SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Fiscal Year Ended June 30, 1999
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, 1999, 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, 1999
TABLE OF CONTENTS
Page
ITEM 1 - Business 3,4,5
ITEM 2 - Properties 5
ITEM 3 - Legal Proceedings 5,6,7
ITEM 4 - Submission of Matters to a Vote of Security Holders 7
ITEM 5 - Market for Registrant's Common Stock 8
ITEM 6 - Selected Financial Data 9
ITEM 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 9,10
ITEM 8 - Financial Statements 10
ITEM 9 - Disagreements on Accounting and Financial Disclosure 10
ITEM 10 - Directors, Executive Officers, Promoters, and
Control Persons of the Registrant 11,12
ITEM 11 - Executive Compensation 12
ITEM 12 - Security Ownership of Certain Beneficial
Owners and Management 13,14
ITEM 13 - Certain Relationships and Related Transactions 14
ITEM 14 - Exhibits, Financial Statement Schedules 14
-2-
<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
the State of Delaware in 1973, maintains its principal offices at 2575 South
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 contem-
plated.
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, 1999, nor is the development of new products contemplated in the
future. Since the electronic gaming device 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, 1999.
Marketing and Service
---------------------
The Company has not been successful in expanding its market or marketing its
products during the fiscal year ended June 30, 1999. The Company does not
contemplate any material marketing activities during the next year ending
June 30, 2000.
- 3 -
<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, Asian
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, 1999.
Employees
---------
As of June 30, 1999, the Company had one employee.
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 Legal Proceedings - Item 3)
- 4 -
<PAGE>
PART I (Continued)
Item 1 - Business (Continued):
Government Regulation
---------------------
Manufacturers and distributors 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 reputation 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.
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.
In this lawsuit, the Global Gaming and Technology, Inc. contends that the
defendants infringed upon a patent owned in connection with the manufacture,
use or sale of slot machines driven by stepper motors.
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 was to receive a non-
refundable net royalty payment in the amount of one million dollars
($1,000,000).
- 5 -
<PAGE>
PART I (Continued)
Item 3 - Legal Proceedings (Continued):
The Company reported that Bally Gaming International, Inc. ("Bally") ceased
making payments pursuant to the promissory note dated May 2, 1994. As a result,
the Company initiated a breach of contract action in the Circuit Court of
Cook County located in Chicago, Illinois. In response to this lawsuit, Bally
asserted in a counterclaim that it was not obligated to make any further
payments and demanded a refund of all prior payments made.
On March 5, 1998 the Circuit Court in Global v. Bally entered a final judgment
in favor of Global and against Bally in the amount of $1,282,131.55 (the
"Judgment"). As a result, on March 26, 1998, Bally filed a notice of appeal
from the Judgment in Global v. Bally in the Illinois Appellate Court for the
First District. On April 16, 1998, a settlement agreement was entered into
between the Company and Bally, whereas Bally agreed to pay Global $1,070,000.00
as full satisfaction of the Judgment in exchange for the execution of
"Satisfaction/Release of Judgment" by Global to Bally. After payment by Bally,
an Agreed Motion for Entry of Orders Dismissing Appeal was filed by Bally in
the Circuit Court.
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 the Company for declaratory
judgement of non-infringement, invalidity, unenforceability and laches. 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 filed a counterclaim for infringement against IGT North America,
Universal Distributing of Nevada, Inc., and Sigma Game, Inc. The Company has
settled independently with Universal Distributing of Nevada, Inc. and Sigma
Game, Inc.
On February 18, 1997, the United States District Court for the District of
Nevada entered a Decision and Order regarding the Company's patent infringe-
ment claim, which was pending against IGT. In the Decision and Order, the Court
found that IGT's reel-type slot machines infringe the Company's patent, but
held that the patent was invalid under 35 U.S.C. Section 102(b) because the
invention disclosed therein was on sale more than one year prior to the date
on which the Company's patent application was filed. Global appealed the
determination. Additionally, IGT appealed the finding of infringement.
