PROSPECTUS
705,000 SHARES
ACRES GAMING INCORPORATED
COMMON STOCK
This Prospectus relates to the sale of 655,000 shares of Common Stock of
Acres Gaming Incorporated (the "Company") which are currently outstanding and
50,000 shares (collectively, the "Shares") which are issuable upon the exercise
of a common stock purchase warrant (the "Warrant"). All of the Shares offered
hereby will be sold by the holder of the Warrant (the "Warrantholder") and
certain shareholders (the "Selling Shareholders"). See "Selling Shareholders."
The Company will not receive any of the proceeds from the sale of Shares by the
Warrantholder or Selling Shareholders, but will receive proceeds upon the
exercise of the Warrant.
The Company's Common Stock is currently traded on the Nasdaq Small Cap
Market under the symbol "AGAM." On May 20, 1996, the last bid price for the
Company's Common Stock reported thereon was $8.75 per share. See "Price Range of
Common Stock."
THESE ARE SPECULATIVE SECURITIES. SEE "RISK FACTORS" BEGINNING ON PAGE 4
FOR INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
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
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
NEITHER THE NEVADA GAMING COMMISSION NOR THE NEVADA STATE GAMING
CONTROL BOARD 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.
===============================================================================
PRICE TO PROCEEDS TO SELLING
PUBLIC (1) SHAREHOLDERS (1)(2)
- -------------------------------------------------------------------------------
Per Share....................... $8.75 $8.75
- -------------------------------------------------------------------------------
Total........................... $6,168,750 $6,168,750
===============================================================================
(1) Based on the average of the closing bid and asked prices for the Common
Stock as reported on the Nasdaq Small Cap Market on May 20, 1996. The
actual Price to Public will be based on market prices on the respective
dates of sale, and may be more or less than the Price to Public set forth
above. The Company will not receive any of the proceeds from the sale of
the Shares offered hereby.
(2) Proceeds to Selling Shareholders will be the Price to Public, less the
agents' sales commissions or underwriters' discounts, if any, and other
expenses of the offering. Expenses of the offering are estimated at
approximately $11,500 and will be paid, in part, by certain Selling
Shareholders or the party from whom they acquired the Shares. See "Selling
Shareholders."
The Selling Shareholders directly, through agents designated from time to
time or through dealers or underwriters also to be designated, may sell the
Shares from time to time on terms to be determined at the time of sale. To the
extent required, the specific Shares to be sold, the names of the Security
Holders, the purchase price, the public offering price, the names of any such
agents, dealers or underwriters and any applicable commissions or discount with
respect to a particular offer will be set forth in an accompanying Prospectus
supplement. Such Prospectus supplement will also set forth information regarding
indemnification by the Company of the Selling Shareholders and any underwriter,
dealer or agent against certain liabilities, including liabilities under the
Securities Act of 1933 ("Securities Act"). See "Plan of Distribution."
The Selling Shareholders and any broker-dealers, agents or underwriters
that participate with the Selling Shareholders in the distribution of the Shares
may be deemed to be "Underwriters" within the meaning of the Securities Act, and
any commissions received by them and any profit on the resale of the Securities
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
The date of this Prospectus is May 20, 1996.
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the Commission's regional offices located at Northwestern Atrium Center,
Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, 13th Floor, New
York, New York 10048. Copies of such material may also be obtained by mail from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates.
This Prospectus is part of a Registration Statement on Form S-3 (the
"Registration Statement") which the Company has filed with the Commission under
the Securities Act of 1933, as amended (the "Securities Act"), relating to the
securities offered hereby. This Prospectus omits certain information contained
in the Registration Statement, to which reference is hereby made for further
information with respect to the Company and the Shares offered hereby. Copies of
the Registration Statement may be inspected without charge at the offices of the
Commission or obtained at prescribed rates from the Public Reference Section of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are hereby incorporated by reference in this
Prospectus except as superseded or modified herein:
1. The Company's Annual Report on Form 10-KSB for the fiscal year ended
June 30, 1995 and Form 10-KSB/A-1 amending such Annual Report;
2. The Company's Proxy Statement dated December 18, 1995, for its Annual
Meeting of Shareholders held on January 4, 1996;
3. The Company's Quarterly Reports on Form 10-QSB for the fiscal quarters
ended September 30, 1995, December 31, 1995 and March 31, 1996;
4. The Company's Form 10-C filed with the Commission on July 14, 1995
relating to a private placement of common stock; and
5. The description of the Company's Common Stock, contained in the
Company's Form 8-A relating to its Common Stock, filed by the Company
with the Commission on September 27, 1993.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering of the shares offered hereby shall
be deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing such documents.
