content: 8K FOR eLOTTERY RISK FACTORS 4/14/99
  
                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549
  
  
  
                                   FORM 8-K
  
  
  
                                CURRENT REPORT
  
                    PURSUANT TO SECTION 13 or 15(d) OF THE
                     SECURITIES AND EXCHANGE ACT of 1934
  
  
  
       Date of Report (Date of Earliest Event Reported): April 14, 1999
  
  
  
                     EXECUTONE INFORMATION SYSTEMS, INC.
            (Exact name of registrant as specified in its charter)
  
  
            Virginia                   0-11551                    86-0449210
  (State or other jurisdiction   (Commission File No.)         I.R.S. Employer
       of incorporation)                                     (Identification No.)
  
  
                           478 Wheelers Farms Road
                       Milford, Connecticut  06460-1847
                   (Address of principal executive offices)
  
  
                                (203) 876-7600
             (Registrant's telephone number, including area code)
  
  
                                     N/A
        (former name or former address, if changed since last report)
  
  
  <PAGE>
  
  ITEM 5.  OTHER EVENTS
  
       On April 14, 1999, EXECUTONE Information Systems, Inc.
  ("Executone") withdrew the Registration Statement on Form S-1
  (No. 333-63523) (the "Registration Statement") of eLottery, Inc.
  ("eLottery"), a wholly-owned subsidiary of Executone, because of
  certain tax consequences to be incurred by Executone and its
  shareholders in connection with the distribution of shares of
  common stock of eLottery pursuant to the Registration Statement.
  The Board of Directors of Executone has announced its intention
  to separate Executone's telephone and healthcare businesses (the
  "Core Business") from the electronic lottery business of eLottery
  through the sale of the Core Business, subject to the approval of
  the Executone shareholders (the "Sale"). The Board has received
  an offer from a group led by Stanley Kabala, Executone's Chairman
  and Chief Executive Officer, in the range of $70 million and
  subject to a number of conditions.  In connection with the Sale,
  Executone also intends to submit to its shareholders a proposal
  to amend its Articles of Incorporation to change its name to
  eLottery, Inc.
  
       In light of the withdrawal of the Registration Statement and
  the impending Sale, Executone deems it appropriate to disclose
  the following risk factors that could materially adversely affect
  the performance of eLottery:
  
  No Prior Market for Common Stock Independent of the Core Business
  -----------------------------------------------------------------
       Until the date of closing of the Sale, the common stock of
  Executone (the "Common Stock") will not have traded independently
  of the Core Business in the public market.  There can be no
  assurance that an active trading market for the Common Stock will
  be sustained following the Sale nor can there be any assurance as
  to the prices at which the Common Stock will trade following the
  Sale.
  
  No Current Source of Revenue
  ----------------------------
       On December 17, 1998, the Idaho Federal District Court
  issued an opinion and order granting declaratory judgment in
  favor of AT&T in the action styled AT&T v. Coeur D'Alene Tribe.
  In response to that decision, eLottery and the Coeur D'Alene
  Tribe (the "CDA") terminated operation of the National Indian
  Lottery (the "NIL") and the US Lottery, the trade name under
  which the NIL operated, which were the only existing operations
  of eLottery.  eLottery has yet to enter into any agreements with
  any state, national or international lotteries for the use of its
  lottery systems.  Although eLottery believes it is well
  positioned in the event that the state, national or international
  lotteries decide to sell their tickets over the Internet,
  Intranet, by telephone or through networked custom-designed
  electronic lottery terminals and is currently in various stages
  of negotiation with several U.S. and international lotteries,
  there can be no assurance that the state, national or
  international lotteries will sell their tickets by these methods
  or, if sold by these methods, that such lotteries will enter into
  contracts with eLottery to utilize the applications of the
  systems.
  
  Risk of Delisting from Nasdaq
  -----------------------------
       There can be no assurance that the Common Stock will
  continue to be included on the Nasdaq National Market after the
  closing of the Sale.  Failure to meet the listing requirements
  for the Nasdaq National Market or the Nasdaq SmallCap Market
  could result in the Common Stock being delisted from the Nasdaq
  Stock Market.  If the Common Stock is delisted from trading on
  Nasdaq, trading, if any, would thereafter be conducted in the
  over-the-counter market in the so-called "pink sheets" or the
  "Electronic
                                2
  <PAGE>
  
  Bulletin Board" of the National Association of Securities Dealers, Inc.
  and consequently, an investor may find it more difficult to dispose of,
  or to obtain accurate quotations as to the price of, the Common Stock.
  
