<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION APRIL 18, 1997
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
INNOVATIVE GAMING CORPORATION OF AMERICA
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
MINNESOTA 41-1713864
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification number)
4750 TURBO CIRCLE
RENO, NEVADA 89502
(702) 823-3000
(Address, including zip code, and telephone number, including area code, of
registrants' principal executive offices)
-----------------------
EDWARD G. STEVENSON
PRESIDENT AND CHIEF EXECUTIVE OFFICER
INNOVATIVE GAMING CORPORATION OF AMERICA
4750 TURBO CIRCLE
RENO, NEVADA 89502
(702) 823-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
WITH COPIES TO:
DOUGLAS T. HOLOD, ESQ.
MASLON EDELMAN BORMAN & BRAND,
A PROFESSIONAL LIMITED LIABILITY PARTNERSHIP
3300 NORWEST CENTER
MINNEAPOLIS, MINNESOTA 55402-4140
(612) 672-8200
APPROXIMATE DATE OF THE COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
================================================================================
<TABLE>
<CAPTION>
Title of Each Class of PROPOSED MAXIMUM AMOUNT OF REGISTRATION
Securities AGGREGATE OFFERING FEE
to be Registered PRICE(1)
<S> <C> <C>
Common Stock, $.01 par value $4,000,000 $1,212.00
</TABLE>
================================================================================
(1) Calculated pursuant to Rule 457(o) under the Securities Act of 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 2
INFORMATION CONTAINED HEREIN IN SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALES WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED APRIL 18, 1997
PROSPECTUS
Innovative Gaming Corporation of America
SHARES OF COMMON STOCK
----------------------
All of the shares of Common Stock of Innovative Gaming Corporation of
America (the "Company") offered hereby and issuable upon conversion of Series A
Convertible Preferred Stock (the "Preferred Stock") are being sold by certain
shareholders of the Company (the "Selling Shareholders"). Each share of
Preferred Stock is convertible into shares of Common Stock, at a conversion
price equal to 82% of the average closing bid price of the Company's Common
Stock as reported on the Nasdaq National Market over a ten-day period ending on
the day prior to conversion. The Preferred Stock is convertible in 25%
increments, at the option of the holder thereof, beginning July 9, 1997, at the
earliest, and following the end of each 30 day period thereafter for three
months. Preferred Stock not converted eleven months from the effectiveness of
the Registration Statement is automatically converted into Common Stock. The
Company will not receive any of the proceeds for the sale of shares by the
Selling Shareholders.
The Common Stock is listed on the Nasdaq National Market under the
symbol "IGCA." On April 15, 1997, the last sale price for the Common Stock as
reported on the Nasdaq National Market was $5.125.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DESCRIPTION OF CERTAIN
FACTORS WHICH SHOULD BE CONSIDERED BY INVESTORS BEFORE PURCHASING THE
SECURITIES OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
NEITHER THE COLORADO GAMING COMMISSION, THE MISSISSIPPI GAMING
COMMISSION, THE NEVADA GAMING CONTROL BOARD NOR THE NEVADA
GAMING COMMISSION NOR ANY OTHER GAMING AUTHORITY HAS
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS OR THE INVESTMENT MERITS OF
THE SECURITIES OFFERED HEREBY. ANY
REPRESENTATION TO THE
CONTRARY IS UNLAWFUL.
---------------------
The date of this Prospectus is , 1997.
<PAGE> 3
ADDITIONAL INFORMATION
This Prospectus is part of a Registration Statement on Form S-3
(together with all amendments and exhibits thereto, the "Registration
Statement") which the Company has filed with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Securities Act"), relating to the securities offered hereby. This Prospectus
does not contain all of the information set forth in the Registration
Statement, certain parts of which are omitted in accordance with the rules and
regulations of the Commission. For further information, reference is made to
the Registration Statement. Statements made in this Prospectus as to the
contents of any contract, agreement or other document referred to herein are
not necessarily complete. With respect to each such contract, agreement or
other document filed as an exhibit to the Registration Statement, reference is
made to the exhibit for a more complete description of the matter involved, and
each such statement shall be deemed qualified in its entirety by such
reference.