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 modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including a
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any or all documents that have been or may be
incorporated by reference herein (other than exhibits to such documents which
are not specifically incorporated by reference into such documents). Such
requests should be directed to the Chief Financial Officer at the Company's
principal executive offices at 815 NW Ninth Street, Corvallis, Oregon 97330,
telephone number (541) 753-7648.
PROSPECTUS SUMMARY
The following information is qualified in its entirety by the more
detailed information and financial statements of Acres Gaming Incorporated,
including the notes thereto, appearing elsewhere in this Prospectus or
incorporated herein by reference. The information in this Prospectus reflects a
6-for-1 stock split of the Company's Common Stock effected in September 1993.
THE COMPANY
Acres Gaming Incorporated (the "Company") develops, manufactures and
markets electronic game promoting, casino accounting and game monitoring systems
to the casino gaming industry. Its Concept III products are designed to enhance
casino profitability by providing entertainment and incentives to players of
casino games and collecting and analyzing data for use by casino managers. The
Concept III technology improves the efficiency of bonus and incentive programs
currently offered by many casinos, and makes possible bonus and incentive
programs that have not previously been offered. The primary manufacturers of
slot machines have made extensive changes to the software used in their machines
to support the Concept III technology.
Concept III currently includes four major categories:
* Bonusing systems.
* Progressive jackpot systems.
* Casino accounting.
* Player tracking.
Bonusing systems and progressive jackpot systems, which provide players
with opportunities for additional play and special pay-outs, are designed to
enhance interest in the machines and games to which they are attached. The
casino accounting module collects, analyzes and reports data to casino managers
to satisfy accounting and regulatory requirements and to enable the casino
manager to analyze the performance of each gaming device by type and location.
The player tracking module enables a casino to monitor the playing patterns of
individual players or selected groups of players and to develop incentives and
promotions to those players.
Concept III and its component products are a modular, integrated system.
The casino accounting, player tracking, progressive jackpot and bonusing modules
can be purchased and installed individually or as an integrated system.
Modularity permits a casino to introduce Concept III in stages, adding modules
as additional functions are desired. The modular design also is intended to
permit products that may be developed in the future to be integrated into the
Concept III system.
The Company was incorporated under the laws of the State of Nevada in
January 1985. Its principal offices are located at 815 NW Ninth Street,
Corvallis, Oregon 97330, and its telephone number is (541) 753-7648.
THE OFFERING
Common Stock Offered:
By the Selling Shareholders.................. 705,000 shares
Common Stock Outstanding....................... 7,556,525 shares at
February 29, 1996 (1)
NASDAQ/Small Cap Symbol........................ "AGAM"
- --------------------------
(1) Does not include (i) 911,375 shares of Common Stock reserved for issuance
under the Acres Gaming Incorporated 1993 Stock Option and Incentive Plan
(of which 665,750 shares were subject to outstanding options), (ii)
290,000 shares of Common Stock subject to warrants granted outside of the
Plan; (iii) 833,750 shares of Common Stock subject to Redeemable Stock
Purchase Warrants issued in the Company's October 1993 initial public
offering; or (iv) 145,000 Units which may be purchased upon exercise of
warrants sold to the underwriter of the Company's October 1993 initial
public offering.
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD BE AWARE OF THE FOLLOWING RISK FACTORS AND
SHOULD REVIEW CAREFULLY THE INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS
OR INCORPORATED HEREIN BY REFERENCE.
LIMITED OPERATING HISTORY; LOSSES. Although it was incorporated in January
1985, the Company made initial installations of its Concept III product line
during the fiscal year ended June 30, 1992. For the fiscal year ended June 30,
1995 and the six month period ended December 31, 1995, the Company had revenues
of $4,006,000 and $1,861,000, respectively, and net losses of $2,505,000 and
$1,578,000, respectively. The Company also incurred net losses for the fiscal
years ended June 30, 1992, 1993 and 1994. At December 31, 1995, the Company had
an accumulated deficit of $7,250,000. At its current stage of operations, the
Company's quarterly revenues and results of operations may be materially
affected by the receipt or loss of any one order and by the timing of the
delivery, installation and regulatory approval of any one order. There can be no
assurance that the Company will be able to attain or maintain profitable
operations on a consistent basis.
POTENTIAL DIFFICULTIES IN MANAGING GROWTH. The Company's historical
operating results reflect the design and development of the Concept III system.
The Company's future success will depend on its ability to generate sales of the
Concept III system, expand its corporate infrastructure commensurate with any
increase in product sales, and attract, hire and retain skilled employees. Any
failure by the Company to achieve these objectives could cause the loss of
customers and have a material adverse effect on the Company's results of
operations. There can be no assurance that the Company will be able to
effectively manage any future growth.
