<PAGE>
As filed with the Securities and Exchange Commission on February 18, 1997
Registration No. 333-____
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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ACRES GAMING INCORPORATED
(Exact name of Registrant as specified in its charter)
Nevada 88-0206560
(State of Incorporation) (I.R.S. Employer Identification No.)
815 N.W. Ninth Street
Corvallis, Oregon 97330
(541) 753-7648
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
Robert W. Brown
EXECUTIVE VICE PRESIDENT
ACRES GAMING INCORPORATED
815 N.W. Ninth Street
Corvallis, Oregon 97330
(541) 753-7648
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Copies to:
Patrick J. Simpson, Esq.
Danielle Benderly, Esq.
PERKINS COIE
1211 S.W. Fifth Avenue, Suite 1500
Portland, OR 97204
(503) 727-2000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
If any securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. /X/
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of Each Class Amount to be Proposed Maximum Proposed Maximum Amount of
of Securities to be Registered Registered Offering Aggregate Registration
Price Per Share(1) Offering Price(1) Fee
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<S> <C> <C> <C> <C>
Common Stock, $.01 par value 40,000 $9.40 $376,000 $113.94
</TABLE>
(1) Pursuant to Rule 457(c), the offering price is the average of the high and
low prices of the Common Stock as reported in the consolidated reporting system
on February 12, 1997.
------------------------------
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, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
40,000 SHARES
ACRES GAMING INCORPORATED
COMMON STOCK
----------------------
This prospectus relates to 40,000 shares of common stock, $.01 par value
per share (the "Common Stock") of Acres Gaming Incorporated (the "Shares")
issued or to be issued upon exercise of Warrants to purchase Common Stock (the
"Warrants"). All of the shares offered hereby will be sold by certain
shareholders (the "Selling Shareholders") who obtained the Shares upon exercise
of the Warrants. See "Selling Shareholders." The Company will not receive any
of the proceeds from the sale of Shares by the Selling Shareholders.
The Company's Common Stock is currently traded over-the-counter on the
Nasdaq Small Cap Market under the symbol "AGAM". On February 12, 1997, the
average of the high and low prices for the Common Stock was $9.40.
----------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 6 OF THIS PROSPECTUS FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE
SHARES.
----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE 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.
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UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND SELLING
PUBLIC(1) COMMISSIONS(2) SHAREHOLDERS(2)
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PER SHARE ............... $9.40 --- $9.40
TOTAL ................... $376,000 --- $376,000
(1) Based on the average of the high and low prices for the Common Stock as
reported in the consolidated reporting system on February 12, 1997. 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. Expenses of
the offering, estimated at $19,113.94, will be paid by the Company.
----------------------
THE DATE OF THIS PROSPECTUS IS FEBRUARY __, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
----
Available Information . . . . . . . . . . . . . . . . . 3
Incorporation of Certain Documents by Reference . . . . 3
Prospectus Summary. . . . . . . . . . . . . . . . . . . 5
Risk Factors. . . . . . . . . . . . . . . . . . . . . . 6
Recent Developments . . . . . . . . . . . . . . . . . . 9
Use of Proceeds . . . . . . . . . . . . . . . . . . . . 9
Selling Security Holders. . . . . . . . . . . . . . . . 9
Description of Securities . . . . . . . . . . . . . . . 10
Plan of Distribution. . . . . . . . . . . . . . . . . . 12
Legal Matters . . . . . . . . . . . . . . . . . . . . . 13
Experts . . . . . . . . . . . . . . . . . . . . . . . . 13
<PAGE>
AVAILABLE INFORMATION
This Prospectus is part of a Registration Statement on Form S-3 (the
"Registration Statement") which the Company has filed with the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"), relating to the Shares offered hereby. The
Prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits thereto. For further information with respect to the
Company and the Shares, reference is made to the Registration Statement and the
exhibits thereto. Statements made in this Prospectus as to the contents of any
contract or other document referred to are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference.