In August, 1999, the Federal Circuit Court of Appeals remanded the case to the
United States District Court for the District of Nevada for a determination
of whether Claim 18 is infringed and, if so, whether that claim is valid and
whether any of IGT's affirmative defenses would bar enforcement of the claim.
The Court of Appeals also affirmed the trial court's ruling that Claims 1 and
12 of Global's patent are invalid. Therefore, based on all available informa-
tion, it is not known how the District Court of Nevada will rule with respect
to Claim 18 or whether any
- 6 -
<PAGE>
PART I (Continued)
Item 3 - Legal Proceedings (Continued):
meaningful damage award will be granted assuming a finding of infringement
and validity is entered.
The Company will be incurring legal costs regarding the prosecution of its
infringement claims. Per Counsel for the Company, at present it is difficult
to determine these future legal costs.
Item 4 - Submission of Matters to Vote of Security Holders:
No matter was submitted to the vote of security holders during the fiscal
year.
- 7 -
<PAGE>
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 2,715 shareholders of record on June 30, 1999.
The following table indicates the range of high and low bid prices of the
Company's Common Stock for the quarterly periods starting September 30, 1995,
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, 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
Quarter Ending September 30, 1996 1/8 3/8 1/8 3/8
Quarter Ending December 31, 1996 1/8 3/8 1/8 3/8
Quarter Ending March 31, 1997 1/8 3/8 1/8 3/8
Quarter Ending June 30, 1997 1/8 3/8 1/8 3/8
Quarter Ending September 30, 1997 1/8 3/8 1/8 3/8
Quarter Ending December 31 1997 1/8 3/8 1/8 3/8
Quarter Ending March 31, 1998 1/8 3/8 1/8 3/8
Quarter Ending June 30, 1998 1/8 3/8 1/8 3/8
Quarter Ending September 30, 1998 1/8 3/8 1/8 3/8
Quarter Ending December 31, 1998 1/8 3/8 1/8 3/8
Quarter Ending March 31, 1999 1/8 3/8 1/8 3/8
Quarter Ending June 30, 1999 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.
- 8 -
<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>
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Total Revenues $ 1,000 $ 2,709 $ 20,601 $245,078 $ 25,230
Net Income (Loss) (135,100) (156,697) (202,091) 4,894 (137,633)
Income (Loss) per
Common Share (.005) (.006) (.008) .000 (.005)
Cash Dividends per
Common Share -0- -0- -0- -0- -0-
Total Assets 55,000 119,980 604,275 758,084 772,789
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.
- 9 -
<PAGE>
PART II (Continued)
Item 7 - Management's Discussion and Analysis of Financial Condition and
Results of Operations (Continued):
Total debt of the Company aggregated $860,935, $860,935, and $1,155,353 (exclu-
sive of accounts payable and accrued interest and expenses) for the years
ended June 30, 1999, 1998 and 1997, respectively. Of these amounts, $617,134,
617,134, and $829,474 was owed to Michael Wichinsky as of June 30, 1999, 1998
and 1997, respectively. Total revenues aggregated $1,000, $2,709 and $20,601
for the years ended June 30, 1999, 1998, and 1997, respectively. As of June 30,
1999 and 1998, the Company has negative working capital of $1,931,682 and
$1,797,234, 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, 1999
and 1998, and does not anticipate having the necessary resources to manu-
facture 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 $135,047, $159,406 and $222,692 for the years ended June 30, 1999, 1998
and 1997, 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.
- 10 -
<PAGE>
PART III
Item 10 - Directors and Executive Officers of the Registrant:
Effective June 21, 1999, 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,
and Treasurer 52
Wayne D. Umbertis, Director 61
Constance Koplow, Director 59
Mark Sarason has 28 years experience in the gaming industry, directed pri-
marily to marketing and marketing operations. Since 1994 Mr. Sarason has acted
as president of Casino Marketing Services, Ltd., a company specializing in
marketing development programs for secondary gaming destinations. 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 four years,
he has served as President of "U" Call, a Division of FonExpress, Inc.,
which markets prepaid phone cards and telecommunication promotional and
marketing 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 eighteen 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 Company Act of 1940.