NEED FOR ADDITIONAL CAPITAL. If new product introductions require more
capital than anticipated, or if cash flows from operations should be less than
anticipated, the Company may need additional equity capital in the future in
order to maintain its new product development efforts and expected levels of
operations. There can be no assurance that additional capital from any source
will be available when needed by the Company, or that such capital will be
available on terms acceptable to the Company.
POTENTIAL VOLATILITY IN REVENUES AND STOCK PRICES. The Company's future
operating results may vary substantially from quarter to quarter. At its current
stage of operations, the Company's quarterly revenues and results of operations
may be materially affected by the receipt or loss of any one order and by the
timing of the delivery, installation and regulatory approval of any one order.
Product development and marketing costs are often incurred in periods before any
revenues are recognized from the sales of products, and gross margins are lower
and operating expenses are higher during periods in which such product
development expenses are incurred and marketing efforts are commenced. 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
Company's Common Stock has been and may continue to be highly volatile. See
"Price Range of Common Stock."
TECHNOLOGICAL CHANGE; NEW PRODUCTS; POTENTIAL OBSOLESCENCE. The markets in
which the Company competes are subject to frequent technological changes and one
or more of the Company's competitors may develop alternative technologies for
casino accounting, player tracking or game promotions. While the Company plans
to expend a significant portion of its revenues on research and development and
on product enhancement, there can be no assurance that the Company's technology
and products based thereon will not be made obsolete by technologies developed
by others.
COMPETITION. The market for electronic casino accounting, game monitoring
and game promotion systems is highly competitive. The Company faces direct
competition from domestic and foreign manufacturers of casino accounting and
player tracking systems and similar products, including competitors with
significantly greater financial and other resources than the Company.
PATENTS AND TRADEMARKS. 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 has applied for U.S. patents on certain features of its Concept III
product line, and may in the future apply for other U.S. patents and
corresponding foreign patents. The Company may also file for patents on certain
features of products that the Company may develop in the future. No assurance
can be given that any patents that are applied for 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
current products, 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; POTENTIAL RESTRICTIONS ON SALES. The Company is
subject to gaming regulations in each jurisdiction in which its products are
sold or are used by persons licensed to conduct gaming activities. The Company's
products generally are regulated as "associated equipment," pursuant to which
gaming regulators have discretion to subject the Company, its officers,
directors, key employees, other affiliates, and certain shareholders to
licensing, approval, and suitability requirements. In the event that gaming
authorities determine that any person is unsuitable to act in such capacity, the
Company will be required to terminate its relationship with such person, and
under certain circumstances, the Company has the right to redeem its securities
from persons who are found unsuitable. See "Description of Common Stock."
Products offered and expected to be offered by the Company include features that
are not available on products currently in use. These new features may, in some
cases, result in additional regulatory review and licensing requirements for the
products or the Company. Compliance with such regulatory requirements may be
time consuming and expensive, and may delay or prevent a sale in one or more
jurisdictions. In addition, associated equipment generally must be approved by
the regulatory authorities for its use by each licensed location within the
jurisdiction, regardless of whether the Company is subject to licensing,
approval, or suitability requirements. Failure by the Company to obtain, or the
loss or suspension of, any necessary licenses, approvals, or suitability
findings, may prevent the Company from selling or distributing its product in
such jurisdiction. Such results may have a material adverse effect on the
Company. From time to time, the Company enters into contracts that are
contingent upon the Company and/or the customer obtaining the necessary
regulatory approvals to sell or use the Company's products or to operate a
casino. Failure to timely obtain such approvals may result in the termination of
the contract of sale and the Company may be required to return all monies paid
pursuant to such contract, which likely would have a material adverse effect.
DEPENDENCE ON KEY PERSONNEL. The Company's operations are materially
dependent upon the services of John F. Acres, Chief Executive Officer and
principal shareholder of the Company. The Company does not have an employment or
non-competition agreement with Mr. Acres. The loss of the services of Mr. Acres
would materially and adversely affect the Company's business. The Company
maintains "key person" insurance on the life of Mr. Acres, payable to the
Company, in the sum of $7,000,000.
CONTROL BY EXISTING MANAGEMENT. John F. Acres, the Chief Executive Officer
of the Company, beneficially owns approximately 43% of the Company's outstanding
shares of Common Stock. Because of such ownership, Mr. Acres is able to control
the affairs of the Company, including the election of the entire board of
directors. See "Description of Common Stock."
NO CASH DIVIDENDS. The Company has not paid cash dividends on its Common
Stock in the past and does not intend to do so in the foreseeable future. See
"Dividend Policy."
RECENT DEVELOPMENTS
Casino Royale in Las Vegas, with approximately 700 slot machines, has
operated with the Concept III casino accounting module since January 1992. In
November 1994, the bonusing system module was installed at the Casino Royale to
operate a Double Jackpot time promotion on 40 slot machines. In May 1995, the
promotion was expanded to a total of 200 machines. In February 1996, the
promotion was further expanded to include an additional 140 video poker
machines.