  Potential Volatility of Common Stock Price
  ------------------------------------------
       The prices at which the Common Stock trades may fluctuate
  significantly in response to such factors as: (i) actual or
  anticipated variations in quarterly operating results; (ii)
  announcements of new product or service offerings; (iii)
  technological innovations; (iv) competitive developments; (v) the
  entering into or loss of a long-term governmental contract; (vi)
  changes in financial estimates by securities analysts; (vii)
  conditions and trends in the lottery and the internet and
  electronic commerce industries; and (viii) general market
  conditions and other factors.  Prices for the Common Stock will
  be determined in the trading markets, to the extent that such
  markets exist, and may be influenced by other factors, including
  the depth and liquidity of the market for the Common Stock and
  investor perceptions of eLottery.
  
  eLottery's History of Losses and Lack of Assurance of Future Profitability
  --------------------------------------------------------------------------
       eLottery has generated no revenues as of the date hereof.
  eLottery is in the development stage and its activities to date
  have been primarily related to organization of the Company and
  development of the business and computer and lottery systems
  necessary to further its business plan.  There is no assurance
  that enough future revenues will be generated by, or that
  alternative sources of funding will be available to, eLottery to
  support the furtherance of its business plan or to meet its
  operating expenses.
  
  eLottery Has Never Operated as an Independent Entity
  ----------------------------------------------------
       eLottery has never operated as a separate, independent
  entity, and has never operated as a public company.  Management's
  ability to operate eLottery as a public company on a stand-alone
  basis, including eLottery's ability to obtain additional
  financing, will impact the performance of eLottery and ultimately
  the return on each shareholder's investment in eLottery.
  
  Unavailability of the Financial and Other Resources of the Core Business
  ------------------------------------------------------------------------
       Executone, through the revenues generated by the Core
  Business, has provided all of eLottery's financial support and
  will continue to provide such support until the closing of the
  Sale.  Executone, until the closing of the Sale, has agreed to
  continue to provide financial support to eLottery not to exceed
  an average sum of $1.5 million per quarter in accordance with the
  terms of the Agreement for Redemption and Conversion of Preferred
  Stock, dated as of March 31, 1999 (the "Conversion Agreement"),
  between Executone and eLottery and Watertone Holdings L.P.,
  Cooper Life Sciences, Inc., John C. Shaw, Richard Bartlett, Jerry
  M. Seslowe, 10-26 S. William Street Associates, Louis K. Adler
  and Resource Holdings Ltd., the holders of the Executone
  Preferred Stock (the "Executone Preferred Holders").  Following
  the date of closing of the Sale, however, eLottery will no longer
  be able to rely on the Core Business for either financial support
  or to obtain credit for the purpose of supporting its operations.
  It is the current intention of the Board of Directors, however,
  that the proceeds of the Sale will remain in eLottery to help it
  implement its business plan.  eLottery expects the proceeds from
  the sale of the Core Business to adequately fund its operations
  for at least the next 18 months.
  
  Dependence upon Key Personnel
  -----------------------------
       eLottery is dependent upon the ability and experience of its
  executive officers. Although eLottery currently has employment
  contracts with three of its executive officers, it does not
  maintain key man life insurance on the lives of such executive
  officers.  The loss of the services of any or all of its
  executive
                                3
  <PAGE>
  
  officers or eLottery's inability in the future to attract and retain
  management and other key personnel could have a material adverse
  effect on eLottery.
  
  Certain Antitakeover Effects of Certain Provisions of Executone's
  Certificate of Incorporation
  -----------------------------------------------------------------
       Certain provisions of the Amended and Restated Certificate
  of Incorporation of Executone currently in effect, which
  Certificate of Incorporation, other than the name change, will be
  the same Certificate of Incorporation in effect for eLottery
  after the closing of the Sale (the "Certificate"), may have the
  effect of making more difficult an acquisition of control of
  Executone in a transaction not approved by the Board of
  Directors.  The Certificate would, in some circumstances,
  eliminate certain liabilities of directors in connection with the
  performance of their duties.
  
