SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended December 31, 1998
OR
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ____________ to ___________
Commission file number 0-21831
__________
International Sports Wagering Inc.
___________________________________________________________________________
(Exact name of Small Business Issuer as specified in its charter)
Delaware 22-3375134
___________________________________________________________________________
(State or other jurisdiction of (IRS Employer Identification
incorporation or organization) No.)
201 Lower Notch Road, Little Falls, NJ 07424
___________________________________________________________________________
(Address of principal executive (Zip Code)
Issuer's telephone number, including area code: (973) 256-8181
_________________
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 report) and (2) has been
subject to such filing requirement for the past 90 days.
Yes X No
There were 7,819,660 shares of Common Stock outstanding at February 8, 1999.
Transitional Small Business Disclosure Format (check one):
Yes No X
<PAGE>
International Sports Wagering Inc.
December 31, 1998
FORM 10-QSB
Index
Page
Part I: Financial Information
Item 1. Financial Statements
Balance Sheets at December 31, 1998 Unaudited)
and September 30, 1998. 2
Statement of Operations for the Three Months
Ended December 31, 1998 and 1997 and May 22,
1995 (date of inception) to December 31, 1998
(Unaudited) 3
Statement of Changes in Stockholder s Equity for
the Three Months Ended December 31, 1998
(Unaudited) 4
Statements of Cash Flows for the Three Months
Ended December 31, 1998 and 1997 and May 22,
1995 (date of inception) to December 31, 1998
(Unaudited) 5
Notes to Financial Statements 6-7
Item 2. Management s Discussion and Analysis of Financial
Condition and Results of Operations or Plan of
Operation. 8-14
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K. 15
Signatures 16
<PAGE>
Part I: Financial Information
Item 1. Financial Statements
International Sports Wagering Inc.
(A Development Stage Company)
Balance Sheets
December 31, September 30,
1998 1998
(Unaudited) (Note 1)
Current assets:
Cash and cash equivalents $ 394,811 $ 198,607
Accounts receivable 4,357 3,401
Investments 2,481,004 3,274,963
Current portion of notes
receivable 19,774 25,000
Prepaid expenses and other
current assets 137,150 105,486
Total current assets 3,037,096 3,607,457
Property and equipment, net 722,393 800,070
Notes receivable, less current
portion 8,269 8,620
Other assets 5,006 13,423
Total assets $ 3,772,764 $ 4,429,570
Liabilities and Stockholders' Equity
Current liabilities:
Deposits payable $ 11,685 $ 10,490
Accounts payable 56,870 94,629
Accrued expenses 152,185 155,910
Total current liabilities 220,740 261,029
Stockholders' Equity:
Preferred stock, par value $.001
per share; 2,000,000 shares
authorized, none issued or
outstanding -- --
Common stock, par value $.001 per
share; 20,000,000 shares
authorized, issued and out-
standing 7,819,660 and
7,819,660 shares, respectively 7,820 7,820
Additional paid-in capital 10,264,243 10,264,243
Deficit accumulated during the
development stage (6,720,039) (6,103,522)
Total stockholders' equity 3,552,024 4,168,541
Total liabilities and
stockholders' equity $ 3,772,764 $ 4,429,570
See accompanying notes to financial statements
2
International Sports Wagering Inc.
(A Development Stage Company)
Statements of Operations
(Unaudited)
May 22, 1995
Three Months Ended (Date of Inception)
December 31, to December 31,
1998 1997 1998
Revenues $ 4,356 $ 24,695 $ 44,354
Costs and expenses
Research and development
expense 185,493 263,963 2,965,116
General and administrative
expense 477,488 802,493 4,115,009
662,981 1,066,456 7,080,125
Operating loss (658,625) (1,041,761) (7,035,771)
Other income (expense)
Interest income 42,108 65,522 614,830
Interest expense -- -- (299,098)
42,108 65,522 315,732
Net loss $(616,517) $ (976,239) $(6,720,039)
Net loss per share- $ (.08) $ (.13) $ (.93)
basic and diluted
Weighted average common
shares outstanding-basic 7,819,660 7,749,762 7,207,465
and diluted
See accompanying notes to financial statements
3
International Sports Wagering Inc.
(A Development Stage Company)
Statement of Stockholders' Equity
For the Three Months Ended December 31, 1998
(Unaudited)
Deficit
Accumulated
Additional During The
Common Stock Paid-In Development
Shares Amount Capital Stage Total
Balance at
September 30,1998 7,819,660 $7,820 $10,264,243 $(6,103,522) $4,168,541
Net loss -- -- -- (616,517) (616,517)
Balance at
December 31,1998 7,819,660 $7,820 $10,264,263 $(6,720,039) $3,552,024
See accompanying notes to financial statements
4
International Sports Wagering Inc.
