<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 19, 2001
REGISTRATION NO. 333-94633
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
INNOVATIVE GAMING CORPORATION OF AMERICA
------------------------------------------------------
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1713864
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
333 ORVILLE WRIGHT COURT
LAS VEGAS, NV 89119
(702) 614-7199
-------------------------------------------------------------
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
ROLAND M. THOMAS
CHAIRMAN, CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
INNOVATIVE GAMING CORPORATION OF AMERICA
333 ORVILLE WRIGHT COURT
LAS VEGAS, NV 89119
(702) 614-7199
-------------------------------------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With copies to:
Douglas T. Holod, Esq.
Alan M. Gilbert, Esq.
Maslon Edelman Borman & Brand, LLP
3300 Wells Fargo 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. [ ]
<PAGE> 2
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>
-------------------------------------------------------------------------------------------------------
Proposed Proposed
Amount to Maximum Maximum
Title of Each Class of Securities be Offering Price Aggregate Amount of
to be Registered Registered per Share Offering Price Registration Fee
----------------------------------- ------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 1,654,500 $ 1.69 $ 2,791,968.75 $ 737.08 (1)
----------------------------------- ------------- ----------------- ----------------- -----------------
Common Stock, $.01 par value (2) 355,000 $ 1.69 $ 599,062.50 $ 158.15 (1)
----------------------------------- ------------- ----------------- ----------------- -----------------
Common Stock, $.01 par value (2) 60,000 $ .97 $ 58,125.00 $ 15.35 (4)
----------------------------------- ------------- ----------------- ----------------- -----------------
Common Stock, $.01 par value 7,959,054 $ .77 $ 6,093,451.74 $ 1,523.36 (5)
----------------------------------- ------------- ----------------- ----------------- -----------------
Common Stock, $.01 par value (2) 516,250 $ .77 $ 395,241.00 $ 98.81 (5)
----------------------------------- ------------- ----------------- ----------------- -----------------
TOTAL 10,544,804 $ 1.06(3) $ 9,938,078.59 $ 2,532.75 (6)
-------------------------------------------------------------------------------------------------------
</TABLE>
(1) Fee calculated pursuant to Rule 457(c), based on the average high and low
sales price on January 10, 2000. Fee for such shares previously paid at the
time of the Registrant's original filing on Form S-3 on January 13, 2000.
(2) Shares issuable upon exercise of certain warrants to purchase common stock.
(3) Based on a weighted average of the Proposed Maximum Offering Prices per
Share.
(4) Fee calculated pursuant to Rule 457(c), based on the average high and low
sales price on May 10, 2000. Fee for such shares previously paid at the
time of the Registrant's filing on Form S-3/A on May 23, 2000.
(5) Fee calculated pursuant to Rule 457(c), based on the average high and low
sales price on January 16, 2001.
(6) Pursuant to Rule 457(b), $910.58 of this filing fee has been previously
paid by the Registrant.
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> 3
Information contained herein is 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 sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION; DATED JANUARY 19, 2001
PROSPECTUS
INNOVATIVE GAMING CORPORATION OF AMERICA
10,544,804 SHARES OF
COMMON STOCK
This prospectus relates to a maximum of 10,544,804 shares of common
stock of Innovative Gaming Corporation of America issuable upon the conversion
of Series D 6% Convertible Preferred Stock, Series E 6% Convertible Preferred
Stock, Series F 6% Convertible Preferred Stock and Series G 6% Convertible
Preferred Stock, certain shares of common stock issuable in lieu of payment of
dividends and upon the exercise of warrants granted to the selling shareholders
listed on page 9 of this prospectus, and certain shares of common stock issued
to the selling shareholders listed on page 9 of this prospectus. We will receive
no proceeds from the sale of the common stock by selling shareholders.
Our common stock is listed on the Nasdaq Small Cap Market under the
symbol "IGCA." On January 16, 2001, the last sale price for the Common Stock as
reported on the Nasdaq Small Cap Market was $0.7813.
THE SHARES OFFERED BY THE PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. SEE
RISK FACTORS" BEGINNING ON PAGE 2 FOR A DESCRIPTION OF FACTORS WHICH SHOULD BE
CONSIDERED BY INVESTORS BEFORE PURCHASING THE SHARES OFFERED BY THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. A REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
NEITHER THE COLORADO GAMING COMMISSION, THE MISSISSIPPI GAMING
COMMISSION, THE NEVADA GAMING CONTROL BOARD, THE NEVADA GAMING COMMISSION, NOR
ANY OTHER GAMING AUTHORITY HAS PASSED UPON THE ADEQUACY OR ACCURACY OF THIS
PROSPECTUS OR THE INVESTMENT MERITS OF THE SECURITIES OFFERED HEREBY. A
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE INFORMATION IN THE PROSPECTUS IS NOT COMPLETE, AND MAY BE CHANGED.
THIS PROSPECTUS IS INCLUDED IN THE REGISTRATION STATEMENT THAT WAS FILED BY IGCA
WITH THE SECURITIES AND EXCHANGE COMMISSION. THE SELLING SHAREHOLDERS CANNOT
SELL THEIR SHARES UNTIL THAT REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THE SHARES OR THE SOLICITATION OF AN OFFER TO
BUY THE SHARES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
The date of this Prospectus is January 19, 2001.
<PAGE> 4
TABLE OF CONTENTS
PROSPECTUS SUMMARY...................................................... 1
RISK FACTORS............................................................ 2
USE OF PROCEEDS......................................................... 9
SELLING SHAREHOLDERS.................................................... 9
PLAN OF DISTRIBUTION.................................................... 11
MINNESOTA ANTI-TAKEOVER LAW............................................. 12
MATERIAL CHANGES........................................................ 13
WHERE YOU CAN FIND MORE INFORMATION..................................... 14
NOTE REGARDING FORWARD-LOOKING STATEMENTS............................... 16
LEGAL MATTERS........................................................... 16
EXPERTS................................................................. 16
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES.......................... 16
No dealer, salesman or other person has been authorized to give any information
or to make any representations other than those contained in this prospectus.
You must not rely on any information or representations not contained in this
prospectus, if given or made, as having been authorized by us. This prospectus
is not an offer or solicitation in respect to these securities in any
jurisdiction in which such offer or solicitation would be unlawful. The delivery
of this prospectus shall not under any circumstances, create any implication
that there has been no change in our affairs or that the information contained
in this prospectus is correct as of any time subsequent to the date of this
prospectus. However, in the event of a material change, this prospectus will be
amended or supplemented accordingly.
<PAGE> 5
PROSPECTUS SUMMARY
As used in this prospectus, the terms "IGCA", "Company", "we", "us" and
"our" refer to Innovative Gaming Corporation of America and its consolidated
subsidiary.
