UNITED STATES
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) April 5, 2001
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VendingData Corporation
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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 Number) (IRS Employee Identification No.)
6830 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 9. REGULATION FD DISCLOSURE.
VendingData Corporation (the "Company") is furnishing the information
set forth in this Item 9 solely to avoid any issues relating to the Company's
compliance with Regulation FD without expressing any view as to whether such
information is material information. The information "furnished" in this report
shall not be deemed "filed" for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, nor shall it be deemed incorporated by
reference in any filing under the Securities Act of 1933, as amended.
The financial projections (the "Projections") set forth below are
intended to speak only as of the date of this report and should not be construed
as representing projections of the Company's anticipated sales, revenues, costs,
expenses, net income, or assumptions or estimates as to future events or
outcomes, as to any subsequent date. By furnishing the Projections, the Company
is not undertaking, and it disclaims any obligation, to furnish updated or
revised projections, or information contained in the Projections, to reflect any
events or circumstances occurring or existing at any time after the date of this
report. Consequently, the Projections set forth below should not be regarded as
a representation by the Company that the Projections, or any one of them, can or
will be achieved. The Projections were not prepared with a view toward public
disclosure or compliance with the Securities and Exchange Commission's published
guidelines regarding projected financial information. The Company's annual and
quarterly financial statements, and the accompanying discussion of the Company's
financial condition and results of operations, contained in the Company's annual
report on Form 10-KSB and quarterly reports on Form 10-QSB filed with the
Securities and Exchange Commission after the date of this report will contain
disclosures and information regarding the Company's actual results and condition
for the periods covered by the Projections. No assurance can be given that the
Company can or will attain the results contemplated in the Projections.
The Projections set forth below, and all statements of management
concerning future events or outcomes contained in this report, contain
"forward-looking statements" as defined in the Private Securities Litigation
Reform Act of 1995. Such statements can be identified by the use of
forward-looking terminology, such as the words "will," "anticipate," "believe,"
"estimate," "expect" and similar expressions. Such forward-looking statements
involve known and unknown risks, uncertainties and other important factors that
could cause the actual results, performance or achievements of the Company, or
industry results, to differ materially from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
risks, uncertainties and other important factors include, among others: general
economic or business conditions; the Company's limited operating history;
industry trends; changes in business strategy or development plans; availability
and terms of capital; changes in or the failure to comply with governmental
regulations; dependence on key personnel; market acceptance of the Company's
products; inability to protect the Company's intellectual property rights; the
continued growth of the gaming industry; vigorous competition in the gaming
industry; dependence on existing management; gaming regulations (including
actions affecting licensing); and other factors referenced in the Projections
and the Company's annual and quarterly reports on file with the Securities and
Exchange Commission. As with the Projections, the Company disclaims any
obligation to disseminate or furnish any updates or revisions to any
forward-looking statement contained in this report to reflect any change in the
Company's expectations with regard to the statement or any change in events,
conditions or circumstances on which any such statement is based.
I. THE PROJECTIONS: THE ASSUMPTIONS
The description of the Company's business, including its products, such
as its shufflers and its SecureDrop(TM) product line, is contained in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 2000,
"Item. 1 - Business."
2
The Projections do not include the purchase of certain assets and
technology consummated by the Company in March 2001. This asset acquisition is
described in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 2000, "Item. 1 - Business." The Company plans to use the assets and
technology so acquired to broaden the SecureDrop(TM) product line. Management
believes the addition of the acquired assets and technology could add $4 to $6
million in revenue for the year 2002.
In addition to the foregoing, to achieve the results contained in the
Projections, it is assumed that the Company will have obtained the necessary
gaming licenses, approvals or approval waivers to sell its products in the
following jurisdictions by the date indicated:
Indiana, April 2001
New Jersey, May 2001
Connecticut, June 2001
Caribbean, August 2001
Canada, August 2001
Philippines, May 2001
Puerto Rico, November 2001
France, December 2001
The Netherlands, May 2001
Monte Carlo, June 2001
Colorado, September 2001
Peru, August 2001
Chile, May 2001
Acquiring a gaming license or approval can be time consuming and
costly. No assurance can be given that the Company will be able to acquire the
gaming licenses, approvals or approval waivers or acquire them in a timely
manner.