The Registration Statement is available for review at the Commission's
offices in Washington, D.C. All or part of the Registration Statement may be
inspected and copied, upon payment of the prescribed fees, at the Public
Reference Section of the Commission, 450 Fifth Street N.W., Judiciary Plaza,
Washington, D.C. 20549-1004.
In addition, the Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Commission. Such reports, proxy statements and other information can be
inspected and copied at, and copies of such material obtained at prescribed
rates from, the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549-1004, at the
Commission's Website at http://www.sec.gov and at the Commission's regional
offices located at 7 World Trade Center, Suite 1300, New York, New York 10048
and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511.
The Company currently furnishes Annual Reports to its shareholders and
intends to continue to do so.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission pursuant to the Exchange
Act are incorporated in this Prospectus by reference:
1. The Company's Annual Report on Form 10-K for the year ended June 30,
1996, including financial statements incorporated by reference, as
amended by the Form 10-K/A filed with the Commission on October 29,
1996.
2. The Company's Quarterly Reports on Form 10-Q for the quarters ended
September 30, 1996, and December 31, 1996, including financial
statements incorporated by reference.
3. The description of the Company's Common Stock contained in the
Registration Statement on Form 8-A filed with the Commission on
September 27, 1993 under Section 12(g) of the Exchange Act.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of this Offering shall be deemed to be incorporated by reference in
this Prospectus and to be a part hereof from the date of filing of such
documents (such documents, and the documents enumerated above, being hereinafter
referred to as "Incorporated Documents").
PAGE 3
<PAGE>
Any statement contained in an Incorporated Document shall be deemed to be
modified or superseded for purposes of this Prospectus and the Registration
Statement of which it is a part to the extent that a statement contained herein
or in any other subsequently filed Incorporated Document or in an accompanying
prospectus supplement modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded, to constitute a part of this Prospectus or such Registration
Statement.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, on the written or oral request of any such
person, a copy of any or all of the Incorporated Documents, other than exhibits
to such documents, unless such exhibits are specifically incorporated by
reference therein. Requests should be directed to Robert W. Brown, Executive
Vice President, at the Company's principal executive offices, Acres Gaming
Incorporated, 815 N.W. Ninth Street, Corvallis, Oregon 97330, telephone (541)
753-7648. The information relating to the Company contained in this Prospectus
does not purport to be comprehensive and should be read together with the
information contained in the Incorporated Documents.
PAGE 4
<PAGE>
PROSPECTUS SUMMARY
THE COMPANY
Acres Gaming Incorporated (the "Company") develops, manufactures and
markets electronic game promotion, slot 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
slot machines 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. A number of the primary
manufacturers of slot machines have made extensive changes to the software used
in their machines to support the Concept III technology.
The Company currently offers products in four major categories:
- Bonusing
- Progressive jackpots
- Slot accounting
- Player tracking
Bonusing 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 slot
accounting products collect, analyze and report data to casino managers to
satisfy accounting and regulatory requirements and to enable casino management
to analyze the performance of each gaming device by type and location. Player
tracking systems allow a casino to monitor the playing patterns of individual
players or selected groups of players and to develop incentives and promotions
for those players. See "Recent Developments--IGT Strategic Alliance" regarding
potential changes in the Company's player tracking/slot accounting business.
Concept III and its component products are a modular, integrated system.
The slot 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. The Company's principal office is located at 815 N.W. Ninth
Street, Corvallis, Oregon 97330. Its telephone number is (541) 753-7648.
PAGE 5
<PAGE>
RISK FACTORS
An investment in the Shares offered hereby involves a high degree of risk.
This Prospectus contains, in addition to historical information, forward-looking
statements that involve risks and uncertainties. The Company's actual results
could differ materially from the results discussed in the forward-looking
statements. Prospective investors should consider the following factors, among
others, in making a decision concerning purchase of the Shares offered hereby:
LIMITED OPERATING HISTORY; LOSSES. Although the Company was incorporated
in January 1985, the Company did not make initial installations of its
Concept III product line until the fiscal year ended June 30, 1992. The
Company's limited operating history makes the prediction of future operating
results difficult. For the fiscal year ended June 30, 1996, the Company had
revenues of $6,942,000 and a net loss of $1,641,000. The Company also incurred
net losses for the fiscal years ended June 30, 1995, 1994, 1993 and 1992. At
December 31, 1996, the Company had an accumulated deficit of $4,458,000.
