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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________________________________________________
FORM 10-K/A
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [Fee Required]
FOR THE FISCAL YEAR ENDED JUNE 30, 1996
(Commission File No.) 0-22498
__________________________________________________
ACRES GAMING INCORPORATED
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 88-0206560
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
__________________________________________________
815 NW NINTH STREET, CORVALLIS, OREGON 97330
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(541) 753-7648
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
None
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
Common Stock, $.01 par value
Redeemable Common Stock Purchase Warrants
Units (one share of Common Stock and one-half Redeemable
Common Stock Purchase Warrant)
(TITLE OF CLASS)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10.
The aggregate market value of the voting stock held by non-affiliates computed
by reference to the price at which the stock was sold, or the average bid and
asked prices of such stock, as of August 31, 1996 was $50,719,000.
The number of shares outstanding of the Registrant's Common Stock, par value
$.01 per share as of August 31, 1996 was 7,621,600 shares.
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EXPLANATORY NOTE
The information required by Part III, Items 10 through 13, was to be
incorporated by reference to the Company's Proxy Statement filed in connection
with its 1996 Annual Meeting of Shareholders held on November 12, 1996. The
Company's Definitive Proxy Statement was not filed with the Commission within
the 120-day period after the end of the Company's fiscal year. Part III,
Items 10 through 13 are therefore filed herewith.
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
DIRECTORS AND EXECUTIVE OFFICERS
The following discussion sets forth information about the director and
executive officers of the Company.
NAME POSITIONS WITH THE COMPANY AGE OFFICER
SINCE
John F. Acres Chief Executive Officer, Secretary 42 1985
and Director
Joseph A. Huseonica President and Chief Operating 52 1996
Officer
Robert W. Brown Chief Financial Officer and Treasurer 41 1993
JOHN F. ACRES, the founder of the Company, has served as
Chief Executive Officer, Secretary and a director of the Company since its
inception in 1985. Mr. Acres served as President of the Company from January
1985 to January 1996. Mr. Acres has been involved in the gaming industry since
1972, and has designed slot data collection systems, player tracking systems,
and equipment for progressive jackpot systems that are widely used in the
industry.
JOSEPH A. HUSEONICA joined the Company in January 1996 as
President and Chief Operating Officer. From July 1994 to December 1995,
Mr. Huseonica served as chief operating officer for Centric Corporation, a
Portland, Oregon marketing services company. From August 1993 to July 1994,
Mr. Huseonica was a consultant to various companies. From October 1991 to
August 1993, 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.
ROBERT W. BROWN joined the Company in July 1993 as Chief
Financial Officer and Treasurer. From June 1991 through May 1993, Mr. Brown was
the chief financial officer of Color & Design Exhibits, Inc., a manufacturer of
interpretive and trade show exhibits in Portland, Oregon. From September 1983
through May 1991, Mr. Brown held financial management positions with Floating
Point Systems, Inc., a Beaverton, Oregon manufacturer of mini-supercomputers,
and served as its corporate controller from November 1989 through May 1991.
Prior to 1983, Mr. Brown was employed by Arthur Andersen LLP for more than six
years. Mr. Brown is a certified public accountant.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), requires that the Company's officers, directors
and persons who own more than 10 percent of the Common Stock file with the
Securities and Exchange Commission (the "SEC") initial reports of beneficial
ownership on Forms 3 and reports of changes in beneficial ownership of Common
Stock and other equity securities of the Company on Forms 4. Officers,
directors and greater than 10 percent shareholders of the Company are required
by SEC regulations to furnish to the Company copies of all Section 16(a) reports
that they file. To the Company's knowledge, based solely on a review of copies
of such reports furnished to the Company and written representation that no
other reports are required, during the 1996 fiscal year all Section 16(a) filing
requirements applicable to its officers, directors and greater than 10 percent
beneficial owners were complied with by such persons.
