-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FUyYet7DRCKS3QjxHbVtZjQRL3FljemOirJHubQEeCJoLQdQt02mrh8S2glzp1tO rI8q4sXtqej79DHjc8WVsg== 0001227528-07-000093.txt : 20070418 0001227528-07-000093.hdr.sgml : 20070418 20070417215419 ACCESSION NUMBER: 0001227528-07-000093 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20061231 FILED AS OF DATE: 20070418 DATE AS OF CHANGE: 20070417 FILER: COMPANY DATA: COMPANY CONFORMED NAME: STRATEGIC GAMING INVESTMENTS, INC. CENTRAL INDEX KEY: 0000278165 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MISCELLANEOUS AMUSEMENT & RECREATION [7990] IRS NUMBER: 020314487 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-09047 FILM NUMBER: 07772190 BUSINESS ADDRESS: STREET 1: 845 SOUTH MAIN SUITE 1B CITY: BOUNTIFUL STATE: UT ZIP: 84010 BUSINESS PHONE: 8012444405 MAIL ADDRESS: STREET 1: 845 SOUTH MAIN SUITE 1B CITY: BOUNTIFUL STATE: UT ZIP: 84010 FORMER COMPANY: FORMER CONFORMED NAME: LEFT RIGHT MARKETING TECHNOLOGY INC DATE OF NAME CHANGE: 20031002 FORMER COMPANY: FORMER CONFORMED NAME: LEFT RIGHT MAKETING TECHNOLOGY INC DATE OF NAME CHANGE: 20030815 FORMER COMPANY: FORMER CONFORMED NAME: GLOBAL GAMING & TECHNOLOGY INC DATE OF NAME CHANGE: 19920703 10KSB 1 msgme10ksb123106v3.txt STRATEGIC GAMING INVESTMENTS, INC. DECEMBER 31, 2006 FORM 10-KSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-KSB [X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2006 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 000-09047 STRATEGIC GAMING INVESTMENTS, INC. ---------------------------------------------- (Name of small business issuer in its charter) DELAWARE 20-3454263 ----------------------------- ----------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2580 Anthem Village Dr., Henderson, NV 89052 ---------------------------------------------- (Address of principal executive offices)(zip code) Issuer's Telephone Number: (702) 563-1600 Securities registered under Section 12(b) of the Exchange Act: None. Securities registered under Section 12(g) of the Exchange Act: Common Stock, $0.001 par value ------------------------------ (Title if Class) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 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 ----- ----- Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10- KSB or any amendment to this Form 10-KSB. [ ] Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). 1 Yes X No ----- ----- State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of a specified date within the past 60 days: $6,424,487 ($3.10 per share as of April 13, 2007). State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: Common Stock, $0.001 par value, 8,312,137 shares (as of April 13, 2007). DOCUMENTS INCORPORATED BY REFERENCE None. TABLE OF CONTENTS PART I Page Item 1.Description of Business 3 Item 2.Description of Property 7 Item 3.Legal Proceedings 7 Item 4.Submission of Matters to a Vote of Security Holders 7 PART II Item 5. Market for Common Equity and Related Stockholder Matters 8 Item 6. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 7. Financial Statements 15 Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 28 Item 8A.Controls and Procedures 29 Item 8B.Other Information- 29 PART III Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance With Section 16(a) of the Exchange Act 29 Item 10.Executive Compensation 34 Item 11.Security Ownership of Certain Beneficial Owners and Management 35 Item 12.Certain Relationships and Related Transactions 36 Item 13.Exhibits 36 Item 14 Principal Accountant Fees and Services 36 2 PART I ITEM 1. DESCRIPTION OF BUSINESS. (A) GENERAL BUSINESS DEVELOPMENT Left Right Marketing Technology, Inc., formerly Global Gaming Technology, Inc., was incorporated in the state of Delaware in 1973. In this filing references to "Company," "we," "our," and "us," refers to Left Right Marketing Technology, Inc., a Delaware corporation. We had been dormant for several years prior to October 6, 2000, when we entered into a contract for the sale of used gaming equipment to a Native American casino located in California. Although opportunities existed in to distribute refurbished gaming equipment to Native American casinos, as well as in the export of such equipment, we were unable to continue due to competition from large manufacturers, jurisdictional regulatory laws and our inability to obtain sufficient capital. On June 30, 2003, our then existing management signed a binding letter of intent to merge with Left Right Marketing & Technology, Inc., a private Nevada corporation, or LRMT Nevada. On July 20, 2003, in anticipation of closing the merger with LRMT Nevada, we filed an amendment to our Certificate of Incorporation to effectuate (i) a name change from Global Gaming Technology, Inc. to Left Right Marketing Technology, Inc., (ii) a 1 for 5 reverse split of our outstanding shares of common stock, and (iii) an increase of authorized shares of common stock to 100,000,000 shares, $0.001 par value, and 25,000,000 shares of preferred stock, $0.001. Effective September 29, 2003, we completed a reverse triangular merger between the Company, Global Gaming Technologies, Inc., a Nevada corporation, and wholly owned subsidiary, or GGTI, and LRMT Nevada, whereby we issued 36,390,000 shares of our restricted common stock in exchange for 100% of the outstanding common stock of LRMT Nevada. Pursuant to the terms of the merger, LRMT Nevada merged with GGTI, and GGTI was dissolved, As a result, LRMT Nevada became our wholly owned subsidiary. On October 29, 2003, our board of directors approved a change in our fiscal year-end from June 30 to December 31. Our primary motivation for the merger was to obtain from LRMT Nevada the right to acquire CrazyGrazer.com, LLC, a Nevada limited liability company formerly known as Crazy Grazer, LLC, a Nevada limited liability company. CrazyGrazer.com operated an online shopping mall website known as www.CrazyGrazer.com. Effective April 26, 2004, we completed a reverse triangular merger by and among between the Company, LRMT Nevada and CrazyGrazer.com, whereby CrazyGrazer.com merged with LRMT Nevada. LRMT was dissolved, and CrazyGrazer.com became our wholly owned subsidiary. Effective February 16, 2005, Richard M. Hall, as the sole member of the board of directors, appointed S. Mathew Schultz to our board of directors. Concurrently, Mr. Hall resigned as our President and Director and Mr. Schultz as the sole member of the board of directors appointed himself as our President and appointed Lawrence S. Schroeder as our Secretary, Treasurer and a Director. 3 On March 8, 2005, the Company, Mr. Hall and CrazerGrazer.com executed a rescission agreement, or the Rescission Agreement, whereby the parties mutually agreed to rescind the merger agreement effective April 26, 2005. The Rescission Agreement provided that all terms, conditions, covenants, representations and warranties contained therein be rescinded and deemed null and void, effective immediately. Pursuant to the Rescission Agreement, the liabilities and assets of CrazyGrazer.com that existed at the time of consummation of the merger, and outstanding as of the date of execution of the Rescission Agreement, remained the liabilities and assets of CrazyGrazer.com. On November 4, 2005, the Company entered into an agreement and plan of reorganization, or the Merger Agreement, with Strategic Gaming Investments, Inc., a Nevada corporation, or SGI. The transaction between the Company and SGI has been accounted for as a recapitalization. Since SGI is the only operating company in the exchange and the stockholders of SGI received a substantial majority of the voting securities of the combined companies, the transaction exchange has been accounted for as a "reverse acquisition" and, effectively, as a recapitalization, in which SGI has been treated as the accounting acquirer (and the legal acquiree), and the Company has been treated as the accounting acquiree (and the legal acquirer). The accompanying financial statements have been prepared in conformity with generally accepted accounting principles that contemplate our continuance as a going concern. Our cash position may be inadequate to pay all of the costs associated with our intended business operations. Management intends to use borrowings and security sales to mitigate the effects of its cash position, however no assurance can be given that debt or equity financing, if and when required, will be available. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should we be unable to continue existence. CHANGE IN BUSINESS DIRECTION Following the consummation of the Merger Agreement on April 26, 2006, we adopted SGI's business plan which is subject to us procuring adequate funding and successfully implementing the anticipated business strategy set forth below. There can be no assurance that we will be successful in procuring sufficient funding to achieve all of the strategic objectives. In addition, the business strategies formulated by SGI are subject to significant uncertainty in terms of revenues, expenses, timing and procurement of long-term partners, among other things. Given the foregoing, we may have to alter the business strategies discussed below until such time as we achieved sufficient revenues to achieve each of the objectives set forth in the following discussion. SGI, through its wholly-owned subsidiary, The Ultimate Poker League, Inc., a Nevada corporation, or UPL, is in the process of creating and operating a poker league, or the Poker League. SGI is negotiating with a third party to serve as its partner and to sponsor the contest. In the event a definitive agreement is not reached with this third party, SGI has identified several other entities that it intends to approach to serve as its partner and sponsor the Poker League. SGI intends to combine the rapidly growing popularity of poker, or Poker, with corporate team building exercises. The Poker League will initially consist of an intra-departmental playoff designed to promote participation as well as the "team" concept within large corporations. Once the teams are established, 4 the inter-departmental play begins. Teams participate using the Ultimate Poker League's format, including the use of substitutions on the level change. At the finals, the four person teams will compete to be the team with the final player remaining in the contest, or the final player with poker chips in the contest. The final player remaining will win the grand prize on behalf of their respective team and department. Over time, we anticipate expanding the Poker League beyond corporations and to the general public. Throughout the initial contest, we anticipate that camera crews will compile video footage for the purpose of creating a DVD surrounding the events of the Poker League's contest. This DVD would be edited for use as a sales aid to present this concept to other corporate human resource departments across the country as well as expand into charitable events. While SGI is presently negotiating with a third party to produce this DVD, it has not yet reached a definitive agreement. PLAN OF OPERATION We will need to achieve each of the milestones outlined below within the next twelve months to achieve long-term viability. It is anticipated that initial revenues will be realized in the nine months ending September 30, 2007. However, there can be no assurance that achievement of this six step plan will result in us becoming fully operational or profitable: 1. PROCURE ADEQUATE FUNDING FOR OPERATIONS. Since the Poker League is a new venture, one of our primary objectives is to secure adequate funding to fully implement our business strategies. In the fourth quarter of 2006 and first quarter of 2007 we have received debt financing in the amount of $180,000. In the future, we will require equity financing to finance our business strategies. 2. ENTER INTO A DEFINITIVE AGREEMENT WITH A FACILITIES PROVIDER WITH MULTIPLE LOCATIONS THROUGHOUT THE UNITED STATES. SGI is in negotiations with a third party to sponsor The Ultimate Poker League contest. This third party will require specific financial performance from us in exchange for the marketing rights to their brand and the ability to prove the concept with their staff. In this regard, we will be required to provide certain staffing as well as cash and prizes. 3. CREATE A SUBSTANTIAL MEMBER BASE. We anticipate displaying advertisements at participating locations of our proposed partner as well as at retail outlets (grocery stores, convenience stores, etc.) in cities in which the Poker League is offered. We also anticipate advertising in industry publications and through the use of online banner ads in an effort to maximize the visibility of the Poker League. 4. BEGIN NEGOTIATIONS WITH ADVERTISING PARTNERS. We anticipate advertising in several industry publications, such as Card Player, Poker Player, Top Pair and Bluff magazines. Additionally, we anticipate purchasing online advertising on strategic gaming sites, including Poker Lifestyle, as well as links and banner advertisements on other participating sponsors' web sites. 5. DEVELOP THE ULTIMATE POKER LEAGUE BRAND CLOTHING AND OTHER LOGO MERCHANDISE. We anticipate marketing apparel and industry specific merchandise, including hats, shirts, clothing apparel, tables, playing cards, chips, books, and DVD's, among other items. The development of logo merchandise will be determined by the success of the Poker League. 5 6. EXPAND CONTESTS INTO OTHER CITIES. Through the use of national advertising campaigns and a strategic partnership with a location facilitator, we anticipate that we will be able to solicit interest in multiple cities in the United States. Our plan is to create a uniform contest that can be easily duplicated in many locations. While there can be no assurance as to the timing and effectiveness of commencement of the Poker League contest, below is an anticipated timeline of events over the twelve months following the close of the merger: SECOND QUARTER 2007: -------------------- - Enter into a definitive agreement with a facilities provider - Procure funding for operations through an equity fund raising - Finalize the Company's website - Begin negotiations with advertising partners THIRD QUARTER 2007: ------------------- - Hold initial Poker League contest - Create a substantial member base - Continue to expand relations with advertising partners - Procure a merchandising partner for The Ultimate Poker League clothing and merchandise FOURTH QUARTER 2007: -------------------- - Continue to build a substantial member base - Develop The Ultimate Poker League brand clothing and other logo merchandise FIRST QUARTER 2008: ------------------- - Produce and begin marketing of The Ultimate Poker League brand clothing and other logo merchandise - Expand contests into other cities At this time, SGI and UPL are engaged in development stage activities which raise substantial doubt about their ability to continue as a going concern. The majority of our business efforts are focused on securing contracts in order to commence operations. Currently, The Ultimate Poker League, Inc. does not have a definitive agreement or other understanding with any party to host the Poker League. 