SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Six Months Ended December 31, 2000 Commission File Number: 0-9047 GLOBAL GAMING AND TECHNOLOGY, INC. - ------------------------------------------------------ (Exact Name of Registrant as specified in its charter) Delaware 02-0314487 - ------------------------------- ---------------------------- (State or other jurisdiction of (IRS Employer Identification incorporation or organization) Number) 1200 N Federal Highway #200, Boca Raton, FL 33432 - ------------------------------------------------------ (Address of principal executive offices) (Zip Code) Registrant's Telephone Number, including Area Code: 561-447-8222 Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 12 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. X YES NO As of December 31, 2000, there was issued and outstanding 26,328,028 shares of Common Stock of Registrant. The aggregate market value of the shares of Common Stock held by non-affiliates (without admitting that any person whose shares are not included in determining such value is an affiliate) was not available because the prices for such shares are not quoted by the National Association of Securities Dealers through NASDAQ, its automated system for reporting quotes. Global Gaming and Technology, Inc. Form 10-Q Quarter Ended December 31, 2000 TABLE OF CONTENTS PART I - Financial Information: Page - -------------------------------- Item I - Financial Statements Balance Sheet 4 Statement of Operations and Deficit 5 Statement of Cash Flows 6 Summary of Significant Accounting Policies and Notes to Financial Statements 7-9 Item II - Management's Discussion and Analysis of Financial Condition and Results of Operations. 10 PART II - Other Information: 11 - ---------------------------- Item 1 - Legal Proceedings. Item 2 - Changes in Securities. Item 3 - Defaults upon Senior Securities. Item 4 - Submission of Matters to a vote of security holders. Item 5 - Related Party Transactions. Item 6 - Exhibits and Reports on Form 8-K. - 2 - PART I Global Gaming and Technology, Inc. Financial Statements December 31, 2000 - 3 - Global Gaming and Technology, Inc. Balance Sheet December 31, 2000 and June 30, 2000 Dec 31 June 30 2000 2000 (Unaudited) ASSETS CURRENT ASSETS Cash $ 76,844 $ 15,867 Inventories (Note 5) 275,390 4,000 ----------- ----------- Total Current Assets 352,234 19,867 ----------- ----------- OTHER ASSETS Deposits 300 300 ----------- ----------- Total Other Assets 300 300 ----------- ----------- TOTAL ASSETS $ 352,534 $ 20,167 =========== =========== LIABILITIES AND STOCKHOLDER'S DEFICIT CURRENT LIABILITIES Accounts Payable $ 14,944 $ 9,969 Accrued Interest 1,220,016 1,185,016 Unearned Revenue 360,150 0 Notes Payable (Note 4) 860,935 860,935 ----------- ----------- Total Current Liabilities 2,456,045 2,055,920 ----------- ----------- STOCKHOLDER'S DEFICIENCY (Note 6) Preferred Stock, $.01 par value, 1,000,000 Shares Authorized, none issued. -0- -0- Common Stock, $.01 par value, 27,000,000 Shares Authorized, 26,378,577 Shares Issued (Including 51,382 held in the company name at no cost). 263,280 263,280 Paid in Capital in excess of par value 3,395,568 3,395,568 Accumulated Deficit (5,762,359) (5,694,601) ----------- ----------- Total Stockholder's Deficit (2,103,511) (2,035,753) ----------- ----------- TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIT $ 352,534 $ 20,167 =========== =========== <FN> The accompanying notes are an integral part of these financial statements. - 4 - Global Gaming and Technology, Inc. Statement of Operations and Deficit For the Three Months Ended December 31, 2000 and 1999 And the Six Months Ended December 31, 2000 and 1999 (Unaudited) Three Months Ended Six Months Ended December 31 December 31 December 31 December 31 2000 1999 2000 1999 REVENUE AND INCOME Other Income $ 646 $ -0- $ 646 $ -0- ------------ ------------ ------------ ------------ Total Income -0- -0- -0- -0- ------------ ------------ ------------ ------------ COSTS AND EXPENSES Commissions 6,500 0 6,500 0 Licenses & Taxes 800 0 2,400 0 Professional Fees 2,590 2,819 4,659 6,663 Rent 1,120 0 1,120 0 Travel 6,552 0 6,552 0 Interest 17,500 17,500 35,000 35,000 Transfer Fees 1,000 774 2,500 1,524 Salaries and Wages 4,875 4,875 8,125 9,750 Payroll Tax Expense 544 517 890 1,061 Miscellaneous 312 50 658 89 Total Costs ------------ ------------ ------------ ------------ and Expenses 41,793 26,535 68,404 54,087 ------------ ------------ ------------ ------------ Net Income (Loss) (41,147) (26,535) (67,758) (54,087) Deficit Beginning of Period (5,721,212) (5,618,382) (5,694,601) (5,590,830) ------------ ------------ ------------ ------------ Deficit End of Period (5,762,359) (5,644,917) (5,762,359) (5,644,917) ============ ============ ============ ============ Loss per Common Share $ (.002) $ (.001) $ (.003) $ (.002) ============ ============ ============ ============ Weighted Average Number of Common Shares Outstanding 26,328,028 26,328,028 26,328,028 