THE COMPANY
Innovative Gaming Corporation of America, through its wholly-owned
operating subsidiary, Innovative Gaming, Inc., develops, manufactures, markets
and distributes multi-station and other specialty gaming machines to regulated
gaming markets world-wide. We have two primary product lines:
multi-player/multi-station video table games and single player video slot
machines incorporating state of the art graphics and sound. We believe that our
gaming machines will appeal to casinos/clubs, lotteries and slot route operators
seeking to enhance the entertainment experience by providing new and unique
forms of gaming.
We distribute our products directly and through distributors, primarily
on a cash sales basis. In Nevada, we directly place our products under lease,
sales (cash or extended payment terms) or participation agreements where we
retain ownership and share in the net win of the games with the casino.
Our primary target markets have been gaming jurisdictions in North
America, including the states where we are presently licensed: Arizona,
Colorado, Iowa, Louisiana, Mississippi, Minnesota, Nevada, New Mexico, North
Carolina and South Carolina, South Dakota and through distributors in Europe and
Australia. We have submitted and have a pending application in Connecticut and
have submitted games for approval in New Jersey. Previously registered with
Alberta, Manitoba, Saskatchewan, Quebec and the Atlantic Lottery Corporation we
have applications pending in British Columbia and Ontario.
Our executive offices are located at 333 Orville Wright Court, Las
Vegas, Nevada 89119 and our telephone number is (702) 614-7199.
RECENT DEVELOPMENTS
On December 31, 1999, we executed a merger agreement with Equitex, Inc.
and Equitex's subsidiary, nMortgage, Inc., which governed a contemplated merger
between the Company and nMortgage in a tax-free exchange of stock. The nMortgage
merger agreement required that prior to the merger, we divest substantially all
of our gaming-related assets. Accordingly, on February 1, 2000, we entered into
an asset purchase agreement with Xertain, Inc., a private Delaware corporation
located in Las Vegas, Nevada with its primary business predicated on
gaming-related technologies and international manufacturing.
Due to continued complications associated with the nMortgage
transaction, the Company formally terminated the nMortgage merger agreement on
September 19, 2000. In conjunction with the termination of the nMortgage merger
agreement, we also terminated the asset purchase agreement with Xertain, and
instead entered into a Letter of Intent with Xertain pursuant to which we agreed
to acquire 14.9% of Xertain's common stock at an initial closing in exchange for
14.9% of our common stock, and to acquire the balance of subject to and upon our
receipt of shareholder approval for the merger. On October 12, 2000, we executed
1
<PAGE> 6
a definitive merger agreement with Xertain and completed the initial closing of
the transaction. In light of certain gaming and NASDAQ regulatory matters, the
parties amended the Xertain merger agreement on December 20, 2000 to provide
that each party redeem shares of its previously-issued common stock such that,
thereafter, the parties each held 9.9% of the other's common stock.
THE OFFERING
Common stock offered (1)..................... 10,544,804 shares
Common stock outstanding
before the offering.......................... 13,568,774 shares
Common stock outstanding
after the offering (2)....................... 19,144,187 shares
Nasdaq Small Cap Market symbol............... IGCA
--------------
(1) Based upon the maximum number of shares that can be issued under the
Securities Purchase Agreements upon conversion of shares of the
Company's Series D, E, F & G Preferred Stock, payment of dividends in
connection with these preferred shares, shares issuable upon exercise of
the certain warrants issued to the selling shareholders, and certain
shares issued to the selling shareholders.
(2) Does not include (a) 1,044,900 shares of common stock that are issuable
upon exercise of outstanding options pursuant to the employee and
director stock option plans; (b) 240,000 shares of common stock issuable
upon the exercise of additional outstanding options; (c) 970,000 shares
of common stock that are issuable upon the exercise of the outstanding
warrants (other than the warrants issued to the selling shareholder and
for which the resale of common stock issuable upon conversion thereof is
registered hereunder); and (d) 406,666 shares of common stock that are
issuable upon the conversion of certain convertible promissory notes.
RISK FACTORS
An investment in our common stock is very risky. You may lose the entire
amount of your investment. Prior to making an investment decision, you should
carefully review this entire prospectus and consider the following risk factors,
which we believe disclose all risks material to an investment in the securities
offered by this prospectus:
GENERAL RISKS:
WE HAVE INCURRED LOSSES TO DATE AND IF OUR SALES DO NOT IMPROVE, WE WILL
NEED ADDITIONAL FINANCING IN ORDER TO CONTINUE OPERATIONS.
We have incurred net losses of approximately $14.1 million in 1999, $4.7
million in 1998, $2.9 million in 1997 and $6.9 million in 1996. The third
quarter of 2000, in which we
2
<PAGE> 7
realized earnings of approximately $148,000, is the first profitable quarter we
have had since the fourth quarter of fiscal 1997. Given the relatively large
fluctuations in the frequency and size of our receivables, we continue to
experience significant fluctuations in our cash position. We believe that our
cash and anticipated funds from operations, absent additional financing, will be
adequate to fund cash requirements until through the end of 2001. If our sales
forecasts do not materialize, we will require additional financing to fund
further production, marketing and distribution of our products. There can be no
assurance that we will be successful on obtaining such additional financing on
terms acceptable to us, which may require us to consider liquidating all or a
part of our assets and possibly discontinuing operations. Any 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.
OUR COMMON STOCK COULD BE DELISTED FROM THE NASDAQ SMALL CAP MARKET,
WHICH DELISTING COULD HINDER OUR ABILITY TO OBTAIN FINANCING AND HINDER YOUR
ABILITY TO OBTAIN ACCURATE QUOTATIONS AS TO THE PRICE OF OUR COMMON STOCK, OR
DISPOSE OF OUR COMMON STOCK IN THE SECONDARY MARKET.
Although our common stock is currently listed on the Nasdaq Small Cap
Market, we cannot guarantee that an active public market for our common stock
will continue to exist. The market price of our common stock has been highly
volatile. We have received a notice from Nasdaq indicating that our common stock
has failed to maintain the $1.00 per share minimum closing bid price which
Nasdaq required for continued listing of securities on The Nasdaq National and
Small Cap Markets. In response to a recent presentation made before a Nasdaq
Listing Qualifications Panel, the Nasdaq transferred trading of our securities
from The Nasdaq National Market to The Nasdaq Small Cap Market and granted us a
limited exemption from the minimum bid price requirement. However, if our common
stock fails to demonstrate a closing bid price of at least $1.00 on or before
January 22, 2001, and maintain that closing bid price for each of the ten
trading days immediately thereafter, our securities will be delisted from The
Nasdaq Stock Market. If our securities are delisted, trading in our common stock
could thereafter be conducted in the over-the-counter markets in the so-called
"pink sheets" or the National Association of Securities Dealer's "Electronic
Bulletin Board." Consequently, the liquidity of our common stock would likely be
impaired, not only in the number of shares which could be bought and sold, but
also through delays in the timing of the transactions, reduction in the coverage
of IGCA by security analysts and the news media, and lower prices for our
securities than might otherwise prevail. This impaired liquidity of our common
stock may hinder our ability to raise additional capital to fund operations. In
addition, our common stock would become subject to certain rules of the
Securities and Exchange Commission relating to "penny stocks." These rules
require broker-dealers to make special suitability determinations for purchasers
other than established customers and certain institutional investors and to
receive the purchasers' prior written consent for a purchase transaction prior
to sale. Consequently, these "penny stock rules" may adversely affect the
ability of broker-dealers to sell our common stock and may adversely affect your
ability to sell shares of our common stock in the secondary market.
