UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X]
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2000
[] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________ to _________
Commission file number 0-21991
ADVANCED GAMING TECHNOLOGY, INC.
(Exact name of small business issuer as specified in its charter)
Wyoming 98-0152226
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
P O BOX 46855 LAS VEGAS, NEVADA 89114
(Address of principal executive offices)
(702) 227-6578
Issuer's telephone number
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date: October 6, 2000 25,000,000
Transitional Small Business Disclosure Format (check one). Yes [ ] No [X]
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited condensed consolidated financial statements presented herein have
been prepared by the Company in accordance with the instructions to Form 10-QSB
and do not include all of the information and note disclosures required by
generally accepted accounting principles. These condensed consolidated financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's Form 10-KSB for the year
Ended December 31, 1999. The accompanying financial statements have not been
examined by independent accountants in accordance with generally accepted
auditing standards, but in the opinion of management such financial statements
include all adjustments (consisting only of normal recurring adjustments)
necessary to present fairly the Company's financial position and results of
operations. The results of operations for the three and nine months ended
September 30, 2000 may not be indicative of the results that may be expected for
the year ending December 31, 2000.
2
Advanced Gaming Technology, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2000 1999
----------- ----------
ASSETS:
Current Assets
Cash and cash equivalents .......................... $ 264,996 $ 440,561
Prepaid expenses ................................... 1,000 1,000
Inventory .......................................... 20,000 20,000
---------- ----------
Total current assets ............................... 285,996 461,561
Property and Equipment, net ........................ 94,740 141,740
Intangible and other assets ........................ 156,333 1,906,333
--------- ---------
Total assets ....................................... $ 537,069 $2,509,634
========= ==========
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Advanced Gaming Technology, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
2000 1999
----------- ----------
LIABILITIES AND STOCKHOLDERS' DEFICIT:
Liabilities
Accounts payable and accrued liabilities ........... $ 240,441 $ 140,510
Current portion of long term debt .................. 104,000 104,000
----------- ----------
Total liabilities .................................. 344,441 244,510
Long term obligations, net of current portion ...... 800,673 2,535,019
----------- ----------
Total liabilities .................................. 1,145,114 2,779,529
Stockholders' Deficit:
Preferred Stock-10% cumulative, $.10 par value;
authorized 4,000,000 shares; issued - nil ......... -- --
Common Stock - $.005 par value; authorized
150,000,000 shares, issued and outstanding
25,000,000 on September 30, 2000 and
December 31, 19998, respectively .................. 125,000 125,000
Accumulated deficit ................................ (733,045) (394,895)
----------- ----------
Total stockholders' deficit ........................ (608,045) (269,895)
----------- ----------
Total liabilities and stockholders deficit ......... $ 537,069 $2,509,634
=========== ==========
4
Advanced Gaming Technology, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months For the Nine Months
Ended September 30, Ended September30,
2000 1999 2000 1999
---------- ---------- ---------- ----------
Revenue ....................... $ -- $ 612,536 $ 15,163 $ 787,538
Cost of revenue ............... -- -- -- --
---------- ---------- ---------- ----------
Gross margin .................. -- 612,536 15,163 787,538
Expenses ...................... 97,065 153,418 298,246 405,960
---------- ---------- ---------- ----------
Earnings (Loss) from
operations ................... (97,065) 459,118 (283,083) 381,578
Other income
(expense), net ............... (12,879) -- (55,068) (96,500)
---------- ---------- ---------- ----------
Earnings (Loss) before
reorganization charges ....... (109,944) 459,118 (338,151) 285,078
Reorganization charges ........ -- (266,294) -- (266,294)
---------- ---------- ---------- ----------
Net income (loss) ............. (109,944) 192,824 (338,151) 18,784
========== ========== ========== ==========
Net income(loss)
per common share ............. $ -- $ (.01) $ (.01) $ --
========== ========== ========== ==========
Weighted average common
shares outstanding 25,000,000 25,000,000 25,000,000 25,000,000
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Advanced Gaming Technology, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months
Ended September 30,
2000 1999
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss) ..................................... $ (338,151) $ 18,784
Adjustments to Reconcile Net Loss to Net Cash
Provided by (Used in) Operating Activities:
Depreciation and amortization ......................... 47,000 162,517
Reorganization charges ................................ -- 266,294
Change in operating assets and liabilities:
Accounts receivable ................................... -- 6,607
Accounts payable and accrued liabilities .............. 99,931 25,195
---------- ----------
Net cash provided by (used in)
operating activities ................................. (191,220) 479,397
---------- ----------
Cash Flows From Investing Activities:
Other assets .......................................... 1,750,000 75,796
Purchase of property and equipment .................... -- --
---------- ----------
Net Cash (Used in) provided by
Investing Activities ................................. 1,750,000 75,796
---------- ----------
Cash Flows From Financing Activities:
Proceeds from issuance of common stock ................ -- 150,000
Proceeds from debt and notes .......................... -- --
Repayment of debt and notes ........................... (1,734,345) --
---------- ----------
Net cash provided by (used in)
financing activities .................................. (1,734,345) 150,000
---------- ----------
Net change in cash and cash equivalents ............... (175,565) 705,193
Cash and cash equivalents at
beginning of period .................................. 440,561 109,824
---------- ----------
Cash and cash equivalents at end of period ............ $ 264,996 $ 815,017
========== ==========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest .............. $ 69,957 $ --
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Advanced Gaming Technology, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
1. Interim Reporting
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles and Form
10-QSB requirements. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. Operating results for the
Three and nine month periods ended September 30, 2000, are not necessarily
indicative of the results that may be expected for the year ended December
31,2000. For further information, refer to the financial statements and
footnotes thereto included in the Company's annual report on Form 10-KSB for the
year ended December 31, 1999.
