SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
________________________
FORM 8-K/A
AMENDMENT NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Earliest Event Reported
January 6, 2004
IGAMES ENTERTAINMENT, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Nevada
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(STATE OR OTHER JURISDICTION OF INCORPORATION OF ORGANIZATION)
000-49723 88-0501468
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(COMMISSION FILE NUMBER) (IRS EMPLOYER IDENTIFICATION NUMBER)
700 South Henderson Road, Suite 210
King of Prussia, Pennsylvania 19406
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (610) 354-8888
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--------------------------------------------------------------
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT.)
______________________________
GENERAL EXPLANATION
The purpose of this Report is to amend the Registrant's Current Report
on Form 8-K dated January 6, 2004 that was filed with the Securities and
Exchange Commission on January 21, 2004 (the "Initial Report") which reported on
the acquisition of Available Money, Inc. This Report amends the Initial Report
so as to provide the information required under Item 7(a) and 7(b) of Form 8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Business Acquired
Audited Financial Statements of Available Money, Inc.
Independent Auditors' Report
Balance Sheets Dated as of December 31, 2003 and December 31, 2002
Statements of Operations for the Years ended December 31, 2003 and
December 31, 2002
Statements of Cash Flows for the Years Ended December 31, 2003 and
December 31, 2002 Notes to Financial Statements
(b) Pro Forma Financial Statements of Business Acquired
Unaudited Pro Forma Combined Financial Statements of Available Money,
Inc.
Unaudited Pro Forma Combined Balance Sheet December 31, 2003
Unaudited Pro Forma Statements Of Operations for the Year Ended March
31, 2003
Unaudited Pro Forma Statements Of Operations for the Nine Months Ended
December 31, 2003
2
(a) Financial Statements of Business Acquired
AUDITED FINANCIAL STATEMENTS OF AVAILABLE MONEY, INC.
INDEX TO AUDITED FINANCIAL STATEMENTS
Independent Auditors' Report...................................................4
Balance Sheets.................................................................5
Statements of Operations and Retained Earnings.................................6
Statements of Cash Flows.......................................................7
Notes to Financial Statements..................................................8
3
SHERB & CO., LLP
805 Third Avenue New York, NY 10022 Voice: 212 838-5100 Fax: 212 838-2676
________________________________________________________________________________
Certified Public Accountants
INDEPENDENT AUDITORS' REPORT
Board of Directors
Available Money, Inc.
We have audited the accompanying balance sheets of Available Money, Inc., (an S
Corporation) as of December 31, 2003 and 2002, and the related statements of
operations and retained earnings and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects the financial position of Available Money, Inc. as of
December 31, 2003 and 2002, and the results of its operations and its cash flows
for the years then ended in conformity with accounting principles generally
accepted in the United States of America.
/s/ Sherb & Co., LLP
Certified Public Accountants
New York, New York
February 6, 2004
4
AVAILABLE MONEY, INC.
BALANCE SHEETS
December 31,
--------------------
2003 2002
-------- --------
ASSETS
Current assets:
Cash and cash equivalents ............................ $ 38,602 $ 62,385
Commission receivable ................................ 48,241 66,135
Advances to shareholder .............................. - 104,757
-------- --------
Total current assets ............................... 86,843 233,277
Property and equipment, net ............................ 54,314 -
Cash surrender value of life insurance ................. 35,590 -
Deposits ............................................... 26,500 33,314
-------- --------
$203,247 $266,591
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ..................................... $ 15,256 $ 712
Due to shareholder ................................... 128,500 133,758
-------- --------
Total current liabilities .......................... 143,756 134,470
Stockholders' equity:
Common stock, $1.00 par value, 75,000 shares
authorized; 200 shares issued and outstanding ....... 200 200
Additional Paid-in Capital ........................... 3,160 3,160
Retained Earnings .................................... 56,131 128,761
-------- --------
Total stockholders' equity ......................... 59,491 132,121
-------- --------
$203,247 $266,591
======== ========
See notes to financial statements.
5
AVAILABLE MONEY, INC.