The Company is subject to the informational reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy and information statements and other
information with the Commission. Such reports, proxy and information statements
and other information as well as the Registration Statement and Exhibits of
which this Prospectus is a part filed by the Company may be inspected and
copied at the public reference facilities of the Commission, Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, DC 20549, as well as at
the following Regional Offices: 7 World Trade Center, 13th Floor, New York, New
York 10048 and 500 West Madison Street--Suite 1400, Chicago, Illinois 60661.
Copies of such material can be obtained from the Commission by mail at
prescribed rates. Requests should be directed to the Commission's Public
Reference Section, Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, DC 20549. Material filed by the Company can also be inspected at
the offices of the National Association of Securities Dealers, Inc., 1735 K
Street N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated in this Prospectus by reference and made a part hereof:
(i) the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996.
(ii) the description of the Company's Common Stock included in its
Registration Statement on Form SB-2 (Registration No. 33-61492C) under
the caption "Description of Securities."
(iii) the Company's Current Report on Form 8-K filed April 17, 1997.
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All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, subsequent to the date of this
Prospectus and prior to the termination of the offering described herein shall
be deemed to be incorporated by reference in this Prospectus from the
respective dates those documents are filed. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus has been delivered, on the written or oral request of such
person, a copy of any or all of the documents referred to above which have
been, or may be, incorporated in this Prospectus by reference, other than
exhibits to such documents. Request for such copies should be directed to
Innovative Gaming Corporation of America, 4750 Turbo Circle, Reno, Nevada
89502, Attention: Scott H. Shackelton, Chief Financial Officer.
3
<PAGE> 5
RISK FACTORS
Each prospective investor should carefully consider the following
factors, among others, prior to purchasing any of the securities offered
hereby.
NEW AND EXPANDING BUSINESSES
The Company is continuing to expand and diversify its business by
developing and introducing new products and entering into new lines of business
that complement and enhance the Company's existing businesses. The Company
faces the risks, expenses and difficulties frequently encountered by new and
rapidly expanding businesses, including, but not limited to, fluctuating cash
flow, initial high development costs of new products without corresponding
revenues, pending receipt of corporate and product regulatory approvals, market
introduction and acceptance of new products and the Company's ability to
increase production volume. There is no assurance that the Company's products
will be accepted in the marketplace and that all necessary regulatory approvals
will be obtained. Furthermore, the Company will need to manage the transition
to higher volume operations, entrance into new markets, integration of
operations and product development, control of overhead expense and training
and management of qualified personnel.
The Company's successful entry into new key gaming markets as a gaming
machine manufacter and supplier is dependent upon numerous factors, including
its ability to design, manufacture, market and service gaming machines that
achieve player and casino acceptance while maintaining product quality and
acceptable margins and to compete against gaming machine suppliers with greater
financial resources, name recognition and established service networks and
customer relationships. The Company believes that it will need to develop
gaming machines that offer technological advantages or unique entertainment
features in order for the Company to be able to compete effectively in the
gaming machine market.
RAPIDLY CHANGING TECHNOLOGY
The Company's business is characterized by rapidly changing technology
and frequent new product introductions and enhancements. The Company's success
will depend in part on its ability to continue to enhance its existing products
and to introduce in a timely manner new products that meet existing and future
regulatory requirements and evolving customer requirements and to achieve
market acceptance. There can be no assurance that the Company will be
successful in identifying, developing and marketing new products or enhancing
its existing products. The Company's business will be adversely affected if
the Company experiences delays in developing new products or enhancements or if
such products or enhancements do not meet and receive all regulatory approvals
and/or gain customer acceptance.
4
<PAGE> 6
COMPETITION
The market for gaming machines is very competitive. There are a
number of established, well-financed and well-known companies that compete with
the Company's products. The Company will also compete with other established
gaming machine manufacturers such as International Game Technology, Bally
Gaming International, Inc., WMS Gaming, Inc. and Sigma Gaming, Inc. The
development of a successful new product or product design by a competitor could
adversely affect sales of the Company's products and, although the Company
would endeavor to respond quickly with its own competing products, no assurance
can be made that a significant new product designed by a competitor would not
have a material adverse effect on the Company's results of operations.
