10-Q/A 1 l96051ae10vqza.txt INTERLOTT TECHNOLOGIES, INC. 10-Q/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q/A (Amendment No. 1) [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended June 30, 2002 OR [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period from____ to ____ Commission File Number 001-12986 INTERLOTT TECHNOLOGIES, INC. (Exact name of Registrant as specified in its charter) Delaware 31-1297916 (State of Incorporation) (I.R.S. Employer Identification No.) 7697 Innovation Way, Mason, Ohio 45040 (Address of principal executive offices, including zip code) (513) 701-7000 (Registrant's telephone number, including area code) -------------------- Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve 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 -- Indicate the number of shares outstanding of each of the issuer's classes of Common Stock as of the latest practicable date. CLASS OUTSTANDING AT AUGUST 14, 2002 ---------------------------- ------------------------------ Common Stock, $.01 Par Value 6,462,669 shares EXPLANATORY NOTE This amendment is filed to correct a transposition error in the Condensed Statements of Income. The original filing showed "Selling, general, and administrative expenses" for the six months ended June 30 in the three-month columns and vice versa. The error did not affect any of the other numbers reported. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS INTERLOTT TECHNOLOGIES, INC. CONDENSED BALANCE SHEETS JUNE 30, 2002 AND DECEMBER 31, 2001

See accompanying notes to condensed financial statements. 2 INTERLOTT TECHNOLOGIES, INC. CONDENSED STATEMENTS OF INCOME THREE MONTHS AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001

3 INTERLOTT TECHNOLOGIES, INC. CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED) SIX MONTHS ENDED JUNE 30, 2002 AND 2001

4 Supplemental Disclosures of Cash Flow Information: Interest paid $1,141,567 $732,949 Income taxes paid 132,686 1,246,656 Net book value of capitalized leased ITVMs returned from field and transferred to inventory 44,738 902,574 Interest swap liability 117,855 - Business combination accounted for as a purchase Accounts receivable 0 1,043,852 Inventory 0 3,422,053 Value of leases acquired 0 4,281,005 Goodwill 0 4,664,769 ---------- ----------- $0 $13,411,679 ========== ===========

See accompanying notes to condensed financial statements. 5 INTERLOTT TECHNOLOGIES, INC. Notes to Condensed Financial Statements 1. BASIS OF PRESENTATION The accounting and reporting policies of Interlott Technologies, Inc. conform to generally accepted accounting principles in the United States of America. The financial statements for the three months and six months ended June 30, 2002 and 2001 are unaudited and do not include all information or footnotes necessary for a complete presentation of financial condition, results of operations and cash flows. The interim financial statements include all adjustments, consisting only of normal recurring accruals, which in the opinion of management are necessary for a fair presentation. The financial statements should be read in conjunction with the financial statements and notes which appear in the Company's 2001 Annual Report on Form 10-K. The results of operations for the three months and six months ended June 30, 2002 are not necessarily indicative of the results to be expected for the entire year ending December 31, 2002. 2. INVENTORIES Inventories at June 30, 2002 and December 31, 2001 consisted of the following: 2002 2001 ----------- ----------- Finished goods $ 2,202,812 $ 2,255,882 Work in process 256,329 531,355 Raw materials and supplies 6,756,889 7,841,053 ----------- ----------- $ 9,216,030 $10,628,290 3. ACQUISITION On June 1, 2001, Interlott Technologies, Inc. completed the acquisition of the lottery assets of On-Point Technology Systems, Inc. of San Marcos, California. Through the purchase, Interlott acquired all of the lottery assets of On-Point, including patents, technology, accounts receivable, inventory, service contracts and lease contracts with the New York, Illinois, Virginia and Missouri state lotteries. The purchase price included approximately $13 million paid at closing, deferred payments of $9 million payable, subject to adjustment, over 5 years, and an earn-out of up to $6 million based upon certain future revenues. In addition, at the closing Interlott and On-Point entered into a separate agreement to market a patented design for an on-line activated instant lottery ticket. Prior to the closing, to finance the cash payment paid at closing, Interlott increased its existing credit facility with Fifth Third Bank, Cincinnati, Ohio (which participated portions of the credit facility to Huntington Bank and National Bank of Canada) from $25 million to $30 million, and completed a mezzanine financing of junior debt in the form of a term note due June 30, 2003 in the principal amount of $5 million with Fifth Third Bank. The note bears interest at the rate of 9% per annum and the Company has paid and must pay a success fee equal to 1% of the unpaid principal balance of the note outstanding on the last day of the fiscal quarter for each of the four (4) fiscal quarters ending on September 30, 2001, December 31, 2001, March 31, 6 2002, and June 30, 2002; and equal to 1.5% of the unpaid principal balance of the note outstanding on the last day of the fiscal quarter for each of the four (4) fiscal quarters ending on September 30, 2002, December 31, 2002, March 31, 2003, and June 30, 2003. The acquisition has been accounted for by the purchase method. Revenues reported during the quarter ending June 30, 2002 from lease and maintenance contracts acquired were approximately $1.5 million. 4. GOODWILL On July 20, 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141, Business Combinations and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No. 141 requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. The Company adopted SFAS No. 141 on July 1, 2001. The change had no material effect on the Company's financial position or results of operations. SFAS No. 142 requires that goodwill and intangible assets with indefinite useful lives no longer be amortized, but instead be tested for impairment at least annually in accordance with the provisions of SFAS No. 142. SFAS No. 142 also requires that intangible assets with definite useful lives be amortized over their respective estimated useful lives to their estimated residual values, and reviewed for impairment. The Company adopted SFAS No. 142 on January 1, 2002, as required. As a result, there was no amortization of goodwill relating to the On-Point acquisition for the three or six months ended June 30, 2002. Goodwill amortization for the three months ended June 30, 2001 was $54,427. At this time, the Company believes that no impairment exists. 5. COMPREHENSIVE INCOME Comprehensive income reflects the change in the estimated fair market value of the Company's interest rate swap agreements. The estimated fair value is based upon appropriate market information and projected interest rate changes obtained from a reputable financial institution. Total comprehensive income for the three and six months ended June 30, 2002 is summarized as follows: Three Months Six Months ------------ ---------- Net income $185,390 $707,169 Other comprehensive income 2,670 117,855 -------- -------- Total comprehensive income $188,060 $825,024 ======== ======== 7 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this amendment to report to be signed on its behalf by the undersigned thereunto duly authorized. INTERLOTT TECHNOLOGIES, INC. (Registrant) Date: August 30, 2002 /s/ Dennis W. Blazer -------------------------------------------- Dennis W. Blazer Chief Financial and Accounting Officer 8

INTERLOTT TECHNOLOGIES INC 10-Q/A