THERE IS THE RISK THAT DUE TO THE LIMITATIONS PLACED ON THE CONVERSION
OF THE PREFERRED SHARES, THE PREFERRED SHARES MAY NOT BE CONVERTED INTO COMMON
STOCK AND WOULD HAVE TO BE REDEEMED IN CASH.
3
<PAGE> 8
The terms of our Series C Convertible Preferred Stock and our Series D
6% Convertible Preferred Stock prohibit us from issuing common stock upon the
conversion of these series of preferred stock in excess of 20% of the number of
our common shares issued and outstanding on June 1, 1999 and September 1, 1999,
respectively. Because we have already issued the maximum allowable number of
shares of common stock upon conversion of these series of preferred stock and
are no longer able to honor conversion requests from the holders of outstanding
Series C and Series D preferred shares, we have offered to exchange those
preferred shares for shares of another series of our preferred stock. However,
if holders of our outstanding Series C and Series D preferred shares choose to
retain and make conversion requests with respect to these shares, we will be
required to redeem these preferred shares in cash at 115% and 125%,
respectively, of the amount paid for those shares plus any accrued and unpaid
dividends thereon.
Similarly, the total number of shares of common stock issuable in
connection with the offering of each of the Series E 6% Preferred Stock, the
Series F 6% Preferred Stock and the Series G 6% Preferred Stock cannot exceed
20% of the number of shares of common shares of the Company issued and
outstanding on November 1, 2000, December 1, 2000 and January 8, 2001,
respectively. In the event the holders of shares of these series of preferred
stock are unable to convert their shares into common stock because these
limitations have been reached, we would be required to redeem those preferred
shares in cash at 125% of their stated value, plus any accrued and unpaid
dividends thereon.
If we are required to redeem shares of the our Series C, D, E, F, or G
preferred stock, we may, depending on the number of preferred shares we are
required to redeem, lack sufficient cash to accomplish the required redemption.
In that situation, we may be required to liquidate all or a part of our assets
and possibly discontinue our operations.
OUR OPERATIONS MAY PROVE UNSUCCESSFUL WHICH WOULD RESULT IN OUR
CONTINUED UNPROFITABILITY AND MAY CAUSE OUR STOCK PRICE TO FALL.
We have not generated a profitable year since the fiscal year ended July
31, 1994. Due to a variety of factors, many of which are discussed in this
prospectus, we may never generate significant revenues or operate profitability.
Even if we succeed in our operations as contemplated, we cannot assure a
successful transition to higher volume operations. We may be unable to control
our expenses, attract necessary additional personnel, or procure the capital
required to maintain expanded operations. If our sales growth is ultimately
unsuccessful, the results of our operations will suffer accordingly, and the
market price of our stock may fall.
WE CONTINUE TO FACE RISKS, EXPENSES AND DIFFICULTIES ASSOCIATES WITH NEW
AND EXPANDING BUSINESSES.
Although our business was formed in 1991, we continue to face the
risks, expenses and difficulties frequently encountered by new and expanding
businesses. These risks include, but are not limited to, negative cash flow,
initial high development costs of new products without corresponding sales
pending receipt of corporate and product regulatory approvals and market
introduction and acceptance of new products. We cannot guarantee that our
products will be accepted in the marketplace or that we will be able to obtain
the regulatory approvals we require to conduct our business.
4
<PAGE> 9
THE CONVERSION OF PREFERRED SHARES INTO SHARES OF OUR COMMON STOCK MAY
SIGNIFICANTLY DILUTE THE INTERESTS OF OUR OTHER INVESTORS.
As of January 16, 2001, we had an aggregate of $6,509,500 of preferred
stock issued and outstanding, the substantial majority of which converts into
common stock at the lesser of $0.8125 or 70% of the average closing bid price of
our common stock for the five consecutive days immediately preceding the
conversion date. Because our outstanding preferred stock converts at a discount
to the market price of our common stock, investors in our common stock will
experience dilution if holders of these preferred shares elect to convert. Based
upon the variable conversion prices of the outstanding shares of our preferred
stock, these conversion will result in greater dilution to investors the more
the price of our common stock declines.
PURSUANT TO ITS AUTHORITY TO DESIGNATE AND ISSUE SHARES OF OUR STOCK AS
IT DEEMS APPROPRIATE, OUR BOARD OF DIRECTORS MAY ASSIGN RIGHTS AND PRIVILEGES TO
CURRENTLY UNDESIGNATED SHARES WHICH COULD ADVERSELY AFFECT YOUR RIGHTS AS A
COMMON SHAREHOLDER.
Our authorized capital consists of 100,000,000 shares of capital stock.
Our Board of Directors, without any action by the shareholders, may designate
and issue shares in such classes or series (including classes or series of
preferred stock) as it deems appropriate and establish the rights, preferences
and privileges of such shares, including dividends, liquidation and voting
rights. The rights of holders of preferred shares and other classes of capital
stock that may be issued may be superior to the rights granted to the holders of
our common stock. Our Board's ability to designate and issue such undesignated
shares could impede or deter an unsolicited tender offer or takeover proposal.
Further, the issuance of additional shares having preferential rights could
adversely affect the voting power and other rights of holders of common stock.
WE MAY NOT PAY DIVIDENDS ON OUR COMMON STOCK, IN WHICH EVENT YOUR ONLY
RETURN ON INVESTMENT, IF ANY, WILL OCCUR ON THE SALE OF OUR STOCK.
To date, we have not paid any cash dividends on our common stock, and we
do not intend to do so in the foreseeable future. Rather, we intend to use any
future earnings to fund our operations and the growth of our business.
Accordingly, the only return on an investment in our common stock will occur
upon its sale.
MINNESOTA LAW MAY INHIBIT OR DISCOURAGE TAKEOVERS, WHICH COULD REDUCE
THE MARKET VALUE OF OUR STOCK.
Being a corporation organized under Minnesota law, we are subject to
certain Minnesota statutes which regulate business combinations and restrict the
voting rights of certain persons acquiring shares of our stock. By impeding a
merger, consolidation, takeover or other business combination involving
Innovative Gaming Corporation of America or discouraging a potential acquiror
from making a tender offer or otherwise attempting to obtain control of us,
these regulations could adversely affect the market value of our stock.
