Parts Sales -0- 2,500 -0-
Interest Income 8,534 19,447 -0-
----------- ----------- -----------
Total Revenue 245,078 25,230 918,450
----------- ----------- -----------
COSTS AND EXPENSES
Cost of Sales -0- 2,500 -0-
Professional Services 133,563 79,579 3,828
Interest 94,426 108,574 118,597
Loss on Inventory -0- 7,500 -0-
Other General & Adminis 12,195 13,107 7,244
----------- ----------- -----------
Costs and Expenses 240,184 211,260 129,669
----------- ----------- -----------
Income (Loss) from Operations 4,894 ( 186,030) 788,781
Extraordinary Item - Gain on
Extinguishment of Debt -0- 48,397 -0-
Prior Period Adjustment Income
Taxes (Note 7) -0- ( 9,736) -0-
Deficit Beginning of Period ( 5,101,888) ( 4,954,519) ( 5,743,300)
----------- ----------- -----------
Deficit End of Period ($5,096,994) ($5,101,888) ($4,954,519)
=========== =========== ===========
Earnings Per Share:
Income (Loss) per Common
Share Before Extraordinary
Item (Note 6) $ .00 ($ .01) $ .03
=========== =========== ===========
Income (Loss) per Common
Share After Extraordinary
Item (Note 6) $ .00 ($ .01) $ .03
=========== =========== ===========
<FN>
The accompanying Summary of Significant Accounting Policies and Notes
are an integral part of these financial statements.
- 3 -
</TABLE>
<PAGE>
<TABLE>
Global Gaming and Technology, Inc.
Statement of Cash Flows
For the Years Ended June 30, 1996, 1995 and 1994
<CAPTION>
June 30, June 30, June 30,
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net Income (Loss) $ 4,894 ($137,633) $ 788,781
Depreciation -0- -0- -0-
Changes in:
Note Receivable (Current) ( 165,095) 47,325 ( 153,670)
Inventories -0- 10,000 -0-
Accounts Payable ( 12,482) 35,596 113,597
Notes Payable ( 7,117) ( 35,377) 5,000
--------- --------- ---------
Total Operating ( 180,610) ( 80,089) 753,708
--------- --------- ---------
CASH FLOWS FROM
INVESTING ACTIVITIES
Capital Expenditures -0- -0- -0-
--------- --------- ---------
CASH FLOW FROM
FINANCING ACTIVITIES
Prior Period Adjustment -0- ( 9,736) -0-
Notes Receivable 166,686 112,717 ( 754,780)
--------- --------- ---------
Total Financing 166,686 102,981 ( 754,780)
--------- --------- ---------
Net Increase (Decrease) in Cash ( 13,924) 22,892 ( 1,072)
Cash at the Beginning 24,081 1,189 2,261
--------- --------- ---------
Cash at the End $ 10,157 $ 24,081 $ 1,189
========= ========= =========
<FN>
The accompanying Summary of Significant Accounting Policies and Notes
are an integral part of these financial statements.
- 4 -
</TABLE>
<PAGE>
Global Gaming and Technology, Inc.
Summary of Significant Accounting Policies
and Notes to Financial Statements
June 30, 1996, 1995 and 1994
THE COMPANY
-----------
The Company was incorporated in the State of Delaware in 1973 and has elected
June 30, as its year end. The Company has been engaged in the research,
development, manufacture and marketing of electronic gaming devices and coin-
less games of chance. On April 27, 1995, it came to the Company's attention
that it had failed to file its franchise tax reports for the State of
Delaware for fiscal years 1987 through 1994 and, as a result, its corporate
charter was revoked effective March 1, 1994. Effective May 15, 1995 the
Company's corporate charter was reinstated by the State of Delaware retro-
actively to February 28, 1994.
PROPERTY AND EQUIPMENT
----------------------
Property and equipment, including significant improvements thereto, are
carried at cost, less accumulated depreciation. Expenditures for repairs and
maintenance are charged to expenses as incurred. When assets are retired or
disposed of, the cost and related accumulated depreciation are removed from
the accounts. Gains and losses from the disposition of property are included
in operations. Depreciation is provided using Straight-Line methods.
INCOME TAXES
------------
Because of a net operating loss carry forward from prior years, the Company
does not have an income tax obligation.