The Ho-Chunk Nation (the "Nation"), formerly named the Wisconsin Winnebago
Nation, has purchased the Concept III casino accounting and player tracking
modules for approximately 2,100 slot machines in three casinos operated by the
Nation in the State of Wisconsin. Installation of the casino accounting system
was completed during the first half of the fiscal year ended June 1994, and
installation of the player tracking modules was completed during June and July
1994. In June 1995, the Nation purchased equipment to expand the casino
accounting and player tracking modules to an additional 400 machines.
The Rio Suite Hotel and Casino in Las Vegas purchased the casino
accounting and player tracking modules for approximately 2,300 slot machines.
Installation was completed in January 1995.
The Treasure Island Casino in Las Vegas, which opened in October 1993,
purchased the progressive jackpot system for slot machines for casino-wide use.
Treasure Island Casino also ordered the Concept III bonusing module for
implementation of the Match Play and Personal Progressive promotions on 50 slot
machines. Both promotions were approved by the Nevada Gaming Control Board,
subject to review of their operation during a minimum thirty-day trial period,
and installation was completed in November 1995.
In January 1995, the Company entered into a three-year agreement with
Anchor Gaming, pursuant to which Anchor Gaming will use the Company's Concept
III technology in its operations. Anchor Gaming operates two casinos in Colorado
and one of the largest gaming machine routes in Nevada. It also develops and
distributes custom games. Anchor Gaming's Colorado Grande Casino in Cripple
Creek, Colorado purchased the casino accounting and player tracking modules for
approximately 200 machines. Installation was completed in July 1995. They also
purchased the bonusing module for implementation of the Thermometer promotion on
approximately 200 machines. Installation is subject to approval of the Colorado
Division of Gaming and, if approved, is anticipated to be completed by April
1996.
Since January 1, 1995, the Company has sold new installations or
expansions of its bonusing, progressive Jackpot systems, casino accounting and
player tracking modules for installation in approximately 20 other casinos in
Nevada and Colorado. In addition, the Company has sold components of its Concept
III systems, such as displays, to five other manufacturers of gaming equipment
and signage for inclusion in their products.
In May 1995, the Company entered into an agreement in principle with
Aristocrat Leisure Industries of Australia ("Aristocrat"). Aristocrat is the
leading manufacturer of slot machines in Australia and the second largest in the
world. Under the agreement, Aristocrat will purchase bonusing, progressive
jackpot, casino accounting, and player tracking systems exclusively from the
Company and the Company will sell such equipment exclusively through Aristocrat
in Australia, New Zealand, Oceania, and Southeast Asia. Aristocrat will, at its
option, either purchase assembled components of the Concept III products from
the Company for distribution to end users, or manufacture some or all of those
components within its own facilities and pay a royalty to the Company. While the
Company has an agreement in principle with Aristocrat, the parties have not
entered into a definitive agreement for Aristocrat's ongoing purchase of the
Company's products. As such, the amount of the Company's future sales to
Aristocrat, if any, is uncertain and will be dependant, in part, on the success
of Aristocrat's marketing efforts in Australia. Under the terms of an agreement
between Crown Ltd. ("Crown") and Aristocrat, the Company was selected to provide
its Concept III bonusing system in Crown's new casino in Melbourne, Australia
which is scheduled to open in late 1996.
Until May 1995, the Company had not been required to obtain a
manufacturer's or distributor's license to sell any of its products in Nevada.
In May 1995, the regulatory authorities in Nevada determined that, because of
the ability of the Concept III bonusing system to deliver instructions which
cause slot machines to pay coins out of their hoppers (the "Pay Command"), the
Company was required to obtain licensing before any promotions using the Pay
Command would be approved. On December 21, 1995, the Nevada Gaming Commissions
(the "Nevada Commission") registered the Company as a publicly traded
corporation, found certain individuals suitable to be associated with the
Company as officers, shareholders and controlling shareholders, and granted
nonrestricted Manufacturer's and Distributor's licenses to the Company's
wholly-owned subsidiary, AGI Distribution, Inc., a Nevada corporation ("AGI").
The Nevada Commission also granted AGI a nonrestricted Slot Route Operator's
license, provided however, that said license shall not issue until AGI's
fulfillment of certain conditions within a one-year period. The Nevada
Commission also granted individual gaming licenses to the officers and sole
director of AGI. In granting the aforementioned registration, findings of
suitability and licenses, the Nevada Commission also imposed certain reporting
and investigative criteria on the Company to help insure that the Nevada
Commission remains fully informed regarding the Company's activities in Nevada
and other jurisdictions where the Company is licensed to engage, or do business
in, the gaming industry.