- 11 -
<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 con-
tinuing 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 vacated, 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 $19,500 to Constance Koplow in the fiscal year ended June
30, 1999. None of the officers or directors were indebted to the Company
during the fiscal year. The Company does not contemplate any increase in the
payment of salaries to officers or directors in the near future. During the
fiscal years ended June 30, 1999, 1998 and 1997, 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.
- 12 -
<PAGE>
PART III (Continued)
Item 12 - Security Ownership of Certain Beneficial Owners and Management:
The following table sets forth as of June 30, 1999, 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.
<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 5,120,493* 19%
Estate of
W.T. O'Donnell, Sr.
144 Green Bay Road
Winnetka, IL 60093 Common Stock 4,470,275* 17%
Glenn E Wichinsky
2390 NW 38th Street
Boca Raton, FL 33431 Common Stock 2,964,647* 11%
Nessa Alice Mary Charlton
5 Crowe Street
Dundalk Company
Louth, Rep of Ireland Common Stock 1,459,214* 6%
Claudia Wichinsky
2900 Gilmary
Las Vegas, NV 89107 Common Stock 2,155,584 8%
CEDE & Co.
Box 20 Bowling Green Station
New York, NY 10004 Common Stock 5,359,407 20%
<FN>
- 13 -
<PAGE>
Part III (Continued)
Item 12 - Security Ownership of Certain Beneficial Owners and
Management (Continued):
* The foregoing shares include the following number of shares held by Michael
Wichinsky in trust on behalf of the persons named herein:
Michael Wichinsky 41.67% 3,129,411
Estate of W.T. O'Donnell, Sr. 38.22% 2,870,275
Nessa Alice Mary Charlton 8.33% 625,881
Glenn Wichinsky 11.78% 885,017
------- ---------
Total Shares in Trust 100.00% 7,510,584
=========
</TABLE>
Item 13 - Certain Relationships and Related Transactions:
(A) Transactions with Management and Related Parties
------------------------------------------------
During the year ended June 30, 1999, Michael Wichinsky was repaid
$300,000 from the Company as interest and principal payments on his note
to the Company and the Estate of William T. O'Donnell, Sr. was repaid
$119,164 as interest and principal payments on his note to the Company.
The Company accrued interest on the loans to related parties totaling
$69,419 and $89,756 during the years ended June 30, 1999 and 1998,
respectively.
(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 June 21, 1999 until the next annual election of the Board
of Directors.
PART IV
Item 14 - Exhibits, Financial Statement Schedules:
Attached hereto as EXHIBIT A Net Operating Carryforwards to 2000 and as
EXHIBIT B are the financial statements and additional financial statement
schedules required by Item 8 of this form.
- 14 -
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 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: 09/27/99
--------------------
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: 09/27/99
--------------------
Mark Sarason
--------------------------
Mark Sarason
Chief Financial Officer
Mark Sarason
--------------------------
Mark Sarason
Secretary/Treasurer
Constance Koplow
--------------------------
Constance Koplow
Director
- 15 -
<PAGE>
EXHIBIT A
NET OPERATING LOSS CARRYFORWARDS TO 2000
Tax Year Expires
6/30 6/30
- -------- -------
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 137,588 2007
1993 202,091 2008
1995 137,588 2010
1997 202,091 2012
1998 156,697 2013
1999 135,047 2014
----------
$2,886,547
==========
- 16 -
<PAGE>
EXHIBIT B
FINANCIAL STATEMENTS
Global Gaming and Technology, Inc.
Financial Statements
For the Years Ended June 30, 1999 and 1998
- 17 -
<PAGE>
Global Gaming and Technology, Inc.