PRODUCT CONCENTRATION. The Company derives substantially all of its
revenues from the sale of products in its Concept III system and the Company's
future success will depend on its ability to continue to generate sales of these
products. A decline in demand or prices for the Company's Concept III system,
whether as a result of new product introduction or price competition from
competitors, technological change, or failure of the Company's Concept III
system to address customer requirements or otherwise, could have a material
adverse effect on the Company's revenues and operating results.
MANAGEMENT OF GROWTH. The Company has recently experienced significant
growth in its business, which has placed, and if sustained will continue to
place, a substantial burden on its operational, administrative and financial
resources. The Company's ability to compete effectively and to manage future
growth, if any, would require the Company to continue to improve its financial
and management controls, reporting systems and procedures on a timely basis and
expand, train and manage its employees. Any failure by the Company to implement
and improve any of the foregoing could have a material adverse effect on the
Company's business, operating results and financial condition.
STRATEGIC ALLIANCE. On January 29, 1997, the Company finalized
arrangements to form a strategic alliance with International Game Technology
("IGT"). IGT is the largest manufacturer of slot machines in the world. The
agreement includes a $5 million investment from IGT in return for 519,481 newly
issued shares of the Company's 3% convertible preferred stock, with a 12 month
option to purchase an additional 519,480 shares at the same price. The
strategic alliance, however, may not be fully implemented or, if implemented,
could adversely affect the Company's financial condition and results of
operations. In addition, customers and potential customers of the Company who
are competitors of IGT may view this strategic alliance unfavorably.
LIQUIDITY. Sufficient funds to maintain new product development efforts
and expected levels of operations may not be available and additional capital,
if and when needed by the Company, may not be available on terms acceptable to
the Company.
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS. The Company's quarterly
operating results have fluctuated in the past, and may fluctuate significantly
in the future, due to a number of factors, including, among others, the size and
timing of customer orders, the timing and market acceptance of new products
introduced by the Company, changes in the level of operating expenses,
technological advances and new product introductions by the Company's
competitors, competitive conditions in the industry, regulatory approval and
general economic conditions. 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
PAGE 6
<PAGE>
periods in which such product development expenses are incurred and marketing
efforts are commenced. 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. The Company may not be able to attain
or maintain profitable operations on a consistent basis. The Company believes
that period to period comparisons of its financial results may not be meaningful
and should not be relied upon as indications of future performance.
Fluctuations in operating results may result in volatility in the price of the
Company's Common Stock.
RISKS OF TECHNOLOGICAL CHANGE. 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 bonusing, progressive
jackpots, slot accounting, player tracking or game promotions. The Company's
future results of operations will depend upon its ability to improve and market
its existing products and to successfully develop, manufacture and market new
products. While the Company plans to expend a significant portion of its
revenues on research and development and on product enhancement, the Company may
not be able to continue to improve and market its existing products or develop
and market new products, or technological developments may cause the Company's
products or technology to become obsolete or noncompetitive. Any failure by the
Company to anticipate or respond adequately to technological developments and
customer requirements could materially and adversely affect the Company's
operating results.
COMPETITION. The market in which the Company participates is highly
competitive. Many of the Company's competitors have substantially greater
financial, marketing and technological resources than the Company and the
Company may not be able to compete successfully with them.
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 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. Notwithstanding these safeguards, it is
possible for competitors of the Company to obtain its trade secrets and to
imitate its products. Furthermore, others may independently develop products
similar or superior to those developed or planned by the Company. While the
Company may obtain patents with respect to certain of its products, the Company
may not have sufficient resources to defend such patents, such patents may not
afford all necessary protection and competitors may develop equivalent or
superior products which may not infringe such patents.
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 would 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 Securities -- 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 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
PAGE 7
<PAGE>
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 amounts paid pursuant to such contract. Failure to
obtain necessary regulatory approvals could have a material adverse effect on
the Company.