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
May 22, 1995
Three Months Ended (Date of Inception)
December 31, to December 31,
1998 1997 1998
Cash Flows from
Operating Activities:
Net loss $ (616,517) $ (976,239) $(6,720,039)
Adjustment to reconcile
net loss to net cash
(Used in)operating
activities:
Depreciation and
amortization 81,577 101,935 776,760
Provision for doubtful
accounts -- 48,389 79,497
Issuance of options
to consultants -- -- 14,500
Changes in assets
and liabilities:
Accounts receivable (956) (20,439) (83,854)
Prepaid expenses and
other current assets (31,663) (132,263) (137,149)
Other assets 8,220 (741) (7,820)
Customer deposits 1,195 -- 11,685
Accounts payable (37,759) (83,982) 56,870
Accrued expenses (3,725) 33,043 152,185
Net Cash (Used In)
Operating Activities (599,628) (1,030,297) (5,857,365)
Cash Flows from Investing
Activities:
Proceeds from sales of
investments 2,693,959 1,987,625 38,888,449
Purchase of investments (1,900,000) (1,499,843) (41,369,453)
Purchase of property
and equipment (3,704) (77,969) (1,496,340)
Proceeds from repayments
of notes receivable 5,577 13,461 71,957
Issuance of notes receivable -- (50,000) (100,000)
Net Cash Provided By (Used
In) Investing Activities 795,832 373,274 (4,005,387)
Cash Flows from Financing
Activities:
Net proceeds from issuance
of common stock -- 2,125 10,257,563
Net (Decrease) Increase in
Cash and Cash Equivalents 196,204 (654,898) 394,811
Cash and Cash Equivalents,
Beginning of Period 198,607 2,026,313 --
Cash and Cash Equivalents,
End of Period $ 394,811 $ 1,371,415 $ 394,811
See accompanying notes to financial statements
5
International Sports Wagering Inc.
Notes To Financial Statements
Note l Basis of Presentation:
The information at December 31, 1998 and for the three months
ended December 31, 1998 and 1997, is unaudited, but includes all
adjustments (consisting only of normal recurring adjustments)
which in the opinion of management, are necessary to state fairly
the financial information set forth therein in accordance with
generally accepted accounting principles. The interim results are
not necessarily indicative of results to be expected for the full
fiscal year period. These Financial Statements should be read in
conjunction with the audited Financial Statements for the year
ended September 30, 1998 included in the Company s Annual Report
on Form 10-KSB filed with the Securities and Exchange Commission.
Footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been omitted in accordance with the published
rules and regulations of the Securities and Exchange Commission.
Note 2 - Net Losses per Share of Common Stock:
During March 1997, the Financial Accounting Standards Board
( FASB ) Released statement of Financial Accounting Standards No.
128, Earnings Per Share ( SFAS128 ). SFAS 128 establishes
standards for computing and presenting earnings per share and is
effective for financial statements for both interim and annual
periods ending after December 15,1997. Accordingly, effective
December 31,1997, the accompanying net loss per share information
has been calculated and presented in accordance with the
provisions of SFAS 128 and as further prescribed by the relevant
Staff Accounting Bulletins of the securities and Exchange
Commission.
Basic net loss per share is computed by dividing net loss by the
weighted average number of common shares outstanding during the
applicable reporting periods. The computation of diluted net
loss per share is similar to the computation of basic net loss per
share except that the denominator is increased to include the
number of additional common shares that would have been
outstanding if the dilutive potential common shares had been
6
International Sports Wagering Inc.
Notes To Financial Statements
Note 2 - Net Losses per Share of Common Stock: (continued) :
issued. However, the Company s computations of dilutive net loss
per share does not assume any conversion or exercise of securities
as their effect is anti-dilutive for all periods presented.
The weighted average number of shares used in the basic and diluted
net loss per share computations for the three months periods ended
December 31, 1998 and 1997 and the period from May 22, 1995
(date of inception) to December 31, 1998 were 7,819,660, 7,749,762,
7,207,465, respectively.
Common equivalent shares that could potentially dilute basic
earnings per share in the future and that were not included in the
computation of diluted loss per share because of anti-dilution
were 2,319,525 and 2,289,342 for three month periods ending
December 31, 1998 and 1997, respectively.
Note 3 - Accounts and Notes Receivable:
In June of 1997, the Company entered into an agreement with a
Nevada casino whereby the Company granted the casino a license to
function as the hub operator(the "Hub Operator")of the Company's
sports wagering system. Under the agreement, the Company was to
receive a fixed fee based on a per-terminal use basis. In October
of 1997, an affiliate of the Hub Operator executed a promissory
note to the Company for $50,000 loaned to the Hub Operator by the
Company. The note provides for principal in the amount of $5,000
and accrued interest at the rate of 10% per annum to be paid in
consecutive monthly installments commencing in February of 1998
and continuing thereafter, with all amounts fully due by September
of 1998. The note is guaranteed by two principals of the affiliate
of the Hub Operator. The Hub Operator agreement was to terminate
in March of 1999 or sooner as specified in the agreement. In
January of 1998, the Hub Operator ceased doing business as a
result of financial difficulties unrelated to the operation of the
system. For the year ending September 30, 1998, the Company has
posted a reserve of $79,497, which represents the above loan of
$50,000, and $29,497 in receivables.