In January 1996, the Company hired Joseph A. Huseonica to serve as its
President and Chief Operating Officer. From April 1994 to December 1995, Mr.
Huseonica served as Chief Operating Officer for Centric Corporation, a Portland,
Oregon marketing services company. From October 1991 to March 1994, Mr.
Huseonica was Vice President, Marketing & Sales for Radisys Corporation, a
manufacturer of embedded computer systems based in Beaverton, Oregon. For more
than 10 years prior to 1991, Mr. Huseonica held various senior management
positions at Intel Corporation, including General Manager of its OEM Platforms
Operations.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares
offered hereby. The Company may, however, receive up to $275,000 upon the
exercise of the Warrant and the purchase of the 50,000 Shares underlying such
Warrant at an exercise price of $5.50 per share. Whether the Warrants are
exercised is in the discretion of the holder of such Warrant, and there can be
no assurance as to the number of Warrants, if any, that will be exercised. The
Company intends to apply any net proceeds received from the exercise of the
Warrant for general corporate and working capital purposes.
PRICE RANGE OF COMMON STOCK
The Company's common stock began trading on the Nasdaq Small-Cap Market on
October 27, 1993 under the symbol "AGAM." Prior thereto, there was no public
market for the Company's common stock. The following table sets forth, for the
period indicated, the range of high and low bid prices for the Company's common
stock as reported by the Nasdaq Small-Cap Market. The following quotations
represent prices between dealers, do not include retail mark-ups, mark-downs or
commissions, and do not necessarily represent actual transactions.
<TABLE>
<CAPTION>
Bid
Low High
<S> <C> <C>
Fiscal Year Ended June 30, 1994:
Second quarter (commencing October 27, 1993
through December 31, 1993).................... $8.50 $14.50
Third quarter.................................... $9.00 $12.25
Fourth quarter................................... $4.00 $9.50
FISCAL YEAR ENDED JUNE 30, 1995:
First quarter.................................... $3.50 $6.38
Second quarter................................... $4.25 $6.63
Third quarter.................................... $4.75 $7.00
Fourth quarter................................... $5.75 $7.63
FISCAL YEAR ENDING JUNE 30, 1996:
First quarter.................................... $7.00 $9.00
Second quarter................................... $4.50 $8.00
Third quarter.................................... $3.50 $5.44
Fourth quarter (through May 20, 1996)............ $4.63 $8.75
</TABLE>
At February 29, 1996, there were approximately 260 record holders of the
Company's common stock, and approximately 1,000 beneficial owners.
DIVIDEND POLICY
The Company has never paid or declared any cash dividends on its Common
Stock and does not intend to pay cash dividends on its Common Stock in the
foreseeable future. The Company presently expects to retain its earnings to
finance the development and expansion of its business. The payment by the
Company of cash dividends, if any, on its Common Stock in the future will be
subject to the discretion of the Board of Directors and will depend on the
Company's earnings, financial condition, capital requirements and other relevant
factors. See "Description of Common Stock."
SELLING SHAREHOLDERS
The following table sets forth the number of shares of Common Stock
beneficially owned by the Warrantholder and each of the Selling Shareholders
before and after the offering.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING (1) TO BE SOLD AFTER OFFERING (1)
-------------------------------------- ---------------- -----------------------
BENEFICIAL OWNER NUMBER PERCENT (2) NUMBER PERCENT (2)
- ---------------- ---------------------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
