U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 1996
______________________________
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 000-20685
________________________________________
American Wagering, Inc.
_________________________________________________________________
(Exact name of small business issuer as specified in its charter)
Nevada 88-0344658
___________________________________ _________________________
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
675 Grier Drive, Las Vegas, Nevada 89119
_________________________________________________________________
(Address of principal executive office)
(702) 735-0101
_________________________________________________________________
(Issuer's telephone number)
_________________________________________________________________
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed 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 No x
___________ _____________
The number of shares of Common Stock outstanding as of June
20, 1996 was 7,500,000.
<PAGE>
PART I -- FINANCIAL INFORMATION.
_____________________
Item 1. FINANCIAL STATEMENTS.
AMERICAN WAGERING, INC.
(COMBINED FINANCIAL STATEMENTS OF AMERICAN WAGERING, INC.,
LEROY'S HORSE AND SPORTS PLACE AND LEROY'S HOTEL CORPORATION)
UNAUDITED CONDENSED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
January 31, April 30,
1996 1996
---------- ----------
<S> <C> <C>
CURRENT ASSETS:
Cash $3,938,582 $2,552,957
Other current assets 459,414 354,781
---------- ----------
4,397,996 2,907,738
PROPERTY AND EQUIPMENT, NET 420,992 412,332
INVESTMENT IN PARTNERSHIP 1,331,844 1,439,331
DEPOSITS AND OTHER ASSETS 88,977 27,135
---------- ----------
$6,239,809 $4,786,536
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Unpaid winning tickets $1,006,056 $559,712
Accounts payable/accrued expenses 495,176 379,151
Current portion of long-term debt 236,365 224,137
Shareholder notes payable - 2,433,124
Other current liabilities 656,157 472,607
---------- ----------
2,393,754 4,068,731
LONG-TERM DEBT (less
current portion) 757,956 712,695
---------- ----------
3,151,710 4,781,426
========== ==========
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS, EQUITY:
Common stock 50,251 50,251
Additional paid-in capital 445,006 1,003,006
Retained earnings (accumulated
deficit) 2,592,842 (1,048,147)
---------- ----------
3,088,099 5,110
---------- ----------
$6,239,809 $4,786,536
</TABLE>
NOTE: The balance sheet at January 31, 1996 has been taken
from the audited financial statements at that date and condensed
The accompanying notes are an integral part
of these financial statements.
<PAGE>
AMERICAN WAGERING, INC.
(COMBINED FINANCIAL STATEMENTS OF AMERICAN WAGERING, INC.,
LEROY'S HORSE AND SPORTS PLACE AND LEROY'S HOTEL CORPORATION)
UNAUDITED CONDENSED STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED APRIL 30, 1995 AND 1996
<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
REVENUES:
Horse and sports wagering $1,202,767 $1,053,042
Other revenues 12,237 59
---------- ----------
Total revenues 1,215,004 1,053,101
DIRECT COSTS 669,713 642,578
---------- ----------
Gross profit 545,291 410,523
ADMINISTRATIVE EXPENSES 345,692 399,427
DEPRECIATION AND AMORTIZATION 18,792 38,172
---------- ----------
Operating income (loss) 180,807 (27,076)
INTEREST AND OTHER INCOME, net 35,472 35,108
---------- ----------
Net income before pro forma
income tax provision 216,279 8,032
PRO FORMA PROVISION FOR INCOME TAXES 73,535 2,731
---------- ----------
PRO FORMA NET INCOME $142,744 $5,301
========== ==========
PRO FORMA EARNINGS PER SHARE $0.03 $0.00
PRO FORMA WEIGHTED SHARES
OUTSTANDING 5,250,000 5,250,000
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
AMERICAN WAGERING, INC.