6 NEOLINK WIRELESS CONTENT, INC. On January 10, 2007, SGME and Neolink Wireless Content, Inc., a Nevada corporation ("Neolink"), closed a merger transaction ("Merger") whereby Neolink became a wholly-owned subsidiary of SGME. The Merger is evidenced by a Merger and Share Exchange Agreement ("Merger Agreement"). Neolink is the owner and operator of Vegas Sports{trademark} and Vegas Scoreline{trademark}, two sports channels currently offered on mobile media devices through Mobitv on a subscription basis. Vegas Sports{trademark} is a sports, statistics and odds channel offering subscribers a full range of sporting options in the palm of their hand. In addition, Vegas Sports{trademark} offers twice daily sports "wrap-up" shows of the days' events, additional programming loops that include sports betting handicappers offering their expertise, and highlights from some of the greatest moments in sports. Vegas Scoreline{trademark} is an extensive up to the minute scores, statistics and odds channel with updated "Las Vegas" betting line, scores and statistics from all major professional and college sports. Pursuant to the terms of the Agreement, SGME issued the stockholders of Neolink, on a pro-rated basis, a total of One Million (1,000,000) shares of common stock, $0.001 par value, in consideration for 100% of the issued and outstanding capital stock of Neolink. In addition, SGME has committed to provide financing to Neolink as follows: (i) $50,000 at the Closing ("Initial Payment"); (ii) $50,000 on or before January 31, 2007; (iii) $50,000 on or before March 15, 2007; (iv) $50,000 on or before April 30, 2007; and (v) $50,000 on or before June 15, 2007 (collectively, the "Funding Commitment"). The Funding Commitment is to be utilized as set forth in the mutually agreed upon budget set forth on Schedule 1.4(a) to the Agreement and as may otherwise be necessary in connection with Neolink's business, operations and affairs, as reasonably determined by Donald R. Beck ("Beck"), President, Chief Executive Officer and Chairman of Neolink. In the event that SGME fails to timely provide funding on the dates set forth above, and such failure to fund is not rectified within ten (10) days of the due date, then Beck shall have the right to reacquire One Hundred Percent (100%) of the shares of NEOLINK from SGME for 15% of that portion of the Funding Commitment provided by SGME prior to any such failure to fund. Following the closing, Beck will continue to serve as President, Chief Executive Officer and Chairman of the Board of Neolink pursuant to a two (2) year employment agreement. The employment agreement with Beck provides that Beck will receive 120,000 shares of SGME common stock over the two (2) employment term ("Shares"). The Shares shall accrue during each year of the Employment Period and shall be issued to Executive on two issuance dates: (i) 60,000 shares on January 15, 2008; and (ii) 60,000 shares on January 15, 2009. 7 On April 16, 2007, SGME and Beck entered into a Settlement Agreement and Mutual Release of Claims ("Settlement Agreement"). The parties mutually decided it was in their respective best interests to terminate the relationship and did so on the following terms: (i) Beck shall purchase 100% of the Neolink shares issued to SGME at the time of merger for a purchase price of $15,000 (ii) 200,000 shares of the common stock issued to Neolink shareholders shall be returned to SGME by Beck and one additional Neolink shareholder (iii) The employment agreement between SGME and Beck shall be terminated and Beck shall waive his rights to the consideration SGME shares stipulated therein (iv) Neolink shall retain liability for all debts incurred during the course of their business both prior to the merger and subsequent to the merger, with the exception of the lease and T-1 line agreements for the Las Vegas office. SGME shall assume only these two liabilities (v) SGME and Beck have forever released and discharged the other, as well as their spouses, heirs, beneficiaries, shareholders, members, directors, officers, managers, employees, contractors, partners, joint venturers, attorneys, agents, representatives, successors and assigns, as applicable, from any and all contracts and other obligations relating to the Merger. As a result of the termination of the merger, SGME received $15,000 and 200,000 shares in exchange for the return of the Neolink stock to Don Beck. It is anticipated the Company will record a loss as a result of the rescission during 2007 and the loss may be material. COMPETITION There is significant competition in the United States in the poker sector. To our knowledge, each of the companies currently offering a competitive product possess significantly greater resources, brand name recognition, revenues, financial, technical and marketing resources, and have longer operating histories. EMPLOYEES The Company currently has three employees and three consultants The current employees of SGI and UPL oversee our daily operations and will oversee the Poker League. In addition, we will hire several additional employees to handle administration and other matters upon the commencement of the Poker League. ITEM 2. DESCRIPTION OF PROPERTY. In 2006, we changed our principal address to 2580 Anthem Village Dr., Henderson, NV 89052. Our lease is on a month-to-month basis at the rate of $1,000 per month. ITEM 3. LEGAL PROCEEDINGS. In March 2006, the Company's registered agent was served in the matter of Mark Newburg and Arnoldo Galassi vs. CrazyGrazer.com, LLC; Left Right Marketing Technology, Inc., a Delaware Corporation; Hall Communications, Inc., a Nevada Corporation; Case No. A 500824. Mr. Newburg formerly served as our Chief Operating Officer and Senior Vice President and is alleging he is owed back salary of over $50,000, as well as repayment of a note payable of $130,554.12. The Company will file a responsive pleading shortly denying each of his allegations and fully intends to defending its position that Mr. Newburg is not entitled to any monies. The complaint also seeks to resolve an issue of responsibility for payroll taxes due to the Internal Revenue Service by Left Right Marketing Technologies, Inc. a Nevada corporation, pre-dating new management. Mr. Galassi, our former Chief Financial Officer, is alleging he is owed back salary of over $50,000. The Company has filed a responsive pleading denying Mr. Galassi's allegations. Management for the Company believes that the claims relating to the alleged promissory notes and employment contracts are without merit and the ultimate resolution will not have a material effect on the Company. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. No matters were submitted to a vote of security holders during the fourth quarter of the fiscal year ended December 31, 2006. 8 PART II ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. Our common stock is traded on the Over the Counter Bulletin Board through the National Association of Securities Dealers Automated Quotation Bulletin Board System, under the symbol "SGME". The following table sets forth the quarterly high and low bid prices for our common stock during our last two fiscal years. The quotations reflect inter-dealer prices, without retail mark- up, markdown or commission, and do not necessarily represent actual buy and sell transactions. FY2007 (as of 4/13/07) FY2006 FY2005 ---------------------- ------------- ------------------- High Low High Low High Low 1st Quarter 3.75 2.40 9.50 6.50 50.0 10.0 2nd Quarter 3.10 3.10 6.50 5.00 18.0 7.0 3rd Quarter - - 6.50 5.00 40.0 5.5 4th Quarter - - 6.25 3.75 51.0 7.0 Through August 25, 2003, we traded under the symbol "GBTE". From August 26, 2003, through September 23, 2003, as a result of our name change, our trading symbol was changed from "GBTE" to "LRMKV." On September 24, 2003, our symbol was changed to "LRMK." On September 21, 2005, our symbol was changed to "LRMT." On or about April 18, 2006, our symbol was changed to "SGME." The last reported sales price of our common stock was $3.10 as of April 13, 2007. As of April 13, 2007, we had approximately 49 stockholders of record. DIVIDENDS We have never declared or paid dividends on our common stock. We intend to follow a policy of retaining earnings, if any, to finance the growth of the business and do not anticipate paying any cash dividends in the foreseeable future. The declaration and payment of future dividends on the common stock will be at the sole discretion of the Board of Directors and will depend on our profitability and financial condition, capital requirements, statutory and contractual restrictions, future prospects and other factors deemed relevant. SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS CONSULTANT AND EMPLOYEE STOCK COMPENSATION PLAN Effective December 10, 2004, we adopted the 2005 Consultant and Employee Stock Compensation Plan. The maximum number of shares that may be issued pursuant to the plan is 2,000,000 shares. On January 7, 2005, the 2,000,000 shares were granted to a consultant. We have terminated the 2005 Consultant and Employee Stock Compensation Plan. Subject to obtaining the approval of our common stockholders at our 2007 9 annual stockholders meeting, we intend to implement a stock option and incentive plan for future issuances of options to purchase our common stock to our executive officers, directors, employees and key consultants. RECENT SALES OF UNREGISTERED SECURITIES On January 7, 2005, we issued 2,000,000 shares of our restricted common stock to Affinity Financial Group, Inc. pursuant to its consulting agreement dated December 9, 2004. We believe that the issuance and sale of the shares was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2). On March 15, 2005, we entered into an Equity-for-Debt Exchange Agreement with S. Matthew Schultz wherein we agreed to exchange $420,000 in debt due to Mr. Schultz for 42,000,000 shares of our restricted common stock. We believe that the issuance of the shares was exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2). On May 1, 2006, the Company issued 10,000 shares of common stock at a price of $1.00 per share to settle $10,000 in accrued interest on a note payable. The issuance of the shares was exempt from the registration requirements of the Securities Act of 1933, as amended ("Act") pursuant to Section 4(2) thereof. On May 1, 2006, the Company issued 83,333 shares of common stock at a price of $3.00 per share to settle $250,000 in notes payable. The issuance of the shares was exempt from the registration requirements of Act pursuant to Section 4(2) thereof. On June 1, 2006, the Company received cash for 165,000 shares of common stock at a price of $1.00 per share. The issuance of the shares was exempt from the registration requirements of Act pursuant to Section 4(2) thereof. On August 1, 2006, the Company issued 5,000 shares of common stock for services at a value of $2 per share. The issuance of the shares was exempt from the registration requirements of Act pursuant to Section 4(2) thereof. In the three months ended December 31, 2006, the Company issued promissory notes in the original principal amount of $120,000, collectively ("Notes"). The Notes bear simple interest at the rate of 8% per annum, have a term of three (3) years, and are convertible at any time into shares of common stock at the rate of $0.40 per share. The Notes were purchased by accredited investors and were issued pursuant to the exemption from securities registration provided by Section 4(2) of the Act and Rule 506 of Regulation D promulgated thereunder. In the three months ended March 31, 2007, the Company issued Notes in the original principal amount of $120,000. In addition, we have issued warrants to purchase 120,000 shares of common stock, exercisable at $0.40 per share for a period of ten (10) years, and warrants to purchase 250,000 shares, exercisable at $0.35 per share for a period of ten (10) years. The Notes were purchased by accredited investors and were issued pursuant to the exemption from securities registration provided by Section 4(2) of the Act and Rule 506 of Regulation D promulgated thereunder. 10 ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following discussion should be read in conjunction with our financial statements and notes to our financial statements included elsewhere in this report. This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors discussed elsewhere in this report. Certain information included herein contains statements that may be considered forward-looking statements, such as statements relating to our anticipated revenues, gross margin and operating results, future performance and operations, plans for future expansion, capital spending, sources of liquidity and financing sources. Such forward-looking information involves important risks and uncertainties that could significantly affect anticipated results in the future, and accordingly, such results may differ from those expressed in any forward-looking statements made herein. These risks and uncertainties include, but are not limited to, those relating to our liquidity requirements, the success of our product-development, marketing and sales activities, dependence on existing management, uncertainty as to certain balance sheet liabilities, domestic economic conditions, the inherent uncertainty and costs of prolonged litigation, and changes in federal or state tax laws or the administration of such laws. SUMMARY Strategic Gaming Investments, Inc., a Delaware corporation formerly known as Left Right Marketing Technology, Inc., was incorporated in the state of Delaware in 1973. In this Quarterly Report on Form 10-QSB, references to "Company," "we," "our," and "us," refer to Left Right Marketing Technology, Inc., a Delaware corporation, prior to April 18, 2006, and Strategic Gaming Investments, Inc., a Delaware corporation, from April 18, 2006 forward. On April 18, 2006, we consummated a merger and share exchange with Strategic Gaming Investments, Inc., a Nevada corporation, including its wholly- owned subsidiary, The Ultimate Poker League, Inc., a Nevada corporation. In conjunction with the merger and share exchange, we (a) exchanged 7,650,000 shares of our common stock for 100% of the issued and outstanding common stock of Strategic Gaming Investments, Inc. and The Ultimate Poker League, Inc., (ii) amended our articles of incorporation to change our name to Strategic Gaming Investments, Inc., and (iii) effected a change of its trading symbol from "LRMT" to "SGME". We continue to develop the poker league, or the Poker League. We have been negotiating with several third parties to serve as our partner and to sponsor the contest, but we have reached a definitive agreement. SGI intends to combine the rapidly growing popularity of poker, or Poker, with corporate team building exercises. The Poker League will initially consist of an intra-departmental playoff designed to promote participation as well as the "team" concept within large corporations. Once the teams are established, the inter-departmental play begins. Teams participate using the Ultimate Poker League's format, including the use of substitutions on the level change. At the finals, the four person teams will compete to be the team with the final player remaining in the contest, or the final player with poker chips in the contest. The final player remaining will win the grand prize on behalf of their respective team and department. Over time, we anticipate expanding the Poker League beyond corporations and to the general public. 