DEPENDENCE ON FOUNDER. 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 recently entered into an employment
agreement with Mr. Acres. In addition, the Company maintains "key person"
insurance on the life of Mr. Acres, payable to the Company, in the sum of
$7,000,000. The loss of the services of Mr. Acres would materially and
adversely affect the Company's business.
CONTROL BY EXISTING MANAGEMENT. John F. Acres, the sole Director and Chief
Executive Officer of the Company, beneficially owns approximately 25% of the
Company's outstanding shares of Common Stock. Mr. Acres controls the affairs of
the Company. See "Description of Securities -- Common Stock."
ABSENCE OF DIVIDENDS. The Company has not paid any dividends on its Common
Stock since its inception and does not anticipate paying any dividends in the
foreseeable future. Earnings of the Company, if any, are expected to be used to
finance the development and expansion of the Company's business. Any future
decision with respect to dividends will depend on future earnings, future
capital needs and the Company's operating and financial condition, among other
factors. See "Description of Securities--Common Stock."
EXERCISE OF OPTIONS AND WARRANTS. As of December 31, 1996, 883,075 shares
of Common Stock were subject to outstanding stock options under the Company's
Stock Option Plan at exercise prices ranging from $3.00 to $17.625 per share and
approximately 150,000 shares were issuable upon exercise of outstanding warrants
at exercise prices ranging from $4.75 to $9.00 per share. While outstanding
options and warrants are exercisable, the holders thereof have the opportunity
to profit from a rise in the market price of the common stock. The Company may
find it more difficult to raise additional equity capital while the options and
warrants are outstanding. At any time when the holders might be expected to
exercise their options and warrants, the Company would probably be able to
obtain additional equity capital on terms more favorable than those provided in
the options and warrants being exercised. Holders of options and warrants do
not have any of the rights or privileges of shareholders of the Company prior to
exercise of the options and warrants.
PAGE 8
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RECENT DEVELOPMENTS
IGT STRATEGIC ALLIANCE
In January 1997, the Company and IGT entered into agreements to form a
strategic alliance (the "Strategic Alliance"). Under the Strategic Alliance,
the Company plans to (i) create proprietary games, using IGT equipment as the
foundation, to be installed under leasing or revenue sharing agreements in
casinos; (ii) sell its Concept III Bonusing Technology and player tracking
components for use in IGT Smart System-TM- player tracking/slot accounting
installations; (iii) eventually withdraw from the player tracking/slot
accounting business; (iv) have its displays and other game enhancements tools
incorporated into IGT's slot machines; and (v) develop promotions for use on
IGT's Wide Area Network that supports "Megabucks," "QuarterMania" and other
progressive jackpot promotions.
As part of the Strategic Alliance, the Company and IGT have executed a
Stock Purchase Agreement, pursuant to which IGT purchased 519,481 shares of the
Series A Convertible Preferred Stock of the Company (described below). IGT may
purchase up to an additional 519,480 shares of the Series A Convertible
Preferred Stock in increments not less than 103,896 shares on or before
August 8, 1997.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of shares by the
Selling Shareholders.
SELLING SECURITY HOLDERS
<TABLE>
<CAPTION>
Shares Beneficially Owned Shares Beneficially
Prior to Offering (1) Owned After Offering (1)
----------------------------- ----------------------------
Beneficial Owner Number Percent (2) Shares To Be Number Percent (2)
---------------- ------ ----------- ------------ ------ -----------
Sold
----
<S> <C> <C> <C> <C> <C>
John G. Kinnard and 28,000 * 28,000 0 --
Company, Inc.
David D. Metz 6,400 * 3,400 3,000 *
Thomas J. Pierce 3,450 * 3,450 0 --
Robert V. Webb 6,150 * 1,150 5,000 *
Michael Jon Norton 1,000 * 1,000 0 --
Joseph Anthony Radecki 1,000 * 1,000 0 --
Jerald Scott Johnson 1,000 * 1,000 0 --
George William 1,000 * 1,000 0 --
Mitchell, Jr. ----- ----- - --
Total 48,000 * 40,000 8,000 *
</TABLE>
* Less than 1 percent.