POTENTIAL ADVERSE MARKET PRICE IMPACT OF SHARES ELIGIBLE FOR FUTURE
SALE.
The sale, or availability for sale, of substantial amounts of our common
stock in the public market subsequent to this offering of common stock,
including sales upon exercise of
5
<PAGE> 10
employee and director stock options and warrants, may adversely affect the
prevailing market price of common stock and may impair whether we can raise
additional capital by the sale of stock. If we require additional financing and
are unable to raise it by selling stock, we may seek debt financing to fund our
operations, which debt financing may not be available on terms acceptable to us.
If we are unable to obtain equity or debt financing needed to fund our continued
operations, we may be forced to liquidate all or part of our assets and possibly
discontinue operations.
WE ARE HEAVILY DEPENDENT ON THE ONGOING SERVICES OF MR. ROLAND M.
THOMAS, THE LOSS OF WHOM COULD HAVE A DETRIMENTAL EFFECT ON OUR PROFITABILITY
AND THE MARKET PRICE OF OUR STOCK.
Our plan of business development and our day-to-day operations rely
heavily on the experience efforts of Roland M. Thomas, our Chairman of the
Board, Chief Executive Officer, Chief Financial Officer, Secretary and
Treasurer. Mr. Thomas has experience in managing and guiding the business
affairs of companies that operate in the gaming industry and is responsible for
the development of our current business plan. The loss of Mr. Thomas could
adversely affect the success of our strategic plans and the viability of our
operations and, consequently, could have a detrimental effect on the market
price of our stock.
SHARES OF OUR COMMON STOCK TO BE ISSUED IN CONNECTION WITH OUR
CONTEMPLATED ACQUISITION OF XERTAIN, INC. WILL DILUTE THE INTERESTS OF OUR
CURRENT INVESTORS, WHILE OUR INABILITY TO OBTAIN SHAREHOLDER APPROVAL FOR THE
TRANSACTION COULD ADVERSELY IMPACT OUR OPERATIONS AND LONG-TERM STRATEGIC PLANS.
We have entered into an agreement to acquire Xertain, Inc., a
corporation of which Roland M. Thomas, our Chairman and Chief Executive Officer,
serves as Chief Executive Officer. Pursuant to the terms of the agreement
governing this acquisition, we have already exchanged approximately 9.9% of our
outstanding common stock for 9.9% of Xertain's common stock. The final step in
this acquisition, in which Xertain will be merged with and into one of our
wholly-owned subsidiaries, is contingent upon the approval of our shareholders.
If our shareholders approve the acquisition, we will be required to issue
additional common stock to the Xertain shareholders such that the Xertain
shareholders will hold approximately 45% of our outstanding common stock after
the merger, which issuance will substantially dilute the interests of our
current shareholders. Our failure to obtain shareholder approval for the
transaction will result in Xertain continuing to operate as a separate entity,
which may adversely affect our operations and our current management's strategic
plans.
RISKS ASSOCIATED WITH THE GAMING MACHINE INDUSTRY:
OUR SUCCESS DEPENDS IN LARGE PART UPON OUR ABILITY TO DESIGN,
MANUFACTURE, MARKET AND SERVICE PRODUCTS THAT WILL BE ACCEPTED IN THE GAMING
MACHINE MARKET.
Our success as a gaming machine manufacturer and supplier is dependent
upon numerous factors, including our ability to design, manufacture, market and
service gaming machines that achieve player and casino acceptance while
maintaining product quality and acceptable margins. In addition, we must compete
against gaming machine suppliers with greater financial resources, name
recognition and established service networks, customer relationships and
licensed in more jurisdictions. To date, the sales of our multi-player games
have been significantly lower than we anticipated. In order to diversify and
expand sales, we have begun licensing, marketing and selling single player
games. We cannot assure you that single player games developed by the Company
will be accepted by the market. We will need to
6
<PAGE> 11
develop gaming machines that offer technological advantages or unique
entertainment features in order for us to be able to compete effectively in the
gaming machine market.
WE MAY BE UNABLE TO COMPETE SUCCESSFULLY IN THE SINGLE PLAYER GAMES
MARKET, FOR WHICH WE ARE CURRENTLY DEVELOPING PRODUCTS, OR WITH COMPETITORS WHO
DEVELOP GAMING MACHINES THAT ARE SIMILAR TO OUR MULTI-STATION PRODUCTS.
Many gaming equipment companies, several of which are large and
well-established, supply the casino and video lottery industries with video
gaming machines and other gaming equipment. Our management believes that
Aristocrat, Alliance Gaming, International Game Technology, Anchor Gaming and
WMS Industries are among the largest and most-established gaming machine
suppliers. Sigma Games distributes a multi-player horserace game, which our
management believes competes for the same casino floor space as our games.
Additionally, Sega Gaming also offers similar games in a multi-player format and
has applied for licensure in certain U.S. markets. Upon licensing, we believe
Sega Gaming will become a direct competitor. However, these competitors, or
another competitor, may develop gaming machines that are similar to our gaming
machines in the future. Furthermore, we cannot assure you that any of the single
player games we are currently developing for the intensely competitive single
player game market will be accepted in such a competitive market.
AS WITH OTHER BUSINESSES IN THE GAMING INDUSTRY, OUR PROFITABILITY AND
OUR POTENTIAL FOR GROWTH ARE HIGHLY DEPENDENT ON MANY FACTORS WHICH ARE OUT OF
OUR CONTROL.
Our revenues are derived from the gaming industry. The growth of our
business is substantially dependent upon factors that are beyond our the
control. Such factors include, among others, the pace of development, changes in
gaming regulation, expansion and renovation of casinos and other forms of casino
gaming in new jurisdictions, and 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 our control. As a result of these and
other factors, we cannot assure you that we will be able achieve planned growth
or profitability.
THE LOSS OF ORDERS OR THE INABILITY TO OBTAIN NEW ORDERS COULD CAUSE
SIGNIFICANT FLUCTUATIONS IN OUR REVENUES AND CASH FLOW AND ADVERSELY AFFECT OUR
OPERATING RESULTS AS A WHOLE.
Our operating results have varied substantially from quarter to quarter.
Revenues in any quarter are substantially dependent on regulatory approval,
receipt of orders, availability of parts and components necessary to manufacture
the products, delivery and installation in that quarter. Our staffing and
operating expenses are based on anticipated revenue levels, and a high
percentage of our costs are fixed, in the short-term. As a result, the loss of
any one order, or the failure to obtain new orders as existing orders are
completed, could have a material adverse effect on, or cause significant
fluctuations in, our revenues and cash flow from quarter to quarter.