(COMBINED FINANCIAL STATEMENTS OF AMERICAN WAGERING, INC.,
LEROY'S HORSE AND SPORTS PLACE AND LEROY'S HOTEL CORPORATION)
UNAUDITED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED APRIL 30, 1995 AND 1996
<TABLE>
<CAPTION>
1995 1996
--------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $216,279 $8,032
Adjustments to reconcile net
income to cash provided by
operating activities:
Depreciation and amortization 18,792 38,172
Equity in earnings from
investment in partnership - (59,087)
Changes in assets and liabilities:
Decrease (increase) in assets:
Other current assets 217,716 104,633
Deposits and other assets 3,792 (1,016)
Increase (decrease) in liabilities:
Unpaid winning tickets (591,699) (446,344)
Other current liabilities 153,438 (183,550)
Accounts payable/accrued expenses (16,598) (116,025)
---------- ----------
Total adjustments (214,559) (663,217)
---------- ----------
Net cash provided by (used in)
operating activities 1,720 (655,185)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (17,163) (15,054)
Proceeds from sale of property
and equipment 150,000 -
---------- ----------
Net cash provided by (used in)
financing activities 132,837 (15,054)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt - (57,489)
Shareholder notes payable - 2,433,124
Contributions from stockholders 558,000
Dividends paid (1,805,854) (3,649,021)
---------- ----------
Net cash used in financing
activities (1,805,854) (715,386)
---------- ----------
NET DECREASE IN CASH (1,671,297) (1,385,625)
CASH, beginning of period 4,485,116 3,938,582
---------- ----------
CASH, end of period $2,813,819 $2,552,957
========== ==========
</TABLE>
The accompanying notes are an integral part
of these financial statements.
<PAGE>
AMERICAN WAGERING, INC.
(COMBINED FINANCIAL STATEMENTS OF AMERICAN WAGERING, INC.,
LEROY'S HORSE AND SPORTS PLACE AND LEROY'S HOTEL CORPORATION)
NOTES TO CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED APRIL 30, 1995 AND 1996
1. Information and Disclosure
The accompanying unaudited condensed financial statements do
not include all information and disclosures required for
fair presentation by generally accepted accounting
principles. However, in the opinion of management, the
accompanying financial statements contain all adjustments
(consisting of normal recurring accruals) considered
necessary to present fairly the financial position of the
Company at April 30, 1996, and the results of operations and
cash flows for the three months ended April 30, 1995 and
1996. The audited financial statements as of and for the years
ended January 31, 1995 and 1996 and the notes thereto contained in the
Company's SB-2 Registration Statement effective May 10, 1996 should
be read in conjunction with these interim financial
statements.
2. Period Results Not Indicative of the Full Year
The results of operations for the three months ended April
30, 1995 and 1996 are not necessarily indicative of the
results to be expected for the full calendar year.
3. Reorganization
In August 1995, the Company was formed to be a holding
company for two wholly owned subsidiaries, Leroy's Horse and
Sports Place (LHSP) and Leroy's Hotel Corporation (LHC).
Immediately prior to the closing of the stock offering (see
Note 6), the stockholders of LHSP and LHC exchanged their
shares in those companies for shares of American Wagering,
Inc. These transactions are referred to as the
Reorganization.
<PAGE>
4. Income Taxes
In connection with the Reorganization on May 10, 1996, the S
corporation status of LHSP and LHC terminated. Upon
termination of the S corporation election, LHSP and LHC
became subject to federal income taxes. The accompanying
financial statements include a pro forma income tax
adjustment, using a tax rate of 34 percent, to reflect the
estimated income tax expense of the Company as if LHSP and
LHC had been subject to federal income taxes for all periods
presented.
5. Investment in Subsidiary
In March, 1995, LHC purchased fifty percent interests in
certain entities which own and operate a hotel/casino
located in Las Vegas, Nevada. The related entities are BSRB
Resort Hotels (a Nevada general partnership) and B-P Food
Corporation (a Nevada corporation which is wholly owned by
BSRB Resorts) (see Note 6). The purchase was financed by a
bank borrowing by LHSP for approximately $1.1 million. In
February, 1996, the shareholders of the Company purchased a
fifty percent interest in the stock of BP-Gaming Corporation
(a Nevada corporation), which was contributed to the Company
in connection with the Reorganization.
The Company's investment has been accounted for under the
equity method and the excess of the purchase price over the
net assets received in the purchase has been capitalized and
is being amortized over 25 years.
Summarized, combined financial information for these
entities for the period from January 1, 1996 to March 31,
1996 is as follows:
Revenues $1,112,379
Operating Income $123,894
Net Income $118,161
6. Stockholder's Equity
Stockholders's Equity includes the following at April 30, 1997
American Wagering, Inc. -- Common stock, par value $.01; Authorized
-- 25,000,000 shares; Issued and outstanding -- 100 shares; Preferred
stock, par value $.01; Authorized -- 25,000,000 shares.