NEED FOR ADDITIONAL FINANCING
The Company's ability to execute its long-term business strategy
depends to a significant degree on its ability to finance the development,
marketing and production of its products. If additional funds are required,
there can be no assurance that any additional funds will be available on terms
acceptable to the Company or its present shareholders. New investors may seek
and obtain substantially better terms than were granted to its present
investors and the issuance of such securities would result in dilution to its
existing shareholders.
FACTORS AFFECTING PROFITABILITY AND GROWTH
All of the Company's revenues and profits are derived from the gaming
industry. The profitability and growth of the Company's business is
substantially dependent upon factors that are beyond the control of the
Company, including, among others, the pace of development, changes in gaming
regulation, expansion and renovation of casinos and other forms of casino
gaming in new jurisdictions, the continued popularity of casino gaming as a
leisure activity. The expansion of the gaming industry has slowed in recent
years and the continued expansion of gaming markets is dependent upon
political, legal and other factors which are beyond the control of the Company.
As a result of these and other factors, there is no assurance of the Company's
growth or profitability.
DEPENDENCE UPON RELATIONSHIP WITH VENDORS AND SUPPLIERS
The Company has historically utilized one of its suppliers to
facilitate the flow of various parts and components from Japanese vendors. The
Company is not obligated to purchase parts and components from any specific
vendor and is not subject to any minimum purchase requirements. On February 2,
1996, the Company negotiated pricing for a minimum of two years for specific
electronic components with its Japanese suppliers in its efforts to reduce
product cost. With pricing of certain electronic parts solidified by contract,
the Company is utilizing a more domestic base of vendors for the balance of
components to reduce the reliance on exchange rate sensitivities. A
significant interruption or delay in the delivery of or the availability of
5
<PAGE> 7
components from suppliers could have a material adverse effect on the Company's
results of operations.
PRODUCT PROTECTION
The Company's business is dependent upon its ability to protect its
proprietary software, hardware and other intellectual property. The Company
relies primarily on a combination of non-disclosure agreements for its key
employees, license agreements with its customers and suppliers and trade secret
protection to protect such intellectual property. Despite the Company's
precautions, it may be possible for unauthorized parties to copy or to "reverse
engineer" certain portions of the Company's products or to obtain and use
information that the Company believes is proprietary. Therefore, there is no
assurance that precautionary steps taken by the Company in this regard will be
adequate to deter misappropriation of its intellectual property or independent
third party development of functionally equivalent products or that the Company
can meaningfully protect its rights to such proprietary intellectual property.
The Company relies on a combination of patent, trade secret, copyright
and trademark law, nondisclosure agreements and technical security measures to
protect its rights pertaining to its products. The Company holds patents for
its blackjack, craps and roulette machines. There can be no assurance that
such patents are valid. The Company may file for patents on certain features
of products that the Company may develop in the future. No assurance can be
given that, if applied for, any patents will be issued, or, if issued, that
such patents will be valid or will provide any significant competitive
protection for such products. Only certain features of the Company's
blackjack, craps, roulette and any other products the Company may develop in
the future may be eligible for patent protection. Such protection may not
preclude competitors from developing products with features similar to the
Company's products.
GOVERNMENT REGULATION
The manufacture, distribution, sale and operation of gaming machines
are subject to extensive federal, state, provincial, tribal, and local
regulation, including licensing requirements. These regulations are constantly
changing and evolving, and may permit additional gaming or curtail gaming in
various jurisdictions in the future, which may have a material adverse impact
on the Company. The Company, its key personnel, and the Company's gaming
machines are required to hold various licenses from each jurisdiction in which
the Company does business. Generally, regulatory authorities have broad
discretion when granting, renewing or revoking such licenses. The failure of
the Company, any of its key personnel, or its gaming machines to obtain or
retain a necessary license and or approvals in any jurisdiction could have a
material adverse effect on the Company or on the ability of the Company, its
key personnel, and its gaming machines to obtain or retain required licenses in
other jurisdictions. If the Company enters into lease participation agreements
under which the Company shares in the revenues generated by gaming machines,
the Company may be subject to additional regulation as a gaming operator.
Regulatory authorities may require significant shareholders to submit to
background investigations
6
<PAGE> 8
and respond to questions from regulatory authorities, and may revoke the
Company's licenses based upon their findings.