11 Throughout the initial contest, we anticipate that camera crews will compile video footage for the purpose of creating a DVD surrounding the events of the Poker League's contest. This DVD would be edited for use as a sales aid to present this concept to other corporate human resource departments across the country as well as expand into charitable events. While SGI is presently negotiating with a third party to produce this DVD, it has not yet reached a definitive agreement. In addition to the foregoing, we are currently discussing several gaming centric products that will compliment our proposed Poker League to provide additional branding awareness and media related visibility. At this time, there can be no assurance that we will be successful in reaching a definitive agreement regarding any of the proposed opportunities. DESCRIPTION OF REVENUES At this time we are not generating revenues. We anticipate that upon the commencement of the Poker League, we will generate revenues in the nine months ending September 30, 2007. Until we commence the Poker League, our long-term viability is subject to substantial doubt. REVENUE RECOGNITION Sales revenue from the Poker League and merchandise sales, once applicable, will be recognized upon receipt. DESCRIPTION OF EXPENSES Our current expenses consist primarily of general and administrative matters, including legal and accounting fees. At this time, our officers are not being paid. Over time, general and administrative expenses will increase should our Poker League operations commence. RESULTS OF OPERATIONS COMPARISON OF FISCAL YEARS ENDED DECEMBER 31, 2006 AND DECEMBER 31, 2005 REVENUES We did not realize revenues during fiscal year 2006 or 2005. OPERATING EXPENSES General and administrative expenses were $283,165 for the twelve months ended December 31, 2006, compared to $134,196 for the twelve months ended December 31, 2005, representing an increase of $148,969, or 111.0%. The increase relates to our development activities associated with the Poker League. However, given the limited nature of our operations, the results for the twelve months ended December 31, 2006 are not necessarily indicative of future fiscal periods. To this end, we expect that our general and administrative expenses, as well as our selling expenses, will increase if, and when, Poker League operations commence. NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS 12 We realized a net loss of $293,845 for the twelve months ended December 31, 2006, compared to $135,983 during the twelve months ended December 31, 2005. It is likely that we will incur losses in future fiscal periods. LIQUIDITY AND CAPITAL RESOURCES At December 31, 2006, we had $25,515 of cash, and a working capital deficit of $856,218, as compared to zero cash and a working capital deficit of $1,192,895 at December 31, 2005. Our stockholders' deficit was $850,193 at December 31, 2006, compared to a stockholders' deficit of $1,192,895 at December 31, 2005, a decrease of $342,702. Our accumulated deficit increased from $4,311,791 at December 31, 2005 to $4,414,090 at December 31, 2006, an increase of $102,299. Our accumulated deficit will likely increase in the future unless we commence operations, and realize profits, from the Poker League. Operating activities used net cash of $264,917 during the twelve months ended December 31, 2006, compared to $95,195 used during the same period in 2005, an increase of $169,722. Investing activities provided $4,868 during the twelve months ended December 31, 2006, as compared to zero during the twelve months ended December 31, 2005, an increase of $4,868. Financing activities for the twelve months ended December 31, 2006 provided net cash $295,000, compared to $95,196 net cash provided for the twelve months ended December 31, 2005. We will require additional capital in the future to become a viable entity and to achieve our long-term business objectives. There can be no assurance that such financing will be made available, or if it is made available, on acceptable terms. If such future financing is procured in the form of equity or convertible securities, the shareholdings of the current stockholders of the Company will be diluted. RISK FACTORS We are subject to a high degree of risk as we are considered to be in unsound financial condition. The following risks, if any one or more occurs, could materially harm our business, financial condition or future results of operations. If that occurs, the trading price of our common stock could further decline. RISKS RELATED TO OUR COMPANY WE HAVE A HISTORY OF NET LOSSES AND LOSSES MAY CONTINUE IN THE FUTURE. Since our inception we have not been profitable and have reported net losses. For the years ended December 31, 2006 and December 31, 2005 we incurred net losses of $298,346 and $135,983, respectively. Our accumulated deficit as of December 31, 2006 was $4,414,090. No assurance can be given that we will be successful in reaching or maintaining profitable operations. Accordingly, we may experience liquidity and cash flow problems. If our losses continue, our ability to operate may be severely impacted. 13 WHILE WE ANTICIPATE COMMENCING POKER LEAGUE OPERATIONS, THERE IS NO ASSURANCE WE WILL BE SUCCESSFUL IN THIS ENDEAVOR. We have limited experience in operating the type of business contemplated. In addition, without sufficient third party funding, commencement of the proposed business operations will be extremely difficult. Accordingly, our future financial results are difficult to predict. WE WILL EXPERIENCE SIGNIFICANT COMPETITION WITH RESPECT TO OUR PROPOSED BUSINESS OPERATIONS FROM MANY COMPANIES WITH SIGNIFICANTLY MORE EXPERIENCE, FINANCIAL RESOURCES AND BRAND NAME RECOGNITION. While poker has become a very popular pastime for many individuals in the United States, there are many choices for players, including, among other things, online poker and various poker tournaments offered by well regarded entities and world renowned casinos. Our Poker League is a contest and we must procure sufficient third party financing, strategic facilities providers to achieve success. The foregoing factors will have a significant impact on our ability to realize measurable revenues and achieve profitability. Thus, unless we procure each of the above-mentioned items, our business condition and results of operations will be adversely affected. SINCE THERE IS EXTREMELY LIMITED LIQUIDITY IN OUR COMMON STOCK, AND OUR COMMON STOCK IS QUOTED ON THE OTC BULLETIN BOARD, OUR COMMON STOCKHOLDERS MAY HAVE DIFFICULTY RESELLING THEIR SHARES. Our common shares are currently quoted for public trading on the Over- the-Counter Bulletin Board. The trading price of our common shares has been subject to wide fluctuations. Trading prices of our common shares may fluctuate in response to a number of factors, many of which will be beyond our control. The stock market has generally experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies with limited business operations. These broad market and industry factors may adversely affect the market price of our common shares, regardless of our operating performance. Further, until such time as we are an operating company, it is unlikely that a measurable trading market will exist for our common stock. BECAUSE OUR COMMON STOCK IS DEEMED A LOW-PRICED "PENNY" STOCK, AN INVESTMENT IN OUR COMMON STOCK SHOULD BE CONSIDERED HIGH RISK AND SUBJECT TO MARKETABILITY RESTRICTIONS. Since our common stock is a penny stock, as defined in Rule 3a51-1 under the Securities Exchange Act, it will be more difficult for investors to liquidate their investment. Until the trading price of the common stock rises above $5.00 per share, if ever, trading in the common stock is subject to the penny stock rules of the Securities Exchange Act specified in rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting transactions in any penny stock, to: - Deliver to the customer, and obtain a written receipt for, a disclosure document; - Disclose certain price information about the stock; - Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer; 14 - Send monthly statements to customers with market and price information about the penny stock; and - In some circumstances, approve the purchaser's account under certain standards and deliver written statements to the customer with information specified in the rules. Consequently, the penny stock rules may restrict the ability or willingness of broker-dealers to sell the common stock and may affect the ability of holders to sell their common stock in the secondary market and the price at which such holders can sell any such securities. These additional procedures could also limit our ability to raise additional capital in the future. WE WILL NEED ADDITIONAL CAPITAL IN THE FUTURE TO FINANCE OUR OPERATIONS, WHICH MAY NOT BE AVAILABLE ON TERMS FAVORABLE TO US, IF AT ALL, AND IF FUNDING IS OBTAINED, OUR STOCKHOLDERS, WILL INCUR IMMEDIATE DILUTION. Given our historical operating results, obtaining sufficient financing for our proposed business operations will be difficult. This is further compounded by the extremely limited liquidity in our common stock and the lack of business operations for an extended period. Financing, if available, will likely be significantly dilutive to our common stockholders and will not necessarily improve the liquidity of our common stock without a vast improvement in our operating results. In the event we are unsuccessful in procuring adequate financing to fund our proposed business initiatives, our financial condition and results of operations will be materially adversely affected. If operating difficulties or other factors, many of which are beyond our control, because our revenues or cash flows from operations, if any, to decrease, we may be limited in our ability to spend the capital necessary to complete our revised business plan. If our resources or cash flows do not rapidly commence, we will require additional financing to fund our planned growth. Additional financing might not be available on terms favorable to us, or at all. If adequate funds were not available or were not available on acceptable terms, our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance our business or otherwise respond to competitive pressures would be significantly limited. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders would be reduced, and these newly issued securities might have rights, preferences or privileges senior to those of existing stockholders. OUR AUDITOR'S REPORT STATES THAT WITHOUT REALIZATION OF ADDITIONAL CAPITAL, IT WILL BE UNLIKELY FOR US TO CONTINUE AS A GOING CONCERN. As a result of our deficiency in working capital at December 31, 2006 and other factors, our auditors have stated in their report that there is substantial doubt about our ability to continue as a going concern. In addition, the Company's cash position is inadequate to pay all of the costs associated with its operations. Management intends to use borrowings and security sales to mitigate the effects of its cash position, however no assurance can be given that debt or equity financing, if and when required, will be available. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should the Company be unable to continue existence. 15 ITEM 7. FINANCIAL STATEMENTS. STRATEGIC GAMING INVESTMENTS, INC. INDEX TO FINANCIAL STATEMENTS Report of Independent Registered Public Accounting Firm.....................15 Balance Sheet December 31, 2006 and December 31, 2005.....................................16 Statement of Operations Years Ended December 31, 2006 and 2005......................................17 Statement of Stockholders' Deficiency Years Ended December 31, 2006 and 2005......................................18 Statement of Cash Flows Years Ended December 31, 2006 and 2005......................................19 Notes to Consolidated Financial Statements..................................20 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Audit Committee of Strategic Gaming Investments, Inc. 2580 Anthem Village Dr. Henderson, NV 89052 We have audited the accompanying balance sheet of Strategic Gaming Investments, Inc. as of December 31, 2006, and the related statements of operations, changes in stockholders' deficit and cash flows for the years ended December 31, 2006 and 2005. 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 audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the balance sheets are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the balance sheet. 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 audit 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 the Company as of December 31, 2006, and the results of its operations and its cash flows for the years ended December 31, 2006 and 2005, in conformity with U.S. generally accepted accounting principles. The accompanying financial statements have been prepared on the basis of a going concern, which anticipates the payment of liabilities through the realization of assets and operations in the normal course of business. The Company is not a going concern, as it has no assets or ongoing operations. No adjustments have been made to reduce the existing liabilities based on the Company's inability to pay the obligations. /s/Beadle, McBride, Evans & Reeves, LLP - --------------------------------------- Las Vegas, Nevada April 17, 2007 16
STRATEGIC GAMING INVESTMENTS, INC. (formerly Left Right Marketing Technologies, Inc.) CONSOLIDATED BALANCE SHEETS Audited CONSOLIDATED Audited As of As of December 31, 2006 December 31, 2005 ================= ================= ASSETS Current assets Cash $ 25,215 $ - ---------- ---------- Total current asset 25,215 - Other current assets Prepaid expense 999 - Loan receivable 8,228 - ---------- ---------- Total other current assets 9,227 - Intangible Assets, net of accumulated depreciation 2,596 - ---------- ---------- Total assets $ 37,038 - ========== ========== LIABILITIES AND STOCKHOLDERS' (DEFICIT) Current liabilities Accounts payable $ 93,276 $ 74,281 Accounts payable - related parties 30,000 30,000 Loan payable 120,000 250,000 Advances from related parties 131,158 73,102 Accrued payroll 487,797 461,963 Contingency payable - 25,000 Payroll tax accrual - 278,549 ---------- ---------- Total current liabilities 862,231 1,192,895 ---------- ---------- Total liabilities 862,231 1,192,895 Stockholders' deficit Preferred Stock (25,000,000 shares authorized and zero issued and outstanding) - - Common stock; $.001 par value; 100,000,000 authorized; 8,047,137 and 98,804 shares issued and outstanding as of December 31, 2006 and December 31, 2005, respectively 8,048 99 Additional paid-in capital 3,580,849 3,118,797 Accumulated (deficit) (4,414,090) (4,311,791) ---------- ---------- Total stockholders' (deficit) (825,193) (1,192,895) ---------- ---------- Total liabilities and stockholders' (deficit) $ 37,038 $ - ========== ==========
17