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Item 2. Management's Discussion and Analysis
General -
This discussion should be read in conjunction with Management's Discussion and
Analysis of Financial Condition and Results of Operations in the Company's
annual report on Form 10-KSB for the year ended December 31, 1998. The Company's
shares of capital stock are registered under Section 12 of the Securities
Exchange Act of 1934. The Company became a reporting issuer in March 1997. This
quarterly report on Form 10-QSB and the information incorporated by reference
herein contain forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Such statements include, but are not limited
to, projected sales, gross margin and net income figures, the availability of
capital resources, plans concerning products and market acceptance.
Forward-looking statements are inherently subject to risks and uncertainties,
many of which cannot be predicted with accuracy and some of which may not even
be anticipated. Future events and actual results, financial and otherwise, could
differ materially from those set forth in or contemplated by the forward-looking
statements herein and any forward looking statements should be considered
accordingly.
In August of 1998 the company filed for reorganization under chapter 11 of the
U. S. Bankruptcy Code in the District of Las Vegas The company operated as a
debtor-in-possession until June 29, 1999 when its plan was confirmed by the
court. The plan became effective on August 19, 1999.
Under the terms of the court-approved plan the existing common stock interests
in Advanced Gaming technology, Inc were cancelled. The company, as reorganized,
issued new common stock. The plan provided generally that unsecured creditors of
the company holding allowed claims receive 1.88 shares of new common stock for
each $1 of allowed claim. Holders of common stock of the company received 7% of
the new common stock under the terms of the plan.
The company has adopted fresh-start accounting on the effective date of the plan
in accordance with AICPA Statement of Position 90-7 " Financial reporting by
entities in reorganization under the bankruptcy code" (SOP 90-7). The fresh
start reporting is reflected in the September 30, 1999 Consolidated Balance
Sheet.
Liabilities subject to compromise immediately prior to the effective date were
discharged on the effective date. Depending on the nature of the claim each
obligation was paid, exchanged for stock, discharged, or carried forward as a
new liability under the terms of the plan.
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Results of Operations -
2000 Compared to 1999
Net income for the nine months ended September 30, 2000 was a loss of $338,151
compared to net income of $18,784 for the same period in 1999. The 1999 results
reflected a one-time settlement of a product licensing dispute regarding the
company's electronic bingo products of $850,000.
The company is generating minimal revenue from operations. Revenue for the nine
months ended September 30, 2000 was $15,163 compared to $787,538 in 19998.
Again, the 1999 results reflect the settlement of the licensing dispute.
Leasing of the company's electronic bingo products has been hampered by
competitive market forces and an aging product line. Management has made efforts
to establish a network of distributors to market, service and support the
product. However, most distributors are aligned with other electronic providers.
The company is considering all options related to the electronic equipment,
including sale of the products and related intellectual property.
The company is developing a new bingo product using current technology.
Management expects to introduced this product during the fourth quarter of 2000.
The company is currently negotiating a beta site to test the product in a live
environment. If the beta result is acceptable the product would be available to
for live installations during the fourth quarter of 2000.
During the first quarter of 2000 the company formed the Internet travel provider
TravelSwitch.com. This venture provides room reservations for the Las Vegas
market from the Internet address www.777LasVegas.com. The venture also handles
all forms of retail travel through the dba's Imperial Travel, PlayVegas.com and
Speedway Travel. The company holds a 22% interest in TravelSwitch.com.
This investment diversifies operations and gives the company a presence in the
booming Internet commerce sector. Although the company believes it is building
equity in this venture, it is not likely that TravelSwitch will provide cash
flow for some time. Cash excesses, if any, will likely be utilized to build
additional market share. Management will continue to evaluate new investments as
opportunities arise.
Expenses for the first nine months of 2000 were $298,246 compared to $405,960 in
the prior year. Operating costs have been reduced to a minimum until cash flow
from revenue can be generated. Of the expenses through September 30, 2000,
$131,250 represents unpaid payroll to management. Expenses for the third quarter
of 2000 were $97,065 compared to $153,418 in 1999.
9
Other income (expense) consisted of an expense of $55,068 for the first nine
months of 2000 compared to an expense of $96,500 in 1999. Interest expense
decreased in 2000 is due to the reduction in outstanding debt during the past
year.
Liquidity and Capital Resources -
The company's debt was restructured pursuant to the reorganization plan
completed in 1999. Long-term debt was reduced from over $10 million prior to the
reorganization to one note for approximately $900,000 at September 30, 2000. The
company is current on debt service payments for this note. The note is
convertible in common stock of the company at the option of the holder at rate
of $.53 per share.
Efforts to generate cash flow from the company's electronic bingo products have
not been successful due to competitive forces and an aging product line.
Management is pursuing all options related to the electronic products and
related intellectual property. Development of a new game utilizing current
technology will be introduced in the fourth quarter of 2000. The net realizable
value of these efforts may not be sufficient to produce a positive cash flow
from operations. Management will make every effort to reduce operating expenses
until a new source of revenue is determined.
Inflation and Regulation -
The Company's operations have not been, and in the near term are not expected to
be, materially affected by inflation or changing prices. The Company encounters
competition from a variety of firms offering similar products in its market
area. Many of these firms have long-standing customer relationships and are well
staffed and well financed. The Company believes that competition in the industry
is based on competitive pricing, although the ability, reputation and technical
support of a concern is also significant. The Company does not believe that any
recently enacted or presently pending proposed legislation will have a material
adverse effect on its results of operations.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
ADVANCED GAMING TECHNOLOGY, INC.
--------------------------------
(Registrant)
DATE: October 17, 2000 By: /s/ DANIEL H. SCOTT
------------------------------------
Daniel H. Scott
President, Chief Executive
Officer and Director
(Principal executive and
accounting officer)
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