OUR OPERATIONS ARE DEPENDENT UPON OUR RELATIONSHIPS WITH OUR VENDORS,
SUPPLIERS AND DISTRIBUTORS.
7
<PAGE> 12
We are highly dependent upon our relationships with our vendors,
suppliers and distributors. A significant interruption or delay in the delivery
of components from our suppliers, or the loss of a significant distributor,
could materially and adversely affect the results of our operations.
WE ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATION WHICH COULD NEGATIVELY
IMPACT OUR BUSINESS.
The manufacture and distribution of gaming machines are subject to
numerous federal, state, provincial, tribal, international and local
regulations. 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 us. The timing and expense
of obtaining gaming licenses has an affect on our ability to expand our market.
Together with our key personnel, we undergo extensive investigation before each
jurisdictional license is issued. Our gaming machines are subjected to
independent testing and evaluation prior to approval from each jurisdiction in
which we do business. Generally, regulatory authorities have broad discretion
when granting, renewing or revoking such game approvals and licenses. Our
failure, or the failure of any of our key personnel or gaming machines, in
obtaining or retaining a license in any jurisdiction could have a material
adverse effect on our business. Furthermore, the failure to obtain or retain a
required license in one jurisdiction could negatively impact our ability (or the
ability of any of our key personnel or gaming machines) to obtain or retain
required licenses in other jurisdictions. In addition, we may also be subject to
regulation as a gaming operator if we enter into lease participation agreements
under which we share in the revenues generated by gaming machines. Regulatory
authorities may require significant shareholders to submit to background
investigations and respond to questions from regulatory authorities, and may
deny a license or revoke our licenses based upon their findings. For a more
complete description of the gaming regulations impacting us, you should refer to
the Regulation section of our Form 10-K for the fiscal year ended December 31,
1999.
THERE IS A RISK THAT THE VALUE OF OUR PROPRIETARY INTELLECTUAL PROPERTY
RIGHTS COULD BE DIMINISHED BY IMPROPER USE BY OTHERS.
Our products are technology-based and as such, we face several
intellectual property risks. We believe that our proprietary software, hardware
and other intellectual property are important to our success and our competitive
position. We rely on a combination of patent, trade secret, copyright and
trademark law, nondisclosure agreements and technical security measures to
protect our rights pertaining to our products. We currently hold patents for our
blackjack, craps and roulette machines. However, the actions we have taken to
protect our proprietary rights may be inadequate to prevent others from
imitating our products. For instance, we may not be granted patents for products
that we develop in the future. Even if we are granted patents for our products,
we may still be unable to prevent third parties from being able to copy or to
"reverse engineer" certain portions of our products or to obtain and use
information that we believe is proprietary.
Although we are not aware of any infringement, we may be subject to
claims from third parties alleging that we have infringed their proprietary
intellectual property rights. Such claims could have a material adverse effect
on our business given the costs associated with intellectual property
litigation, the potential diversion of our management's resources to litigation
and the risk of an injunction or other delay in the offering of our products.
8
<PAGE> 13
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the common
stock by the selling shareholders.
SELLING SHAREHOLDERS
The following table sets forth the number of shares of the common stock
owned by the selling shareholders as of January 16, 2001 and after giving effect
to this offering. We will not receive any proceeds from the sale of the common
stock by the selling shareholders. The shares of common stock received upon
exercise of the Preferred Share Warrants may be offered from time to time by the
selling shareholders.
<TABLE>
<CAPTION>
Shares Percentage Percentage
Beneficially Beneficial Number of Shares Beneficial
Owned Before Ownership Offered By Selling Ownership After
Name Offering Before Offering Shareholder Offering (30)
---------------------- ------------ --------------- ------------------ ---------------
<S> <C> <C> <C> <C>
The Shaar Fund, Ltd. (1) 1,292,564 (1)(2)(29)
World Capital Funding, Inc., LLC (3) 58,543 (3)
Brad Blumenthal (4) 58,543 (4)
C. Jesse Reggio (5) 58,543 (5)
Levana Fund N.V. (6) 292,764 (6)
Barry Seidman (7) 595,703 (7)
Blakely Trading, Ltd. (8) 117,105 (8)
Cynthia Frank (9) 47,583 (9)
Four Corp. Employees
Defined Contribution Plan & Trust (10) 47,583 (10)
Taurus Enterprises, LLC (11) 47,583 (11)
Dale Steen DDS IRA (12) 117,105 (12)
Fong Charitable Foundation (13) 25,000 (13)
Vista Gaming (14) 50,000 (14)
Grogen Financial (15) 10,000 (15)
Don Stephan (16) 60,000 (16)
Zakeni Limited (17) 451,500 (2)(17)(29)
Lucy Birkemeier (18) 91,357 (18)
Ronnie L. Williams, Sr. (19) 45,679 (19)
Jimmy Dowda (20) 49,228 (20)(29)
Augustine Fund, LP (21) 816,683 (2)(21)
Wyncrest Capital (22) 138,233 (2)(22)
Gulfstream Financial Partners (23) 737,240 (2)(23)
Richard Lockwood (24) 276,465 (2)(24)
Esquire Trade and Financial (25) 230,388 (2)(25)
Celeste Trust Reg. (26) 230,388 (2)(26)
Wayne W. Mills (27) 2,368,346 (2)(27)
Tom Foley 113,356
Roland Thomas 599,295
Steve Peterson 349,295
Kevin Quigley 84,358
Ted Yeh 50,527
Doug Twait 5,272
Jim Hamilton 5,272
Karen Mayer 3,954
Scott Dacey 5,272
Marshal Goodman 13,181
Dan Stark 6,590
Doug Sanderson 13,181
Mike McKenzie 26,362
Jana McKeag 6,590
John Zanoni 26,362
Henry Fong 26,362
Debbie Hulbert 2,636
Christine Hall 2,636
Ryan Peterson 1,318
TOTAL 10,544,804 (28)
</TABLE>
-------------------------
*Less than 1%.
9
<PAGE> 14
(1) Includes (i) 879,633 shares of common stock issuable upon conversion of
Series G Preferred Shares, (ii) 322,543 shares of common stock issuable
upon conversion of Series E Preferred Shares and (v) 85,000 shares
issuable upon exercise of certain warrants exercisable currently or
within 60 days. Shares are beneficially owned by Samuel Levinson.
(2) The number of common shares issuable upon conversion of preferred stock
and offered by the selling shareholder, as referenced above, is based
upon such selling shareholder's pro rata share of the maximum number of
common shares which remained issuable upon conversion of each series of
preferred stock on January 16, 2001. Because the number of shares of
common stock issuable upon conversion of preferred shares and as a
payment of dividends thereon is dependent in part upon the market price
of the common stock prior to conversion, the actual number of shares of
common stock that will be issued upon such conversion or dividend
payments, and consequently the number of shares of common stock that
will be beneficially owned and offered by the selling shareholder will
fluctuate daily and cannot be determined at this time. However, the
selling shareholder has contractually agreed to restrict its ability to
convert preferred stock (and receive common stock in payment of
dividends thereon) to the extent that the number of shares of common
stock held by it and its affiliates after such conversion exceed 4.9% of
IGCA's outstanding common stock.