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
Years Ended
December 31,
-----------------------
2003 2002
--------- ---------
Revenues ........................................... $ 615,742 $ 569,405
Selling, general and administrative expenses ....... 153,888 151,941
--------- ---------
Net income ......................................... 461,854 417,464
Retained earnings, beginning of year ............... 128,761 -
Less distributions ................................. (534,484) (288,703)
--------- ---------
Retained earnings, end of year ..................... $ 56,131 $ 128,761
========= =========
See notes to financial statements.
6
AVAILABLE MONEY, INC.
STATEMENTS OF CASH FLOWS
Years Ended
December 31,
----------------------
2003 2002
--------- ---------
Cash flows from operating activities:
Net income ......................................... $ 461,854 $ 417,464
Adjustments used to reconcile net income to net
cash provided (used) by operating activities:
Depreciation and amortization .................... 13,580 3,104
Cash surrender value of life insurance ........... (35,590) -
Increase (decrease) in:
Accounts payable ................................ 14,545 (1,576)
(Increase) decrease in:
Commission receivable ........................... 17,893 (66,134)
Deposits ........................................ 6,814 19,153
--------- ---------
Net cash provided by operating activities ............ 479,096 372,011
--------- ---------
Cash flows from investing activities:
Purchases of property and equipment ................ (67,894) (3,104)
--------- ---------
Cash flows from financing activities:
Advances to shareholder ............................ 104,757 (26,114)
Distributions to owners ............................ (534,484) (288,703)
Due to shareholder ................................. (5,258) (26,742)
--------- ---------
Net cash used by financing activities ................ (434,985) (341,559)
--------- ---------
NET INCREASE (DECREASE) IN CASH ...................... (23,783) 27,348
CASH, beginning of year .............................. 62,385 35,037
--------- ---------
CASH, end of year .................................... $ 38,602 $ 62,385
========= =========
Supplemental disclosures:
Cash paid during the year for interest ............. $ - $ -
========= =========
See notes to financial statements.
7
AVAILABLE MONEY, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002
1. ORGANIZATION
Available Money, Inc. ("Available Money", or the "Company"), a Nevada
corporation, was organized in April 1998 as a limited liability company. On
July 25, 2002 the Company changed its business structure to an S Corporation;
see Note 2 under "income taxes" for further discussion.
Available Money is a sales and marketing company for the automated teller
machine ("ATM") business throughout the United States. The Company is
currently contracted with approximately 20 businesses, primarily gaming
establishments, to provide and service ATMs. As a result of these contracts,
the Company has approximately 100 ATMs in service at these locations. The
Company has an agreement with Midwest Payment Systems, Inc. "MPS", a
subsidiary of Fifth Third Bank, pursuant to which MPS purchases the ATMs and
also provides the necessary processing services for each machine. In essence,
the Company is acting as a broker between the gaming establishments and MPS.
As a result of the acquisition, which occurred subsequent to year-end, the
Company plans on purchasing and servicing the ATMs directly, eliminating the
need for MPS, see Note 6 "Subsequent Events" for further discussion.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. CASH AND CASH EQUIVALENTS
For purposes of the statements of cash flows, the Company considers all
highly-liquid investments with an original maturity date of three months
or less to be cash equivalents.
b. REVENUE RECOGNITION
Revenue is recorded each month as it is earned. Each month the Company
receives a wire transfer from MPS, representing approximately 45% of the
net profit from the cooperative agreement between Available Money and MPS.
Net profit consists of interchange and surcharge fees received, less
operating expenses. Operating expenses consist of telecommunication
charges, cash replenishment services, repairs and maintenance expenses,
costs of funds, payments to landlord, depreciation and other miscellaneous
expenses. As new management plans on purchasing and servicing all the ATMs
directly in the subsequent year, the Company will change its revenue
recognition policy from net to gross. Interchange and surcharge fees from
each ATM and the corresponding expenses will be recorded directly as
revenues and expenses of the Company.