Generally, holders of 10% or more of a corporation's common stock are
deemed significant shareholders, but certain jurisdictions have thresholds as
low as 5%. As a licensee in certain jurisdictions, including Mississippi and
Nevada, the Company may be required to obtain such jurisdictions' prior approval
for activities in other jurisdictions or prior approval for certain corporate
transactions, such as the public offering of stock. No assurance can be given
that such licenses, permits or approvals will be given or renewed. Regulations
must be adopted and implemented before the Company can commence operations in
certain states, and most of the regulations concerning gaming on Indian land
continue to be promulgated. The Company cannot predict the nature of the
regulatory scheme in these jurisdictions, or in any jurisdiction that may
authorize gaming operations in the future. Any such regulatory scheme may have
an adverse effect on the Company, its key personnel and its shareholders. The
Company may not make a public offering of its securities without the prior
approval of the Nevada Gaming Commission if the securities or proceeds therefrom
are intended to be used to construct, acquire or finance gaming facilities in
Nevada, or to retire or extend obligations incurred for such purposes. The
Company will apply for approval by the Nevada Commission of the registration of
the securities from this Offering. However, there can be no assurances that
such approval will be granted. Furthermore, any such approval, if granted, does
not constitute a finding, recommendation or approval by the Nevada Gaming
Commission or the Nevada Gaming Control Board as to the accuracy or adequacy of
this Memorandum or the investment merits of the securities offered hereby. Any
representation to the contrary is unlawful. Mississippi requires similar
approvals to those of Nevada. The Company has received shelf approval of a
public offering with the Mississippi Gaming Commission. See "Regulation" in the
Company's Form 10-K for the year ended December 31, 1996, for additional
discussion regarding governmental regulation.
POTENTIAL REVENUE AND STOCK PRICE VOLATILITY
The Company's future operating results may vary substantially from
quarter to quarter. Revenues in any quarter are substantially dependent on
regulatory approval, receipt of orders and delivery and installation in that
quarter. Because the Company's staffing and operating expenses are based on
anticipated revenue levels, and a high percentage of the Company's costs are
fixed, in the short-term, the loss of any one order, or the failure to obtain
new orders as existing orders are completed, could have a material adverse
effect or cause significant fluctuations in the Company's revenues and cash
flow from quarter to quarter. Due to these and other factors, including the
general economy, stock market conditions or announcements by the Company or its
competitors, the market price of the securities offered hereby may be highly
volatile.
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<PAGE> 9
DEPENDENCE ON KEY PERSONNEL
The Company is highly dependent upon the personal efforts and
abilities of certain key personnel. The loss of the services of any member of
management could have a substantial adverse effect on the Company's ability to
achieve its objectives.
ABSENCE OF DIVIDENDS ON COMMON SHARES
The Company has not paid any dividends on its capital stock since its
incorporation and does not intend to pay any cash dividends in the foreseeable
future on its Common Stock.
UNDESIGNATED STOCK
The Company's authorized capital consists of 100,000,000 shares of
capital stock. The Board of Directors, without any action by the Company's
shareholders, is authorized to designate and issue shares in such classes or
series (including classes or series of preferred stock) as it deems appropriate
and to establish the rights, preferences and privileges of such shares,
including dividends, liquidation and voting rights. Other than the presently
outstanding classes of capital stock, no other class of common stock, or
preferred stock, is currently designated and there is no current plan to
designate or issue any such securities. The rights of holders of preferred
stock and other classes of commons stock that may be issued may be superior to
the rights granted to the holders of the shares. Further, the ability of the
Board of Directors to designate and issue such undesignated shares could impede
or deter an unsolicited tender offer or takeover proposal regarding the Company
and the issuance of additional shares having preferential rights could
adversely affect the, voting power and other rights of holders of Common Stock.
CONFLICTS OF INTEREST
Grand Casinos, Inc. ("Grand Casinos") is a principal shareholder of
the Company. Lyle Berman, Chairman of the Company, is the Chief Executive
Officer and Chairman of the Board of Grand Casinos. The Company and Grand
Casinos have entered into an agreement that allows casinos owned or managed by
Grand Casinos or its affiliates to purchase the Company's video gaming machines
at distributor level prices. Mr. Berman may have conflicts of interest with
respect to this agreement, any future agreements between the Company and Grand
Casinos, and with respect to the sale of the Company's video gaming machines to
competitors of Grand Casinos.