Financial Statements
For the Years Ended June 30, 1999 and 1998
TABLE OF CONTENTS
-----------------
PAGE
----
Independent auditors' report 19
Balance sheets 20
Statements of operations 21
Statements of changes in stockholders' deficit 22
Statements of cash flows 23
Notes to financial statements 24 - 26
- 18 -
<PAGE>
Bradshaw, Smith & Co., LLP
CPAs, Business Advisors & Consultants
5851 W Charleston
Las Vegas, NV 89146
(702) 878-9788
To the Board of Directors and Stockholders
Global Gaming and Technology, Inc.
Las Vegas, Nevada
INDEPENDENT AUDITOR'S REPORT
----------------------------
We have audited the accompanying balance sheet of Global Gaming and Tech-
nology, Inc. as of June 30, 1999, and the related statements of operations,
changes in stockholders' deficit, and cash flows for the year then ended.
These financial statements are the responsibility of the Company's manage-
ment. Our responsibility is to express an opinion on these financial state-
ments based on our audit. The financial statements of Global Gaming and Tech-
nology, Inc. as of June 30, 1998 were audited by other auditors whose report
dated September 3, 1998 on those statements included an explanatory paragraph
that described the uncertain outcome of litigation giving rise to substantial
doubt about the Company's ability to continue as a going concern discussed in
Note 2 to the financial statements.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit 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 audit provides a reasonable
basis for our opinion.
In our opinion, the 1999 financial statements referred to above present
fairly, in all material respects, the financial position of Global Gaming
and Technology, Inc. as of June 30, 1999 and the results of its operations
and its cash flows for the year then ended, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company is dormant and has negative working capital,
and no current operations or sources of revenue. Those conditions raise sub-
stantial doubt about its ability to continue as a going concern. Management's
plans regarding those matters are also described in Note 2. The financial
statements do not include any adjustments that might result from the outcome
of this uncertainty.
Las Vegas, Nevada Bradshaw, Smith & Co., LLP
August 11, 1999
- 19 -
<PAGE>
<TABLE>
Global Gaming and Technology, Inc.
Balance Sheets
June 30, 1999 and 1998
<CAPTION>
June 30, June 30,
1999 1998
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 50,700 $ 79,600
Inventories (Note 4) 4,000 28,500
Notes receivable-current (Note 5) -- 11,600
----------- -----------
Total current assets 54,700 119,700
OTHER ASSETS 300 300
----------- -----------
TOTAL ASSETS $ 55,000 $ 120,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 10,700 $ 10,000
Accrued interest payable (Note 3) 1,115,400 1,046,000
Notes payable (Notes 3 and 7) 860,900 860,900
----------- -----------
Total current liabilities 1,987,000 1,916,900
----------- -----------
STOCKHOLDERS' DEFICIT
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 issued (including
51,382 held in the company
name at no cost). 263,800 263,800
Additional paid-in-capital 3,395,100 3,395,100
Accumulated deficit (5,590,900) (5,455,800)
----------- -----------
Total stockholders' deficit (1,932,000) (1,796,900)
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' DEFICIT $ 55,000 $ 120,000
=========== ===========
<FN>
The Notes to Financial Statements are an integral part of these statements.
- 20 -
</TABLE>
<PAGE>
<TABLE>
Global Gaming and Technology, Inc.
Statements of Operations
For the Years Ended June 30, 1999 and 1998
<CAPTION>
June 30, June 30,
1999 1998
----------- -----------
<S> <C> <C>
OTHER INCOME (EXPENSE)
Interest income $ 1,000 $ 2,700
Asset impairment (Note 4) (24,500) --
----------- -----------
Total Revenue (23,500) 2,700
----------- -----------
OPERATING EXPENSES
Interest (Note 3) 69,400 89,800
Salaries 19,500 21,100
Professional services 15,700 42,400
Transfer fees 3,000 3,000
Payroll tax expense 2,300 2,300
Maintenance and repairs 1,400 --
Office and other expenses 300 800
----------- -----------
Total operating expenses 111,600 159,400
----------- -----------
NET LOSS AVAILABLE TO COMMON
STOCKHOLDERS $ (135,100) $ (156,700)
=========== ===========
NET LOSS PER COMMON SHARE $ (.005) $ (.006)
=========== ===========
Weighted average common
shares outstanding 26,378,577 26,378,577
=========== ===========
<FN>
The Notes to Financial Statements are an integral part of these statements.