(3) Includes 5,000 shares issuable upon exercise of certain warrants
exercisable currently or within 60 days. Shares are beneficially owned
by Keith Mazer.
(4) Includes 5,000 shares issuable upon exercise of certain warrants
exercisable currently or within 60 days.
(5) Includes 5,000 shares issuable upon exercise of certain warrants
exercisable currently or within 60 days.
(6) Includes 25,000 shares issuable upon exercise of certain warrants
exercisable currently or within 60 days. Shares are beneficially owned
by Maxo Benealal.
(7) Includes 40,000 shares issuable upon exercise of certain warrants
exercisable currently or within 60 days.
(8) Includes 10,000 shares issuable upon exercise of certain warrants
exercisable currently or within 60 days.
(9) Includes 2,500 shares issuable upon exercise of certain warrants
exercisable currently or within 60 days.
(10) Includes 2,500 shares issuable upon exercise of certain warrants
exercisable currently or within 60 days.
(11) Includes 2,500 shares issuable upon exercise of certain warrants
exercisable currently or within 60 days. Shares are beneficially owned
by Matt Holstein.
(12) Includes 10,000 shares issuable upon exercise of certain warrants
exercisable currently or within 60 days.
(13) Includes 25,000 shares issuable upon exercise of certain warrants
exercisable currently or within 60 days. Shares are beneficially owned
by Henry Fong.
(14) Includes 50,000 shares issuable upon exercise of certain warrants
exercisable currently or within 60 days.
(15) Includes 10,000 shares issuable upon exercise of certain warrants
exercisable currently or within 60 days.
(16) Includes 60,000 shares issuable upon exercise of certain warrants
exercisable currently or within 60 days.
(17) Includes (i) 540,095 shares of common stock issuable upon conversion of
Series G Preferred Shares, and (ii) 25,000 shares issuable upon exercise
of certain warrants exercisable currently or within 60 days. Shares are
beneficially owned by Sheldon Salzman.
(18) Includes 5,000 shares issuable upon exercise of certain warrants
exercisable currently or within 60 days.
10
<PAGE> 15
(19) Includes 2,500 shares issuable upon exercise of certain warrants
exercisable currently or within 60 days.
(20) Includes (i) 43,982 shares of common stock issuable upon conversion of
Series G Preferred Shares, and (ii) 5,000 shares issuable upon exercise
of certain warrants exercisable currently or within 60 days.
(21) Includes (i) 114,352 shares of common stock issuable upon conversion of
Series G Preferred Shares, and (ii) 50,000 shares issuable upon exercise
of certain warrants exercisable currently or within 60 days. Shares are
beneficially owned by John Porter.
(22) Includes (i) 138,233 shares of common stock issuable upon conversion of
Series E Preferred Shares, and (ii) 40,000 shares issuable upon exercise
of certain warrants exercisable currently or within 60 days. Shares are
beneficially owned by Ron Eibensteiner.
(23) Includes (i) 737,240 shares of common stock issuable upon conversion of
Series E Preferred Shares, and (ii) 80,000 shares issuable upon exercise
of certain warrants exercisable currently or within 60 days. Shares are
beneficially owned by Henry Fong.
(24) Includes (i) 276,465 shares of common stock issuable upon conversion of
Series E Preferred Shares, and (ii) 30,000 shares issuable upon exercise
of certain warrants exercisable currently or within 60 days.
(25) Includes (i) 230,388 shares of common stock issuable upon conversion of
Series E Preferred Shares, and (ii) 25,000 shares issuable upon exercise
of certain warrants exercisable currently or within 60 days. Shares are
beneficially owned by Ari Rabinowitz.
(26) Includes (i) 230,388 shares of common stock issuable upon conversion of
Series E Preferred Shares, and (ii) 25,000 shares issuable upon exercise
of certain warrants exercisable currently or within 60 days. Shares are
beneficially owned by Ari Rabinowitz.
(27) Includes (i) 2,062,096 shares of common stock issuable upon conversion
of Series F Preferred Shares, and (ii) 306,250 shares issuable upon
exercise of certain warrants exercisable currently or within 60 days.
(28) Includes (i) 5,575,413 shares of common stock convertible upon
conversion of preferred stock, (ii) 931,250 shares issuable upon
exercise of certain warrants exercisable currently or within 60 days.
(29) Assumes conversion of all shares of Series D 6% Convertible Preferred
Stock into Series G 6% Convertible Preferred Stock.
(30) Each selling shareholder is subject to restrictions limiting its ability
to hold shares of common stock of IGCA to the extent that the number of
shares of common stock held by it and its affiliates will exceed 4.9% of
IGCA's outstanding common stock.
PLAN OF DISTRIBUTION
We are registering the shares offered by this prospectus on behalf of
the selling shareholders. We agreed to file a registration statement under the
Securities Act of 1933, as amended covering resale by the selling shareholders
of the shares and to use our best efforts to cause such registration statement
to be declared effective as soon as possible thereafter. As used in this
section, the term "selling shareholders" includes donees, pledgees, transferees
and other successors in interest selling shares received from a selling
shareholder after the date of this prospectus. We will pay all costs and
expenses in connection with the preparation of this prospectus and the
registration of the shares offered by it. Any brokerage commissions and similar
selling expenses attributable to the sale of shares will be borne by the selling
shareholders. Sales of shares may be effected by the selling shareholders at
various times in one or more types of transactions (which may include block
transactions) on the Nasdaq Small Cap Market, in negotiated transactions,
through put or call options transactions relating to the shares, through short
sales of shares, or a combination of such methods of sale at market prices
prevailing at the time of sale or at negotiated prices. Such transactions may or
may not involve brokers or dealers. The selling shareholders have advised us
that they have not entered into any agreements, understandings or arrangements
with any underwriters or broker-dealers regarding
11
<PAGE> 16
the sale of the shares, nor is there an underwriter or coordinating broker
acting in connection with the proposed sale of shares by the selling
shareholders.
We have agreed to indemnify the selling shareholders and their officers,
directors, employees and agents, and each person who controls any selling
shareholder, in certain circumstances against certain liabilities, including
liabilities arising under the Securities Act. Each selling shareholder has
agreed to indemnify the Company and its directors and officers in certain
circumstances against certain liabilities, including liabilities arising under
the Securities Act.
The selling shareholders and any broker-dealers that act in connection
with the sale of securities might be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, and any commissions received by
such broker-dealers and any profit on the resale of the securities sold by them
while acting as principals might be deemed to be underwriting discounts or
commissions under the Securities Act.