Robert G. Allison.................. 5,000 * 5,000 -- --
Stanford Baratz.................... 42,825 (3) * 20,000 22,825 (3) *
Donald W. Beaupre.................. 10,000 (4) * 10,000 (4) -- --
W. William Bednarczyk
Revoc TR U/A/D 2/26/88
W. William and Colette M.
Bednarczyk TTES................. 7,000 * 5,000 2,000 *
Donald R. Brattain................. 61,000 * 60,000 1,000 *
William D. Corneliuson............. 128,000 (5) 1.7% 100,000 28,000 (5) *
Craig L. Campbell.................. 5,000 * 5,000 -- --
Ronald E. Eibensteiner............. 10,000 (4) * 10,000 (4) -- --
Ellis Family Limited
Partnership..................... 10,000 * 10,000 -- --
John E. Feltl...................... 100,809 (4)(6) 1.3% 15,000 (4) 85,809 (6) 1.1%
Carolyn Fong....................... 20,000 (4) * 20,000 (4) -- --
Kenneth B. Heithoff................ 5,000 * 5,000 -- --
Gary S. Holmes..................... 5,000 * 5,000 -- --
Piper Jaffray as Custodian
FBO William R. Kennedy
Profit Sharing Plan & Trust..... 5,000 * 5,000 -- --
E. Robert Kinney................... 2,500 * 2,500 -- --
Margaret Velie Kinney.............. 2,500 * 2,500 -- --
John T. Kubinski................... 55,687 (4) * 40,000 (4) 15,687 *
Metco Investors LLC................ 100,000 1.3% 30,000 70,000 *
MB Partnership..................... 5,000 * 5,000 -- --
CCRI Corporation................... 50,000 (7) * 50,000 (7) -- --
Tamara Kottom Mills................ 10,000 (4) * 10,000 (4) -- --
Wayne M. Mills..................... 69,000 (4)(8) * 30,000 (4) 39,000 (8) *
Okabena Partnership K.............. 75,000 1.0% 75,000 -- --
Daniel S. Perkins & Patrice
M. Perkins JT/WROS.............. 5,000 * 5,000 -- --
Perkins Capital Management,
Inc. Profit Sharing Plan &
Trust U/A dated 12/15/86........ 5,000 * 5,000 -- --
Perkins & Partners Inc. Profit
Sharing Plan & Trust U/A
dated 10/19/76.................. 10,000 * 10,000 -- --
David M. Pollock & Shirley
F. Pollock TTEE, Pollock
Trust........................... 5,000 * 5,000 -- --
David Pollock Cust for
Dylan K. Pollock................ 5,000 * 5,000 -- --
David Pollock Cust for
Gillian K. Pollock.............. 5,000 * 5,000 -- --
Pyramid Partners L.P............... 40,000 * 40,000 -- --
Ernest C. Roberg................... 40,275 (4) * 30,000 (4) 10,275 *
Piper Jaffray as Custodian
FBO Harold Roitenberg IRA....... 5,000 * 5,000 -- --
Byron G. Schaffer.................. 45,000 * 45,000 -- --
James Elliot Tuite................. 10,000 * 10,000 -- --
Donna L. Welsh..................... 15,000 (4) * 15,000 (4) -- --
David M. Westrum................... 5,000 * 5,000 -- --
-------- --- -------- -------- ----
All Selling Shareholders
as a group....................... 979,596 12.9% 705,000 274,596 3.6%
======= ==== ======= ======= ===
</TABLE>
- ---------------------
* Less than one percent.
(1) Each person has sole voting and sole dispositive power with respect to all
outstanding shares, except as noted.
(2) Based on 7,556,525 shares outstanding at February 15, 1996. Such amounts do
not include 911,375 shares of Common Stock reserved for issuance under the
Acres Gaming Incorporated 1993 Stock Option and Incentive Plan (of which
665,750 shares are subject to outstanding options).
(3) Includes 5,450 shares held jointly and 2,875 shares which may be acquired
upon exercise of stock purchase warrants issued in the Company's initial
public offering.
(4) Such shares were purchased in February 1994 from the John F. and JoAnn
Acres 1989 Trust (the "Trust"), a revocable trust established by John F.
Acres and his wife. The Stock Purchase Agreements between the Selling
Shareholders, the Trust and the Company provided that the Company would
file a registration statement relating to the Shares upon the request of
the Selling Shareholders. The Stock Purchase Agreements also provided that
the Selling Shareholders would pay one-half of the costs of such
registration, up to an aggregate maximum of $12,500, and that the remaining
costs of the registration would be paid by the Trust. Any underwriting
discounts or sales commissions relating to the sale of the Shares are
payable by the Selling Shareholders.
(5) Includes 500 shares which may be acquired upon exercise of stock purchase
warrants issued in the Company's initial public offering.
(6) Includes 57,206 shares that could be acquired pursuant to Unit Purchase
Warrants which are currently exercisable, and an additional 28,603 shares
that could be acquired pursuant to Common Stock Purchase Warrants that
would be received upon exercise of the Unit Purchase Warrants.
(7) Includes 50,000 shares which could be acquired upon the exercise of a
Warrant at an exercise price of $5.50 per share. Such Warrant was issued to
CCRI Corporation in February 1995 in consideration for consulting services.
In addition, the Company made a loan to CCRI in 1995 in the amount of
$15,000, which CCRI intends to repay with the proceeds from the sale of its
Shares.
(8) Includes 26,000 shares that could be acquired pursuant to Unit Purchase
Warrants which are currently exercisable, and an additional 13,000 shares
that could be acquired pursuant to Common Stock Purchase Warrants that
would be received upon exercise of the Unit Purchase Warrants.
John E. Feltl is an owner and officer, and Wayne M. Mills is an officer, of
R.J. Steichen & Company, which acted as underwriter for the Company's initial
public offering in October 1993. Tamara Kottom Mills is the wife of Wayne M.
Mills. None of the other Selling Shareholders is affiliated with the Company.