  Substantial Percentage Ownership of Executone By Former Executone
  Preferred Holders
  -----------------------------------------------------------------
       The Executone Preferred Holders have entered into the
  Conversion Agreement with Executone and eLottery, pursuant to
  which all of the outstanding shares of Executone Preferred Stock
  were redeemed and converted automatically into approximately 21%
  of the outstanding shares of the Common Stock.  As a result, one
  of the former Executone Preferred Holders now owns a substantial
  percentage of the Common Stock.  As a result of this substantial
  percentage ownership, this former Executone Preferred Holder
  could be deemed to control certain significant decisions of
  Executone and could prevent certain transactions that would be
  beneficial to its other common shareholders.
  
  Competition
  -----------
       The development, licensing and management of gaming
  technology and the provision of gaming entertainment are highly
  competitive.  The gaming market is served by state and nationally
  sponsored lotteries and by many domestic and foreign gaming
  companies, including several large land-based casino companies.
  A number of large, mature lottery services companies serve both
  the domestic and international markets.  All these competitors
  have substantially more capital, and therefore broader based
  resources to apply to technology and marketing than eLottery.
  eLottery also competes with other forms of leisure and
  entertainment activities for the public's disposable income.
  
  Market Development Risks
  ------------------------
       There are market risks associated with the development of
  eLottery's business.  eLottery's existing products have not been
  subjected to extensive market exposure.  All of eLottery's
  products currently in development are also products that employ
  new technologies and may not find sufficient customer or consumer
  support to become economically viable.
  
  Risks Associated with International Sales and Operations
  --------------------------------------------------------
       Although eLottery has not to date sold its products
  internationally except to the extent that the NIL had  foreign
  customers, part of its current strategy is to distribute lottery
  products internationally and to license its lottery distribution
  systems to lotteries worldwide.  Entry into the international
  market would subject eLottery to certain risks.  The risks
  associated with international sales include, but are not limited
  to, the length of time required to establish a foreign market
  presence, costs of localizing products for foreign countries,
  trade laws and business practices favoring local competition,
  dependence on local vendors, compliance with multiple,
  conflicting and changing government laws and regulations, longer
  sales and payment cycles, import and export restrictions and
  tariffs, difficulties in staffing and managing foreign
  operations, greater difficulty or delay in accounts receivable
  collection, foreign currency exchange rate fluctuations, in some
  countries, a lesser degree of intellectual property protection,
  multiple and conflicting 
                                4
  <PAGE>
  
  tax laws and regulations and political and economic instability. 
  The occurrence of any of these factors could have a material adverse
  effect on eLottery's business, financial condition and results of
  operations.
  
  Concentration in Single Industry
  --------------------------------
       eLottery's current operating strategy is to focus on lottery
  distribution, technologies and services.  Although eLottery will
  seek to develop other lines of business from the existing lottery
  business, eLottery is subject to risks associated with
  concentrating on a single industry.  Therefore, the adverse
  effect on eLottery's operating revenue resulting from an economic
  downturn in the lottery industry would be more pronounced than if
  eLottery had diversified its line of business.
  
       For further information, contact Edward W. Stone, Jr.,
  Senior Vice President and Chief Financial Officer, at (203) 882-
  6260, 478 Wheelers Farms Road, Milford, Connecticut  06460.
  
  
  
                             SIGNATURE
  
       Pursuant to the requirements of the Securities Exchange Act
  of 1934, the Registrant has duly caused this report to be signed
  on its behalf by the undersigned hereunto duly authorized.
  
                                     
                                     EXECUTONE INFORMATION SYSTEMS, INC.
  