Leroy's Horse and Sports Place -- Common stock, no par value;
Authorized -- 2,500 shares; Issued and outstanding -- 1,800 shares.
Leroy's Hotel Corporation -- Common Stock, no par value; Authorized
-- 25,000 shares; Issued and outstanding -- 25,000 shares.
7. Subsequent Events
On May 15, 1996, the Company completed a public offering of its
stock. The initial public offering price was $6.00 a share,
with 2,250,000 shares being offered, not including the
337,500 shares associated with the underwriting
over-allotment option. A portion of the proceeds of the
offering was used to purchase the remaining fifty percent
interest in BSRB Resort Hotels and B-P Gaming Corporation.
The remaining proceeds of the offering will be used to
renovate the hotel/casino and existing sports books, and for
other corporate purposes.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS.
Results of Operations
Fiscal Quarter Ended April 30, 1996 Compared to Fiscal Quarter
Ended April 30, 1995.
Revenues for the fiscal quarter ended April 30, 1996
("First Quarter of Fiscal 1997") were $1,053,000, a decrease of
$162,000 or 13.3% from revenues of $1,215,000 for the quarter
ended April 30, 1995 ("First Quarter of Fiscal 1996"). Handle
for the First Quarter of Fiscal 1997 was $17,182,000, an increase
of $1,770,000 or 11.5% from First Quarter of Fiscal 1996 of
$15,412,000. Net win percentage (revenues divided by handle) was
6.1% in the First Quarter of Fiscal 1997 compared to 7.9% in the
First Quarter of Fiscal 1996. Net win percentage fluctuates
depending on the outcome of the various sporting events within
the reporting period. The increase in handle for the First
Quarter of Fiscal 1997 as compared to the First Quarter of Fiscal
1996 was due principally to increased wagering on professional
baseball during the quarter. The lower wagering on professional
baseball in the First Quarter of Fiscal 1996 was due to a
continuation of the players' strike which commenced in calendar
1994 and ended in April, 1995. Partly offsetting the
increase in handle from baseball was a decline in wagering on
basketball and on other wagering. Excluding handle from wagers
on professional baseball, handle at the same locations for the
First Quarter of Fiscal 1997 increased approximately $800,000 or
6.1% as compared to the handle for the First Quarter of Fiscal
1996. Revenues decreased in the First Quarter of Fiscal 1997 due
to the lower net win on basketball and parlay cards which was
only partly offset by the net win on professional baseball.
Direct costs were $643,000 in the First Quarter of
Fiscal 1997, a decrease of $27,000 or 4.0% from First Quarter of
Fiscal 1996 direct costs of $670,000. Direct costs were 61.0% of
revenues for the First Quarter of Fiscal 1997 compared to 55.1%
in the First Quarter of Fiscal 1996. Direct costs include
employee wages, payroll and gaming taxes and other costs. The
decline in direct costs was due principally to the reduction of
race wagering operations at the Company's downtown facility, in
connection with the relocation of the operations office to a new
facility. The increase in direct costs as a percentage of
revenues from the First Quarter of Fiscal 1996 to the First
Quarter of Fiscal 1997 was due principally to the decrease in the
net win.
Administrative expenses were $399,000 in the First
Quarter of Fiscal 1997, an increase of $53,000 or 15.3% from the
First Quarter of Fiscal 1996 administrative expenses of $346,000.
Administrative expenses were 37.9% of revenues for the First
Quarter of Fiscal 1997 compared to 28.5% in the First Quarter of
Fiscal 1996. The increase in administrative expenses from the
First Quarter of Fiscal 1996 to the First Quarter of Fiscal 1997
was due principally to higher salaries of continuing employees
and additional employees at Leroy's Horse and Sports Place
("Leroy's") and the Company, reorganization and related expenses
of the Company, and costs associated with the relocation of the
Company's headquarters and operations office for Leroy's.
Depreciation and amortization was $38,000 in the First
Quarter of Fiscal 1997, an increase of $19,000 or 100% from
depreciation of $19,000 in the First Quarter of Fiscal 1996 due
principally to amortization of the excess of purchase price over
net book value relating to the investment in a hotel/casino
operation (the "Hotel/Casino" -- see Liquidity and Capital
Resources, below).