- 21 -
</TABLE>
<PAGE>
<TABLE>
Global Gaming and Technology, Inc.
Statements of Changes in Stockholders' Deficit
For the Years Ended June 30, 1999 and 1998
<CAPTION>
Total
Common stock Additional Accumulated stockholders'
shares Amount paid in capital deficit deficit
------------ ------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Balance,
June 30, 1997 26,378,600 $263,800 $3,395,100 $(5,299,100) $(1,640,200)
Net Loss -- -- -- (156,700) (156,700)
---------- -------- ---------- ----------- -----------
Balance,
June 30, 1998 26,378,600 263,800 3,395,100 (5,455,800) (1,796,900)
Net Loss -- -- -- (135,100) (135,100)
---------- -------- ---------- ----------- -----------
Balance,
June 30, 1999 26,378,600 $263,800 $3,395,100 $(5,590,900) $(1,932,000)
========== ======== ========== =========== ===========
<FN>
The Notes to Financial Statements are an integral part of these statements.
- 22 -
</TABLE>
<PAGE>
<TABLE>
Global Gaming and Technology, Inc.
Statements of Cash Flows
For the Years Ended June 30, 1999 and 1998
<CAPTION>
June 30, June 30,
1999 1998
--------- ---------
<S> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES
Net loss $(135,100) $(156,700)
Asset impairment 24,500 --
Adjustments to reconcile
net loss to net cash used
by operating activities:
(Increase) decrease in:
Notes receivable 11,600 10,700
Increase (decrease) in:
Accounts payable 700 1,800
Accrued interest payable 69,400 (34,900)
--------- ---------
NET CASH USED IN OPERATING
ACTIVITIES (53,400) (179,100)
--------- ---------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Principal paid on notes
receivable -- 523,200
Principal paid on notes
payable -- (294,400)
--------- ---------
NET CASH PROVIDED BY
FINANCING ACTIVITIES -- 228,800
--------- ---------
NET (DECREASE) INCREASE IN CASH (28,900) 49,700
CASH AT BEGINNING OF PERIOD 79,600 29,900
---------- ----------
CASH AT END OF PERIOD $ 50,700 $ 79,600
========== ==========
The Notes to Financial Statements are an integral part of these statements.
- 23 -
</TABLE>
<PAGE>
Global Gaming and Technology, Inc.
Notes to Financial Statements
For the Years Ended June 30, 1999 and 1998
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization and nature of business:
Global Gaming and Technology, Inc. (the "Company") was incorporated in
the State of Delaware in 1973. The Company, although dormant for the
last several years, has been engaged in the research, development,
manufacture and marketing of electronic gaming devices and coinless
games of chance.
Use of estimates in preparation of financial statements:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Loss per share:
Loss per share was computed by dividing the net loss by the weighted ave-
rage number of shares outstanding during the period.
2. ORGANIZATION'S ABILITY TO CONTINUE AS A GOING CONCERN:
The Company has been dormant for the past several years and lacks the
resources to be competitive in the gaming industry at the present time.
As of June 30, 1999 the Company has negative working capital of $1,932,300
and stockholders' deficit of $1,932,000.
The Company initiated a patent infringement case. The case is being
appealed by both parties. The manner in which litigation is resolved is
likely to have significant financial impact on the Company.