  
  
  April 29, 1999                     By:/s/ Edward W. Stone, Jr.
                                     Edward W. Stone, Jr., 
                                     Senior Vice President
                                       and Chief Financial Officer
  
                                   5
metadata_documents: [{"type": "8-K", "sequence": "1", "secsgml_size_bytes": 14691}]
metadata_filer: {"company-data": {"conformed-name": "EXECUTONE INFORMATION SYSTEMS INC", "cik": "0000725282", "assigned-sic": "7385", "irs-number": "860449210", "state-of-incorporation": "VA", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-11551", "film-number": "99603932"}, "business-address": {"street1": "478 WHEELERS FARMS RD", "city": "MILFORD", "state": "CT", "zip": "06460", "phone": "2038767600"}, "mail-address": {"street1": "478 WHEELERS FARMS RD", "city": "MILFORD", "state": "CT", "zip": "06460-1847"}, "former-company": {"former-conformed-name": "VODAVI TECHNOLOGY CORP", "date-changed": "19880802"}}
text: 8K FOR eLOTTERY RISK FACTORS 4/14/99
  
                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC 20549
  
                                   FORM 8-K
  
                                CURRENT REPORT
  
                    PURSUANT TO SECTION 13 or 15(d) OF THE
                     SECURITIES AND EXCHANGE ACT of 1934
  
       Date of Report (Date of Earliest Event Reported): April 14, 1999
  
                     EXECUTONE INFORMATION SYSTEMS, INC.
            (Exact name of registrant as specified in its charter)
  
            Virginia                   0-11551                    86-0449210
  (State or other jurisdiction   (Commission File No.)         I.R.S. Employer
       of incorporation)                                     (Identification No.)
  
                           478 Wheelers Farms Road
                       Milford, Connecticut  06460-1847
                   (Address of principal executive offices)
  
                                (203) 876-7600
             (Registrant's telephone number, including area code)
  
                                     N/A
        (former name or former address, if changed since last report)
  ITEM 5.  OTHER EVENTS
  
       On April 14, 1999, EXECUTONE Information Systems, Inc.
  ("Executone") withdrew the Registration Statement on Form S-1
  (No. 333-63523) (the "Registration Statement") of eLottery, Inc.
  ("eLottery"), a wholly-owned subsidiary of Executone, because of
  certain tax consequences to be incurred by Executone and its
  shareholders in connection with the distribution of shares of
  common stock of eLottery pursuant to the Registration Statement.
  The Board of Directors of Executone has announced its intention
  to separate Executone's telephone and healthcare businesses (the
  "Core Business") from the electronic lottery business of eLottery
  through the sale of the Core Business, subject to the approval of
  the Executone shareholders (the "Sale"). The Board has received
  an offer from a group led by Stanley Kabala, Executone's Chairman
  and Chief Executive Officer, in the range of $70 million and
  subject to a number of conditions.  In connection with the Sale,
  Executone also intends to submit to its shareholders a proposal
  to amend its Articles of Incorporation to change its name to
  eLottery, Inc.
  
       In light of the withdrawal of the Registration Statement and
  the impending Sale, Executone deems it appropriate to disclose
  the following risk factors that could materially adversely affect
  the performance of eLottery:
  
  No Prior Market for Common Stock Independent of the Core Business
  -----------------------------------------------------------------
       Until the date of closing of the Sale, the common stock of
  Executone (the "Common Stock") will not have traded independently
  of the Core Business in the public market.  There can be no
  assurance that an active trading market for the Common Stock will
  be sustained following the Sale nor can there be any assurance as
  to the prices at which the Common Stock will trade following the
  Sale.
  
  No Current Source of Revenue
  ----------------------------
       On December 17, 1998, the Idaho Federal District Court
  issued an opinion and order granting declaratory judgment in
  favor of AT&T in the action styled AT&T v. Coeur D'Alene Tribe.
  In response to that decision, eLottery and the Coeur D'Alene
  Tribe (the "CDA") terminated operation of the National Indian
  Lottery (the "NIL") and the US Lottery, the trade name under
  which the NIL operated, which were the only existing operations
  of eLottery.  eLottery has yet to enter into any agreements with
  any state, national or international lotteries for the use of its
  lottery systems.  Although eLottery believes it is well
  positioned in the event that the state, national or international
  lotteries decide to sell their tickets over the Internet,
  Intranet, by telephone or through networked custom-designed
  electronic lottery terminals and is currently in various stages
  of negotiation with several U.S. and international lotteries,
  there can be no assurance that the state, national or
  international lotteries will sell their tickets by these methods
  or, if sold by these methods, that such lotteries will enter into
  contracts with eLottery to utilize the applications of the
  systems.
  