SHARES ELIGIBLE FOR FUTURE SALE
The sale, or availability for sale, of substantial amounts of Common
Stock in the public market subsequent to this offering of Common Stock may
adversely affect the prevailing market price of Common Stock and may impair the
Company's ability to raise additional capital by the sale of its equity
securities. Prior to this Offering, the Company has 6,476,515 shares of
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<PAGE> 10
Common Stock outstanding, 1,025,000 shares of which are held by Grand Casinos.
In addition, as of April 15, 1997, the Company had 668,850 shares of Common
Stock subject to outstanding options granted under its stock option plans,
602,500 shares of Common Stock subject to outstanding warrants including 102,500
shares issuable upon exercise of a warrant issued to Grand Casinos.
Additionally, the Company's shareholders have been asked to approve, at the
Company's 1997 Annual Meeting of Shareholders, an increase in the shares of
Common Stock reserved for issuance pursuant to the employee stock option plan
by 250,000 shares and to approve a 1997 Director Stock Option Plan pursuant to
which 100,000 shares would be reserved for issuance.
MINNESOTA ANTI-TAKEOVER LAW; RESTRICTIONS IN ARTICLES OF INCORPORATION;
POTENTIAL ANTI- TAKEOVER EFFECT
The Company is subject to Minnesota statutes regulating business
combinations and restricting voting rights of certain persons acquiring shares
of the Company, which may hinder or delay a change in control of the Company.
Beneficial owners of more than certain designated percentages of the Company's
securities are subject to certain reporting and qualification procedures
established by state and federal gaming authorities. The Company is authorized
under the Company's Articles of Incorporation, and may be required, under
certain circumstances, to redeem at fair market value securities held by
persons whose status as a security holder may jeopardize the Company's
eligibility to hold gaming licenses. Such restrictions may discourage
acquisitions of blocks of the Company's securities and may have an anti-
takeover effect.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Common
Stock by the Selling Shareholders.
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<PAGE> 11
SELLING SHAREHOLDERS
The following table sets forth the number of shares of the Common
Stock owned by each Selling Shareholder as of the date hereof and after giving
effect to this offering. All Selling Shareholders are accredited investors as
that term is defined in Regulation D promulgated under the Securities Act of
1933. The Company will not receive any proceeds from the sale of the Common
Stock by the Selling Shareholders.
<TABLE>
<CAPTION> Amount of
Shares Offered by
Beneficial Ownership Selling Beneficial Ownership
Prior to the Offering Shareholders After the Offering
--------------------- ------------ --------------------
Name
----
<S> <C> <C> <C>
Stark International 0% (1) 0%
Shepherd Investments International, 0% (1) 0%
Inc.
</TABLE>
- -------------------------------
(1) Shares of Common Stock issuable upon conversion of Preferred Stock at a
conversion price of 82% of the average closing bid price of the Company's
Common Stock over a ten-day period ending on the day prior to conversion.
Based upon the ten-day period ending April 15, 1997 for which the average
closing bid price was $5.125, the Preferred Stock owned by each of the Selling
Shareholders would convert into 475,907 shares of Common Stock, respectively.
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<PAGE> 12
PLAN OF DISTRIBUTION
4,000 shares of Series A Convertible Preferred Stock were originally
issued to and purchased by the Selling Shareholders at a price of $1,000 per
share in connection with a private placement made by the Company. Each share
of Preferred Stock is convertible into shares of Common Stock at a conversion
price of 82% of the average closing bid price of the Company's Common Stock
over the ten-day trading period ending on the day prior to conversion (the
"Conversion Price"). The Conversion Price may not exceed $8.1725 per share.
Twenty-five percent (25%) of the Preferred Stock is convertible into Common
Stock, at the election of the holder thereof, at the later of July 9, 1997 or
the date of effectiveness of the Registration Statement with the Securities and
Exchange Commission (the "Effective Date"). Twenty-five percent (25%) of the
Preferred Stock is convertible 30 days after the Effective Date; 25% of the
Preferred Stock is convertible 60 days after the Effective Date; and the
remaining 25% of the Preferred Stock is convertible 90 days after the Effective
Date. All outstanding shares of Preferred Stock will automatically be
converted into Common Stock eleven months following the Effective Date. A
holder of Preferred Stock may not convert such stock into Common Stock if,
following such conversion, the holder beneficially owns in excess of 4.9% of
the Company's Common Stock. This Registration Statement is being filed by, and
at the expense of, the Company pursuant to obligations contained in a
Registration Rights Agreement dated April 10, 1997 (the "Registration Rights
Agreement").