26,328,028 ============ ============ ============ ============ <FN> The accompanying notes are an integral part of these financial statements. - 5 - Global Gaming and Technology, Inc. Statement of Cash Flows For the Six Months Ended December 31, 2000 and 1999 (Unaudited) Six Months Ended December 31 December 31 2000 1999 CASH FLOWS FROM OPERATING ACTIVITIES Net Income (Loss) $ (67,758) $ (54,087) Changes in in Inventories (271,390) 0 Unearned Revenue 360,150 0 Accounts Payable 4,975 (708) Accrued Interest Payable 35,000 35,000 ----------- ----------- NET OPERATING CASH 60,977 (19,795) CASH FLOWS FROM INVESTING ACTIVITIES Capital Expenditures -0- -0- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Principal Payments on Debt -0- -0- ----------- ----------- Net Increase (Decrease) in Cash 60,977 (19,795) Cash Beginning of Period 15,867 50,700 ----------- ----------- Cash End of Period $ 76,844 $ 30,905 =========== =========== Supplemental Disclosures Interest Expense $ 35,000 $ 35,000 =========== =========== <FN> The accompanying notes are an integral part of these financial statements. - 6 - Global Gaming and Technology, Inc. Notes to Financial Statements December 31, 2000 NOTE 1 - Summary of Significant Accounting Policies: - ---------------------------------------------------- Global Gaming and Technology, Inc. (The Company) was incorporated in the State of Delaware in 1973 and has elected June 30 as its year end. The Company, al- though dormant until recently, is been engaged in the research, development, manufacture, and marketing of electronic gaming devices and coinless games of chance. The preparation of financial statements in conformity with generally accepted accounting prnciples requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of con- tingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Loss per share was computed by dividing the net loss by the weighted average number of shares outstanding during the period. NOTE 2 - Organization's Ability to Continue as a Going Concern: - --------------------------------------------------------------- The Company had been dormant for the past several years and lacked the re- sources to be competitive in the gaming industry at the present time. As of December 31, 2000, the Company has negative workling capital of $2,103,811 and stockholders' deficit of $2,103,511. The Company initiated a patent infringement case. The case is being appealed by both parties. The manner in which the litigation is resolved is likely to have significant financial impact on the Company. NOTE 3 - Related Party Transactions: - ------------------------------------ Notes payable at December 31, 2000 and 1999 consist of $841,491 due to stock- holders bearing interest at 8% and 10% and are due on demand. Accrued interest at December 31, 2000 and 1999 was $1,220,016 and $1,150,397 and the Company incurrred interest expense of $17,500 and $17,500 in the three months then ended. See "Note 4 - Notes Payable" for details. - 7 - Global Gaming and Technology, Inc. Notes to Financial Statements December 31, 2000 NOTE 4 - Notes Payable - ---------------------- Current Non-Current Maturities Maturities Total Michael Wichinsky Payable upon demand. Interest payable quarterly at 8% $ 511,644 $ - 0 - $ 511,644 Michael Wichinsky Payable upon demand. Interest payable quarterly at 10% 105,490 - 0 - 105,490 Estate of William T. O'Donnell, Sr. Payable upon demand. Interest payable quarterly at 8% 224,357 - 0 - 224,357 State of New Jersey Payable in monthly installments of $1,363 including interest. This note is in arrears. 19,444 - 0 - 19,444 ---------- --------- ---------- TOTAL $ 860,935 - 0 - $ 860,935 ========== ========= ========== The Company incurred interest expense totaling $17,500 and $17,500 on these notes during the three months ended December 31, 2000 and 1999, respectively. NOTE 5 - Inventories: - --------------------- On November 16, 2000, the Company purchased eighty(80) used, reconditioned games of various types and manufactures at a cost of $271,390. These machines are part of a contract-of-sale for a total of 230 machines with Sha Ka Wah Casino in Hopland, CA. The Company also has inventory consisting of ten (10) slot machines from a settlement arising out of litigation with Univeral Distributing of Nevada, Inc. Pursuant to SFAS 121 "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of", the Company evaluated the recov- erability of the long-lived assets. Due to rapid changes in gaming technol- ogy, the machines did not hold their value. The estimated fair value was based on a offer to purchse the machines. - 8 - Global Gaming and Technology, Inc. Notes to Financial Statements December 31, 2000 NOTE 6 - Unearned Revenue: - -------------------------- On October 6, 2000, the company entered into a Contract for Sale of Goods with Sho-Ka-Wah Casino, located in Hopland, California, for the purchase of 230 used, reconditioned machines for a total price of $720,300. The $360,150 