  Risk of Delisting from Nasdaq
  -----------------------------
       There can be no assurance that the Common Stock will
  continue to be included on the Nasdaq National Market after the
  closing of the Sale.  Failure to meet the listing requirements
  for the Nasdaq National Market or the Nasdaq SmallCap Market
  could result in the Common Stock being delisted from the Nasdaq
  Stock Market.  If the Common Stock is delisted from trading on
  Nasdaq, trading, if any, would thereafter be conducted in the
  over-the-counter market in the so-called "pink sheets" or the
  "Electronic
                                2
  Bulletin Board" of the National Association of Securities Dealers, Inc.
  and consequently, an investor may find it more difficult to dispose of,
  or to obtain accurate quotations as to the price of, the Common Stock.
  
  Potential Volatility of Common Stock Price
  ------------------------------------------
       The prices at which the Common Stock trades may fluctuate
  significantly in response to such factors as: (i) actual or
  anticipated variations in quarterly operating results; (ii)
  announcements of new product or service offerings; (iii)
  technological innovations; (iv) competitive developments; (v) the
  entering into or loss of a long-term governmental contract; (vi)
  changes in financial estimates by securities analysts; (vii)
  conditions and trends in the lottery and the internet and
  electronic commerce industries; and (viii) general market
  conditions and other factors.  Prices for the Common Stock will
  be determined in the trading markets, to the extent that such
  markets exist, and may be influenced by other factors, including
  the depth and liquidity of the market for the Common Stock and
  investor perceptions of eLottery.
  
  eLottery's History of Losses and Lack of Assurance of Future Profitability
  --------------------------------------------------------------------------
       eLottery has generated no revenues as of the date hereof.
  eLottery is in the development stage and its activities to date
  have been primarily related to organization of the Company and
  development of the business and computer and lottery systems
  necessary to further its business plan.  There is no assurance
  that enough future revenues will be generated by, or that
  alternative sources of funding will be available to, eLottery to
  support the furtherance of its business plan or to meet its
  operating expenses.
  
  eLottery Has Never Operated as an Independent Entity
  ----------------------------------------------------
       eLottery has never operated as a separate, independent
  entity, and has never operated as a public company.  Management's
  ability to operate eLottery as a public company on a stand-alone
  basis, including eLottery's ability to obtain additional
  financing, will impact the performance of eLottery and ultimately
  the return on each shareholder's investment in eLottery.
  
  Unavailability of the Financial and Other Resources of the Core Business
  ------------------------------------------------------------------------
       Executone, through the revenues generated by the Core
  Business, has provided all of eLottery's financial support and
  will continue to provide such support until the closing of the
  Sale.  Executone, until the closing of the Sale, has agreed to
  continue to provide financial support to eLottery not to exceed
  an average sum of $1.5 million per quarter in accordance with the
  terms of the Agreement for Redemption and Conversion of Preferred
  Stock, dated as of March 31, 1999 (the "Conversion Agreement"),
  between Executone and eLottery and Watertone Holdings L.P.,
  Cooper Life Sciences, Inc., John C. Shaw, Richard Bartlett, Jerry
  M. Seslowe, 10-26 S. William Street Associates, Louis K. Adler
  and Resource Holdings Ltd., the holders of the Executone
  Preferred Stock (the "Executone Preferred Holders").  Following
  the date of closing of the Sale, however, eLottery will no longer
  be able to rely on the Core Business for either financial support
  or to obtain credit for the purpose of supporting its operations.
  It is the current intention of the Board of Directors, however,
  that the proceeds of the Sale will remain in eLottery to help it
  implement its business plan.  eLottery expects the proceeds from
  the sale of the Core Business to adequately fund its operations
  for at least the next 18 months.
  
  Dependence upon Key Personnel
  -----------------------------
       eLottery is dependent upon the ability and experience of its
  executive officers. Although eLottery currently has employment
  contracts with three of its executive officers, it does not
  maintain key man life insurance on the lives of such executive
  officers.  The loss of the services of any or all of its
  executive
                                3
  officers or eLottery's inability in the future to attract and retain
  management and other key personnel could have a material adverse
  effect on eLottery.
  
