[As adopted in Release No. 34-32231, April 28, 1993, 58 F.R. 26509]
U.S. 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: March 31, 1997
[ ] 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.)
2482 - 650 West Georgia Street, P.O. Box 11610, Vancouver,
British Columbia V6B 4N9
(Address of principal executive offices)
(604) 689-8841
Issuer's telephone number
(Former name, former address and former fiscal year, if changed since last
report.)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
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 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: May 1, 1997 51,953,086
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, 1996. 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
months ended March 31, 1997 may not be indicative of the results that may be
expected for the year ending December 31, 1997.
Advanced Gaming Technology, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1997 1996
ASSETS:
Current Assets
Cash and cash equivalents $ 164,668 $ 76,615
Accounts receivable, net 142,279 56,492
Prepaid expenses 863,977 129,969
Inventory 69,316 43,000
Notes receivable 42,975 129,426
Total current assets 1,283,215 435,502
Notes Receivable 1,255,541 1,099,300
Property and Equipment 2,570,890 2,553,293
Less: accumulated depreciation (710,402) (583,412)
1,860,488 1,969,881
Intangible and other assets 5,879,838 5,940,882
Total assets $ 10,279,082 $ 9,445,565
LIABILITIES AND STOCKHOLDERS' DEFICIT:
Current liabilities
Accounts payable and accrued liabilities $ 2,357,483 $ 3,204,497
Bank overdraft and Revolving loan - 354,100
Convertible notes 4,661,123 3,292,715
Deferred revenue 390,000 765,380
Current portion of long term debt 1,892,327 2,459,528
Total current liabilities 9,300,933 10,076,220
Long term obligations, net of current portion 2,431,263 2,531,220
Total liabilities 11,732,196 12,607,440
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
48,867,287 in 1997 and 42,248,368 in 1996 244,336 211,242
Additional paid-in capital 22,409,845 20,000,471
Accumulated deficit (24,107,295) (23,373,588)
Total stockholders' deficit (1,453,114) (3,161,875)
Total Liabilities and
Stockholders' Deficit $ 10,279,082 $ 9,445,565
The accompanying notes are an integral part of the condensed consolidated
financial statements.
Advanced Gaming Technology, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months
Ended March 31,
1997 1996
Revenues $ 510,366 $ 141,210
Cost of revenues 106,734 88,278
Gross margin 403,632 52,932
Expenses
Research and development 214,241 164,437
General and administrative 624,800 637,518
839,041 801,955
Loss from operations 435,409 749,023
Other income (expense),net (298,301) (249,617)
Net Loss $(733,710) $(998,640)
Net loss per common
share $ (.02) $ (.03)
Weighted average common
shares outstanding 45,245,508 31,716,299
The accompanying notes are an integral part of the condensed consolidated
financial statements.
Advanced Gaming Technology, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months
Ended March 31,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (733,710) $ (998,640)
Adjustments to Reconcile Net Loss to Net Cash
Provided by (Used in) Operating Activities:
Depreciation and amortization 191,515 130,833
Deferred revenues (310,000) -
Issuance of common stock for expenses 366,808 -
Change in operating assets and liabilities:
Accounts receivable (85,787) (5,821)
Prepaid expenses (734,008) (132,045)
Inventory (26,316) (14,528)
Notes receivable (69,790) -
Accounts payable and accrued liabilities (847,014) (141,543)
Net cash used in operating activities (2,248,302) (2,483,140)
Cash Flows From Investing Activities:
Intangible assets (2,002) -
Purchase of property and equipment (17,597) (431,678)
Acquisition of land - (11,425)
Deferred development costs (1,476) (39,484)
Purchase of gaming equipment - (477,788)
Net Cash Used In Investing Activities (21,075) (960,375)
Cash Flows From Financing Activities:
Proceeds from issuance of common stock 674,308 1,252,183
Proceeds from debt and notes 2,702,590 2,854,755
Repayment of debt and notes (665,368) (1,346,874)
Advances from joint venture partner - 270,000
Stockholder loans - (1,014,372)
Bank loan (354,100) 113,347
Net cash provided by financing activities 2,357,430 2,129,039
Net increase in cash and cash equivalents 88,053 6,920
Cash and cash equivalents at beginning of period 76,615 17,739
Cash and cash equivalents at end of period $ 164,668 $ 24,659
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for interest $ 125,670 $ 113,652
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Conversion of notes to common stock $ 1,645,903 $ -
The accompanying notes are an integral part of the condensed consolidated
financial statements.
Advanced Gaming Technology, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)
1. Interim Reporting
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
and with 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 month period ended March 31, 1997,
are not necessarily indicative of the results that may be expected for the
year ended December 31, 1997. 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, 1996.
2. Notes Payable
On April 8, 1997 the Company arranged financing for a total of $2,137,500
in 12% subordinated convertible redeemable debentures.