The Selling Shareholders and/or their pledgees, donees, transferees or
other successors in interest will sell the securities of the Company covered by
this Prospectus to the public on the over-the-counter market, or in negotiated
transactions, or otherwise, at prices and at terms then obtainable.
Brokers-dealers either may act as agents for the Selling Shareholders and/or
their pledgees, donees, transferees or other successors in interest for such
commissions as may be agreed upon at the time, or may purchase any of the
securities covered thereby as principals and thereafter may sell such
securities from time to time in the over-the-counter market or in negotiated
transactions, or otherwise, at prices and on terms then obtainable.
LEGAL MATTERS
Certain legal matters in connection with the validity of the
securities offered hereby will be passed upon for the Company by Maslon Edelman
Borman & Brand, a Professional Limited Liability Partnership, Minneapolis,
Minnesota.
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EXPERTS
The financial statements of Innovative Gaming Corporation of America
as of December 31, 1996 incorporated by reference in this Prospectus and
elsewhere in the Registration Statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto incorporated by reference herein in reliance upon the authority of said
firm as experts in giving said report.
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NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES INNOVATIVE GAMING NOT CONSTITUTE
AN OFFER TO SELL, OR SOLICITATION OF CORPORATION OF AMERICA AN OFFER TO BUY, ANY
SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN OFFER
OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE SHARES DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE OF COMMON STOCK HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
TABLE OF CONTENTS PAGE
ADDITIONAL INFORMATION . . . . . . . .. . . . . 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . 2
RISK FACTORS . . . . . . . . . . . . . . . . . . 4
USE OF PROCEEDS . . . . . . . . . . . . . . . . . 9
SELLING SHAREHOLDERS . . . . . . . . . . . . . . 10
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . 11
LEGAL MATTERS . . . . . . . . . . . . . . . . . . 11
EXPERTS . . . . . . . . . . . . . . . . . . . . . 11
INNOVATIVE GAMING
CORPORATION OF AMERICA
SHARES
OF
COMMON STOCK
PROSPECTUS
, 1997
<PAGE> 15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the issuance and
distribution of the securities registered hereby, other than underwriting
discounts and fees, are set forth in the following table:
Securities and Exchange Commission Registration
Fee . . . . . . . . . . . . . . . . . . . . . . . $1,212
Accounting Fees . . . . . . . . . . . . . . . . . $ 500
NASDAQ Listing Fee . . . . . . . . . . . . . . . $17,500
Legal Fees and Expenses . . . . . . . . . . . . . $30,000
Miscellaneous . . . . . . . . . . . . . . . . . . $ 788
-------
Total . . . . . . . . . . . . . . . . . . . . . . $50,000
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company is governed by Minnesota Statutes Chapter 302A. Minnesota Statutes
Section 302A.521 provides that a corporation shall indemnify any person made or
threatened to be made a party to any proceeding by reason of the former or
present official capacity of such person against judgments, penalties, fines,
including, without limitation, excise taxes assessed against such person with
respect to an employee benefit plan, settlements, and reasonable expenses,
including attorney's fees and disbursements, incurred by such person in
connection with the proceeding, if, with respect to the acts or omissions of
such person complained of in the proceeding, such person has not been
indemnified by another organization or employee benefit plan for the same
expenses with respect to the same acts or omissions; acted in good faith;
received no improper personal benefit and Section 302A.255, if applicable, has
been satisfied; in the case of a criminal proceeding, had no reasonable cause
to believe the conduct was unlawful; and in the case of acts or omissions by
persons in their official capacity for the corporation, reasonably believed
that the conduct was in the best interests of the corporation, or in the case
of acts or omissions by persons in their capacity for other organizations,
reasonably believed that the conduct was not opposed to the best interests of
the corporation. Subdivision 4 of Section 302A.521 of the Minnesota Statutes
provides that a company's articles of incorporation or bylaws may prohibit such
indemnification or place limits upon the same. The Company's articles and
bylaws do not include any such prohibition or limitation. As a result, the
Company is bound by the indemnification provisions set forth in Section
302A.521 of the Minnesota Statutes.