Because selling shareholders may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, the selling shareholders
will be subject to the prospectus delivery requirements of the Securities Act.
We have informed the selling shareholders that the anti-manipulative provisions
of Regulation M promulgated under the Securities Exchange Act of 1934, as
amended, may apply to their sales in the market.
Selling shareholders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of that Rule.
MINNESOTA ANTI-TAKEOVER LAW
The Company is governed by the provisions of Sections 302A.671 and
302A.673 of the Minnesota Business Corporation Act. In general, Section 302A.671
provides that the shares of a corporation acquired in a "control share
acquisition" have no voting rights unless voting rights are approved in a
prescribed manner. A "control share acquisition" is an acquisition, directly or
indirectly, of beneficial ownership of shares that would, when added to all
other shares beneficially owned by the acquiring person, entitle the acquiring
person to have voting power of 20% or more in the election of directors. In
general, Section 302A.673 prohibits a publicly-held Minnesota corporation from
engaging in a "business combination" with an "interested shareholder" for a
period of four years after the date of transaction in which the person became an
interested shareholder, unless the business combination is approved in a
prescribed manner. "Business combination" includes mergers, asset sales and
other transactions resulting in a financial benefit to the interested
shareholder. An "interested shareholder" is a person who is the beneficial
owner, directly or indirectly, or 10% or more of the corporation's voting stock
or who is an affiliate or associate of the corporation and at any time within
four years prior to the date in question was the beneficial owner, directly or
indirectly, of 10% or more of the corporation's voting stock.
12
<PAGE> 17
MATERIAL CHANGES
THE MERGER
On December 31, 1999, we executed a merger agreement with Equitex, Inc.
and Equitex's subsidiary, nMortgage, Inc., which governed a contemplated merger
between the Company and nMortgage in a tax-free exchange of stock. The nMortgage
merger agreement required that prior to the merger, we divest substantially all
of our gaming-related assets. Accordingly, on February 1, 2000, we entered into
an asset purchase agreement with Xertain, Inc., a private Delaware corporation
located in Las Vegas, Nevada with its primary business predicated on
gaming-related technologies and international manufacturing.
Due to continued complications associated with the nMortgage
transaction, the Company formally terminated the nMortgage merger agreement on
September 19, 2000. The Company also terminated the asset purchase agreement
with Xertain as of that date, and instead entered into a merger agreement with
Xertain. Pursuant to the terms of the Xertain merger agreement, as amended, we
exchanged approximately 9.9% of our outstanding common stock for 9.9% of the
common stock of Xertain. Subject to and upon our receipt of shareholder approval
for the merger, Xertain will merge with and into IGCA Acquisition Corp., a
Minnesota corporation and wholly-owned subsidiary of the Company, with IGCA
Acquisition Corp. being the surviving corporation in the merger. In connection
with the merger we will issue additional shares of our common stock to the
Xertain stockholders such that the aggregate amount of shares issued to Xertain
and its stockholders equals 45% of our outstanding common shares, calculated on
a post-transaction basis.
Xertain, Inc. is a private Delaware corporation located in Las Vegas,
Nevada, with its primary business predicated on gaming-related technologies and
international manufacturing. See "Description of the Xertain Business" below.
DESCRIPTION OF THE XERTAIN BUSINESS
GENERAL
Xertain was incorporated in Delaware on November 29, 1999, and is a
participant in the legal Class III gaming industry and is primarily engaged in
developing, manufacturing and marketing high-tech based casino gaming
applications and technologies to compete in the market for PC-based gaming
machines. Xertain intends to create and acquire new products for distribution to
existing operators in the gaming industry. In addition, Xertain's business plan
contemplates vertically integrating its products and services through the
ownership and management of casino gaming facilities.
Xertain currently distributes gaming and non-gaming network-based PC
products through its exclusive agreements and distributes these products both
directly to casino operators and through the use of distributors on a
jurisdictional basis. Specifically, Xertain has secured exclusive distribution
agreements for all Innovative Gaming, Inc. products within California and
internationally outside of the United States. In addition to Xertain's present
Las Vegas location, Xertain's business plan includes provisions for the
development of tribal manufacturing and distribution facilities.
13
<PAGE> 18
Xertain intends to evaluate other jurisdictions based on cost and impact
for internal sales and support development or for the use of a distributor.
Where Xertain elects to utilize a distributor, the distributor will be
responsible for the service organization related to the sales.
Gaming device marketing is performed through word of mouth, trade shows
and direct development of future sales through casino management and development
efforts.
CAPITAL STOCK OF XERTAIN
Xertain's authorized capital stock consists of (i) 100,000 shares of
common stock, no par value per share, of which 16,275 shares were issued and
outstanding to 7 registered stockholders as of January 16, 2001, and (ii)
25,000,000 shares of common stock, $.01 par value per share, of which 9,193,488
were issued and outstanding to 20 registered stockholders as of January 16,
2001. Upon the merger of Xertain with and into IGCA Acquisition Corp., all
shares of Xertain's capital stock, with the exception of the those shares owned
by IGCA Acquisition Corp. (which will be cancelled at the effective time of the
merger with IGCA), will be automatically converted into the right receive a pro
rata share of 7,038,181 of IGCA common stock, as adjusted pursuant to the terms
of the Xertain merger agreement, as amended.
No established trading market exists for the shares of capital stock of
Xertain.
LITIGATION
There is no material legal proceedings pending or, to the knowledge of
IGCA or Xertain, threatened against Xertain.
WHERE YOU CAN FIND MORE INFORMATION
Federal securities law requires IGCA to file information with the
Securities and Exchange Commission concerning its business and operations.
Accordingly, we file annual, quarterly, and special reports, proxy statements
and other information with the Commission. You can inspect and copy this
information at the Public Reference Room maintained by the Securities and
Exchange Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
You can receive additional information about the operation of the
Securities and Exchange Commission's Public Reference Rooms by calling the
Commission at 1-800-SEC-0330. The Securities and Exchange Commission also
maintains a website at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding companies that, like
IGCA, file information electronically with the Securities and Exchange
Commission.