  Certain Antitakeover Effects of Certain Provisions of Executone's
  Certificate of Incorporation
  -----------------------------------------------------------------
       Certain provisions of the Amended and Restated Certificate
  of Incorporation of Executone currently in effect, which
  Certificate of Incorporation, other than the name change, will be
  the same Certificate of Incorporation in effect for eLottery
  after the closing of the Sale (the "Certificate"), may have the
  effect of making more difficult an acquisition of control of
  Executone in a transaction not approved by the Board of
  Directors.  The Certificate would, in some circumstances,
  eliminate certain liabilities of directors in connection with the
  performance of their duties.
  
  Substantial Percentage Ownership of Executone By Former Executone
  Preferred Holders
  -----------------------------------------------------------------
       The Executone Preferred Holders have entered into the
  Conversion Agreement with Executone and eLottery, pursuant to
  which all of the outstanding shares of Executone Preferred Stock
  were redeemed and converted automatically into approximately 21%
  of the outstanding shares of the Common Stock.  As a result, one
  of the former Executone Preferred Holders now owns a substantial
  percentage of the Common Stock.  As a result of this substantial
  percentage ownership, this former Executone Preferred Holder
  could be deemed to control certain significant decisions of
  Executone and could prevent certain transactions that would be
  beneficial to its other common shareholders.
  
  Competition
  -----------
       The development, licensing and management of gaming
  technology and the provision of gaming entertainment are highly
  competitive.  The gaming market is served by state and nationally
  sponsored lotteries and by many domestic and foreign gaming
  companies, including several large land-based casino companies.
  A number of large, mature lottery services companies serve both
  the domestic and international markets.  All these competitors
  have substantially more capital, and therefore broader based
  resources to apply to technology and marketing than eLottery.
  eLottery also competes with other forms of leisure and
  entertainment activities for the public's disposable income.
  
  Market Development Risks
  ------------------------
       There are market risks associated with the development of
  eLottery's business.  eLottery's existing products have not been
  subjected to extensive market exposure.  All of eLottery's
  products currently in development are also products that employ
  new technologies and may not find sufficient customer or consumer
  support to become economically viable.
  
  Risks Associated with International Sales and Operations
  --------------------------------------------------------
       Although eLottery has not to date sold its products
  internationally except to the extent that the NIL had  foreign
  customers, part of its current strategy is to distribute lottery
  products internationally and to license its lottery distribution
  systems to lotteries worldwide.  Entry into the international
  market would subject eLottery to certain risks.  The risks
  associated with international sales include, but are not limited
  to, the length of time required to establish a foreign market
  presence, costs of localizing products for foreign countries,
  trade laws and business practices favoring local competition,
  dependence on local vendors, compliance with multiple,
  conflicting and changing government laws and regulations, longer
  sales and payment cycles, import and export restrictions and
  tariffs, difficulties in staffing and managing foreign
  operations, greater difficulty or delay in accounts receivable
  collection, foreign currency exchange rate fluctuations, in some
  countries, a lesser degree of intellectual property protection,
  multiple and conflicting 
                                4
  tax laws and regulations and political and economic instability. 
  The occurrence of any of these factors could have a material adverse
  effect on eLottery's business, financial condition and results of
  operations.
  
  Concentration in Single Industry
  --------------------------------
       eLottery's current operating strategy is to focus on lottery
  distribution, technologies and services.  Although eLottery will
  seek to develop other lines of business from the existing lottery
  business, eLottery is subject to risks associated with
  concentrating on a single industry.  Therefore, the adverse
  effect on eLottery's operating revenue resulting from an economic
  downturn in the lottery industry would be more pronounced than if
  eLottery had diversified its line of business.
  
       For further information, contact Edward W. Stone, Jr.,
  Senior Vice President and Chief Financial Officer, at (203) 882-
  6260, 478 Wheelers Farms Road, Milford, Connecticut  06460.
  
                             SIGNATURE
  
       Pursuant to the requirements of the Securities Exchange Act
  of 1934, the Registrant has duly caused this report to be signed
  on its behalf by the undersigned hereunto duly authorized.
  
                                     
                                     EXECUTONE INFORMATION SYSTEMS, INC.
  
  April 29, 1999                     By:/s/ Edward W. Stone, Jr.
                                     Edward W. Stone, Jr., 
                                     Senior Vice President
                                       and Chief Financial Officer
  
                                   5