AGTI filed the 3-31-99 10QSB today. This section was the most interesting:
ADVANCED GAMING TECHNOLOGY INC has filed a Form 10QSB with the United States Securities and Exchange Commission.
Click on the following hyperlink to view this filing:
freeedgar.com
Advanced Gaming Technology, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998
(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 ending March 31, 1999, are not necessarily indicative of the results that may be expected for the year ended December 31, 1999. 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, 1998.
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, 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 nor 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.
Te company filed for reorganization under chapter 11 of the U.S.
bankruptcy code on August 26, 1998. Since that time, efforts have been focused on developing a new operating strategy and completing the reorganization process.
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The company filed a plan of reorganization in December 1998. The plan and disclosure statement was approved in March1999. The plan of reorganization was confirmed by the bankruptcy court on June 29, 1999. The plan is expected to become effective in early August 1999.
Confirmation of the plan gives the company a new start and an opportunity to execute a new business plan. The company will receive approximately $1million on the effective date of the plan through settlement of outstanding litigation and new investment in the company. The new business plan will attempt to capitalize on the existing electronic bingo systems. The company will also look to explore new gaming related products and services as such opportunities become available. Diversification of operating revenue is a long-term goal.
Results of Operations -
1999 Compared to 1998
The loss for the three months ended March 31, 1999 was $110,888 compared to a loss of $94,290 for the same period in 1998. Revenue was $87,501 in the first quarter of 1999 compared to $184,790 in 1998. Most revenue in 1999 was royalty revenue from the Max Plus licensing agreement. Most of this revenue had not been collected at March 31, 1999 due to a dispute with the licensee.
The licensing matter was resolved in July of 1999. The parties were disputing payments received under the agreement. The company filed suit against the licensee and its successor in June of 1999. The matter was resolved in July of 1999. The company received a one-time payment of $850,000 in full settlement of the licensing agreement. The company regains the right to market the Max Plus and TurboMax systems.
Expenses for the quarter ended March 31, 1999 decreased to $101,889 from $1,060,118 in 1998. A substantial cost reduction effort was implemented when the reorganization effort began in August 1998.
Other income(expense) for the first quarter of 1998 was boosted by a one-time license fee related to the Max Plus license and royalty agreement of $1,500,000. This caused net other income for the first quarter of 1998 of $873,318. Other income (expense) for the first quarter of 1999 of consisted of an expense of $96,500. This cost represented interest expense on notes payable.
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Interest expense decreased substantially in the first quarter of 1999 due to the conversion of some obligations to common stock during the second half of 1998 and due to re-negotiation efforts in conjunction with the bankruptcy proceeding.
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. This is due in part to the highly capital intensive nature of the majority of the business of the Company, thereby reducing the chances of competition providing for sales price reductions while inflation in the costs are more likely to be passed through to the customer. The Company's operations are subject to state and local
gaming laws as well as various federal laws and regulations governing business activities with Native American Tribes. The State and local laws in the United States which govern the lease and use of gaming products are widely disparate and continually changing due to legislative and administrative actions and
judicial interpretations. If any changes occur in gaming laws through statutory enactment or amendment, judicial decision or administrative action restricting the manufacture, distribution or use of some or all of the Company's products, the Company's present and proposed business could be adversely affected. The operation of gaming on Native American reservations is subject to the Indian Gaming Regulatory Act ("IGR"). Under IGR certain types of gaming activities are classified as Class I, Class II or Class III. The Company's business will be impacted based upon how its products are ultimately classified. However, 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.
Liquidity and Capital Resources -
The Company has minimal revenues, but has eliminated most operating costs until additional product can be placed. The company's plan of reorganization was confirmed by the bankruptcy court in the district of Las Vegas on June 29, 1999. The plan is expected to become effective in early August, 1999. In conjunction
with the plan and settlement of outstanding litigation the company will receive approximately $1 million of new funding. The company believes that this funding will be adequate for near-term operating needs. In the future additional financing may be necessary to support expansion of existing products or to pursue new projects. There is no certainty that such funds will be available to the company when needed. This could inhibit future growth of the company or
could cause the company to delay future projects until financing is available. |