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ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth certain information for
each of the fiscal years ended June 30, 1996, 1995 and 1994 regarding
compensation paid to the Company's Chief Executive Officer and each officer who
was paid compensation in excess of $100,000 in the fiscal year ended June 30,
1996 (the "Named Executive Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
-----------------------
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS
- --------------------------- ---- ------ -----
<S> <C> <C> <C>
John F. Acres. . . . . . . . . . . . . . . . . . . . . . 1996 $180,000 --
Chief Executive Officer and Secretary 1995 $180,000 --
1994 $180,000 --
Robert W. Brown. . . . . . . . . . . . . . . . . . . . . 1996 $100,000 --
Chief Financial Officer and Treasurer. . . . . . . . . . 1995 $ 95,000 --
1994 $ 80,000 --
Joseph A. Huseonica. . . . . . . . . . . . . . . . . . . 1996 $87,500 25,000
Chief Operating Officer and President 1995 -- --
1994 -- --
</TABLE>
The following table sets forth certain information regarding options granted
during the fiscal year ended June 30, 1996, to the Named Executive Officers
OPTION GRANTS IN LAST FISCAL YEAR
---------------------------------
INDIVIDUAL GRANTS
---------------------------------
<TABLE>
<CAPTION>
PERCENT OF POTENTIAL REALIZABLE VALUE AT
NUMBER OF TOTAL OPTIONS ASSUMED ANNUAL RATES OF
SECURITIES GRANTED TO EXERCISE STOCK PRICE APPRECIATION FOR
UNDERLYING EMPLOYEES IN PRICE EXPIRATION OPTION TERM(5)
NAME OPTIONS FISCAL YEAR (S/SHARE) DATE (1) ----------------------------
- ------------------------- --------------- ---------------- ----------- ---------- 5% 10%
----------------------------
<S> <C> <C> <C> <C> <C> <C>
John F. Acres. . . . . . 160,000 (1) 28.4% $3.50 2/1/2006 $912,000 $1,451,200
Robert W. Brown. . . . . 15,000 (2) 7.1% $4.82 4/1/2006 $117,750 $356,750
25,000 (3) $5.50 4/9/2006 $224,000 $187,50
Joseph A. Huseonica. . . 160,000 (4) 28.4% $3.75 1/23/2006 $977,600 $1,556,800
</TABLE>
(1) One-sixth of the options vest six months from the date of grant, with an
additional one-sixth vesting semi-annually thereafter until all options are
vested. The options expire ten years from the date of grant.
(2) One-third of the options vest two years from the date of grant, another
one-third vest three years from date of grant and options become fully
exercisable four years from the date of grant. The options expire ten
years from the date of grant.
(3) One-half of the options vest six months from the date of grant with the
remainder vesting one year from the date of grant. The options expire ten
years from the date of grant.
(4) With respect to 100,000 options, 13,325 options vest approximately six
months from the date of grant, with an additional 13,325 options vesting
semi-annually thereafter for a period of two and one-half years and a final
20,050 options vesting approximately three years from the date of grant.
With respect to 60,000 expire ten years from the date of grant.
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options, one-sixth vest approximately six months from the date of
grant, with an additional one-sixth vesting semi-annually thereafter
until all options are vested. The options expire ten years from the
date of grant.
(5) Future value of current year grants assuming appreciation of 5% and 10% per
year over the ten-year option period. The actual value realized may be
greater than or less than the potential realizable values set forth in the
table.
The following table sets forth the number of securities underlying
unexercised options and the value of unexercised in-the-money options at fiscal
year end.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FY-END (#) AT FY-END ($)
EXERCISABLE/ EXERCISABLE/
NAME UNEXERCISABLE UNEXERCISABLE
- ------------------------ --------------------- ----------------------
<S> <C> <C>
John F. Acres 0/160,000 $0/$940,000
Robert W. Brown 60,000/40,000 $382,500/$165,200
Joseph A. Huseonica 23,325/136,675 $131,203/$768,797
</TABLE>
_________________________
(1)The per share fair market value for the Company's Common Stock was $9.375 at
June 30, 1996.
COMPENSATION OF DIRECTORS
The Company's Sole Director, John F. Acres, does not receive any
compensation for his services as a Director.
RETIREMENT SAVINGS PLAN
The Company maintains a profit sharing and savings plan (the "401(k) Plan")
under Section 401(k) of the Internal Revenue Code of 1986, as amended (the
"Code"), which allows employees to contribute up to 15 % of their pre-tax income
to the 401(k) Plan. The 401(k) Plan includes a discretionary matching
contribution by the Company and provides that the Company may make an additional
discretionary contribution out of profits at the end of any year. The Company
has not made any discretionary matching contributions nor any additional
discretionary contributions under the 401(k) Plan.
STOCK OPTIONS
The Acres Gaming Incorporated 1993 Stock Option and Incentive Plan (the
"1993 Plan") was adopted by the Board of Directors of the Company and approved
by the shareholders in 1993. The 1993 Plan permits the granting of awards to
employees and consultants of the Company in the form of stock options and grants
of restricted stock. Stock options granted under the 1993 Plan may be
"incentive stock options" meeting the requirement of Section 422 of the Code or
non-qualified options which do not meet the requirements of Section 422. A
total of 1,000,000 shares of the Company's Common Stock has been reserved for
issuance pursuant to awards granted under the 1993 Plan. The Board of Directors
has reserved, subject to shareholder approval, an additional 750,000 shares for
issuance under the 1993 Plan. As of October 18, 1996, an aggregate of
1,031,100 shares were subject to outstanding stock options, and 718,900 shares
were available for grant. The exercise prices for currently outstanding stock
options range from $3.00 to $16.00 per share. Options for 154,525
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shares have been exercised under the 1993 Plan. No grants of restricted stock
have been made under the 1993 Plan.