Except as otherwise described in footnote 4 above, the Company has agreed
to pay the offering expenses in connection with the registration of the sale of
the shares offered hereby.
PLAN OF DISTRIBUTION
Any or all of the Shares may be sold from time to time to purchasers
directly by the Warrantholder or any of the Selling Shareholders. Alternatively,
the Warrantholder and Selling Shareholders may from time to time offer the
Shares through underwriters, dealers or agents who may receive compensation in
the form of underwriting discounts, concessions or commissions from the Selling
Shareholders and/or the purchasers of Shares for whom they may act as agents.
The Selling Shareholders and any such underwriters, dealers or agents that
participate in the distribution of Shares may be deemed to be underwriters, and
any profit on the sale of the Shares by them and any discounts, commissions or
concessions received by them may be deemed to be underwriting discounts and
commissions under the Securities Act. The Shares may be sold from time to time
in one or more transactions at a fixed offering price, which may be changed, or
at varying prices determined at the time of sale or at negotiated prices.
At the time a particular offer of Shares is made, to the extent required,
a supplement to this Prospectus will be distributed which will identify and set
forth the aggregate amount of Shares being offered and the terms of the
offering, including the name or names of any underwriters, dealers or agents,
the purchase price paid by any underwriter for Shares purchased from the Selling
Shareholders, any discounts, commissions and other items constituting
compensation from the Warrantholder, the Selling Shareholders and/or the
Company, and any discounts, commissions or concessions allowed or reallowed or
paid to dealers, including the proposed selling price to the public. The Company
will not receive any of the proceeds from the sale by the Warrantholder and the
Selling Shareholders of the Shares offered hereby.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Shares may not simultaneously engage in market
making activities with respect to the Shares for a period of up to nine business
days prior to the commencement of such distribution. In addition, and without
limiting the foregoing, the Selling Shareholders will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder,
including, without limitation, Rules 10b-2, 10b-6 and 10b-7, which provisions
may limit the timing of purchases and sales of the Shares by the Selling
Shareholders.
In order to comply with certain states' securities laws, if applicable,
the Shares will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In certain states the Shares may not be sold unless
the Shares have been registered or qualified for sale in such state, or unless
an exemption from registration or qualification is available and is obtained.
DESCRIPTION OF COMMON STOCK
COMMON STOCK
The Company is authorized to issue up to 50,000,000 shares of Common
Stock, $.01 par value. At February 29, 1996, there were 7,556,525 shares
outstanding and approximately 260 holders of record of the Company's Common
Stock.
Holders of Common Stock are entitled to receive such dividends as are
declared by the Board of Directors of the Company out of funds legally available
for the payment of dividends. The Company expects to retain any earnings to
finance the development of its business. Accordingly, the Company does not
anticipate payment of any dividends on the Common Stock for the foreseeable
future. In the event of any liquidation, dissolution or winding-up of the
Company, the holders of Common Stock will be entitled to receive a pro rata
share of the net assets of the Company remaining after payment or provision for
payment of the debts and other liabilities of the Company.
Holders of Common Stock are entitled to one vote per share in all matters
to be voted upon by shareholders. There is no cumulative voting for the election
of directors, which means that the holders of shares entitled to exercise more
than 50% of the voting rights in the election of directors are able to elect all
of the directors. Holders of Common Stock have no preemptive rights to subscribe
for or to purchase any additional shares of Common Stock or other obligations
convertible into shares of Common Stock which may hereafter be issued by the
Company.
The Company's Articles of Incorporation provide that the Company may
redeem, at fair market value, securities held by any person or entity whose
status as a security holder, in the opinion of the Board of Directors of the
Company, may result in the disapproval, modification or non-renewal of any
contract or the loss or non- reinstatement of any license or franchise from any
governmental agency held by the Company or any of its subsidiaries, which
license or franchise is conditioned upon some or all of the holders of capital
stock meeting certain criteria. These restrictions are contained in a legend on
each certificate evidencing shares of Common Stock.
In addition, on December 21, 1995, the Company was licensed by the Nevada
Gaming Commission ("Nevada Commission") as a publicly traded corporation
("Registered Corporation"). Under the Nevada Gaining Control Act ("Nevada Act"),
any beneficial holder of the Company's voting securities, regardless of the
number of shares owned, may be required to file an application, be investigated,
and have his suitability as a beneficial holder of the Company's voting
securities determined if the Nevada Commission has reason to believe that such
ownership would otherwise be inconsistent with the declared policies of the
State of Nevada.