(1) Each person has sole voting and sole dispositive power with respect to all
outstanding shares.
(2) Based on 8,740,306 Shares outstanding December 31, 1996. Does not include
1,576,425 shares of Common Stock reserved for issuance under the Acres
Gaming Incorporated 1993 Stock Option and Incentive Plan (of which 883,075
shares are subject to outstanding options).
PAGE 9
<PAGE>
DESCRIPTION OF SECURITIES
COMMON STOCK
The Company is authorized to issue up to 50,000,000 shares of Common Stock,
$.01 par value. As of December 31, 1996, there were 8,740,306 shares
outstanding and approximately 230 holders of record of the Company's Common
Stock. The Company estimates that there are more than 1,000 beneficial owners
of the Company's stock.
Holders of Common Stock are entitled, subject to the prior rights of
holders of Preferred Stock, 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 intends 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 in the foreseeable future. In the
event of any liquidation, dissolution or winding up of the Company, the holders
of Common Stock will be entitled, subject to the prior rights of holders of
Preferred Stock, 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. Holders of Preferred Stock have the right to elect one
director. See "Preferred Stock." 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 Gaming 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 reporting of such acquisition with the
Commission. 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.
PAGE 10
<PAGE>
All of the outstanding shares of Common Stock, including the Shares offered
hereby, are, or upon the exercise of the Warrants will be, fully paid and
non-assessable. Holders of Common Stock of the Company are not liable for
further calls or assessments.
PREFERRED STOCK
The Company is authorized to issue 20,000,000 shares of Preferred Stock,
$.01 par value, from time to time in one or more series, in any manner permitted
by law, as determined from time to time by the Board of Directors. The Board of
Directors has the authority to fix and determine the rights and preferences of
the shares of any series so established, including dividends, conversion prices,
voting rights, redemption prices, maturity dates and similar matters without
further action by the shareholders.
TERMS OF SERIES A STOCK
The initial series of Preferred Stock consists of 1,038,961 shares
designated Series A Convertible Preferred Stock (the "Series A Stock"). The
issue price of the Series A Stock is $9.625 per share.
The Series A Stock is entitled to receive non-cumulative dividends at a
rate per share equal to 3 percent of $9.625, the initial purchase price. Any
dividends declared and not paid in cash may be paid in additional shares of
Series A Stock or credits to purchase the Company's products. Holders of the
Series A Stock will have the option, upon notice to the Company, to convert
shares of Series A Stock into shares of Common Stock based upon the applicable
conversion price in effect at the time of conversion. The initial conversion
price for each share of Series A Stock is the lesser of the price at which the
Series A Stock was initially issued and the average closing price of the
Company's Common Stock for the period of thirty days prior to the date of
conversion of shares of Series A Stock. The conversion price is subject to
adjustments for certain events relating to the Common Stock including stock
splits and combinations, dividends and distributions, reclassification,
exchange, substitution, reorganization, merger, or sale of assets. The Series A
Stock is subject to redemption on or after the earlier of five years from the
date of the initial issuance and the date that John F. Acres owns fewer than
1,000,000 shares of the Company's Common Stock (adjusted for any stock dividend
or split). Any such redemption would be at the option of the holders of the
Series A Stock or the Company, at a price equal to the purchase price plus any
declared but unpaid dividends.
So long as 25 percent of the shares of Series A Stock originally issued by
the Company remain outstanding, holders of the Series A Stock are entitled as a
class to elect one director. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Company, the holders of the
Series A Stock will be entitled to receive a liquidation preference of $9.625
per share plus any declared but unpaid dividends prior to the distribution of
any of the Company's assets to holders of the Common Stock. Any assets
remaining after the distribution to holders of the Series A Stock will be
distributed to holders of the Common Stock.