The 1993 Plan is administered by the Board of Directors of the Company, or
by a committee appointed by the Board of Directors. The 1993 Plan gives broad
powers to the Committee to administer and interpret the 1993 Plan, including the
authority to select the individuals to be granted options and to prescribe the
particular form and conditions of each option granted. Options may be granted
pursuant to the 1993 Plan through July 2003. The 1993 Plan may be terminated
earlier by the Board of Directors in its sole discretion.
EMPLOYMENT CONTRACT
The Company entered into an Employment Agreement with Mr. Joseph A.
Huseonica on January 2, 1996 (the "Employment Agreement"). The initial term of
the Employment Agreement runs through December 13, 1998, subject however to
prior termination. The Company may terminate the Employment Agreement upon 180
days written notice, or immediately and without notice for cause. Mr. Huseonica
may terminate the Employment Agreement upon written notice. The Employment
Agreement renews automatically for successive two year terms unless either party
elects to the contrary 90 days prior to the expiration of the then-current term.
The Employment Agreement provides for a base salary of $175,000 per year and a
target bonus of $50,000 per year based on Mr. Huseonica's successful completion
of certain mutually agreed upon objectives. The Employment Agreement provides
that, following termination of employment, Mr. Huseonica will not, directly or
indirectly, be connected in any manner with any business that competes with the
Company, or divert any customer of the Company or induce any employee or
consultant of the Company to terminate his or her relationship with the Company.
COMPENSATION COMMITTEE
The Company has no compensation committee. During the fiscal year ended
June 30, 1996, the Company's sole Director, John F. Acres, determined executive
officer compensation.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information regarding the beneficial
ownership of shares of the Company's Common Stock by each director of the
Company, by each Named Executive Officer, by all directors and executive
officers of the Company as a group, and by each shareholder who is known by the
Company to own more than 5% of the Company's Common Stock as of October 18,
1996.
NUMBER OF SHARES PERCENT OF
BENEFICIAL OWNER BENEFICIALLY OWNED (1) OUTSTANDING (2)
- ------------------------ ---------------------- ---------------
John F. Acres 2,801,152 (3) 35.0%
Robert Brown 80,500 (4) 1.0%
Joseph A. Huseonica 23,325 (5) *
All directors and executive
officers as a group (3 persons) 2,904,977 (6) 36.4%
*Less than 1%.
(1) "Beneficial Ownership" is defined pursuant to Rule 13d-3 of the Exchange
Act, and generally means any person who directly or indirectly has or
shares voting or investment power with respect to a security. A person
shall be deemed to be the beneficial owner of a security if that person has
the right to acquire beneficial ownership of such security within 60 days,
including, but not limited to, any right to acquire
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such security through the exercise of any option or warrant or through the
conversion of a security. Any securities not outstanding that are subject
to such options or warrants shall be deemed to be outstanding for the
purpose of computing the percentage of outstanding securities of the class
owned by such person, but shall not be deemed to be outstanding for the
purpose of computing the percentage of the class owned by any other person.
Each person has sole voting and sole dispositive power with respect to all
outstanding shares, except as noted.
(2) Based on 7,982,524 shares outstanding at October 18, 1996.
(3) Includes 2,574,186 shares held by a revocable trust established by Mr.
Acres and his wife, with respect to which Mr. Acres has shared voting and
shared dispositive powers. Also includes 199,500 shares beneficially owned
by Mr. Acres' children who reside in his household, with respect to which
Mr. Acres has no voting or dispositive powers. Also includes 26,666 shares
subject to options exercisable within 60 days of October 18, 1996.
(4) Includes 2,000 shares beneficially owned by Mr. Brown's wife with respect
to which Mr. Brown has no voting or dispositive powers. Also includes
72,500 shares subject to options exercisable within 60 days of October 18,
1996.
(5) Includes 23,325 shares subject to options exercisable within 60 days of
October 18, 1996.
(6) Includes 122,491 shares subject to options exercisable within 60 days of
October 18, 1996.
ITEM 13. CERTAIN RELATIONSHIPS AND TRANSACTIONS
There are no relationships or transactions that have been conducted during
the fiscal year that would require disclosure under this item. As one of the
conditions to closing of the Strategic Alliance, the Company plans to enter into
a five year employment and noncompetition agreement with John Acres, the
Company's Chairman and Chief Executive Officer. Although the Company and Mr.
Acres have been discussing an employment agreement, no agreement has been
reached.
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SIGNATURES
The undersigned hereby amends its Annual Report on Form 10-K for the fiscal
year ended June 30, 1996, pursuant to Regulation Section 240.12b-25 of the
Securities Exchange Act of 1934.
The Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
Date: November 12, 1996.
ACRES GAMING INCORPORATED
(Registrant)
By: /s/ Robert W. Brown
-----------------------------------
Robert W. Brown
Chief Financial Officer and Treasurer
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