3. RELATED PARTY TRANSACTIONS:
Notes payable at June 30, 1999 and 1998 consist of $841,500 and due to
stockholders bearing interest at 8% and 10% and are due on demand. Accrued
interest at June 30, 1999 and 1998 was $1,115,400 and $1,046,000 and the
Company incurred interest expense of $69,400 and $89,800 during the years
then ended.
- 24 -
<PAGE>
Global Gaming and Technology, Inc.
Notes to Financial Statements (Continued)
For the Years Ended June 30, 1999 and 1998
4. INVENTORIES
The Company has inventory consisting of ten (10) slot machines from a
settlement arising out of litigation with Universal Distributing of
Nevada, Inc. Pursuant to SFAS 121 "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of", the Company
evaluated the recoverability of the long-lived assets. Due to rapid
changes in gaming technology, the machines did not hold their value. The
estimated fair value was based on a recent offer to purchase the machines.
5. NOTE RECEIVABLE:
Note receivable as of June 30, 1998 consisted of a promissory note due
from Sigma Game, Inc. from settlement of a lawsuit, bearing interest at
8%, and matured February 1999.
6. INCOME TAXES:
The benefit for income taxes is different than the amount computed by
applying the statutory federal income tax rate to net loss before taxes.
A reconciliation of the net income tax benefit follows:
1999 1998
---------- ---------
Computed tax benefit at federal statutory rate $ 37,600 $ 53,300
Expired net operating loss carryforwads 79,600 402,700
Changed in deferred income tax valuation allowance (117,200) (456,000)
---------- ----------
$ -- $ --
========== ==========
The provision for federal and state income taxes consisted of the
following:
Year ended June 30,
1999 1998
--------- ----------
Current $ -- $ --
Deferred -- --
--------- -----------
$ -- $ --
========== ===========
The deferred tax asset consisted of the following:
Net operating loss carryforwards $ 973,100 $ 1,090,300
Valuation allowance (973,100) (1,090,300)
--------- -----------
Net deferred tax asset $ -- $ --
========= ===========
- 25 -
<PAGE>
Global Gaming and Technology, Inc.
Notes to Financial Statements (Continued)
For the Years Ended June 30, 1999 and 1998
7. INCOME TAXES (CONTINUED):
The Company has a net operating loss carryforward ("NOL") for federal
income tax reporting purposes at June 30, 1999 of approximately
$2,862,100. A portion of the NOL expires after each year.
8. NOTES PAYABLE:
Notes payable at June 30, 1999 and 1998 consisted of the following:
<TABLE>
<CAPTION>
June 30, 1999 June 30, 1998
------------- -------------
<S> <C> <C>
Note payable to Michael Wichinsky,
a stockholder, bearing interest at 8%,
due on demand. $ 511,600 $ 511,600
Note payable to Michael Wichinsky,
a stockholder, bearing interest at 10%,
due on demand 105,500 105,500
Note payable to the estate of
William T O'Donnell, Sr., a
stockholder, bearing interest at
8%, due on demand. 224,400 224,400
Note payable to the State of New Jersey,
payable in monthly installments of $1,363
including interest. This note is in
arrears. 19,400 19,400
------------- -------------
$ 860,900 $ 860,900
============= =============
</TABLE>
The Company incurred interest expense totaling $69,400 and $89,800 on these
notes during the years ended June 30, 1999 and 1998, respectively.
- 26 -
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Jun-30-1999
<PERIOD-START> Jul-01-1998
<PERIOD-END> Jun-30-1999
<CASH> 50700
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 4000
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 55000
<CURRENT-LIABILITIES> 1987000
<BONDS> 0
<COMMON> 263800
0
0
<OTHER-SE> (2195800)
<TOTAL-LIABILITY-AND-EQUITY> 55000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 136100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 69400
<INCOME-PRETAX> (135100)
<INCOME-TAX> 0
<INCOME-CONTINUING> (135100)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (135100)
<EPS-BASIC> (.005)
<EPS-DILUTED> (.005)
</TABLE>