The Nevada Act requires any person who individually, or in conjunction
with others, directly or indirectly acquires beneficial ownership of more than
5% of the voting securities of the Company to report such acquisition to the
Nevada Commission within ten days following the required, or voluntary,
reporting of such acquisition with the Securities and Exchange Commission
("SEC"). Likewise, the Nevada Act requires any person who individually, or in
conjunction with others, directly or indirectly acquires beneficial ownership of
more than 10% of the voting securities of the Company to report such acquisition
to the Nevada Commission in the same manner, and further, to apply to the Nevada
Commission for a finding of suitability to be associated with the Company within
30 days after the chairman of the Nevada Board mails a written notice to such
person(s) requiring such filing. Under certain circumstances, an "institutional
investor," as defined in the Nevada Act, which acquires more than 10%, but not
more than 15%, of the voting securities of the Company may apply to the Nevada
Commission for a waiver of such finding of suitability if such institutional
investor holds the voting securities for investment purposes only.
All of the outstanding shares of Common Stock, including the Shares
offered hereby, are, or upon the exercise of the Warrant will be, fully paid and
non-assessable. Holders of Common Stock of the Company are not liable for
further calls or assessments.
NEVADA CORPORATION LAW
The Company is governed by the provisions of Chapter 78 of the Nevada
Revised Statutes, including without limitation, Sections 78.378 through 78.3793
and 78.411 through 78.444 of the Nevada corporation law. Section 78.379 provides
that an acquiring person shall obtain only such rights in acquired control
shares as are conferred by a resolution of the shareholders of a corporation.
Generally, this section applies to the acquisition, directly or indirectly, of
beneficial ownership of shares that would, when added to all other shares
beneficially owned by the acquiring person, enable the acquiring person to
exercise 20% or more of all the voting power of the corporation in the election
of directors. In general, Section 78.438 prohibits a resident domestic Nevada
corporation from engaging in a "business combination" with an "interested
stockholder" for a period of three years after the date of the transaction in
which the person became an interested stockholder, 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 stockholder. An "interested stockholder" is a person who is the
beneficial owner, directly or indirectly, of 10% or more of the corporation's
voting stock or who is an affiliate or associate of the corporation and at any
time within three years prior to the date in question was the beneficial owner,
directly or indirectly, of 10% or more of the corporation's voting stock.
INDEMNIFICATION AND WAIVER OF DIRECTOR LIABILITY
The Nevada corporation law provides that a Company may indemnify its
officers, directors and employees for liability arising out of certain actions.
The Company has included in its Bylaws a provision to indemnify its directors
and officers to the fullest extent permitted by Nevada law. Such indemnification
may be available for liabilities arising in connection with this Offering.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or persons controlling the Company
pursuant to such indemnification provisions, 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 Act and is therefore unenforceable.
The Company has adopted in its Articles of Incorporation a provision which
limits personal liability for breach of the fiduciary duty of its directors, to
the extent provided by Section 78.037 of the Nevada corporation law. Such
provision eliminates the personal liability of directors for damages occasioned
by breach of fiduciary duty, except for liability based on the director's duty
of loyalty to the Company, liability for acts or omissions involving intentional
misconduct, fraud or a knowing violation of law, liability based on payments of
improper dividends, and liability for acts occurring prior to the date such
provision was added.
TRANSFER AGENT AND REGISTRAR
Norwest Bank Minnesota, National Association, South St. Paul, Minnesota,
is the Transfer Agent and registrar for the Common Stock of the Company.
LEGAL MATTERS
The validity of the shares of Common Stock being offered hereby will be
passed upon for the Company by Winthrop & Weinstine, P.A., Minneapolis,
Minnesota.
EXPERTS
The financial statements of the Company as of June 30, 1994 and 1995, and
for each of the two years in the period ended June 30, 1995, incorporated by
reference in this Prospectus and elsewhere in this Registration Statement, have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report.
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
INCORPORATED HEREIN BY REFERENCE IN CONNECTION WITH
THE OFFER MADE HEREBY. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE
SELLING SHAREHOLDERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR SOLICITATION OF AN OFFER TO
PURCHASE BY ANY PERSON IN ANY JURISDICTION IN WHICH
SUCH OFFER WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL
UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN OR INCORPORATED
HEREIN BY REFERENCE IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THE DATE OF THE REPORT
FROM WHICH IT IS INCORPORATED.
TABLE OF CONTENTS
PAGE
Available Information.................................. 2
Incorporation of Certain Documents by Reference........ 2
Prospectus Summary..................................... 3
Risk Factors........................................... 4
Recent Developments.................................... 6
Use of Proceeds........................................ 8
Price Range of Common Stock............................ 8
Dividend Policy........................................ 8
Selling Shareholders................................... 9
Plan of Distribution.................................. 11
Description of Common Stock........................... 11
Legal Matters.......................................... 13
Experts................................................ 13
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705,000 SHARES
ACRES GAMING
INCORPORATED
COMMON STOCK
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PROSPECTUS
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MAY 20, 1996
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