STRATEGIC GAMING INVESTMENTS, INC. (formerly Left Right Marketing Technologies, Inc.) CONSOLIDATED STATEMENTS OF INCOME Audited CONSOLIDATED Audited Twelve months Twelve months ended ended December 31, December 31, 2006 2005 =========== =========== Revenue $ - $ - Operating expenses General and administrative 287,666 134,196 --------- --------- Total operating expenses 287,666 134,196 Loss from operations (287,666) (134,196) Other income (expenses): Interest expense (10,680) (1,787) --------- --------- Total other income (expenses) (10,680) (1,787) --------- --------- (Loss) before provision for income tax (298,346) (135,983) Provision for income tax - - Net (loss) $(298,346) $(135,983) --------- --------- Basic and diluted (loss) per common $ (0.05) $ (1.55) share ========= ========= Basic and diluted weighted average common shares outstanding 5,698,526 87,888 ========= =========
18
STRATEGIC GAMING INVESTMENTS, INC. (formerly Left Right Marketing Technologies, Inc.) CONSOLIDATED STATEMENTS OF CASH FLOWS Audited CONSOLIDATED Audited Twelve months Twelve months ended ended December 31, December 31, 2006 2005 =========== =========== Cash flows from operating activities: Net loss $ (298,346) $ (135,983) Adjustments to reconcile net loss to net cash used by operating activities: Changes in operating assets and liabilities: Stock issued for services 10,000 - Stock issued for interest expense 10,000 - Depreciation and amortization 2,826 - (Increase) / decrease in prepaid expenses (999) - (Increase) / decrease in loans receivable (8,228) - Increase / (decrease) in accounts payable - related - 30,000 Increase / (decrease) in accounts payable 18,996 1,314 Increase / (decrease) in deferred payroll 25,834 28,193 Increase / (decrease) in contingency payable (25,000) (25,000) Increase / (decrease) in payroll tax accrual - 6,281 ---------- ---------- Net cash used by operating activities (264,917) (95,195) Cash flows from investing activities: Deficit from acquisition (82,502) - Purchase of property and equipment (5,422) - ---------- ---------- Net cash provided by investing activities (87,924) - Cash flows from financing activities: Reduction of bank - (19,908) Advance from related party 58,056 115,103 Proceeds from issuance of notes payable 120,000 - Proceeds from issuance of common stock 200,000 - ---------- ---------- Net cash provided by financing activities 378,056 95,195 ---------- ---------- Net increase in cash 25,215 - Cash, beginning of period - - ---------- ---------- Cash, end of period 25,215 $ - ========== ========== Payroll tax write-off 278,549 - Debt settled with stock 250,000 - ========== ==========
19
STRATEGIC GAMING INVESTMENTS, INC. (formerly Left Right Marketing Technologies, Inc.) CONSOLIDATED STATEMENTS OF STOCKHOLDERS' (DEFICIT) Additional Stock Total Common Stock Paid-in Subscription Accumulated Stockholders' Shares Amount Capital Receivable Deficit Deficit ============ ============ ============ ============ ============ ============ Balance, December 31, 2004 56,350 $ 57 $ 3,045,373 $ - $(4,175,808) $(1,130,378) ============ ============ ============ ============ ============ ============ Shares issued for debt settlement 42,000 42 41,958 - - 42,000 Reverse split 1:1000 - - - - - - Conversion of debt 454 - 6,484 - - 6,484 Debt cancelled and recorded to APIC - - 24,982 - - 24,982 Net loss - - - - (135,983) (135,983) ------------ ------------ ------------ ------------ ------------ ------------ Balance, December 31, 2005 98,804 $ 99 $ 3,118,797 $ - $(4,311,791) $(1,192,895) ============ ============ ============ ============ ============ ============ Shares issued for merger with SGI 7,650,000 7,650 (7,650) - - - Shares issued for interest expense 10,000 10 9,990 - - 10,000 Record accumulated deficit for SGI - - - - (82,502) (82,502) Debt settled with stock 83,333 83 249,917 - - 250,000 Shares issued for cash 165,000 165 164,835 - - 165,000 Stock subscription 35,000 35 34,965 (35,000) - - Shares issued for services 5,000 5 9,995 - - 10,000 Money received on stock subscription - - - 35,000 - 35,000 Adjustment to retained earnings to reflect the* removal of payroll tax liabilities per IRS - - - - 278,549 278,549 Net loss - - - - (298,346) (298,346) ------------ ------------ ------------ ------------ ------------ ------------ Balance, December 31, 2006 8,047,137 8,047 3,580,549 - (4,414,090) (825,193) ============ ============ ============ ============ ============ ============
20 STRATEGIC GAMING INVESTMENTS, INC. (FORMERLY LEFT RIGHT MARKETING TECHNOLOGY, INC.) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES Description of Business and History - Strategic Gaming Investments, Inc., a Delaware corporation ("SGME" or the "Company"), formerly named Left Right Marketing Technology, Inc., was incorporated in 1973. Prior to June 2003, the Company was involved in various businesses, none of which were unsuccessful. On June 30, 2003, the Company executed a binding letter of intent which resulted in a merger with Left Right Marketing & Technology, Inc., a Nevada corporation ("LRMT") in September 2003. LRMT had an option to acquire Crazy Grazer, LLC, a Nevada limited liability company ("Crazy Grazer"). The Company entered into a binding letter of intent with Crazy Grazer on September 29, 2003 and a revised binding letter of intent on March 8, 2004, which included the acquisition of Hall Communications, Inc., a Nevada corporation. On April 30, 2004, the Company executed an amendment to the letter of intent to extend the merger closing date of Hall Communications, Inc. to occur on or before October 31, 2004. Effective April 26, 2004, the Company completed a reverse tri-party merger among LRMT and Crazy Grazer, whereby the Company issued 950,000 shares of Series A Preferred Stock in exchange for 100% of the membership interests of Crazy Grazer. The shares of Series A Preferred are convertible into shares of our common stock based upon certain milestones achieved by Crazy Grazer. Pursuant to the terms of the merger, Crazy Grazer merged with LRMT wherein LRMT ceased to exist and Crazy Grazer became our wholly owned subsidiary. Following closing of the merger, Crazy Grazer changed its name to CrazyGrazer.com, LLC ("CrazyGrazer.com"). Richard M. (Mick) Hall was the sole member of CrazyGrazer.com and was the sole recipient of the 950,000 shares of Series A Preferred Stock. Mr. Hall abstained from voting as a director of the company on the Merger. On March 8, 2005, the Company entered into a Rescission Agreement with Mr. Hall, former Chief Executive Officer, President and the sole director of the company, and CrazyGrazer.com, to rescind the merger that closed on April 26, 2004. Pursuant to the Rescission Agreement, 950,000 shares of the Company's Series A Convertible Preferred Stock issued to Mr. Hall as full consideration for Crazy Grazer were returned to the Company for cancellation. The rescission shall have the effect of placing the Company in the position it was in prior to the Merger. Going Concern - The Company incurred net losses of approximately $293,845 from the period from January 1, 2006, through December 31, 2006, and currently has no source of revenue, raising substantial doubt about the Company's ability to continue as a going concern. The Company will seek additional sources of capital through the issuance of debt or equity financing, but there can be no assurance the Company will be successful in accomplishing its objectives. 21 The ability of the Company to continue as a going concern is dependent on additional sources of capital and the success of the Company's plan. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Year end - The Company's fiscal year end is December 31. Use of estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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 financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Income taxes - The Company accounts for its income taxes in accordance with Statement of Financial Accounting Standards No. 109, which requires recognition of deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax credit carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. Management feels the Company will have a net operating loss carryover to be used for future years. Such losses may not be fully deductible due to the significant amounts of non-cash service costs. The Company has established a valuation allowance for the full tax benefit of the operating loss carryovers due to the uncertainty regarding realization. Net loss per common share - The Company computes net loss per share in accordance with SFAS No. 128, Earnings per Share (SFAS 128) and SEC Staff Accounting Bulletin No. 98 (SAB 98). Under the provisions of SFAS 128 and SAB 98, basic net loss per share is computed by dividing the net loss available to common stockholders for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net loss per share gives effect to common stock equivalents; however, potential common shares are excluded if their effect is antidilutive. For the period January 1, 2006, through December 31, 2006, no options and warrants were excluded from the computation of diluted earnings per share because their effect would be antidilutive. Comprehensive income (loss) - There has been no comprehensive income or loss items as of December 31, 2006. Concentration of risk - A significant amount of the Company's assets and resources are dependent on the financial support of certain of its shareholders. Should such shareholders determine to no longer finance the operations of the Company, the Company may not be able to continue its activities. Revenue recognition - The Company has not generated revenues to date from its operations. Once revenues are generated, management will establish a revenue recognition policy. 22 Advertising costs - The Company recognizes advertising expenses in accordance with Statement of Position 93-7 "Reporting on Advertising Costs." Accordingly, the Company expenses the costs of producing advertisements at the time production occurs, and expenses the costs of communicating advertisements in the period in which the advertising space or airtime is used. The Company has recorded advertising costs of $10,286 for the period from January 1, 2006, through December 31, 2006. New Accounting Pronouncements On December 16, 2004, the Financial Accounting Standards Board ("FASB") published Statement of Financial Accounting Standards No. 123 (Revised 2004), Share-Based Payment ("SFAS 123R"). SFAS 123R requires that compensation cost related to share-based payment transactions be recognized in the financial statements. Share-based payment transactions within the scope of SFAS 123R include stock options, restricted stock plans, performance-based awards, stock appreciation rights, and employee share purchase plans. The provisions of SFAS 123R are effective as of the first interim period that begins after June 15, 2005. The Company does not anticipate that the implementation of this standard will have a material impact on its financial position, results of operations or cash flows In March 2006, the FASB issued FASB Statement No. 156, Accounting for Servicing of Financial Assets - an amendment to FASB Statement No. 140. Statement 156 requires that an entity recognize a servicing asset or servicing liability each time it undertakes an obligation to service a financial asset by entering into a service contract under certain situations. The new standard is effective for fiscal years beginning after September 15, 2006. The Company does not expect its adoption of this new standard to have a material impact on its financial position, results of operations or cash flows. NOTE 1 - DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT POLICIES (CONT.) In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109" (FIN 48), which clarifies the accounting for uncertainty in tax positions. This Interpretation requires that we recognize in our financial statements the benefit of a tax position if that position is more likely than not of being sustained on audit, based on the technical merits of the position. The provisions of FIN 48 become effective as of the beginning of our 2008 fiscal year, with the cumulative effect of the change in accounting principle recorded as an adjustment to opening retained earnings. We are currently evaluating the impact that FIN 48 will have on our financial statements. In September 2006, the FASB issued Statement No. 157, "Fair Value Measurements" (FAS 157), which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of FAS 157 become effective as of the beginning of our 2009 fiscal year. We do not expect the adoption of SFAS No. 157 to have a material impact on its consolidated financial position, results of operations or cash flows. In September 2006, the FASB issued Statement No. 158, "Employer's Accounting for Defined Benefit Pension and Other Postretirement Plans - an amendment of FASB Statements No. 87, 88, 106, and 132(R)" (FAS 158). FAS 158 requires that employers recognize the funded status of their defined benefit pension and 23 other postretirement plans on the balance sheet and recognize as a component of other comprehensive income, net of tax, the plan-related gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit cost. We do not feel the implementation of this will effect our financial statements. In September 2006, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 108, "Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements" (SAB 108), which addresses how to quantify the effect of financial statement errors. The provisions of SAB 108 become effective as of the end of our 2007 fiscal year. We do not expect the adoption of SAB 108 to have a significant impact on our financial statements. In February 2007, the FASB issued Statement No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment of FASB Statement No. 115" (FAS 159). FAS 159 permits companies to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value and establishes presentation and disclosure requirements designed to facilitate comparisons between companies that choose different measurement attributes for similar types of assets and liabilities. The provisions of FAS 159 become effective as of the beginning of our 2009 fiscal year. We are currently evaluating the impact that FAS 159 will have on our financial statements. NOTE 2 - BUSINESS COMBINATION On April 18, 2006, the Company consummated the acquisition of Strategic Gaming Investments, Inc., a Nevada corporation ("SGI Nevada"), and its wholly-owned subsidiary, The Ultimate Poker League, Inc., a Nevada corporation. Strategic Gaming Investments, Inc., a Nevada corporation, plans to operate in the gaming, entertainment and hospitality sectors. In conjunction with the acquisition, the Company amended its articles of incorporation and changed its name to Strategic Gaming Investments, Inc. In addition, the Company changed its trading symbol from "LRMT" to "SGME". As a result of the acquisition, there was a change in control of the entity, SGI Nevada. For accounting purposes, SGI Nevada shall be a wholly owned subsidiary of the Company. The transaction is accounted for using the purchase method of accounting. The total purchase price and carrying value of net assets acquired by the Company was $(82,502). The results of operations of SGI Nevada, subsequent to the acquisition date are included in the Company's consolidated statement of losses. In accordance with SFAS No. 141, the Company is the acquiring entity. Pursuant to the Agreement and Plan of Reorganization ("Agreement"), the Company exchanged 7,650,000 shares common stock for 100% of the issued and outstanding common stock of SGI Nevada. In conjunction with the share exchange, each stockholder of SGI Nevada, received a pro rata portion of the 7,650,000 shares of common stock of the Company issued in the exchange. The value of the stock that was issued to the stockholders of SGI Nevada, is the historical cost of the Company's net tangible assets. The value of the Company's net tangible assets as of the date of the acquisition did not differ materially from the fair value of the common stock issued. SGI Nevada had a net loss of $47,995 from January 1, 2006 through April 18, 2006. Accordingly, the following unaudited pro-forma summary statement of operations gives effect, on a consolidated basis, for the full twelve month period ended December 31, 2006: 24