The Projections assume that when a corporation with multiple casino
properties installs SecureDrop(TM) in one property, it will realize the benefits
to SecureDrop(TM) and install SecureDrop(TM) in the remaining properties. No
assurance can be given that corporate customers will install SecureDrop(TM) in
any property or in other properties once the first installation has been
completed.
The Projections assume that, as additional SecureDrop(TM) units are
placed, demand will increase for the product as it becomes more accepted in the
industry. No assurance can be given that the increase in demand will occur.
As the Company is currently not profitable, no assurance can be given
that the Company will be profitable.
REVENUES
SecureDrop(TM) revenues are recognized when the SecureDrop(TM) buckets
and bases are installed and the customer has received the SecureDrop(TM) cart,
mule and conveyor. Rental revenue from the Company's shufflers is recognized on
a monthly basis after installation. Revenue on shuffler sales is recognized when
the shufflers are shipped.
3
SECUREDROP(TM)
The Company has installed, through December 31, 2000, a total of 15,933
SecureDrop(TM) 2000 and 2804 SecureDrop(TM) 3000 units in 26 properties in the
United States and internationally. Domestically, the Company has contracts or
contracts pending approval with over 12 casino properties for the purchase and
installation of 18,000 units that the Company expects to ship in the first half
of 2001. The Company has several domestic customers, representing approximately
one third of the current installed base, who operate multiple properties
controlling an additional 50,000 gaming machines. Management believes it will
install between 15,000 and 20,000 SecureDrop(TM) units in the additional
machines during the third and fourth quarters of 2001. The Company has signed
contracts or contracts pending approval with 12 international casino properties
for the purchase of 4,100 units. Management expects to ship these units in the
second and third quarters of 2001. The Company has installed 2,100 units for
five international customers who operate multiple properties controlling an
additional 90,000 gaming machines. Management believes it will install 3,000
SecureDrop(TM) units into these additional machines in 2001 and 6,000
SecureDrop(TM) units in 2002.
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SecureDrop(TM) Sales Price/Unit Units
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Product ($) 2001 Sales 2002 Sales
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Bucket 2000 110 63,040 100,000
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Bucket 3000 200 6,800 15,300
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Bucket 5000 400 0 14,250
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Mule & Cart 37,500* 63 98
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Push Cart 24,500 37 78
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Soft Drop Cart 14,000 5 40
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*THE COMPANY WILL BE OFFERING INTRODUCTORY PRICING THROUGH THE 1ST QUARTER OF
2001.
SHUFFLERS
Through year ended December 31, 2000, the Company has installed 443
Random Ejection Shufflers(TM), 334 of which are on a rental basis and 109 of
which were sold, at 59 properties.
The Company is currently pursuing contracts with over 30 casinos for
the installation of approximately 240 Random Ejection Shuffler(TM) units (185
rentals and 55 sales). Management expects the majority of these units to be
installed during the third and fourth quarters of 2001. The Company is also
pursuing contracts for the installation of 60 Continuous shufflers, most of
which will be installed in the third and fourth quarters of 2001.
4
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Product Monthly Rental/ Units
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units ($)
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SHUFFLER RENTALS 2001 RENTALS 2002 RENTALS
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Random Ejection 275-325 530 650
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Continuous 300-325 200 320
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Specialty 450 0 230
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SHUFFLER SALES 2001 SALES 2002 SALES
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Random Ejection 6500 97 133
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Continuous 7500 48 120
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Specialty 8950 0 104
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The following table reflects the revenue breakdown projections by
product. (Figures are in thousands of dollars.)