So long as 25 percent of the shares of the Series A Stock originally issued
by the Company are outstanding, the Company cannot effect any sale, lease,
assignment, transfer or other conveyance of all or substantially all of the
assets of the Company, or any consolidation or merger in which the Company is
not the surviving corporation or in which the holders of the capital stock of
the Company before the consolidation or merger own less than 50 percent of the
Company after the consolidation or merger, or any reclassification or other
change of any stock, or any recapitalization of the Company, or any voluntary
dissolution, liquidation or winding up of the Company, without the approval of
the holders of the Series A Stock.
Shares of the Series A Stock and shares of Common Stock issuable upon
conversion of the Series A Stock will be "restricted securities" under the
federal securities laws and may not be resold without registration under the
Securities Act of 1933, as amended, unless an exemption from registration is
available.
PAGE 11
<PAGE>
The Company has granted to IGT certain rights to demand registration of the
Common Stock underlying the Series A Stock which may be exercised on or after
December 31, 1997. Those rights require the Company to register with the SEC
the shares of Common Stock issuable on conversion of the Series A Stock. The
Company has agreed to pay all the expenses of one such registration. The
Company has agreed to indemnify certain parties in connection with such
registration, including any underwriters. The Company also granted piggy-back
and S-3 rights to IGT.
WARRANTS
The 40,000 shares of Common Stock which may be sold pursuant to this
Prospectus were acquired upon exercise of certain Warrants to purchase common
stock, which warrants were issued for services in connection with a private
placement of equity by the Company in June 1995. The Warrants were issued by
the Company on June 30, 1995, at an exercise price of $7.20 per share, subject
to certain antidilution provisions which provide for adjustment of the Warrant
Exercise Price if the Company (i) pays any dividends on any class of the
Company's stock payable in Common Stock or securities convertible into Common
Stock, (ii) subdivides its then outstanding shares of Common Stock into a
greater number of shares; or (iii) combines outstanding shares of Common Stock,
by reclassification or otherwise. The Warrants are exercisable until June 30,
2000.
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 Articles of Incorporation and Bylaws provisions
to indemnify its directors and officers to the fullest extent permitted by
Nevada General Corporation Law. Such indemnification may be available for
liabilities arising in connection with this offering. Insofar as
indemnification for liabilities arising under the Securities Act 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 General 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.
PLAN OF DISTRIBUTION
Any or all of the Shares may be sold from time to time to purchasers
directly by any of the Selling Shareholders. Alternatively, the 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
PAGE 12
<PAGE>
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. The Company is
obligated to maintain the effectiveness of this Registration Statement for a
period of six months from the date hereof.
LEGAL MATTERS
The validity of the shares of Common Stock being offered hereby will be
passed upon for the Company by Perkins Coie, Portland, Oregon.
EXPERTS
The financial statements of the Company incorporated by reference in this
Prospectus 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.
PAGE 13
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Amount
---------------
SEC Registration Fee . . . . . . . . . . . . . . . . . 113.94
Accounting Fees and Expenses*. . . . . . . . . . . . . 2,000.00
Legal Fees and Expenses* . . . . . . . . . . . . . . . 10,000.00
Blue Sky Fees and Expenses*. . . . . . . . . . . . . . 1,000.00
Printing, including Registration Statement,
Prospectus, etc.* . . . . . . . . . . . . . . . . . 2,500.00
Miscellaneous Expenses*. . . . . . . . . . . . . . . . 3,500.00
---------------
TOTAL EXPENSES*. . . . . . . . . . . . . . . . . . . . $19,113.94
---------------
---------------
---------------
*ESTIMATED
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.751 of the Nevada General Corporation Law provides that a
corporation may indemnify its current and former officers, directors, employees
and agents against expenses (including attorneys' fees), judgments, penalties,
fines and amounts paid in settlement and which were incurred in connection with
actions, suits, or proceedings, except an action by or in the right of the
corporation, in which such persons are parties by reason of the fact that they
are or were an officer, director, employee or agent of the corporation, if they
(i) have not been adjudged to be liable to the corporation, (ii) acted in good
faith, (iii) in the case of a criminal proceeding, had no reasonable cause to
believe the conduct was unlawful and (iv) reasonably believed that the conduct
was in the best interests of the corporation. Section 78.752 also permits a
corporation to purchase and maintain insurance on behalf of its officers,
directors, employees and agents against any liability which may be asserted
against, or incurred by, such persons in their capacities as officers,
directors, employees and agents of the corporation, whether or not the
corporation would have had the power to indemnify the person against the
liability under the provisions of such section.