LITIGATION
----------
On or about May, 1994, the Company instituted litigation in the United States
District Court for the District of New Jersey for patent infringement against
Bally's Park Place, Inc., Trump Plaza Associates, Trump Taj Mahal Associates,
Trump Castle Associates, The Claridge Hotel and Casino Corporation, Resorts
International Hotel, Atlantic Showboat, Inc., and Greate Bay Hotel and Casino,
Inc. Global was seeking damages to adequately compensate for the past
infringement of the patent in suit by each of the defendants together with
interest and costs.
As a result of this action, on June 30, 1994 the Company entered into a
license agreement with Bally's Gaming, whereby the Company grants a non-
exlusive, personal, non-transferable right and paid-up license to make, have
made, use and sell, test, lease or otherwise dispose of licensed products
under claims of this license patent. The Company will receive a non-
refundable net royalty payment in the amount of one million dollars
($1,000,000). (See Note 2 for details)
- 5 -
<PAGE>
Global Gaming and Technology, Inc.
Summary of Significant Accounting Policies
and Notes to Financial Statements
June 30, 1996, 1995 and 1994
LITIGATION - (Continued)
------------------------
In this lawsuit, Global Gaming and Technology, Inc. contends that the defen-
dants named in the complaint infringed upon a patent owned in connection with
the manufacture, use or sale of slot machines driven by stepper motors. The
Company intends to prosecute the matter fully until such time as the case is
either tried or settled to the Company's satisfaction.
On or about July 6, 1994, IGT North America, Universal Distributing of Nevada,
Inc. and Sigma Game, Inc. filed a civil complaint in the United States
District Court for the District of Nevada against Global Gaming and
Technology, Inc. for declaratory judgment of noninfringement, invalidity,
unenforceability and laches.
The Company has settled independently with Sigma Game, Inc. and Universal
Distributing of Nevada, Inc. (See Note 2 for details)
This lawsuit arose as a result of the New Jersey litigation (see above
paragraph), and was filed for the purpose of having Global's patent declared
invalid. The Company is vigorously contesting the allegations alleged in the
complaint and has filed a counterclaim for infringement against IGT North
America, Universal Distributing of Nevada, Inc., and Sigma Game, Inc. The
Comany's counsel cannot yet render a definite opinion with respect to this
case.
At this time, the Company believes that its only financial exposure in this
case is (i) the financial impact of having its patent declared invalid
(which patent expired at the end of July 1995) and (ii) the payment of any
fees and costs that may be awarded by the court if IGT prevails on its claim,
the amount of which exposure is difficult to predict at present.
The Company will be incurring legal costs regarding the prosecution of its
infringement claims. Per counsel of the Company, at present it is very
difficult to determine these future legal costs.
On September 11, 1995, the Court ordered that discovery in this case will
close on May 1, 1996 and set a trial date of September 9, 1996. In connection
with this ruling, the Court also denied IGT's, Sigma Games' and Universal
Distributing's motion to bifurcate the damages and liability phases of this
case.
- 6 -
<PAGE>
Global Gaming and Technology, Inc.
Summary of Significan Accounting Policies
and Notes to Financial Statements
June 30, 1996, 1995 and 1994
NET OPERATING LOSS CARRYFORWARDS TO 1997
----------------------------------------
Expires
-------
1983 $ 1,184,519 1998
1984 455,313 1999
1985 276,972 2000
1986 226,859 2001
1987 216,931 2002
1988 451,580 2003
1989 104,956 2004
1990 136,629 2005
1991 362,469 2006
1992 122,207 2007
1993 356,521 2008
1995 137,588 2010
-----------
$ 4,032,544
===========
NOTE 1 - Inventories
The Company has no inventories as of June 30, 1996.
Note 2 - Notes Receivable
(1) The total amount due pursuant to the promissory note from Bally's Gaming
shall be paid in sixty consecutive installments, pursuant to the follow-
ing schedule:
A. $10,166.66 per month shall be paid on the first day of each month,
starting on July 1, 1994, and continuing through December 1, 1996.
B. $21,500.00 per month sall be paid on the first day of each month,
starting on January 1, 1997, and continuing through June 1, 1999.
C. $122,000 was received during the year ended 6/30/96. The scheduled
payments under this note have been discounted at 8% to reflect the
present value of the note.