Twelve months ended December 31, 2006 (Unaudited) Pro-forma Pro-forma As reported adjustments (loss) ----------- ----------- ---------- Costs and expenses: $ (298,346) $ (47,995) $ (346,341) Other income (expense) Other income - - - ----------- --------- ---------- Net (loss) before discontinued operations (298,346) (47,995) (346,341) Loss from discontinued operations - - Net loss $ (298,346) $ (47,995) $ (346,341) ----------- --------- ----------
NOTE 3 - STOCKHOLDERS' EQUITY As of December 31, 2006, there were 8,047,137 shares of common stock outstanding. On April 18, 2006, articles of amendment reflecting the merger between Strategic Gaming Investments, Inc., a Nevada corporation, and the Company were filed. Pursuant to the Agreement and Plan of Reorganization, the Company's shareholders exchanged 7,650,000 shares common stock in the Company for 76,500 shares common stock in Strategic Gaming Investments, Inc., a Nevada corporation. Specifically, each SGI Nevada shareholder received a pro rata portion of the Company's shares based on the number of SGI Nevada shares exchanged. On May 1, 2006, the Company issued 10,000 shares of common stock at a price of $1 per share to settle $10,000 in accrued interest on a note payable. On May 1, 2006, the Company issued 83,333 shares of common stock at a price of $3 per share to settle $250,000 in notes payable. On June 1, 2006, the Company received cash for 165,000 shares of common stock at a price of $1 per share. On June 1, 2006, the Company issued a stock receivable subscription for 35,000 shares of common stock at a price of $1 per share. On August 1, 2006, the Company issued 5,000 shares of common stock for services at a value of $2 per share. NOTE 4 - NOTES PAYABLE 25 For the year ended December 31, 2006, the Company issued promissory notes in the original principal amount of $120,000, collectively ("Notes"). The Notes bear simple interest at the rate of 8% per annum, have a term of three (3) years, and are convertible at any time into shares of common stock at the rate of $0.40 per share. The Notes were purchased by accredited investors, as such term is defined under the Securities Act of 1933, as amended ("Act"), and were issued pursuant to the exemption from securities registration provided by Section 4(2) of the Act and Rule 506 of Regulation D promulgated thereunder. NOTE 5 - ACCOUNTS PAYABLE AND ACCRUED PAYROLL As of December 31, 2005, current liabilities includes $461,963 in accrued payroll and $278,550 in payroll taxes due and payable to the Internal Revenue Service for social security, medicare, unemployment and withholding taxes for prior periods and $25,000 of contingency payable booked as a result of the rescission agreement. Based on discussions with counsel and the Internal Revenue Service, management has reason to believe that certain of these liabilities,and perhaps 100% of such liabilities, are the responsibility of Crazygrazer.com, LLC as a result of the rescission agreement between it and the Company in March 2005. On January 11, 2007, the Company received confirmation from the Internal Revenue Service that they have determined the Company is not responsible for the outstanding payroll taxes. Accordingly, the Company has removed the liability from the Company's financial statements as of December 31, 2006. Additionally, some two years subsequent to the rescission agreement, no issues have been identified which would require the utilization of the remaining contingency payable. Since both liabilities were originally booked in connection with the rescission agreementm the amounts have been adjusted to additional paid-in-capital as a modification of the rescission agreement rather than a realization of expenses or forgiveness of debt income during the period. As of December 31, 2006, the $461,963 in accrued payroll has not been definitively resolved. Accordingly, the Company has not removed the liabilities. At the time that an ultimate resolution is determined, to the extent that the Company is not responsible, such liabilities will be credited to additional paid in capital. NOTE 6 - RELATED PARTY TRANSACTIONS As of December 31, 2006, Larry Schroeder, the Company's President, Chief Executive Officer and a Director, has loaned the Company the sum of $64,177. This loan is non-interest bearing and has no due date assigned to it. As of December 31, 2006, Matthew Schultz, the Company's Vice-President and Chairman, has loaned the Company the sum of $48,889. This loan is non-interest bearing and has no due date assigned to it. As of September 30, 2006, Jason Griffith, the Company's Chief Financial Officer and a Director, has loaned the Company the sum of $40,162. Of this amount, $30,000 is in the form of accounts payable for accounting services rendered. This loan is non-interest bearing and has no due date assigned to it. As of September 30, 2006, Anthony Marsiglia, the President of The Ultimate Poker League, Inc., a wholly owned subsidiary of the Company, has loaned the Company the sum of $7,830. This loan is non- interest bearing and has no due date assigned to it. 26 NOTE 7 - INTANGIBLE ASSETS The Company has adopted SFAS No. 142, "Goodwill and Other Intangible Assets", which requires that goodwill and other intangible assets be valued and recorded when acquired and amortized over their estimated useful life unless that that life is determined to be indefinite. Intangible assets are required to be tested for impairment and impairment losses, if any, shall be recorded. NOTE 7 - INTANGIBLE ASSETS (CONT.) As of December 31, 2006, the Company had $7,775 in intangible assets and management has determined those assets to have finite useful lives. The intangible assets that make up that amount include trademark rights of $275 (15-year estimated useful life) and website development cost of $7,500 (2-year estimated useful life). Both are amortized using the straight-line method. The amortized value at December 31, 2006, was $2,596. NOTE 8 - LITIGATION On March 7, 2006, Mark Newburg and Arnoldo Galassi jointly filed a complaint in District Court, Clark County, Nevada, against Left Right Marketing Technology, Inc. (the former name of Strategic Gaming Investments, Inc.) alleging, among other things, breach of contract relating to promissory notes and employment contracts purportedly outstanding in favor of Messrs. Newburg and Galassi. The Company has filed a responsive pleading and has denied each of the allegations made by Messrs. Newburg and Galassi. Management for the Company believes that the claims relating to the alleged promissory notes and employment contracts are without merit and the ultimate resolution will not have a material effect on the Company.. NOTE 9 - DEFERRED INCOME TAX Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial statement purposes and the amounts used for income tax purposes. Significant components of the Company's deferred tax liabilities and assets as of December 31, 2006 are as follows: Deferred tax assets: Net operating loss carry forwards $ 1,112,393 Stock issued for services 3,500 ----------- 1,115,893 Deferred tax assets: Depreciation and amortization (989) ----------- (989) Net deferred tax asset 1,114,904 Less valuation allowance (1,114,904) ----------- $ - =========== 27 At December 31, 2006, the Company had federal net operating loss ("NOL") carryforwards of approximately $1,115,893. Federal NOLs could, if unused, begin to expire in 2021. The valuation allowance for deferred tax assets as of December 31, 2006 was $1,114,904. The reconciliation of the effective income tax rate to the federal statutory rate for the year ended December 31, 2006 is as follows: 2006 -------- Federal income tax rate (35.0%) State tax, net of federal benefit - Loss for which no federal benefit was received 35.0% -------- Effective income tax rate 0.0% NOTE 10 - SUBSEQUENT EVENTS On January 10, 2007, SGME entered into a note and warrant purchase agreement ("Financing Agreement") with several third parties (collectively, the "Purchasers"), each of whom are accredited investors as such term is defined under the Act. The Financing Agreement consists of the following terms: (i) an initial investment of $120,000 and subsequent investment(s) of up to $980,000, for a total investment of up to $1,100,000; (ii) the investments shall be evidenced by convertible promissory notes ("Notes") on the following terms: (a) a term of three (3) years, (b) bearing simple interest at the rate of eight percent (8%) per annum, (c) convertible at $0.40 per share, and (d) secured by a first priority security interest in all of the assets of SGME; and (iii) the Purchasers shall be issued warrants to purchase 10,000 shares of common stock for every $10,000 of Notes purchased ("Warrants"), exercisable at $0.40 per share for a period of ten (10) years. 28 The financing was made in reliance upon the exemptions from securities registration provided by Section 4(2) of the Act and Rule 506 promulgated thereunder. On January 11, 2007, SGME and Neolink Wireless Content, Inc., a Nevada corporation ("Neolink"), closed a merger transaction ("Merger") whereby Neolink became a wholly-owned subsidiary of SGME. The Merger is evidenced by a Merger and Share Exchange Agreement ("Merger Agreement"). Pursuant to the terms of the Agreement, SGME issued the stockholders of Neolink, on a pro-rated basis, a total of One Million (1,000,000) shares of common stock, $0.001 par value, in consideration for 100% of the issued and outstanding capital stock of Neolink. On April 16, 2007, SGME and Beck entered into a Settlement Agreement and Mutual Release of Claims ("Settlement Agreement") relating to the Merger. The parties mutually decided it was in their respective best interests to terminate the Merger and did so on the following terms: (i) Beck to pay SGME the sum of Fifteen Thousand ($15,000) Dollars for 100% of the issued and outstanding capital stock of Neolink; (ii) Beck and another Neolink stockholder will relinquish a total of Two Hundred Thousand (200,000) shares of SGME common stock issued to them in the Merger; (iii) the employment agreement of Beck will be terminated and the Shares will not be issued; (iv) SGME will assume the real property lease of Neolink as well as the contract for T-1 Internet services; and (v) SGME and Beck have forever released and discharged the other, as well as their spouses, heirs, beneficiaries, shareholders, members, directors, officers, managers, employees, contractors, partners, joint venturers, attorneys, agents, representatives, successors and assigns, as applicable, from any and all contracts and other obligations relating to the Merger. As a result of the termination of the merger, SGME received $15,000 and 200,000 shares in exchange for the return of the Neolink stock to Don Beck. It is anticipated the Company will record a loss as a result of the rescission during 2007 and the loss may be material. ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE We have had no disagreements with our independent auditors on accounting or financial disclosures. 29 ITEM 8A. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS We evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2006, the end of the fiscal period covered by this Annual Report on Form 10-KSB. This evaluation was made under the supervision of our principal executive officer and principal financial officer, and in conjunction with our accounting personnel. We reviewed and evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as of the end of the fiscal year covered by this report, as required by Securities Exchange Act Rule 13a-15, and concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in our reports filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended, is accumulated and communicated to management on a timely basis, including our principal executive officer and principal financial officer. Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of the end of such period, our disclosure controls and procedures are effective to ensure that we record, process, summarize, and report information required to be disclosed in the reports we filed under the Securities Exchange Act of 1934 within the time periods specified by the Securities and Exchange Commission's rules and regulations. During the year ended December 31, 2006, there have been no changes in our internal control over financial reporting, or to our knowledge, in other factors, that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting. ITEM 8B. OTHER INFORMATION None. PART III ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT The following information is furnished with respect to each member of our board of directors and our executive officers. There are no family relationships between or among any of our directors or executive officers. Each of our executive officers is an employee of the Company and serves at the discretion of our board. On February 16, 2005, Richard M. Hall, serving as the sole member of the board of directors, appointed S. Matthew Schultz to the board of directors of the Company. Concurrently, Mr. Hall resigned from the Company's board of directors and as President, and Heather M. Hall resigned as Secretary and Treasurer. Mr. Schultz as the sole member of the board of directors appointed himself as President of the Company and appointed Lawrence S. Schroeder as Secretary, Treasurer and a Director of the Company. 