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Product 2001 2002
Revenues Revenues
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SECUREDROP(TM) REVENUES
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Bucket 2000 $6,934 $11,000
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Bucket 3000 1,490 3,825
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Bucket 5000 0 7,055
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Mule & Cart 2,350 3,675
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Push Cart 906 1,911
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Soft Drop 70 560
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SHUFFLER REVENUES
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Random Ejection Shufflers(TM)
(rental and sales) 2,224 3,185
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Continuous Shufflers
(rental and sales) 745 1,933
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Specialty Shufflers 0 1,578
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TOTAL SALES $14,720 $34,722
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DIRECT COST OF GOODS SOLD
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Product 2001 2002
Costs Costs
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SECUREDROP(TM) COSTS
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Bucket 2000 $3,152 $5,000
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Bucket 3000 476 1,071
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Bucket 5000 0 1,339
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Mule & Cart 756 1,176
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Push Cart 333 702
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Soft Drop 23 110
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SHUFFLER COSTS
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Random Ejection Shufflers(TM)(rentals and sales) 548 620
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Continuous Shufflers (rentals and sales) 169 433
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Specialty Shufflers 0 179
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TOTAL COSTS 5,457 10,630
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5
EXPENSES
General and administrative expenses as a percentage of sales decrease
through the year, reaching 21% by fourth quarter. This decrease is attributable
to efficiency in administration as volume increases. The Company plans to
increase the sales force from 4 to 14 by the end of 2001, then to 32 by the end
of 2002.
Research and development expenses decrease during 2001 as the
SecureDrop(TM) 5000 System is completed.
Finance, Human Resources and MIS departments plan to increase the
number of employees from an aggregate of 4 to 6 by the end of 2001 and then to 9
by the end of 2002.
GROSS MARGINS AND NET INCOME
Gross margins improve throughout the year, reaching 56% by the fourth
quarter of 2001 and 66% by the end of 2002, primarily due to:
o Efficiency in manufacturing as volumes increase thus reducing manufacturing
expense; o Improved product sourcing from subcontractors in Asia; and o Higher
prices/higher margins for the SecureDrop(TM) Series 5000.
The Company anticipates it will be profitable by the third quarter of
2001, ending the full year with approximately $600 thousand in net income. Net
income for 2002 is projected to be $12 million.
NEW PRODUCTS LAUNCH
Field trials and beta testing of the SecureDrop(TM) 5000 System are
planned for the second quarter of 2001. Field trials and beta testing of the
specialty shuffler are planned for the third quarter of 2001, with the first
product shipments anticipated in the first quarter of 2002.
6
II. THE PROJECTIONS
VENDINGDATA CORPORATION CONSOLIDATED
QUARTERLY PROFORMA STATEMENT OF OPERATIONS
MARCH 31, 2001 TO DECEMBER 31, 2002
2001
Q1 Q2 Q3 Q4 TOTAL
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SecureDrop 488,400 2,464,000 4,076,000 4,722,500 11,750,900
