Stock sale OK’d for LV slot maker

Thursday, Feb. 7, 2002 | 10:52 a.m.

CARSON CITY -- A Las Vegas slot machine manufacturing company that is on the verge of collapse has gained preliminary approval from the state Gaming Control Board to issue 13 million shares of common stock to pay its investors and creditors.

The board, in a four-hour session Wednesday, approved the application of Innovative Gaming Corp. of America but prohibited the sale of the shares to the public.

Board member Scott Scherer said the stock was "very speculative and a risky investment." He added the issuance of the stock to the security holders and vendors "was the only way to save the company."

Board member Bobby Siller said, "I don't see any other option. It's either this (the stock) or you're under." This will take care of the obligations to the debtors and vendors, Siller said.

The board said there were 350 vendors who were owed more than $3 million plus others who held preferred stock.

Innovative Gaming this week announced a merger with GET, an Australian company involved in software and Internet gaming. GET will put in an additional $5 million to Innovative Gaming and end up with 49 percent of the firm.

Laus Abdo, president of Innovative, said Internet gaming was only a small part of GET, which has 50 employees -- 40 of them software engineers.

Abdo told the board there is a plan in place in which the company hopes to make $17 million in sales this year.

It was revealed during the hearing that Innovative was delinquent in paying money into the 401K accounts of its employees. Loren Piel, a company official, said it has not paid the December amount. And in the past it used employee funds to run the business because of the financial difficulty.

Piel said, "It was a conscious decision to use the funds to meet business obligations."

But he said the delinquency is only $4,000 to $5,000 and it will make deposits "immediately" in the future, plus pay the prescribed penalties.

Siller told Innovative executives the company has been "a ship without a rudder. You didn't know where you were going. You got into questionable business transactions. It looks like the best intentions turned bad."

The company has new officials at the top. The board recommended approval of Minnesota lawyer Thomas J. Foley as chairman of the board and chief executive officer. He took over in October from Roland M. Thomas.

Abdo arrived at Innovative late last year also.

The board allowed former Chief Executive Officer Roland Malcom Thomas to withdraw his application to be licensed as an officer and to acquire control of the company.

Board Chairman Dennis Neilander said Thomas would not have received a license. He said there were inaccuracies in his tax returns; his income reports were not correct and there was an issue of his not reporting his correct net worth.

The board permitted Thomas to withdraw but he will not be able to able to re-apply for one year. Thomas, although he still holds a small stake in Innovative Gaming, will not be permitted to become involved in other gaming operations.

The state Gaming Commission will meet Feb. 21 to take final action on the applications.

Other applications recommended by the board for approval included:

Brian R. Gamache for licensing as president, chief executive officer and director of Chicago slot machine maker WMS Industries Inc.

Mark L. Yoseloff as chief executive officer and chairman of the board of Shufflemaster Inc. in Las Vegas.

Scott Nielson to sell his 25 percent in the Wildfire Casino in Las Vegas to John and James Bauchman, giving them 100 percent of the operation.