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 General 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.
Article IX of the Bylaws of the Company provides that the directors,
officers and representatives of the Company shall have the rights to
indemnification in accordance with, and to the fullest extent provided by,
Section 78.751 of the Nevada General Corporation Law.
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<PAGE>
ITEM 16. EXHIBITS.
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
*4.1 Articles of Incorporation
*4.2 Preferred Stock Certificate
5.1 Opinion of Perkins Coie regarding legality of the Common Stock being
registered.
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Perkins Coie (included in the opinion filed as Exhibit 5.1)
24.1 Power of Attorney (included in signature page)
- ----------
*Incorporated by reference from the Company's Quarterly Report on Form 10-Q for
the period ended December 31, 1996.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) 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.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities 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.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the 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 registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
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 registrant will,
II-2
<PAGE>
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 Act and
will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Corvallis, State of Oregon, on February 18, 1997.
ACRES GAMING INCORPORATED
By:/s/ John F. Acres
--------------------------------
John F. Acres
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
John F. Acres and Robert W. Brown, or either of them, such person's true and
lawful attorney-in-fact and agent with full power of substitution and
resubstitution for such person and in such person's name, place and stead, in
any and all capacities, to sign the Registration Statement on Form S-3 of Acres
Gaming Incorporated and any or all amendments (including post-effective
amendments) to the Registration Statement, and to file the same, with all
exhibits hereto and other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as such person might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or either
of them, or their substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ John F. Acres Chief Executive Officer and Director February 18, 1997
- ---------------------- (Principal Executive Officer
John F. Acres and Director)
/s/ Robert W. Brown Executive Vice President, Chief February 18, 1997
- ---------------------- Financial Officer and Secretary
Robert W. Brown (Principal Financial and Accounting
Officer)
II-4
<PAGE>
INDEX TO EXHIBITS
TO FORM S-3
FOR ACRES GAMING INCORPORATED
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
*4.1 Articles of Incorporation
*4.2 Preferred Stock Certificate
5.1 Opinion of Perkins Coie regarding legality of the Common Stock being
registered
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Perkins Coie (included in the opinion filed as Exhibit 5.1)
24.1 Power of Attorney (included in signature page)
*Incorporated by reference from the Company's Quarterly Report on Form 10-Q for
the period ended December 31, 1996.
<PAGE>
EXHIBIT 5.1
February 13, 1997
Acres Gaming Incorporated
815 N.W. Ninth Street
Corvallis, Oregon 97330
RE: 40,000 SHARES OF COMMON STOCK ($.01 PAR VALUE) OF ACRES GAMING
INCORPORATED (THE "COMPANY")
Ladies and Gentlemen:
We have acted as counsel to you in connection with the preparation of a
Registration Statement on Form S-3 (the "Registration Statement"), under the
Securities Act of 1933, as amended (the "Act"), with respect to 40,000 shares of
Common Stock, $.01 par value (the "Common Stock"), which may be sold from time
to time by certain selling shareholders (the "Selling Shareholders"). We have
examined the Registration Statement and such documents and records of the
Company as we have deemed necessary for the purpose of this opinion.
Based upon and subject to the foregoing, we are of the opinion that the
Shares have been validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement. In giving such consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the Act.
This opinion has been prepared solely for your use in connection with the
Registration Statement, and should not be quoted in whole or in part or
otherwise be referred to, nor be relied upon by, nor be filed with or furnished
to any governmental agency or other person or entity, except as otherwise
provided in this paragraph, without the written consent of the firm.
Very truly yours
PERKINS COIE
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this Form S-3 registration statement of our report dated August
9, 1996 included in the Acres Gaming Incorporated Form 10-K for the year ended
June 30, 1996 and to all references to our firm included in this registration
statement.
ARTHUR ANDERSEN LLP
Portland, Oregon
February 13, 1997