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AVAILABLE MONEY, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
c. FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair values of cash and cash equivalents, commission receivable and
accounts payable approximate their carrying amounts because of the short
maturities of these instruments.
d. PROPERTY AND EQUIPMENT
Property and equipment are stated at cost, and depreciation is provided by
use of straight-line and accelerated methods over the estimated useful
lives of the assets.
e. IMPAIRMENT OF LONG-LIVED ASSETS
The Company reviews long-lived assets to assess recoverability from future
operations using undiscounted cash flows. When necessary, charges for
impairments of long-lived assets are recorded for the amount by which the
present value of future cash flows exceeds the carrying value of these
assets.
f. INCOME TAXES
The shareholders of Available Money elected to be taxed as an S
Corporation, as defined in the Internal Revenue Code. Such status was also
elected for state tax purposes. Under this status, taxable income is
passed through and taxed at the shareholder level, rather than at the
corporate level.
The Company was taxed as a partnership until July 25, 2002, when the
Company changed its ownership structure from a Limited Liability
Corporation (LLC) to an S Corporation. The change in the Company's tax
status did not have a material effect on the financial statements. On July
25, 2002 the partners received a distribution representing all accumulated
earnings of the Company up to that date. The retained earnings balance at
December 31, 2002 represents earnings of the Company from July 25, 2002
through December 31, 2002.
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AVAILABLE MONEY, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, continued
g. USE OF ESTIMATES
Preparation of the financial statements in accordance with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the balance sheets and the reported amounts of
revenues and expenses during the reporting periods. Actual results could
differ from those estimates.
3. PROPERTY AND EQUIPMENT
The major classes of property and equipment at December 31, 2003 and 2002 are
as follows:
Estimated Life 2003 2002
-------------- ---- ----
Equipment ................... 5 years $ 67,894 $ -
Furniture ................... 5 - 7 years 3,104 3,104
--------- --------
70,998 3,104
Less accumulated depreciation .................. (16,684) (3,104)
--------- --------
$ 54,314 $ -
========= ========
Depreciation expense, for property and equipment, for the years ended
December 31, 2003 and 2002 was $13,580 and $3,104 respectively.
4. LIFE INSURANCE
The Company is the beneficiary of an insurance policy on the life of a
corporate officer. At December 31, 2003 and 2002, the cash surrender values
of the policy were $35,590 and 0, respectively.
5. RELATED PARTY TRANSACTIONS
At December 31, 2002 the Company was owed $104,757 from a 50% shareholder.
This amount was taken as a distribution in 2003 by that shareholder. At
December 31, 2003 and 2002 the Company owed the other 50% shareholder
$128,500 and $133,758 respectively. Amounts due from and due to shareholders
are non-interest bearing cash advances.
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AVAILABLE MONEY, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2003 AND 2002
6. SUBSEQUENT EVENTS
On January 6, 2004, pursuant to the terms of a Stock Purchase Agreement
between iGames Entertainment, Inc. ("iGames"), a Nevada Corporation, Helene
Regen and Samuel Freshman, iGames acquired all of the issued and outstanding
shares of capital stock of Available Money, Inc. iGames provides financial
services, primarily automated teller machine ("ATM"), credit card advances
and check cashing, to customers at gaming establishments. The purchase price
of this transaction was $6,000,000, $2,000,000 of which was paid in cash at
closing, $2,000,000 of which is due in cash on or before March 6, 2004, and
$2,000,000 of which is due in cash or, at the election of iGames, by issuance
of 1,470,589 shares of iGames common stock on the earlier of (i) the closing
of iGames' acquisition of Chex Services, Inc., (ii) the termination of that
proposed transaction or (iii) June 30, 2004. The Stock Purchase Agreement
provides for adjustment of the purchase price in the event that certain of
Available Money's customer contracts do not renew or that the former
stockholders of Available Money do not provide iGames with assistance in
obtaining renewals of such contracts. The primary assets acquired as a result
of this transaction are Available Money's contracts to provide automatic
teller machines to 18 customers, 15 of which are traditional casino
operations. The former stockholders of Available Money retain the right to
receive all payments subsequent to the closing date that relate to services
provided by Available Money through December 31, 2003 and are jointly and
severally liable for all costs and expenses incurred by Available Money
relating to services rendered on or before December 31, 2003.
The cash portion of the purchase price was and will be financed by a
$4,000,000 loan to iGames from Chex Services, Inc.