in Unearned Revenue represents a 50% down payment on this contract. NOTE 7 - Income Taxes: - ---------------------- The benefit for income taxes is different than the amount computed by applying the statutory federal income tax rate to net loss before taxes. A reconcilia- tion of the net income tax benefit follows: Three Months Ended 12/31/00 12/31/99 --------- --------- Computed tax benefit at federal statutory rate $ 23,038 $ 18,390 Deferred income tax valuation allowance (23,038) (18,390) --------- --------- Provision for Federal Income Taxes $ 0 $ 0 ========= ========= The Provision for federal income taxes consisted of the following: 12/31/00 12/31/99 --------- --------- Current $ 0 $ 0 Deferred 0 0 --------- --------- Total $ 0 $ 0 ========= ========= The Deferred Tax Asset consisted of the following: Tax Benefit of NOL carryforwards $ 914,200 $ 973,100 Valuation Allowance (914,200) (973,100) --------- --------- Net Deferred Tax Asset $ 0 $ 0 ========= ========= The Company has a net operating loss carryforward ("NOL") for federal income tax reporting purposes at June 30, 2000 of $2,688,846. A portion of the NOL expires after each year. $226,859 will expire at June 30, 2001 if not utilized. - 9 - ITEM II - Management's Discussion and Analysis of Financial Condition and Results of Operations As of December 31, 2000, the Company had negative working capital of $2,103,811. The Company has no commitments for capital expenditures. As of December 31, 2000, the Company had stockholders' deficit of $2,103,511. During the three months ended December 31, 2000, the Company realized $646 in interest income and incurred expenses of $41,793, $17,500 of which is accrued interest expense. Global Gaming and Technology, Inc. has been engaged in the design, manufacture and marketing of electronic microprocessor-controlled gaming machines. The Company, which was incorporated in Delaware in 1973, maintains its principal offices at 1200 N Federal Highway, Boca Raton, Florida 33432 Primary North American markets for gaming devices are Las Vegas, Nevada, and Atlantic City, New Jersey. The Company does not have the resources to apply for licenses in Nevada and New Jersey. However, based upon the opportunities which the Directors perceive to exist in the California Indian Tribal casinos, the Company registered with the California Department of Justice in June, 2000. The Company intends to register in other Indian Gaming jurisdictions. In October, 2000, the Company entered into a contract with Sho-Ka-Wah Casino, located in Hopland, California, for the sale of 230 used and reconditioned machines. A fifty percent (50%) down payment for the purchase of these machines has been collected. Patents expired at the end of July, 1995, and are the subject of current litigation pending a ruling by the court. The Company employs one person on a part-time basis. - 10 - PART II - OTHER INFORMATION ITEM 1 - Legal Proceedings - -------------------------- The Company initiated a patent infringement case which is being appealed by both parties. The manner in which the litigation is resolved is likely to have significant financial impact on the Company. ITEM 2 - Changes in Securities - ------------------------------ None. ITEM 3 - Defaults Upon Senior Securities - ---------------------------------------- Not Applicable ITEM 4 - Submission of Matters to a Vote of Security Holders - ------------------------------------------------------------ None ITEM 5 - Related Party Transactions - ----------------------------------- Michael Wichinsky (19% stockholder) has a note to the Company with a current balance of $511,644, 8% interest, payable on demand. Michael Wichinsky has a second note to the Company in the amount of $105,490 (10% interest, payable on demand). The Estate of William T. O'Donnell, Sr. (17% stockholder) has a note to the Company with a current balance of $224,357, 8% interest, payable on demand. There were no principal or interest payments on these notes during the three months ended December 31, 2000. Accrued interest payable on these notes as of December 31, 2000 amounts to $1,220,016, of which $1,172,563 is payable to Wichinsky and $47,453 is payable to O'Donnell. ITEM 6 - Exhibits and Reports on Form 8-K - ----------------------------------------- None. - 15 - SIGNATURES ---------- Pursuant to the requirements of Section 13 or Section 15(d) 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. GLOBAL GAMING & TECHNOLOGY, INC. By: /s/Glenn E Wichinsky Date: ------------------------------- ------------ Glenn E Wichinsky President, Secretary and Tresurer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons as a majority of the members of the Board of Directors of the registrant and in the capacities and on the dates indicated. By: /s/Claudia D Wichinsky Date: ------------------------------ ------------ Claudia D Wichinsky, Director By: /s/Constance Koplow Date: ------------------------------ ------------ Cosntance Koplow, Director - 12 -