During the quarter ended March 31, 1997, $1,645,903 of certain debt and
liabilities was settled by the issuance of 4,697,309 common shares.
The bank loan expired during the first quarter of 1997. The bank loan
was repaid and the Company has not attained further revolving bank loans.
Item 2. Management's Discussion and Analysis or Plan of Operation.
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,
1996.
On February 11, 1997, the Company announced the introduction of version
2.14 of its software system. The revised software enhances the appeal in new
territories of the world market and the LCD screens of the MAXLITE handsets
were modified to enhance player viewing.
Since these modifications have been made, shipments and scheduled
shipments have shown a substantial increase. Through May 6, 1997 the Company
has installed a total of 1,225 of it's MAX BINGO units throughout North
America. The Company has an additional 570 units scheduled for installation
which will bring the total number of contracted MAX BINGO units to 1,795.
Based upon average lease revenues of $6 per unit, per day, the Company
projects that these 1,795 units will generate approximately $3,600,000 gross
revenue per annum, which exceed the Company's present operating costs. There
cannot, however, be any assurance that such projections will be met or that
operating costs will remain the same as present.
On April 25, 1997 the Company signed an agreement with the Kiowa Tribe of
Oklahoma granting the Company exclusive placement rights for its electronic
bingo equipment. The agreement provides for the installation of up to 1,000
MAX BINGO SYSTEMS units. The installation will comprise a combination of
MAXPLUS, MAXLITE, TurboMAX and Sonic Bingo.
The 1,000 units will be installed at the Kiowa Nation Cultural and
Entertainment Center. The entertainment center is a Class II gaming
operation as currently defined in the Indian Gaming Regulatory Act (IGRA) of
1988, and is located on Route I-44 in Oklahoma on the site of the Kiowa Tribal
land approximately 120 miles north of Dallas/Fort Worth, Texas.
Project funding is to be provided by Tri-State Management, Inc. and its
associates designated as Red River Management.
The Company projects that, at an average lease rate of $6 per unit per
day, the project could produce as much as $2,000,000 in annual gross
revenues. There is no assurance that such projections will be met.
Results of Operations -
1997 Compared to 1996
The net loss from operations was $733,710 in 1997 compared to $998,640 in
1996. Revenues from operations increased 261.42% from 1996. The increase is
primarily the result of $310,000 joint venture projects income and 25%
increase product sales.
Cost of sales as a percent of product sales remained relatively constant
at approximately 62%. The general and administrative expenses increased
slightly due to the addition of administrative personnel in anticipation of
increases in product sales. Research and development expenses increased
primarily due to the efforts of the Company with regards to the development of
Sonic Bingo, enhancements to PARTI-MAX and the development of new games for
the Mississippi and Texas markets.
Liquidity and Capital Resources -
The Company requires working capital principally to fund its current
operations, expand its operations and research. From time to time in the past
the Company has relied on short-term borrowing and the issuance of restricted
common stock to fund its operations. There are no formal commitments from
banks or other lending sources for lines of credit or similar short-term
borrowing, but the Company has been able to borrow any additional working
capital that has been required. It is anticipated that current operations
will expand and the funds generated will exceed the Company's working capital
requirements and that it will no longer seek loans to cover current
operations. However, expansion of current markets and the addition of new
markets, most likely will require additional working capital.
The Company does intend to intensify its search for new products or
technologies in development as well as those currently being marketed,
including complete operating businesses. In its acquisition program, the
Company focuses on opportunities that have demonstrated long-term growth
potential, strong marketing presence, and the basis for continuing
profitability. Where the Company believes it is warranted in order to acquire
a larger and more profitable business, the Company may commit its current
liquid resources, leverage its current operations and assets through
additional borrowings, dispose of one or more of its current activities, seek
additional debt or equity financing, or enter into other transactions to fund
a desired acquisition or expansion.
The Company is exploring potential acquisitions, but has not to date
reached any commitment, there can be no assurance that the Company will be
able to identify an acquisition candidate that will meet its criteria, that
the Company would be able to employ its existing resources advantageously to
fund such an acquisition, that any required debt or equity financing could be
obtained through alternative sources, or that any acquisition will in fact be
completed.
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.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
The Company filed three reports on Form 8-K during the three months ended
March 31, 1997.
1.Item reported: Item 9 sales of equity securities pursuant to regulation S
Date of report: April 24, 1997 (date of earliest event reported April 2,
1997)
2.Item reported: Item 9 sales of equity securities pursuant to regulation S
Date of report: April 7, 1997 (date of earliest event reported March 17,
1997)
3.Item reported: Item 9 sales of equity securities pursuant to regulation S
Date of report: March 17, 1997
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: May 15, 1997 By: /s/
Firoz Lakhani
President, Chief Operating
Officer and Director
DATE: May 15, 1997 By: /s/
Donald Robert Mackay
Principal Financial and
Accounting Officer