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(b) Pro Forma Financial Statements of Business Acquired
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following Unaudited Pro Forma Combined Financial Statements of iGames
Entertainment, Inc. ("iGames") and Money Centers of America, Inc. ("Money
Centers") and Available Money, Inc. ("Available Money") gives effect to the
merger between iGames and Money Centers and the acquisition of Available Money
under the purchase method of accounting prescribed by Accounting Principles
Board Opinion No. 16, Business Combinations. These Pro Forma statements are
presented for illustrative purposes only. The pro forma adjustments are based
upon available information and assumptions that management believes are
reasonable. The Unaudited Pro Forma Combined Financial Statements do not purport
to represent what the results of operations or financial position of iGames
would actually have been if the merger had in fact occurred on April 1, 2002 nor
do they purport to project the results of operations or financial position of
iGames for any future period or as of any date, respectively. The acquisition of
Money Centers by iGames has been accounted for as a reverse acquisition under
the purchase method for business combinations. The combination of the two
companies is recorded as a recapitalization of Money Centers pursuant to which
Money Centers is treated as the continuing entity. Accordingly, the operations
presented in the unaudited pro forma statement of operations include only the
historical operations of Money Centers and Available Money. Accordingly, the
operations for iGames for the year ended March 31, 2003 and for the nine months
ended December 31, 2003, have not been presented.
These Unaudited Pro Forma Combined Financial Statements do not give effect to
any restructuring costs or to any potential cost savings or other operating
efficiencies that could result from the merger between iGames, Money Centers and
Available Money.
You should read the financial information in this section along with iGames's
historical financial statements and accompanying notes in prior Securities and
Exchange Commission filings and in this amended Current Report on Form 8-K.
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iGAMES ENTERTAINMENT, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
DECEMBER 31, 2003
Pro Forma
Available Adjustments
Money, Money -------------------------
Inc. Centers iGames Debit Credit Pro Forma
--------- ----------- ------------ --------- --------- -----------
ASSETS
Current assets:
Cash and cash equivalents .................. $ 38,602 $ 245,999 $ 27,398 $ 311,999
Restricted cash ............................ - 1,675,953 150,000 1,825,953
Accounts receivable ........................ 48,241 28,695 10,060 86,996
Inventory .................................. - - 132,348 132,348
Deferred acquisition costs ................. - - 160,000 160,000
Prepaid expenses and other current assets .. - 250,231 - 250,231
--------- ----------- ------------ -----------
Total current assets ..................... 86,843 2,200,878 479,806 2,767,527
Property and equipment, net .................. 54,314 417,306 7,123 478,743
Intangible assets, net ....................... - 42,360 426,085 (2) 5,940,509 6,408,954
Cash surrender value of life insurance ....... 35,590 - - 35,590
Deposits ..................................... 26,500 - 4,865 31,365
Deferred financing costs ..................... - 141,607 - 141,607
--------- ----------- ------------ -----------
$ 203,247 $ 2,802,151 $ 917,879 $ 9,863,786
========= =========== ============ ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable ........................... $ 15,256 $ 95,415 $ 133,590 $ 244,261
Accrued expenses ........................... - 132,037 168,048 300,085
Current portion of capital lease ........... - 16,521 - 16,521
Notes payable .............................. - - 18,500 18,500
Notes payable - acquisition ................ - - - (2) 6,000,000 6,000,000
Lines of credit ............................ - 2,210,417 375,276 2,585,693
Due to shareholders ........................ 128,500 100,000 - 228,500
Commissions payable ........................ - 97,200 - 97,200
--------- ----------- ------------ -----------
Total current liabilities ................ 143,756 2,651,590 695,414 9,490,760
Capital lease ................................ - 47,795 - 47,795
Stockholder's equity:
Preferred stock, Series A, $.001 par value,
5,000,000, shares authorized 1,351,640
shares issued and outstanding, each share
of Series A Preferred stock is convertible
into 10 shares of common stock ........... - - - (1) 1,352 1,352
Common stock, $.004 par value, 50,000,000
shares authorized; 3,966,291 shares
issued and outstanding ................... 200 1 15,865 (1) 1
(2) 200 15,865
Additional paid-in capital ................. 3,160 142,000 4,746,554 (1) 4,541,305
(2) 3,160 347,249
Deferred compensation ...................... - - (6,250) (1) 6,250 -