As permitted by Section 302A.251 of the Minnesota Statutes, the Articles of
Incorporation of the Company provide that a director shall have no personal
liability to the Company and its shareholders for breach of his fiduciary duty
as a director, to the fullest extent permitted by law. The Underwriting
Agreement contains provisions under which the Company, on the one hand, and the
Underwriters, on the other hand, have agreed to indemnify each other (including
officers and directors of the Company and the Underwriters, and any person who
may be deemed to control the Company or the Underwriters) against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended.
II-1
<PAGE> 16
ITEM 16. EXHIBITS.
EXHIBITS DESCRIPTION OF DOCUMENT
- -------- -----------------------
5 Opinion of Maslon Edelman Borman & Brand, a
Professional Limited Liability Partnership.
23(1) Consent of Arthur Andersen LLP.
23(2) Consent of Maslon Edelman Borman & Brand, a
Professional Limited Liability Partnership
(included in Exhibit 5).
24 Power of Attorney (included on pages II-3 and
II-4).
- ------------------------
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement: (i) to include
any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii)
to reflect in the Prospectus any facts or events arising after the effective
date of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration Statement; and (iii) to
include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination
of the offering.
II-2
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in the City of Reno, State
of Nevada, on April 17, 1997.
INNOVATIVE GAMING CORPORATION OF AMERICA
Registrant
By: /S/ Edward G. Stevenson
-----------------------------
Name: Edward G. Stevenson
Title: President and Chief Executive
Officer
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Edward G. Stevenson and Scott H.
Shackelton, each or either of them, his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and to file the same with all
exhibits thereto, and other documents in connection therewith with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his or her substitutes, may lawfully do or
cause to be done by virtue thereof.
II-3
<PAGE> 18
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on the 17th day of April, 1997 by
the following persons in the capacities indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
President, Chief Executive Officer
/S/ Edward G. Stevenson and Director
------------------------ (principal executive officer)
Edward G Stevenson
/S/ Lyle Berman Director
-----------------------
Lyle Berman
Director
----------------------
Paul A. Bible
/S/ Scott H. Shackelton Chief Financial Officer
------------------------ (principal accounting officer)
Scott H. Shackelton
</TABLE>
II-4
<PAGE> 19
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF DOCUMENT PAGE
5 Opinion of Maslon Edelman Borman & Brand,
a Professional Limited Liability Partnership.
23(1) Consent of Arthur Andersen LLP.
II-5
<PAGE> 1
EXHIBIT 5
April 18, 1997
Innovative Gaming Corporation of America
4750 Turbo Circle
Reno, Nevada 89502
Ladies and Gentlemen:
We have acted on behalf of Innovative Gaming Corporation of America, a
Minnesota corporation (the "Company") in connection with the preparation of a
Registration Statement on Form S-3 (the "Registration Statement") to be filed
by the Company with the Securities and Exchange Commission on April 18, 1997
relating to the registration under the Securities Act of 1933, as amended, of
shares (the "Shares") of the Company's Common Stock, $.01 par value issued upon
conversion of the Series A Convertible Preferred Stock.
Upon examination of such corporate documents and records as we have
deemed necessary or advisable for the purposes hereof and including and in
reliance upon certain certificates by the Company, it is our opinion that:
a. The Company is a validly existing corporation in good standing
under the laws of the State of Minnesota.
b. The Shares have been duly authorized, and when issued as
described in the Registration Statement, will be validly issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and the references to our firm under the heading "Legal
Matters" in the Registration Statement.
Very truly yours,
/S/ Maslon, Edelman, Borman & Brand
A Professional Limited Liability Partnership
<PAGE> 1
EX-23.1
AUDITORS CONSENT
EXHIBIT 23(1)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement of our report dated
February 14, 1997 incorporated by reference in the Innovative Gaming
Corporation of America Form 10-K for the year ended December 31, 1996 and to
all references to our Firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Las Vegas, Nevada
April 17, 1997