Shuffler rental 303,025 431,100 564,525 680,875 1,979,525
Shuffler sale 45,500 273,000 336,000 336,000 990,500
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Total revenue 836,925 3,168,100 4,976,525 5,739,375 14,720,925
SecureDrop COGS 194,000 998,000 1,676,000 1,871,500 4,739,500
Shuffler Rental Depreciation 98,559 98,559 92,994 93,692 383,803
Shuffler COGS 15,400 92,400 112,800 112,800 333,400
Manufacturing 390,000 290,000 200,000 150,000 1,030,000
Service cost 228,401 215,989 223,500 268,775 936,665
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COGS total 926,360 1,694,948 2,305,294 2,496,767 7,423,368
Gross profit (89,435) 1,473,152 2,671,232 3,242,608 7,297,557
General & administrative
Sales 324,887 511,762 692,408 714,545 2,243,602
Executive 301,785 331,473 390,848 390,848 1,414,954
Finance 100,766 113,360 118,100 127,579 459,805
Operating income - - - - -
Before development costs (816,874) 516,557 1,469,876 2,009,636 3,179,196
Development costs - - - - -
SecureDrop 233,034 201,422 169,733 169,733 773,921
Shuffler 79,580 81,110 81,110 81,110 322,909
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Income from operations (1,129,487) 234,025 1,219,034 1,758,794 2,082,366
Interest expense 357,951 398,228 377,491 356,446 1,490,117
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Income before taxes (1,487,439) (164,203) 841,543 1,402,348 592,249
Provision for income taxes - - - - -
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Net income $(1,487,439) $(164,203) $ 841,543 $1,402,348 $ 592,249
EBITDA $ (947,528) $ 410,584 $1,384,627 $1,919,686 $2,767,369
(continued)
2002
Q1 Q2 Q3 Q4 TOTAL
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SecureDrop 5,618,500 6,616,000 7,201,250 8,589,000 28,024,750
Shuffler rental 791,250 930,750 1,070,250 1,209,750 4,002,000
Shuffler sale 529,750 554,250 769,050 842,250 2,695,300
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Total revenue 6,939,500 8,101,000 9,040,550 10,641,000 34,722,050
SecureDrop COGS 2,048,000 2,261,500 2,396,000 2,693,000 9,398,500
Shuffler Rental Depreciation 105,225 117,300 129,375 141,450 493,350
Shuffler COGS 170,000 162,000 195,600 210,600 738,200
Manufacturing 135,000 135,000 135,000 135,000 540,000
Service cost 307,413 324,700 351,400 391,675 1,375,188
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COGS total 2,765,638 3,000,500 3,207,375 3,571,725 12,545,238
Gross profit 4,173,863 5,100,500 5,833,175 7,069,275 22,176,813
General & administrative
Sales 1,027,672 1,243,489 1,498,702 1,707,032 5,476,894
Executive 468,330 470,111 473,674 480,072 1,892,186
Finance 165,041 173,380 173,665 176,370 688,456
Operating income - - - - -
Before development costs 2,512,819 3,213,520 3,687,134 4,705,802 14,119,276
Development costs - - - - -
SecureDrop 179,916 179,916 179,916 183,515 723,264
Shuffler 85,976 85,976 85,976 85,976 343,906
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Income from operations 2,246,926 2,947,627 3,421,241 4,436,311 13,052,106
Interest expense 335,675 290,754 211,471 165,526 1,003,427
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Income before taxes 1,911,252 2,656,873 3,209,770 4,270,785 12,048,679
Provision for income taxes - - - - -
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Net income $ $1,911,252 $2,656,873 $3,209,770 $4,270,785 $12,048,679
EBITDA $2,413,951 $3,123,127 $3,608,816 $4,635,961 $13,781,856
7
VENDINGDATA CORPORATION CONSOLIDATED
QUARTERLY PROFORMA BALANCE SHEET
DECEMBER 31, 2000 TO DECEMBER 31, 2002
Dec-00 Mar-01 Jun-01 Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Dec-02
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ASSETS
Current Assets
Cash $432,069 $147,599 $822,254 $1,032,918 $365,127 $767,230 $1,071,559 $953,025 $2,132,067
Accounts receivable 885,337 709,463 1,671,375 1,661,138 2,826,201 3,477,000 4,051,500 4,692,900 5,505,375
Other receivables 45,445 45,445 45,445 45,445 45,445 45,445 45,445 45,445 45,445