Retained earnings (deficit) ................ 56,131 (39,235) (4,533,704) (2) 56,131 (1) 4,533,704 (39,235)
--------- ----------- ------------ -----------
Total stockholder's equity ............... 59,491 102,766 222,465 325,231
--------- ----------- ------------ -----------
$ 203,247 $ 2,802,151 $ 917,879 $ 9,863,786
========= =========== ============ ===========
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iGAMES ENTERTAINMENT, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED MARCH 31, 2003
Pro Forma
Adjustments
Available Money ------------------------
Money Centers Debit Credit Pro Forma
--------- ----------- --------- --------- -----------
Revenues ................................... $ 614,329 $ 3,179,035 (a) 8,669,020 $12,462,384
Operating expenses ......................... - 2,470,630 (a) 8,038,119 10,508,749
--------- ----------- -----------
Gross Profit ............................... 614,329 708,405 1,953,635
Selling, general and administrative expenses 214,562 766,470 981,032
--------- ----------- -----------
Income from operations ..................... 399,767 (58,065) 972,603
Other income (expenses):
Interest expense, net ...................... - (17,588) (17,588)
--------- ----------- -----------
- (17,588) (17,588)
--------- ----------- -----------
Net income ................................. $ 399,767 $ (75,653) $ 955,015
========= =========== ===========
Net income per common share-basic .................................................................. $ 0.38
===========
Net income per common share-diluted ................................................................ $ 0.05
===========
Weighted average common shares outstanding
-Basic ....................................................................................... 2,521,346
===========
Weighted average common shares outstanding
-Diluted ..................................................................................... 18,537,746
===========
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iGAMES ENTERTAINMENT, INC.
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
NINE MONTHS ENDED DECEMBER 31, 2003
Pro Forma
Adjustments
Available Money ------------------------
Money Centers Debit Credit Pro Forma
--------- ----------- --------- --------- -----------
Revenues ................................... $ 471,548 $ 4,857,133 (a) 7,360,354 $12,689,035
Operating expenses ......................... - 3,859,592 (a) 6,875,555 10,735,147
--------- ----------- -----------
Gross Profit ............................... 471,548 997,541 1,953,888
Selling, general and administrative expenses 125,237 806,685 931,922
--------- ----------- -----------
Income from operations ..................... 346,311 190,856 1,021,966
Other income (expenses):
Gain on forgiveness of debt ................ - 494,470 494,470
Interest expense, net ...................... - (163,069) (163,069)
Gain on disposal of fixed assets ........... - 3,263 3,263
--------- ----------- -----------
- 334,664 334,664
--------- ----------- -----------
Net income ................................. $ 346,311 $ 525,520 $ 1,356,630
========= =========== ===========
Net income per common share-basic .................................................................. $ 0.36
============
Net income per common share-diluted ................................................................ $ 0.07
============
Weighted average common shares outstanding
-Basic ....................................................................................... 3,772,219
===========
Weighted average common shares outstanding
-Diluted ..................................................................................... 19,788,619
===========
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Pro Forma Adjustments:
(1) To record the reverse acquisition between iGames and Money Centers whereby
Money Centers is treated as the continuing accounting entity.
(2) To give effect to the acquisition of Available Money as of December 31,
2003, for $6,000,000, a summary of the transaction is a follows:
Purchase Price ............................ $6,000,000
Fair Market Value of the Assets Acquired .. (203,247)
Liabilities Assumed ....................... 143,756
----------
Intangible Assets Acquired ................ $5,940,509
==========
Adjustment to the statements of operations for the year ended March 31, 2003 and
for the nine months ended December 31, 2003:
(a) To reflect revenues and cost of sales at gross due to Money Centers assuming
the contractual servicing of all ATMs internally, thereby changing the revenue
recognition policy from net to gross.
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SIGNATURES
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.
IGAMES ENTERTAINMENT, INC.
By: /s/ Christopher M. Wolfington
Name: Christopher M. Wolfington
Title: President and Chief Executive Officer
Date: March 17, 2004
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