30 On September 13, 2005, there was a special meeting of the Board of Directors and the Board approved the following appointments and changes to our executive team: Lawrence S. Schroeder accepted the position of President and Chief Executive Officer; Mr. Schultz resigned as President and accepted the position of Chief Operating Officer, while retaining the position of Chairman of the Board; and Jason F. Griffith was appointed Chief Financial Officer and a member of the board of directors. There are currently no formal employment agreements between the Company and our officers. The members of our board of directors serve for one year terms and are elected each year at the annual meeting of stockholders, or until their successors have been elected. The officers serve at the discretion of the board of directors. Information as to our current directors and executive officers is as follows: Name Age Positions - --------------------- ----- ----------------------------------------------- Lawrence S. Schroeder 59 Chief Executive Officer, President and Director S. Matthew Schultz 36 Chief Operating Officer and Chairman Jason F. Griffith 30 Chief Financial Officer, Secretary and Director ________________________ The following is biographical information for each of the directors and officers listed above: LAWRENCE S. SCHROEDER serves as President, Chief Executive Officer and a Director of the Company. Since 1992, Mr. Schroeder has served as a private consultant to the hospitality and other industries. Mr. Schroeder's clients have included the NFL, NASCAR, MLB, NHL and their officially licensed consumer products. Mr. Schroeder is a Director of Responsive Marketing & Communications, an official marketing agency of record for the 1996 Olympic Games. Mr. Schroeder is also Chairman and Chief Executive Officer of New World Entertainment, a joint venture partner and strategic marketing agent for Allied Domecq Spirits and Wine, acting as merchandiser for portfolio brands to stadiums, casinos and other public facilities domestically. Mr. Schroeder received a bachelors of science in business administration from Huron College. S. MATTHEW SCHULTZ serves as Chief Operating Officer and Chairman of the Board of Directors of the Company. Since April 2003, Mr. Schultz has served as President of Wexford Capital Ventures, Inc., a Utah based strategic financial consulting firm. Mr. Schultz has been instrumental in creating successful investor awareness campaigns for numerous publicly traded companies, and has assisted in private placement offerings, both domestically and internationally. From 1999 to 2003, Mr. Schultz was the Chairman of Pali Financial Group, Inc., an investment banking firm specializing in small cap securities. Mr. Schultz also served as the vice-president of the Utah Consumer Lending Association from 1998 through 1999. JASON F. GRIFFITH serves as Chief Financial Officer, Secretary and a Director nominee of the Company. Mr. Griffith's experience includes having served as chief financial officer for two publicly traded companies, including Datascension, Inc., from June 2002 to March 2005, and South Texas Oil Company, from June 2002 to the present. Mr. Griffith has extensive experience in public accounting, including serving as the managing partner of De Joya, Griffith & Company, LLC, formerly known as CFO Advantage, from June 2002 to December 2004, 31 and Franklin, Griffith & Associates, from January 2005 to August 2005. In addition, Mr. Griffith served as the accounting manager for Chavez & Koch, a certified public accounting firm, from August 2001 through June 2002. Previously, Mr. Griffith worked for Arthur Andersen LLP in Memphis, Tennessee from December 1998 until July 2001. Mr. Griffith received a bachelor's degree in business and economics, and a master's degree in accounting, from Rhodes College. Mr. Griffith is a licensed certified public accountant in Nevada and Tennessee, is a member of the American Institute of Certified Public Accountants, The Association of Certified Fraud Examiners, The Institute of Management Accountants, and the Nevada and Tennessee State Society of CPA's. Currently, Mr. Griffith serves as a member of the board of directors for South Texas Oil Company. The following individuals are officers and directors of The Ultimate Poker League, Inc., or UPL, a wholly-owned subsidiary of SGI, will continue to serve in the capacities set forth below: NAME AGE POSITION DATES SERVED - -------------------- ---- ------------ ---------------------- Anthony J. Marsiglia 58 President Since Inception of UPL Jason F. Griffith 29 Secretary, Treasurer Since Inception of UPL Benjamin R. Magee 35 Director (UPL) Since Inception of UPL _________________ OFFICERS AND DIRECTORS - THE ULTIMATE POKER LEAGUE, INC. ANTHONY J. MARSIGLIA serves as the President of UPL. Mr. Marsiglia is currently the President and Chief Executive Officer of Responsive Marketing Communications, a full service marketing agency located in Chicago, Illinois. Mr. Marsiglia is a pioneer in integrated marketing, with extensive experience in advertising, marketing and brand building. From 1969 to 1978, Mr. Marsiglia served as a sales representative and then Group Product Manager of Standard Brands, now know as Kraft. While with Standard Brands, Mr. Marsiglia ultimately directed marketing and brand development campaigns for Planters Nuts & Snacks, Blue Bonnet Margarine and Yardley of London Soaps. Mr. Marsiglia launched Responsive Marketing with the Bertolli olive oil and wine brand, taking the brand from a niche market player to national chain distribution status. Mr. Marsiglia was also instrumental in developing brand recognition and product development for Energizer, Lipton, Thomas', Knorr, Entenmann's, Hillshire Farms and other national brands for large multi-national companies such as Kraft, Unilever, ConAgra and Sara Lee. Responsive Marketing was a marketing agency of record for the 1996 Olympic Games. Responsive Marketing was also one of the first marketing agencies to develop fan clubs and affinity programs to support client bases. Since the 1980's, Responsive Marketing has been a primary developer of fan club and affinity programs, including Gumby, The Teenage Mutant Ninja Turtles and The Energizer Bunny. At its peak, the Teenage Ninja Mutant Turtles fan club boasted 300,000 members and the Energizer Bunny club sold over 250,000 pieces of merchandise. Mr. Marsiglia received a bachelor's degree in marketing from Northern Illinois University. BENJAMIN R. MAGEE serves as a Director of UPL. Since 2004, Mr. Magee has served as the Tournament Director for the Plaza Hotel and Casino, Las Vegas, Nevada, and has increased the Plaza poker tournament schedule from one tournament, operating six days per week, to four tournaments, operating seven days per week. Mr. Magee is responsible for turning an unprofitable venture for the 32 Plaza Hotel into an operation with positive cash flow of approximately $70,000 per month. Mr. Magee oversees all aspects of the Plaza tournaments, including advertising and marketing, the result of which has been a tremendous increase in visibility and profit for the tournaments. Mr. Magee has also organized, structured and operated daily tournaments and major televised events including the Ultimate Poker Challenge and World Poker Classic. Prior to joining Plaza Hotel, Mr. Magee was employed by Binion's Horseshoe Hotel and Casino with the responsibility to direct the satellite tournaments for the 2004 World Series of Poker. While working for Binion's, Mr. Magee standardized gaming regulations and assisted the international poker community with problems related to poker rulings, and was responsible for increasing tournament play from two tournaments per week to ten tournaments per week. From 1995 to 2002, Mr. Magee supervised multi-game dealers and multiple casinos, and was responsible for increasing profitability and the customer loyalty base for such venues. AUDIT COMMITTEE AND FINANCIAL EXPERT Our Audit Committee consists of S. Matthew Schultz (Chairman) and Lawrence S. Schroeder. At this time, we do not have a majority of independent parties serving on our Audit Committee, but we will endeavor to do so in the future. The Audit Committee undertakes the following: recommends the independent certified public accounting firm to audit the Company's annual financial statements and review the quarterly financial statements; reviews the independence of the Company's certified public accounting firm; reviews the independent certified public accounting firm's audit report relating to the Company's annual financial statements and the review of the Company's quarterly financial statements; reviews management's administration of the system of internal accounting controls; at least annually, meets with the Company's in- house counsel to discuss legal matters that may have a material impact on the Company's financial statements; and at least annually, meets with appropriate management to review tax matters affecting the Company, among other items. The Company has a written audit committee charter. The Audit Committee was formed on November 1, 2005. We do not currently have a financial expert that is independent. In the interim, Mr. Griffith will serve in this capacity. Mr. Griffith is not, however, an independent director given that he serves as Chief Financial Officer. In the future, we intend to retain an independent financial expert. An "audit committee financial expert" means a person who has the following attributes: - An understanding of generally accepted accounting principles and financial statements; - The ability to assess the general application of such principles in connection with the accounting for estimates, accruals and reserves; - Experience preparing, auditing, analyzing or evaluating financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can reasonably be expected to be raised by the small business issuer's financial statements, or experience actively supervising one or more persons engaged in such activities; - An understanding of internal control over financial reporting; and - An understanding of audit committee functions. 33 COMPENSATION COMMITTEE The Company's compensation committee is currently comprised of Messrs. Schultz and Schroeder. At this time, we do not have a majority of independent members serving on our Compensation Committee, but will endeavor to do so in the future. In general, the compensation committee's authority and oversight extends to total compensation, including base salaries, bonuses, stock options, and other forms of compensation for the Company's officers, directors and key employees. More specifically, the compensation committee has the responsibility to: - Recommend executive compensation policy to our board - Determine compensation of our senior executives - Determine the performance criteria and bonuses to be granted - Administer and approve stock option grants - In recommending executive compensation, the compensation committee has the responsibility to ensure that the compensation program for executives of the Company is effective in attracting and retaining key officers, links pay to business strategy and performance, and is administered in a fair and equitable fashion in the stockholder's interest. NOMINATING COMMITTEE We do not have a Nominating Committee or Nominating Committee Charter. Our board of directors, perform some of the functions associated with a Nominating Committee. We have elected not to have a Nominating Committee in that we are a development stage company with limited operations and resources. We do, however, intend to implement a nominating committee in 2007 upon appointing not less than two (2), and not more than four (4), independent directors. ELECTION OF DIRECTORS AND OFFICERS. Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and qualified. Officers serve on an annual basis and are elected at the meeting of the board of directors following each annual meeting of stockholders. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, requires the Company's executive officers and directors, and persons who beneficially own more than ten percent (10%) of the Company's common stock, to file initial reports of ownership and reports of changes in ownership with the SEC. Executive officers, directors and greater than ten percent beneficial owners are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. Based upon a review of the copies of such forms furnished to us and written representations from our executive officers and directors, we believe that as of the date of this filing each of our executive officers and directors are current in their filings. 34 ITEM 10. EXECUTIVE COMPENSATION The following table sets forth the cash compensation of the Company's executive officers during the last two fiscal years of the Company. The remuneration described in the table does not include the cost to the Company of benefits furnished to the named executive officers, including premiums for health insurance and other benefits provided to such individuals that are extended in connection with the conduct of the Company's business.
SUMMARY COMPENSATION TABLE NAME OF EXECUTIVE OFFICER ANNUAL BONUS AND OTHER SECURITIES UNDERLYING AND/OR DIRECTOR POSITION OF INDIVIDUAL SALARY COMPENSATION STOCK OPTIONS - ---------------------- ------------------------------------- ------------- ------------------ ------------------ S. Matthew Schultz Chief Operating Officer and Chairman - (2005) - - - (2006) Lawrence S. Schroeder Chief Executive Officer, President and a - (2005) - - 25,000 (2006) Jason F. Griffith Chief Financial Officer, Secretary and a - (2005) - - Director 13,334 (2006) Richard M. Hall Former Chief Executive Officer - - - ____________________
(1)Richard M. Hall, our former Chief Executive Officer, received $0 in salary in 2005 prior to his resignation on February 16, 2005. Mr. Schroeder has an annual salary of $150,000, or $12,500 per month. Mr. Schroeder has been paid in full for the three months ended March 31, 2007. Mr. Griffith has an annual salary of $80,000, or $6,666 per month. In the three months ended March 31, 2007, Mr. Griffith has been paid $3,334, and has accrued the remaining $16,664. Mr. Schultz is not being paid a salary at this time as his day-to-day involvement is minimal. TERMINATION OF EMPLOYMENT There are no compensatory plans or arrangements, including payments to be received from the Company, with respect to any party named above which would result in payments to any such person because of his resignation, retirement, or other termination of such person's employment with the Company or its subsidiaries, or any change in control of the Company, or a change in the person's responsibilities following a change in control of the Company. 35 COMPENSATION OF DIRECTORS All non-employee directors who serve on our board of directors in the future will receive an annual grant of options to purchase shares of common stock, a cash fee for attending board of director meetings, and shall be reimbursed for expenses incurred in attending such meetings. ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. The table below sets forth the beneficial ownership of our common stock as of April 13, 2007 by: - All of our directors and executive officers, individually; - All of our directors and executive officers, as a group; and - All persons who beneficially own more than five percent of our outstanding common stock. The beneficial ownership of each person as described below was calculated based on 8,312,137 shares of our common stock outstanding as of April 13, 2007, according to the record ownership listings as of that date and the verifications we solicited and received from each director, executive officer and five percent holder. The Securities and Exchange Commission has defined "beneficial ownership" to mean more than ownership in the usual sense. For example, a person has beneficial ownership of a share not only if the person owns it in the usual sense, but also if he has the power to vote, sell or otherwise dispose of the share. Beneficial ownership also includes the number of shares that a person has the right to acquire within 60 days of April 13, 2007 pursuant to the exercise of options or warrants or the conversion of notes, debentures or other indebtedness, but excludes stock appreciation rights. In addition, two or more persons might count as beneficial owners of the same share. Unless otherwise noted, the address of the following persons listed below is c/o Strategic Gaming Investments, Inc., 2580 Anthem Village Dr., Henderson, NV 89052. SECURITY OWNERSHIP OF MANAGEMENT PERCENT NUMBER BENEFICIALLY NAME OF BENEFICIAL OWNER OF SHARES OWNED - ----------------------------------- --------- ------------ S. Matthew Schultz 3,057,972 36.8% Lawrence S. Schroeder 2,431,780 29.3% Jason F. Griffith 750,000 9.0% All Directors & Officers as a Group 6,239,752 75.1% 36 CHANGE IN CONTROL On February 16, 2005, Mr. Hall sold 15,000 (reflects 1:1000 reverse stock split effected in September 2005) shares of common stock to S. Matthew Schultz for $80,000 in cash. On March 15, 2005, we entered into an Equity-for-Debt Agreement with Mr. Schultz, wherein we agreed to exchange $420,000 in debt due to Mr. Schultz for 42,000 shares (reflects 1:1000 reverse stock split effected in September 2005) of our common stock. ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS None. ITEM 13. EXHIBITS 10.1 Rescission Agreement, dated March 8, 2005, previously filed as an exhibit to registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on March 24, 2005 10.2 Equity for Debt Exchange Agreement, dated March 15, 2005, previously filed as an exhibit to registrant's Current Report on Form 8-K filed with the Securities and Exchange Commission on April 11, 2005 10.3 Agreement and Plan of Reorganization between the Company and Strategic Gaming Investments, Inc., dated November 4, 2005, previously filed as an exhibit to registrant's Preliminary Information Statement on Schedule 14C as filed with the Securities and Exchange Commission on November 4,2005 10.4* Settlement Agreement and Mutual Release of Claims by and between Strategic Gaming Investments, Inc. and Donald Beck dated April 16, 2007 21.1* List of Subsidiaries 31.1* Certification of Lawrence S. Schroeder pursuant to Section 302 of the Sarbanes-Oxley Act 31.2* Certification of Jason F. Griffith pursuant to Section 302 of the Sarbanes-Oxley Act 32.1* Certification of Jason F. Griffith & Lawrence S. Schroeder pursuant to Section 906 of the Sarbanes-Oxley Act * Filed herewith ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES. AUDIT FEES The aggregate fees billed for professional services rendered by Beadle, McBride, Evans & Reeves, LLP, for the audit of our annual financial statement and review of the financial statements included in our Forms 10-QSB or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for fiscal years 2006 and 2005 were $28,730 and $13,230, respectively. 37 AUDIT-RELATED FEES The aggregate fees billed by Beadle, McBride, Evans, & Reeves, LLP, for professional services rendered for audit related fees for fiscal years 2006 and 2005 were $0 and $0, respectively. TAX FEES The aggregate fees to be billed by Beadle, McBride, Evans, & Reeves, LLP, for professional services to be rendered for tax fees for fiscal years 2006 and 2005 were $0 and $0, respectively. ALL OTHER FEES There were no other fees to be billed by Beadle, McBride, Evans, & Reeves, LLP, for the fiscal years 2006 and 2005 other than fees described above. 39 SIGNATURES In accordance with Section 13 or 15(d) of the Securities Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. STRATEGIC GAMING INVESTMENTS, INC. By: /s/ Lawrence S. Schroeder -------------------------- Lawrence S. Schroeder Dated: April 17, 2007 In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. NAME OFFICER DATE /s/ Lawrence S. Schroeder Chief Executive Officer, April 17, 2007 - ------------------------- President and a Director Lawrence S. Schroeder /s/ S. Matthew Schultz Chief Operating Officer and April 17, 2007 - ------------------------- Chairman S. Matthew Schultz /s/ Jason F. Griffith Chief Financial Officer, April 17, 2007 - ------------------------- Secretary and a Director Jason F. Griffith EX-1 2 ex104.txt SETTLEMENT AGREEMENT AND MUTUAL RELEASE OF CLAIMS BY AND BETWEEN STRATEGIC GAMING INVESTMENTS, INC. AND DONALD BECK, DATED APRIL 16, 2007 SETTLEMENT AGREEMENT AND MUTUAL RELEASE OF CLAIMS THIS SETTLEMENT AGREEMENT AND MUTUAL RELEASE OF CLAIMS (this "AGREEMENT") is dated as of April 16, 2007, and is made and entered into by STRATEGIC GAMING INVESTMENTS, INC., a Delaware corporation ("SGI"), and DONALD R. BECK, an individual ("BECK"). For purposes of this Agreement, SGI and Beck may be referred to in this Agreement individually as a "PARTY," and collectively as the "PARTIES." RECITALS A. Beck, the principal shareholder of Neolink Wireless Content, Inc., a Nevada corporation ("NEOLINK"), together with all other shareholders of Neolink, entered into that certain Merger and Share Exchange Agreement with SGI dated January 5, 2007 (the "MERGER AGREEMENT"), pursuant to which, among other things, all of Neolink's shareholders exchanged their shares of Neolink common stock for a certain number of shares of SGI common stock, resulting in SGI becoming the sole shareholder of Neolink. For purposes of this Agreement, the SGI shares that were received by the shareholders of Neolink pursuant to the Merger Agreement shall be collectively referred to in this Agreement as the "EXCHANGED SGI SHARES." B. As a material part of the transactions contemplated by the Merger Agreement, SGI caused Neolink to employ Beck as its President and Chief Executive Officer pursuant to the terms of that certain Employment Agreement dated January 5, 2007 (the "EMPLOYMENT AGREEMENT"). In consideration of Beck's services in this regard, Neolink agreed to cause SGI to issue to Beck an additional 120,000 shares of SGI common stock over the term of the Employment Agreement (collectively, the "CONSIDERATION SGI SHARES"). To date, none of the Consideration SGI Shares have been issued to Beck. C. A dispute has arisen between the Parties regarding some or all of the foregoing matters. Without making any concessions or admissions regarding the merits of any claims that either Party may have against the other, in the interest of avoiding the time, expense and uncertainty associated with the on-going dispute between the Parties, the Parties have agreed to settle the dispute upon certain terms and to release each other from any and all claims that either Party may have against the other in connection with the foregoing matters and all other prior dealings between the Parties. D. The Parties are entering into this Agreement in order to memorialize the terms of settlement of their dispute and to release each other from any and all claims that may now exist or that may arise in the future in connection with the foregoing matters and all other prior dealings between the Parties, as further set forth below. Accordingly, the Parties hereby agree as follows: 1. ACKNOWLEDGMENT OF RECITALS. The Parties hereby acknowledge the truthfulness and accuracy of, and hereby ratify, the recitals set forth above, each of which is hereby incorporated into this Agreement by reference. 2. TERMS OF SETTLEMENT. The Parties expressly acknowledge and agree to the terms of settlement as set forth in this Section 2, each of which shall occur or take effect, as applicable, promptly upon execution and delivery of this Agreement. 2.1.PURCHASE OF NEOLINK SHARES. 2.1.1.SGI hereby sells, transfers and assigns to Beck, and Beck hereby purchases and acquires from SGI, all of the issued and outstanding shares of Neolink common stock (collectively, the "NEOLINK SHARES"), for the purchase price set forth below and otherwise on the applicable terms and subject to the applicable conditions set forth in this Agreement. The purchase price for the Neolink Shares shall be Fifteen Thousand Dollars ($15,000.00), which Beck shall pay to SGI in immediately available funds promptly upon execution and delivery of this Agreement and SGI's delivery to Beck of all certificates representing the Neolink Shares, duly endorsed in blank. 2.1.2.SGI represents and warrants to Beck that the Neolink Shares are free and clear from any security interest, lien, pledge, encumbrance, claim, charge, right, option, warrant or restriction of any kind, nature or description, and that no option, right or other agreement or commitment exists with respect to any of the Neolink Shares. 2.2.RELINQUISHMENT OF CERTAIN EXCHANGED SGI SHARES. 2.2.1.Beck shall relinquish, endorse over and otherwise transfer and assign to SGI 100,000 of the Exchanged SGI Shares, and Beck shall cause John Padon, a former Neolink shareholder ("PADON"), to relinquish, endorse over and otherwise transfer and assign to SGI an additional 100,000 of the Exchanged SGI Shares. To that end, Beck shall deliver to Wolf, Rifkin, Shapiro and Schulman, LLP (the "FIRM") SGI Share Certificate No. 1063, evidencing 600,000 shares of SGI common stock, and Beck shall cause Padon to deliver to the Firm SGI Share Certificate No. ____ evidencing 200,000 shares of SGI common stock. The Firm shall hold such SGI Share Certificates in trust until such time as all of the following have occurred: (a) SGI has caused its stock transfer agent to issue to Beck a new SGI Share Certificate evidencing 500,000 shares of SGI common stock, (b) SGI has caused its stock transfer agent to issue to Padon a new SGI Share Certificate evidencing 100,000 shares of SGI common stock, and (c) the newly-issued SGI Share Certificates have been delivered to the Firm. Upon the Firm's receipt of the foregoing, the Firm shall deliver to SGI those SGI Share Certificates being held in trust. SGI acknowledges that, upon consummation of the transactions contemplated by this Agreement, each of the Exchanged SGI Shares not being relinquished, endorsed over and otherwise transferred and assigned to SGI pursuant to this Section 2.2.1 (including those being issued to Beck and Padon hereby) shall remain the sole and exclusive property of the former Neolink shareholder who or which owns the same. 2.2.2.Beck represents and warrants to SGI that those Exchanged SGI Shares being relinquished, endorsed over and otherwise transferred and assigned to SGI hereby are free and clear from any security interest, lien, pledge, encumbrance, claim, charge, right, option, warrant or restriction of any kind, nature or description, and that no option, right or other agreement or commitment exists with respect to any of such Exchanged SGI Shares. 2.3.TERMINATION OF EMPLOYMENT AGREEMENT; WAIVER OF RIGHTS IN CONSIDERATION SGI SHARES. The Parties hereby terminate the Employment Agreement in its entirety effective as of the date of this Agreement. In connection therewith, and except as otherwise set forth in this Agreement, neither Party shall owe any further duty or obligation, and neither Party shall be entitled to any further right, privilege or benefit, arising under or in connection with the Employment Agreement. Without limiting the generality of the foregoing, Beck hereby expressly waives any and all right, title, claim and interest that he may now have or hereafter acquire in or to the Consideration SGI Shares, and any portion thereof. 2.4.LIABILITIES AND OBLIGATIONS. 2.4.1.Except as set forth in Section 2.4.2 below, Neolink shall remain responsible for all debts and liabilities incurred by it in the course of its business and operations, including those debts and liabilities incurred during SGI's ownership of the Neolink Shares, and SGI shall have no obligations or responsibilities with respect to any of the same. Neolink shall indemnify, defend, protect and hold harmless SGI from any and all Claims and Liabilities (as defined below) that arise in connection with or that relate to any of the debts and liabilities referenced in this Section 2.4.1. 2.4.2.Notwithstanding the foregoing, SGI shall be obligated to fulfill all of Neolink's office rent and T-1 line obligations owing to Anthem Village Executive Suites incurred through April 30, 2007, for the office located at 2580 Anthem Village Drive, Suite B-18, Henderson, Nevada 89052 (the "PREMISES"). SGI shall indemnify, defend, protect and hold harmless Neolink and Beck from any and all Claims and Liabilities that arise in connection with or that relate to any of the obligations referenced in this Section 2.4.2. 2.5.VACATE THE PREMISES. Beck shall have until April 30, 2007 to vacate the Premises and to remove all of Beck's and Neolink's materials, items and belongings from the Premises. Any of such materials, items or belongings remaining in or about the Premises after April 30, 2007 shall be deemed abandoned, and SGI shall dispose of the same in any manner it deems appropriate. 2.6.REMOVAL OF BRAND REFERENCES. Beck shall cause Neolink to remove from all media any reference to Neolink's current affiliations with Anheuser- Busch Companies, Inc. ("BUDWEISER") and Hooters of America, Inc. ("HOOTERS"), including removing all brand name references and logo designations. Notwithstanding the foregoing, nothing in this Section 2.6 shall prohibit Neolink from hereafter establishing new affiliations with Budweiser or Hooters, or both, and referencing the same in any form of media that Neolink desires in its sole and absolute discretion. 2.7.PROGRAM RIGHTS. Neolink shall remain the sole and exclusive owner of all right, title and interest, including all DVD distribution rights, in and to the program tentatively entitled "How to Beat the Odds in Las Vegas" (working title) (the "PROGRAM"), free from any claim or right therein or thereto by SGI, subject only to the right of Hooters to receive a 10% share of net profits (after recoupment of direct expenses) resulting from the distribution of certain versions of the Program. 3. REPRESENTATIONS AND WARRANTIES BY SGI. SGI hereby represents and warrants to Beck as set forth in this Section 3. 3.1.POWER AND AUTHORITY. SGI has all requisite power, authority and capacity to enter into this Agreement, and all corporate actions required to be taken by SGI to authorize the execution, delivery and performance of this Agreement and all transactions contemplated by this Agreement have been duly and properly taken. Upon SGI's execution and delivery of this Agreement, this Agreement will become a valid and binding obligation of SGI, enforceable against SGI in accordance with its terms. 3.2.ABSENCE OF CHANGES. Since the date of SGI's acquisition of the Neolink Shares, SGI has not caused, undertaken or become aware of the occurrence of any of the following: 3.2.1.any event, occurrence or condition that, either alone or in combination with other events, occurrences or conditions, is materially adverse to Neolink's business, operations, financial performance, properties, assets or prospects; 3.2.2.the sale or issuance of any shares of capital stock or any other securities of Neolink; 3.2.3.the pledge or hypothecation of any Neolink asset, or the subjecting of any Neolink asset to any encumbrance, charge, claim, condition, equitable interest, lien, license, lease, covenant, option, pledge, security interest, right of first refusal or restriction of any kind; 3.2.4.the incurrence or assumption by Neolink, or the subjecting of Neolink to, any debt, obligation, duty or liability outside the ordinary course of business; 3.2.5.any transaction or other action involving Neolink outside of the ordinary course of business; 3.2.6.any agreement involving Neolink regarding any merger or consolidation of or by Neolink with any other entity or any acquisition of all or any part of the stock, equity interest or the business or assets of any other person, firm, association, corporation or business organization; or 3.2.7.any transfer or grant by Neolink of any rights in any trademark (whether registered or unregistered), trademark application, trade name, fictitious business name, service mark (whether registered or unregistered), service mark application, copyright (whether registered or unregistered), copyright application, trade secret, technology, customer list, proprietary right or other intellectual property right or intangible asset. 