Vending inventory - - - - - - - - -
Secure drop inventory 892,598 667,598 442,598 457,200 1,099,650 1,005,375 1,113,750 1,213,500 1,366,500
Shuffler inventory 646,407 526,407 406,407 286,407 166,407 162,000 162,000 195,600 210,600
Prepaid expenses 55,142 55,142 260,142 215,142 170,142 125,142 80,142 35,142 20,142
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Total Current 2,956,998 2,151,653 3,648,221 3,698,249 4,672,972 5,582,192 6,524,396 7,135,612 9,280,129
Property & equipment 894,568 842,968 796,768 755,968 720,568 690,568 664,168 637,768 611,368
VendingData on rent - - - - - - - - -
SecureDrop on rent - - - - - - - - -
Shufflers on rent 1,545,940 1,531,181 1,674,122 1,881,629 2,069,137 2,174,912 2,282,612 2,378,237 2,461,787
Intangible assets 239,186 237,386 235,586 233,786 231,986 230,186 228,386 226,586 224,786
Deferred interest 631,673 574,673 517,673 460,673 403,673 346,673 289,673 232,673 175,673
Deposits 591,266 555,266 519,266 483,266 447,266 411,266 375,266 339,266 303,266
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Total Assets $6,859,631 $5,893,127 $7,391,636 $7,513,571 $8,545,602 $9,435,797 $10,364,501 $10,950,142 $13,057,009
=====================================================================================================
(continued)
Dec-00 Mar-01 Jun-01 Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Dec-02
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Current Liabilities
Working capital
line of credit $450,000 $450,000 $450,000 $450,000 $450,000 $450,000 $450,000 $450,000 $0
Leases payable 1,715,227 1,580,227 1,445,227 1,310,227 1,175,227 1,040,227 905,227 770,227 635,227
Notes payable 1,766,000 2,266,000 2,266,000 1,916,000 1,916,000 1,416,000 1,416,000 1,416,000 -
Accounts payable 952,512 1,002,512 1,002,512 1,002,512 1,002,512 836,373 913,123 1,010,748 1,112,748
Accrued expenses 405,722 405,722 405,722 405,722 405,722 405,722 405,722 405,722 405,722
Accrued interest 310,152 295,152 280,152 265,152 250,152 235,152 220,152 205,152 190,152
Convertible debt - - - - - - - - -
Stockholder loans 109,358 120,211 122,841 93,151 62,752 47,752 32,752 17,752 2,752
Customer deposits 281,254 356,254 431,254 506,254 581,254 656,254 731,254 786,254 801,254
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Total Current
Liabilities 5,990,225 6,476,078 6,403,708 5,949,018 5,843,619 5,087,480 5,074,230 5,061,855 3,147,855
Other long term debt
Leases payable 3,030,573 3,089,661 2,848,749 2,607,837 2,366,925 2,126,013 1,885,101 1,644,189 1,403,277
Convertible debt 3,250,000 3,250,000 5,250,000 5,250,000 5,250,000 5,250,000 3,800,000 1,500,000 1,500,000
Stockholder loans 151,836 136,836 121,836 106,836 91,836 76,836 61,836 - -
Deferred charges 198,769 189,769 180,769 171,769 162,769 153,769 144,769 135,769 126,769
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Total Liabilities 12,621,403 13,142,344 14,805,062 14,085,460 13,715,149 12,694,098 10,965,936 8,341,813 6,177,901
Stockholders' equity
Common stock, $.001
par value 10,855 10,855 10,855 10,855 10,855 10,855 10,855 10,855 10,855
Additional
paid-in-capital 17,238,756 17,238,756 17,238,756 17,238,756 17,238,756 17,238,756 17,238,756 17,238,756 17,238,756
Retained earnings (23,011,383)(24,498,828)(24,663,037)(23,821,500)(22,419,158)(20,507,912)(17,851,046)(14,641,282)(10,370,503)
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Total stockholders'
equity (5,761,772) (7,249,217) (7,413,426) (6,571,889) (5,169,547) (3,258,301) (601,435) 2,608,329 6,879,108
Total Liabilities
and Stockholders'
Equity $6,859,631 $5,893,127 $7,391,636 $7,513,571 $8,545,602 $9,435,797 $10,364,501 $10,950,142 $13,057,009
===========================================================================================================
8
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
VENDINGDATA CORPORATION
Date: April 5, 2001 By: /s/ Steven J. Blad
-------------------------------------
Steven J. Blad
Its: President and Chief Executive Officer
9