SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) May 28, 1999
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Casinovations Incorporated
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(Exact name of Registrant as specified in charter)
Nevada
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(State or other jurisdiction of incorporation)
000-25855 91-1696010
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(Commission File (IRS Employee
Number) Identification No.)
6744 South Spencer Street, Las Vegas, Nevada 89119
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (702) 733-7195
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Not Applicable
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(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS
PURCHASE OF SHARES BY JAMES E. CRABBE
On May 28, 1999, Casinovations Incorporated, a Nevada
corporation (the "Company"), and James E. Crabbe, an individual
and existing stockholder of the Company, entered into a
subscription agreement (the "Subscription Agreement") whereby Mr.
Crabbe will purchase 2,000,000 shares (the "Shares") of the
Company's common stock, $.001 par value ("Common Stock") for
$2.60 per share for an aggregate subscription amount of
$5,200,000. Pursuant to the terms of the Subscription Agreement,
Mr. Crabbe delivered $1,300,000 upon execution of the
Subscription Agreement and agreed to pay the balance of
$3,900,000, in no more than three equal installments of not less
than $1,300,000, by July 10, 1999. Upon receipt of such payment
or payments, the Company will immediately cause the correct
number of the Shares (based upon $2.60 per share) to be issued to
Mr. Crabbe. The Company granted to Mr. Crabbe piggy-back
registration rights as part of this transaction.
After the complete funding of the Subscription Agreement and
issuance of 2,000,000 shares of Common Stock, Mr. Crabbe will be
the beneficial owner of 2,278,570 shares of Common Stock,
approximately 23.5% of the total shares outstanding as of May 31,
1999 (exclusive of 209,300 warrants and 442,307 shares issuable
to Mr. Crabbe pursuant to certain convertible notes). Mr. Crabbe
will thereby become the second largest stockholder of the Comapny
and has filed a Schedule 13D with the Securities and Exchange
Commission accordingly.
The Company intends to use the proceeds from the issuance of
the Shares to Mr. Crabbe for the acceleration of the Company's
manufacturing capabilities to meet the increasing demand for its
products, the international expansion of the Company's
intellectual property rights, the continued development of the
Company's SecureDrop Slot Accounting System, and general working
capital purposes.
CONVERSION OF PROMISSORY NOTE HELD BY RICHARD S. HUSON
On May 28, 1999, the Company and Richard S. Huson, a
director and controlling stockholder of the Company, entered into
a subscription agreement (the "Huson Agreement") whereby Mr.
Huson agreed to convert a certain portion of that certain
Promissory Note dated December 31, 1998 in the original principal
amount of $1,235,000 issued by the Company in favor of Mr. Huson
(the "Note") for shares of Common Stock at a conversion rate of
$2.60 per share. Pursuant to the terms of the Huson Agreement,
Mr. Huson converted $999,999 of outstanding indebtedness under
the Note in to 384,615 shares of Common Stock and received a
replacement promissory note.
As a result of Mr. Huson's partial conversion of the Note,
Mr. Huson beneficially owns 3,268,838 shares of Common Stock,
approximately 33.7% of the total shares of Common Stock
outstanding as of May 31, 1999.
APPOINTMENT OF TIMOTHY P. LEYBOLD AS CHIEF FINANCIAL OFFICER
On May 28, 1999, the Company appointed Timothy P. Leybold as
the Company's Chief Financial Officer. Prior to joining the
Company and since 1995, Mr. Leybold served as Chief Financial
Officer for RLC Industries, Inc., a building products
manufacturing company with operations in Oregon and California
and revenues in excess of $800 million. In 1995, Mr. Leybold
served as Vice President - Financial Planning and Control for
Collins Resources, Inc., a natural resources company located in
Oregon. In 1994, Mr. Leybold served as interim Chief Financial
Officer for Entek, Inc., a manufacturer of battery separator
materials located in Oregon. From 1991 to 1994, Mr. Leybold was
Treasurer and Principal Accounting Officer for Sprouse-Reitz
Stores, Inc., a retail chain of general merchandise stores with
over 200 locations in the western United States. From 1986 to
1991, Mr. Leybold was Chief Financial Officer of The Cutler
Group, a holding company for various manufacturing companies
located in the western United States. From 1978 to 1986, Mr.
Leybold was a Manager at the Portland, Oregon office then
Seattle, Washington office of Arthur Andersen LLP. Mr. Leybold
received his B.B.A. with honors, maxima cum laude, from the
University of Portland in 1978 and his M.B.A. in finance from the
University of Oregon in 1996. Mr. Leybold is a member of the
Financial Executives Institute, Association for Corporate Growth,
and American Society of Certified Public Accountants.
VOLUNTARY ACCELERATION OF CONVERSION DATE OF CERTAIN 9.5%
CONVERTIBLE NOTES DUE 2004 AND EXERCISE OF CERTAIN CLASS E
WARRANTS
Pursuant to notices distributed by the Company to holders of
the Company's 9.5% Convertible Notes Due 2004 (the "Convertible
Notes"), the Company offered to provide a one-time two week
window to expire on May 31, 1999 for the conversion of the
Convertible Notes into shares of Common Stock at the stated
conversion rate of $2.60 per share. Pursuant to its terms, the
Convertible Notes may be converted beginning on the later of six
(6) months from the date of issuance or September 1, 1999.
Additionally, pursuant to notices distributed by the Company to
holders of the Company's Class E Warrants, the Company issued a
voluntary call of the Class E Warrants to expire on May 31, 1999
at the stated exercise price of $3.00 per share. In exchange for
the conversion of the Convertible Notes and the exercise of the
Class E Warrants, the Company offered to issue an additional set
of warrants equal to the number of and on similar terms and
conditions as the Class E Warrants exercised.
As the expiration of the conversion window and call period,
holders of the Convertible Notes converted $400,000 of
Convertible Notes into 153,843 shares of Common Stock and
exercised 72,800 Class E Warrants into 72,800 shares of Common
Stock for an aggregate of 226,643 shares of Common Stock. In
exchange for the conversion and exercise, the Company issued
72,800 warrants to the persons who converted their Convertible
Notes and exercised their Class E Warrants. As a result,
$1,500,000 of the Convertible Notes and 273,000 of the Class E
Warrants issued to holders of the Convertible Notes remain
outstanding.
Through the conversion of the Convertible Notes and the
exercise of the Class E Warrants, the Company converted $400,000
of indebtedness into Common Stock and received
proceeds of $218,400. The Company intends to use such proceeds
for general working capital purposes.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(A) Financial Statements of Businesses Acquired.
Not Applicable.
(b) Pro Forma Financial Information.
Not Applicable.
(c) Exhibits.
10.1 Subscription Agreement dated May 28, 1999 by and
between Casinovations Incorporated and James E.
Crabbe.
10.2 Subscription Agreement dated May 28, 1999 by and
between Casinovations Incorporated and Richard
S. Huson.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
CASINOVATIONS INCORPORATED
(Registrant)
Date: June 4, 1999 By: /s/ Steven J. Blad
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Steven J. Blad
President and Chief Executive
Officer
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE
NUMBER NUMBER
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10.1 Subscription Agreement dated May 28, 1999 by 7
and between Casinovations Incorporated and
James E. Crabbe.
10.2 Subscription Agreement dated May 28, 1999 by 14
and between Casinovations Incorporated and
Richard S. Huson.