The Securities and Exchange Commission allows us to "incorporate by
reference" information that has been filed with it, which means that we can
disclose important information to you by referring you to the other information
we have filed with the Securities and Exchange Commission. The information that
we incorporate by reference is considered to be part of this prospectus, and
related information that we file with the Securities and Exchange Commission
will automatically update and supersede information we have included in this
prospectus. We also incorporate by reference any future filings we make with the
Securities and Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934,
14
<PAGE> 19
as amended, until the selling shareholders sell all of their shares or until the
registration rights of the selling shareholders expire. This prospectus is part
of a registration statement that we filed with the Securities and Exchange
Commission (Registration No. 333-94633). The following are specifically
incorporated herein by reference:
1. Annual Report on Form 10-K for the fiscal year ended December 31, 1999
as filed March 30, 2000;
2. Amended Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1999 as filed May 1, 2000;
3. Amended Annual Report on Form 10-K/A for the fiscal year ended
December 31, 1999 as filed August 8, 2000;
4. Quarterly Report on Form 10-Q filed for the quarterly period ended
March 31, 2000 as filed May 15, 2000;
5. Amended Quarterly Report on Form 10-Q/A filed for the quarterly period
ended March 31, 2000 as filed August 10, 2000; and
6. Quarterly Report on Form 10-Q filed for the quarterly period ended
June 30, 2000 as filed August 14, 2000;
7. Quarterly Report on Form 10-Q filed for the quarterly period ended
September, 30, 2000 as filed November 14, 2000;
8. Current Report on Form 8-K filed January 6, 2000
9. Current Report on Form 8-K filed May 12, 2000;
10. Amended Current Report on Form 8-K/A filed May 19, 2000;
11. Current Report on Form 8-K filed August 18, 2000;
12. Current Report on Form 8-K filed September 22, 2000;
13. Current Report on Form 8-K filed October 16, 2000; and
14. The description of common stock included under the caption "Securities
to be Registered" in the Company's registration statement on Form 8-A,
as filed on September 27, 1993, including any amendments or reports
filed for the purpose of updating such description.
15
<PAGE> 20
You can request a free copy of the above filings or any filings
subsequently incorporated by reference into this prospectus by writing or
calling us at the following address:
Innovative Gaming Corporation of America
Attention: Chief Executive Officer
333 Orville Wright Court
Las Vegas, Nevada 89119
(702) 614-7199
www.igca.com
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement or amendment to this prospectus.
We have not authorized anyone else to provide you with different information or
additional information. Selling shareholders will not make an offer of our
common stock in any state where the offer is not permitted. You should not
assume that the information in this prospectus, or any supplement or amendment
to this prospectus, is accurate at any date other than the date indicated on the
cover page of such documents.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this prospectus and in the documents
incorporated by reference in this prospectus are "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. These forward-looking statements can be
identified by the use of predictive, future-tense or forward-looking
terminology, such as "believes," "anticipates," "expects," "estimates," "may,"
"will" or similar terms. Forward-looking statements also include projections of
financial performance, statements regarding management's plans and objectives
and statements concerning any assumption relating to the foregoing. Important
factors regarding IGCA's business, operations and competitive environment which
may cause actual results to vary materially from these forward-looking
statements are discussed under the caption "Risk Factors."
LEGAL MATTERS
Legal matters in connection with the validity of the shares offered by
this Prospectus will be passed upon for the Company by Maslon Edelman Borman &
Brand, LLP, Minneapolis, Minnesota.
EXPERTS
The consolidated financial statements of IGCA as of December 31, 1999,
December 31, 1998, and December 31, 1997 and for the years then ended
incorporated by reference in the registration statement of which this prospectus
is a part have been audited by Kafoury, Armstrong & Co., independent public
accountants, as indicated in their report with respect thereto, and are
incorporated herein in reliance upon the authority of that firm as experts in
giving said report.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
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 that person with respect to an employee benefit plan,
settlements, and reasonable expenses, including attorney's fees and
disbursements, incurred by
16
<PAGE> 21
that person in connection with the proceeding, if, with respect to the acts or
omissions of the person complained of in the proceeding, that 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 corporation'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, to the fullest extent permitted by law, have no personal liability to the
Company and its shareholders for breach of fiduciary duty as a director.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
17
<PAGE> 22
10,544,804 SHARES
INNOVATIVE GAMING CORPORATION OF AMERICA
COMMON STOCK
-------------------------
PROSPECTUS
-------------------------
JANUARY 19, 2001
<PAGE> 23
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 are set forth in the following table:
SEC registration fee............................................. $ 2,436.62
Nasdaq Small Cap Market additional listing fee................... $17,500
Legal fees and expenses.......................................... $25,000
Accounting fees and expenses..................................... $ 5,000
Miscellaneous.................................................... $ 5,000
Total....................................................... $54,936.62
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 that person with
respect to an employee benefit plan, settlements, and reasonable expenses,
including attorney's fees and disbursements, incurred by that person in
connection with the proceeding, if, with respect to the acts or omissions of the
person complained of in the proceeding, that 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 corporation'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, to the
fullest extent permitted by law, have no personal liability to the Company and
its shareholders for breach of fiduciary duty as a director.
ITEM 16. EXHIBITS.
Exhibit Description of Document
------- -----------------------
5 Opinion of Maslon Edelman Borman & Brand, LLP
23.1 Consent of Kafoury, Armstrong & Co.
23.2 Consent of Maslon Edelman Borman & Brand, LLP (included in
Exhibit 5)
24 Power of Attorney (included on page II-3)
---------------------
* Previously filed
II-1
<PAGE> 24
ITEM 17. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(b) The Company 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; (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, 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;
(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; and
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Company's annual report pursuant to Section
13(a) or 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Exchange Act of 1934) that is incorporated by
reference in the registration statement 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.
II-2
<PAGE> 25
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 Las Vegas,
State of Nevada, on January 19, 2001.
Innovative Gaming Corporation of America,
Registrant
By: /s/ Roland M. Thomas
-----------------------------------------
Roland M. Thomas, Chairman and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints Roland M. Thomas as his or her true and
lawful attorney-in-fact and agent, 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 attorney-in-fact and
agent 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 attorney-in-fact and agent, or his substitutes, may
lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1933,
this Registration Statement has been signed below by the following persons in
the capacities and on the date indicated.
<TABLE>
<CAPTION>
Name Title Date
----------------- --------------- ----------------
<S> <C> <C>
/s/ Roland M. Thomas Director, Chairman of the January 19, 2001
------------------------------------ Board and Chief Executive
Roland M. Thomas Officer, Chief Financial
Officer (Principal Executive
Officer and Principal
Accounting Officer)
/s/ Ronald A. Johnson Director January 19, 2001
------------------------------------
Ronald A. Johnson
/s/ Andrew Tottenham Director January 19, 2001
------------------------------------
Andrew Tottenham
</TABLE>
II-3
<PAGE> 26
EXHIBITS
------------- ----------------------------------------------------- ------------
Exhibit Description of Document Page No.
------------- ----------------------------------------------------- ------------
------------- ----------------------------------------------------- ------------
5 Opinion of Maslon Edelman Borman & Brand, LLP**
------------- ----------------------------------------------------- ------------
23.1 Consent of Kafoury, Armstrong & Co.
------------- ----------------------------------------------------- ------------
23.2 Consent of Maslon Edelman Borman & Brand, LLP
included in Exhibit 5)
------------- ----------------------------------------------------- ------------
24 Power of Attorney (included on page II-3)
------------- ----------------------------------------------------- ------------
II-4