3.3.PROCEEDINGS. To the knowledge of SGI, there is no claim, legal proceeding, action, suit, investigation or other proceeding pending or threatened against Neolink that (A) could adversely affect Neolink's business or any of the assets owned or used by Neolink, or (B) challenges, or that may have the effect of preventing, delaying, making illegal or otherwise interfering with, any of the transactions contemplated by this Agreement. No event has occurred, and no claim, dispute or other condition or circumstance exists, that likely would directly or indirectly give rise to or serve as a basis for the commencement of any of the foregoing. 4. REPRESENTATIONS AND WARRANTIES BY BECK. Beck hereby represents and warrants to SGI that Beck has all requisite power, authority and capacity to enter into this Agreement, and all actions required to be taken by Beck to authorize the execution, delivery and performance of this Agreement and all transactions contemplated by this Agreement have been duly and properly taken. Upon Beck's execution and delivery of this Agreement, this Agreement will become a valid and binding obligation of Beck, enforceable against Beck in accordance with its terms. 5. MUTUAL RELEASE OF CLAIMS. 5.1.RELEASE BY SGI. SGI, on behalf of itself and each of its affiliated persons and entities, and each of their respective spouses, heirs, beneficiaries, shareholders, members, directors, officers, managers, employees, contractors, partners, joint venturers, attorneys, agents, representatives, successors and assigns, hereby forever releases and discharges Beck, each of his affiliated persons and entities and each of their respective spouses, heirs, beneficiaries, shareholders, members, directors, officers, managers, employees, contractors, partners, joint venturers, attorneys, agents, representatives, successors and assigns, and any person or entity acting by, though, under or in concert with any of them, from and against, and forever waive, forfeit and relinquish, each and every claim, action, demand, right, lien, covenant, agreement, contract, representation, warranty, indemnity, obligation, debt, cause of action, liability, lawsuit, litigation, loss, damage (including consequential damages and penalties), fee, cost and expense (including costs and expenses of counsel), indebtedness, order and cause of action, of every and whatever type, kind, nature, description or character, whether sounding in law, equity, contract, tort, statute or otherwise, and whether or not presently or later known, unknown, existing, asserted, suspected, unsuspected, liquidated, unliquidated, fixed, contingent, matured, unmatured, anticipated or unanticipated (each, a "CLAIM AND LIABILITY," and collectively, "CLAIMS AND LIABILITIES") arising out of, based on, relating to or in any way connected with the Merger Agreement, the Employment Agreement, the Exchanged SGI Shares, the Neolink Shares or otherwise with any of the prior dealings between the Parties. 5.2.RELEASE BY BECK. Beck, on behalf of himself and each of his affiliated persons and entities, and each of their respective spouses, heirs, beneficiaries, shareholders, members, directors, officers, managers, employees, contractors, partners, joint venturers, attorneys, agents, representatives, successors and assigns, hereby forever releases and discharges SGI, each of its affiliated persons and entities, and each of their respective spouses, heirs, beneficiaries, shareholders, members, directors, officers, managers, employees, contractors, partners, joint venturers, attorneys, agents, representatives, successors and assigns, and any person or entity acting by, though, under or in concert with any of them, from and against, and forever waives, forfeits and relinquishes, each and every Claim and Liability arising out of, based on, relating to or in any way connected with the Merger Agreement, the Employment Agreement, the Exchanged SGI Shares, the Neolink Shares or otherwise with any of the prior dealings between the Parties. 5.3.CIVIL CODE SECTION 1542. The Parties intend for this Section 5 to serve as a general release, and each Party recognizes that such Party may have Claims and Liabilities of which such Party is totally unaware and unsuspecting, but that which such Party is nevertheless releasing and giving up by executing this Agreement and providing the general release set forth above. In furtherance of such understanding and intention, each Party acknowledges that such Party is familiar with the provisions of California Civil Code Section 1542, and the corresponding provisions of any code, statute or law of any other state having jurisdiction over such Party, and such Party waives all such provisions and applications, including those of California Civil Code Section 1542, which provides as follows: Section 1542. (Extent of General Release.) A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor. 5.4.ASSUMPTION OF RISK. EACH OF THE PARTIES TO THIS AGREEMENT HAS BEEN ADVISED BY SUCH PARTY'S LEGAL COUNSEL AS TO THE EFFECT OF THE RELEASE BEING PROVIDED HEREUNDER AND UNDERSTANDS THAT THE FACTS WITH RESPECT TO WHICH SUCH RELEASE IS GIVEN MAY BE DIFFERENT FROM THE FACTS NOW KNOWN OR BELIEVED BY SUCH PARTY TO BE TRUE. EACH OF THE PARTIES ACCEPTS AND ASSUMES THE RISK THAT SUCH FACTS MAY TURN OUT TO BE DIFFERENT. NEVERTHELESS, EACH PARTY AGREES THAT THE RELEASE SUCH PARTY HAS PROVIDED UNDER THIS SECTION 5 SHALL REMAIN IN ALL RESPECTS EFFECTIVE AND SHALL NOT BE SUBJECT TO TERMINATION OR RESCISSION IN THE EVENT SUCH FACTS TURN OUT TO BE DIFFERENT. 5.5.SURVIVAL OF THIS RELEASE. Each of the Parties acknowledges and agrees that nothing contained in this Section 5 shall release or discharge such Party from such Party's representations, warranties, covenants and agreements set forth in, and from such Party's rights, duties and obligations assumed under, this Agreement. 6. FORBEARANCE FROM LITIGATION. Each Party shall forever refrain and forebear from commencing, instituting or prosecuting any lawsuit, action or other proceeding against the other Party based on, arising out of or in any way connected with any Claim and Liability that is released or discharged under this Agreement. 7. NO ASSIGNMENT OF CLAIMS. Each Party represents and warrants to the other Party that such Party has not assigned any of the Claims and Liabilities released or discharged under this Agreement, and each Party shall indemnify, defend, protect and hold harmless the other Party from and against any and all Claims and Liabilities that such other Party shall suffer or incur as a result of or arising in connection with any breach of the foregoing representation and warranty. 8. ARM'S LENGTH. This Agreement has been negotiated at arm's length between persons knowledgeable in the matters dealt with herein. In addition, each Party has been represented by independent legal counsel of such Party's own choice. Accordingly, any rule of law or any other statute, legal decision or common law principle of similar effect that would require interpretation of any uncertainty or ambiguity in this Agreement against the Party that drafted it, is of no application and is hereby expressly waived. This Agreement shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of the Parties and this Agreement. 9. VOLUNTARY. Each Party warrants, represents and agrees that, in executing this Agreement, such Party (A) does so with knowledge of any and all rights that such Party may have with respect to the provisions of this Agreement, (B) has carefully read and considered this Agreement and fully understands its contents and the significance of its contents, (C) is entering into this Agreement of such Party's own informed and free will, based upon such Party's own judgment and without any coercion or fear of retaliation, and (D) has obtained independent legal advice with respect to this Agreement. 10. NO DISPARAGEMENT. Neither Party shall make or publish, or allow or cause any other person or entity to make or publish, any untrue, derogatory or disparaging statements about the other Party to any third party pertaining to any personal or business matters that previously transpired between the Parties. 11. CONFIDENTIALITY. Each Party agrees that neither such Party nor any person or entity that is an employee, agent or representative of, or otherwise affiliated with, such Party shall reveal, disclose or otherwise make known to any person or entity, other than as the Parties may mutually agree in writing, the existence, or any of the terms or conditions, of this Agreement; provided, however, it is expressly understood and agreed to by Beck that SGI will be required to file a current report on Form 8-K with the Securities and Exchange Commission within four (4) business days of the execution of this Agreement detailing the terms hereof. 12. MISCELLANEOUS. 12.1. ENTIRE AGREEMENT. This Agreement and all exhibits hereto constitute the only and entire agreement between the Parties with respect to the subject matter hereof, and there are no promises, repre- sentations or other agreements or understandings between the Parties with respect to the subject matter hereof other than those set forth herein. The obligations set forth in this Agreement are unconditional. 12.2. GOVERNING LAW; CONSENT TO JURISDICTION. California law, without regard to conflict or choice of law principles, shall govern the construction and interpretation of this Agreement. The Parties agree that all actions or proceedings arising directly or indirectly from this Agreement shall be litigated in courts having a situs within Las Vegas, Nevada, and hereby consent to the jurisdiction of any local, state or federal court in which such an action is commenced that is located in Clark County, Nevada and agree not to disturb such choice of forum or waive the personal service of any and all process upon them. 12.3. ATTORNEYS' FEES. If an action (including arbitration) is brought to interpret or enforce any of the terms of this Agreement, or because of a Party's breach of any provision of this Agreement, the losing Party shall pay the prevailing Party's attorneys' fees, costs and expenses, court costs and other costs of action incurred in connection with the prosecution or defense of such action, whether or not the action is prosecuted to a final judgment. In addition to the foregoing award of attorneys' fees, the prevailing Party shall be entitled to its attorneys' fees incurred in any post-judgment proceeding to enforce any judgment in connection with this Agreement. 12.4. MODIFICATION, WAIVER OR TERMINATION. Except as otherwise expressly provided in this Agreement, no modification, waiver or termination of this Agreement, or any part hereof, shall be effective unless made in writing and signed by the Party or Parties sought to be bound thereby. No failure to pursue or elect any remedy shall constitute a waiver of any default under or breach of any provision of this Agreement, nor shall any waiver of any such default or breach be deemed to be a waiver of any other subsequent default or breach. 12.5. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall constitute an original and together which shall constitute one and the same instrument. 12.6. BINDING EFFECT. This Agreement shall be binding upon and inure to the benefits of the parties hereto and their respective legal representatives, executors, administrators, successors and assigns. 12.7. CONSTRUCTION. Whenever used in this Agreement, the terms "including," "include," "includes" and the like are not intended as terms of limitation, and, hence, shall be deemed to be followed by "without limitation." IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first written above. "SGI" STRATEGIC GAMING INVESTMENTS, INC. By: /s/Lawrence S. Schroeder ----------------------- Lawrence S. Schroeder, President & Chief Executive Officer "BECK" /s/ Donald. R. Beck -------------------- DONALD R. BECK EX-2 3 mex211.txt LIST OF SUBSIDIARIES EXHIBIT 21.1 LIST OF SUBSIDIARIES NAME JURISDICTION OWNERSHIP ----------------------------------- 1. Strategic Gaming Investments, Inc. Nevada 100% 2. Ultimate Poker League, Inc. Nevada 100% EX-3 4 mex311.txt CERTIFICATION OF LAWRENCE S. SCHROEDER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT EXHIBIT 31.1 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Lawrence S. Schroeder, Chief Executive Officer and President of Strategic Gaming Investments, Inc., certify that: 1. I have reviewed this annual report on Form 10-KSB of Strategic Gaming Investments, Inc. for the fiscal year ended December 31, 2006; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: April 17, 2007 /s/ Lawrence S. Schroeder - --------------------------- Lawrence S. Schroeder, Chief Executive Officer and Principal Executive Officer EX-4 5 mex312.txt CERTIFICATION OF JASON F. GRIFFITH PURSUANT TO SECTION 302 OF SARBANES-OXLEY ACT EXHIBIT 31.2 CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Jason F. Griffith, Chief Financial Officer of Strategic Gaming Investments, Inc., certify that: 1. I have reviewed this annual report on Form 10-KSB of Strategic Gaming Investments, Inc. for the fiscal year ended December 31, 2006; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: April 17, 2007 /s/ Jason F. Griffith - -------------------------- Jason F. Griffith, Chief Financial Officer and Principal Financial and Accounting Officer EX-5 6 mex321.txt CERTIFICATION OF JASON F. GRIFFITH & LAWRENCE S. SCHROEDER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT EXHIBIT 32.1 CERTIFICATIONS PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with amendment number one to the Annual Report of Strategic Gaming Investments, Inc. (the "Company") on Form 10-KSB for the fiscal year ended December 31, 2006, as filed with the Commission on the date hereof (the "Report"), we, Lawrence S. Schroeder, Chief Executive Officer of the Company, and Jason F. Griffith, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. By: /s/ Lawrence S. Schroeder Dated: April 17, 2007 --------------------------- Lawrence S. Schroeder Title: Chief Executive Officer and Principal Executive Officer of Strategic Gaming Investments, Inc. By: /s/ Jason F. Griffith Dated: April 17, 2007 --------------------------- Gregory L. Hrncir Title: Chief Financial Officer, Chief Financial and Accounting Strategic Gaming Investments, Inc. This certification is made solely for the purposes of 18 U.S.C. Section 1350, subject to the knowledge standard contained therein, and not for any other purpose. -----END PRIVACY-ENHANCED MESSAGE-----