Note Receivable - Current Portion $ 167,057
Note Receivable - Long Term 475,377
---------
Note Balance as of June 30, 1996 $ 642,434
=========
The amount of this payment is secured by a note from Bally's Gaming and the
collectability of this note is not doubtful. Since June 30, 1994, the Company
has been receiving monthly installment payments on this note.
- 7 -
<PAGE>
Global Gaming and Technology, Inc.
Summary of Significant Accounting Policies
and Notes to Financial Statements
June 30, 1996, 1995 and 1994
(2) The promissory note due from Sigma Game, Inc. is from a settlement
arising out of litigation. The following scheduled payments have been
discounted at 8% to reflect the present value on June 30, 1996 of the
nonte of $54,505.
February 7, 1997 $ 25,000
February 7, 1998 25,000
February 7, 1999 12,500
(3) The note due from Universal Distributing of Nevada, Inc. is from a
settlement arising out of litigation and consists of $19,513 collected
in July of 1996 and ten (10) slot machines, due August 31, 1996, the
Company's share valued at $28,500.
(4) $2,675 is due from a local company for the sale of all inventory.
NOTE 3 - Property and Equipment
The Company has no real or personal property as of June 30, 1996.
NOTE 4 - Notes Payable
<TABLE>
<CAPTION>
Current Non-Current
Maturities Maturities Total
<S> <C> <C> <C>
Michael Wichinsky
Payable upon demand.
Interest payable
quarterly at 8% $ 731,924 $ -0- $ 731,924
Michael Wichinsky
Payable upon demand.
Interest payable
quarterly at 10% 105,490 -0- 105,490
Estate of
William T O'Donnell Sr.
Payable upon demand.
Interest payable
quarterly at 8% 309,811 -0- 309,811
State of New Jersey
Payable in monthly
installments of $1,363
including interest.
This note is in arrears. 19,443 -0- 19,443
---------- ---------- ----------
$1,166,668 $ -0- $1,166,668
========== ========== ==========
</TABLE>
- 8 -
<PAGE>
Global Gaming and Technology, Inc.
Summary of Significant Accounting Policies
and Notes to Financial Statements
June 30, 1996, 1995 and 1994
NOTE 5 - Stockholders' Deficiency
<TABLE>
<CAPTION>
Number of Com Stock Paid in
Shares $.01 Par Capital (Deficit)
<S> <C> <C> <C> <C>
Balance at
June 30, 1994 26,378,577 $ 263,786 $3,395,062 ($4,954,519)
Net Income for
Year Ended
June 30, 1995 ( 186,030)
Extraordinary
Item - Gain 48,397
Prior Period
Adjustment ( 9,736)
---------- ---------- ---------- ----------
Balance at
June 30, 1995 26,378,577 $ 263,786 $3,395,062 ($5,101,888)
Net Income
Year Ended
June 30, 1996 4,894
---------- ---------- ---------- ----------
26,378,577 $ 263,786 $3,395,062 ($5,096,994)
========== ========== ========== ==========
</TABLE>
NOTE 6 - Earnings (Loss) Per Share
Income (Loss) per share was computed by dividing the net income or loss by
the weighted average number of shares outstanding during the period.
NOTE 7 - Prior-Period Adjustment - Income Taxes
At June 30, 1996, the Company has available a net Operating Loss carried
forward from prior years in the amount of $4,037,438. The deficit at the
beginning of the 1995 fiscal year has been adjusted to reflect alternative
minimum tax liability for 1994. This tax liability was paid in full in the
quarter ended September 30, 1994.
NOTE 8 - Other Income
Other Income for the year ended June 30, 1996 consists of settlements reached
with Sigma Game, Inc. and Universal Distributing of Nevada in the amount of
$149,505 and $87,039, respectively. The amount due from Sigma Game, Inc. has
been discounted at 8% per annum.
- 9 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Jun-30-1996
<PERIOD-START> Jul-01-1995
<PERIOD-END> Jun-30-1996
<CASH> 10157
<SECURITIES> 0
<RECEIVABLES> 272250
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 282407
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 758084
<CURRENT-LIABILITIES> 2196230
<BONDS> 0
<COMMON> 263786
0
0
<OTHER-SE> (1174360)
<TOTAL-LIABILITY-AND-EQUITY> 758084
<SALES> 0
<TOTAL-REVENUES> 245078
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 240184
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 94426
<INCOME-PRETAX> 4894
<INCOME-TAX> 0
<INCOME-CONTINUING> 4894
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11923
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