Interest and other income was $35,000 in both the First
Quarter of Fiscal 1997 and Fiscal 1996. The equity in earnings
from the investment in the Hotel/Casino was offset by increased
interest expense associated with the financing of the purchase of
the Hotel/Casino.
Net income was $8,000 in the First Quarter of Fiscal
1997, a decrease of $208,000 or 96.3% from First Quarter of
Fiscal 1996 net income of $216,000. The decrease in net income
from the First Quarter of Fiscal 1996 to the First Quarter of
Fiscal 1997 was due principally to a lower net win and higher
administrative expenses. Since the combined affiliates of
American Wagering were S Corporations and income taxes were
assessed at the stockholder level, the net income does not
reflect a provision for federal or state income taxes. Assuming
that American Wagering was assessed income taxes at a 34% tax
rate, American Wagering's net income after taxes on a pro forma
basis would have been $5,000 for the First Quarter of Fiscal 1997
and $143,000 for the First Quarter of Fiscal 1996.
<PAGE>
Liquidity and Capital Resources
As of April 30, 1996 working capital of American
Wagering was a negative $1.2 million. The negative working
capital was due principally to the shareholder notes of $2.4
million which mature in April, 1997.
Leroy's, an affiliate of the Company, was an S
Corporation under the Internal Revenue Code. From inception
through February 29, 1996, Leroy's made cash distributions of
approximately $4.4 million in aggregate to its stockholders. On
March 21, 1996 Leroy's made cash distributions to its
stockholders in the aggregate amount of $3.0 million representing
undistributed income as of January 31, 1996, on which the
stockholders had previously paid federal income taxes. of the
$3.0 million distributed, approximately $2.4 million was loaned
back to Leroy's by the stockholders and $558,000 was contributed
as capital to Leroy's by the stockholders. The loans are
repayable pursuant to stockholder notes maturing on April 1, 1997
and bearing interest at a 7% annual rate.
On May 15, 1996, the Company completed an initial
public offering of 2,250,000 shares of its common stock at $6.00 per share.
Simultaneous with the completion of the initial public offering,
the Company completed its purchase of the remaining 50% interest
in the 150 room Hotel/Casino complex located at 3111 W. Tropicana
Avenue in Las Vegas, Nevada. The balance of the proceeds will be
used to renovate and convert the Hotel/Casino into a sports theme
hotel/casino, to renovate existing sports and race book
locations, to support the Company's growth and expansion strategy
and for general working corporate purposes.
The Company believes that the net proceeds of the
offering together with the anticipated cash provided by its
operating activities will be sufficient to finance its
operations, scheduled debt repayment and anticipated capital
expenditures through April 30, 1997.
CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The statements contained in this document which are not historical facts contain
forward looking information with respect to plans, projections or future
performance of the Company, the occurrence of which involve certain risks and
uncertainties, including that the sports book operator takes financial risks
on the outcome of sports events as a principal betting against its patrons
and uncertainties detailed in the Company's filings with the Securities and
Exchange Commission.
<PAGE>
PART II -- OTHER INFORMATION
_________________
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits -- Financial Data Schedule
Number Description Method of Filing
------ ----------- ----------------
27 Financial Data Schedule Filed herewith
(b) There were no reports on Form 8-K filed during the
quarter ended April 30, 1996.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
American Wagering, Inc.
_____________________________
(Registrant)
Date June 24, 1996 By: /s/ Robert D. Ciunci
-----------------------------
Robert D. Ciunci, Executive
Vice President (Principal
Financial Officer and Chief
Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
American Wagering, Inc.
Financial Data Schedule Required under:
Appendix A to Item 601(c) of Regulation S-B
Commercial and Industrial Companies
Article 5 of Regulation S-X
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-END> APR-30-1996
<CASH> 2,552,957
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,907,738
<PP&E> 412,332
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,786,536
<CURRENT-LIABILITIES> 4,068,731
<BONDS> 712,695
0
0
<COMMON> 50,251
<OTHER-SE> (45,141)
<TOTAL-LIABILITY-AND-EQUITY> 4,786,536
<SALES> 0
<TOTAL-REVENUES> 1,053,101
<CGS> 0
<TOTAL-COSTS> 642,578
<OTHER-EXPENSES> 437,599
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 35,108
<INCOME-PRETAX> 8,032
<INCOME-TAX> 2,731
<INCOME-CONTINUING> 5,301
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,301
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