7
<PAGE>
Item 2. Management s Discussion and Analysis of Financial
Condition and Results of Operations or Plan of Operation.
In June of 1997 the Company retained Yarlow, Inc. ("Yarlow") d/b/a Tom's
Sunset Casino to operate the Company's SportXction(tm) sports wagering System
until the later of June 1998 or such time as the Company received a Nevada
gaming license as an operator of an inter-casino linked system ( "OILS
license"), permitting it to operate the System. The Company applied for an
OILS license in July 1997. On January 13, 1998, the Company announced that
Yarlow had suspended operation of Tom's Sunset Casino, including operation of
the SportXction(tm) System, as a result of financial difficulties unrelated to
the System.
Live operation of the System commenced on September 21, 1997 and by
January, 1998, when operation of the System was temporarily suspended, as
described above, the System was in operation at eight inter-linked casinos and
gaming establishments in Nevada, with simultaneous wagering conducted through
approximately 220 player-betting stations installed at those eight
establishments.
On April 23, 1998, the Nevada Gaming Authorities granted an OILS license
to the Company. The Company re-commenced operations on May 11, 1998 on a
limited basis in two wagering establishments with the Company performing the
duties of Hub Operator. During the three months ended December 31, 1998, the
System was in operation in a total of four locations. Wagers were accepted on
college basketball, professional baseball, and college and professional
football. During the hiatus in operations, between mid January, 1998 and mid
May, 1998, the Company enhanced the SportXction(tm) System with several new
features including an improved parley of sequential bets which had initial
testing last winter, and free practice bets. By September 30, 1998, the
Company again enhanced the SportXction(tm) System with several new features
including one-sided, long-shot propositions.
On September 23, 1998, the Company announced that it had developed a
version of its SportXction(tm) sports wagering system that could be used for
betting from home utilizing a PC and modem by bettors who have established and
funded accounts at gaming establishments. This modified version of the System
is designed for use for legal sports wagering by a bettor from home within the
State of Nevada. This System was designed to run on a third-party secure
Intranet that assures that players are placing their wagers from within
Nevada. On October 26, 1998, Alliance Gaming Corp. ("Alliance") announced that
it had developed the Remote Access Verification Environment (RAVE)(tm)*
technology which provides the geographic call origination verification of its
PC users and is designed to comply with recently adopted Nevada legislation
regarding on-line gaming. In October 1998, the Company's revised version of
its System in combination with the RAVE(tm) technology was submitted for
approval to the Nevada Gaming Authorities. They are currently being tested
and may not be introduced for service until such approval is obtained.
*RAVE is a trademark of Alliance Gaming Corporation
8
On December 14, 1998, the Company and Alliance signed an agreement
pursuant to which the Company received an exclusive license to use the RAVE(tm)
technology in connection with legal on-line or telephone betting on races or
sports events in conjunction with licensed race and sports books in the State
of Nevada. The agreement to license the RAVE(tm) technology is conditioned upon
approval by the Nevada Gaming Authorities and remains in effect for a period
of seven years after final approval by the Nevada Gaming Authorities is
obtained.
On December 26, 1998, the Company launched sports contests on the
Internet using its SportXction(tm) System as a non-wagering game. It conducted
approximately 20 contests through January 31,1999 as a trial of the technology
without any marketing. The technology trial was successful with modest player
participation.
For the three months ended December 31, 1998 the Company had a net loss
of $616,517 or $0.08 loss per share on a basic and fully diluted basis on the
7,819,660 weighted average common shares outstanding, compared with a net loss
of $976,239, or $ 0.13 loss per share on a basic and fully diluted basis on
the 7,749,762 weighted average common shares outstanding for the three months
ended December 31, 1997. Revenues of $4,356 were reported for the three
months ended December 31, 1998, compared with revenues of $24,695 reported for
the prior period. Prior to being granted an OILS license, including the three
months ended December 31, 1997, the Company charged fixed fees for the use of
the System to the System operator. Subsequent to the granting of the OILS
license to the Company, including the three months ended December 31, 1998,
while the Company was operating the System, the Company's revenues represented
the net win (i.e. total amount wagered less total amount paid out) of the
System.
The net win is affected by the success (or lack thereof) of the players
in making sports wagering bets. The System seeks to induce balanced betting
action. It operates most efficiently when there are a substantial number of
wagers being placed through the System simultaneously. When the number of
wagers through the System is modest, as it has been most of the time the
System has been in operation, it is more difficult to attempt to create
balanced pools. This tends to result in lower net wins. Revenues have also
been adversely affected by the lack of professional basketball due to a labor
dispute.
The decreased loss for the three months ended December 31, 1998 resulted
primarily from: marketing expenses which decreased by $182,287 to $94,247,
primarily reflecting a decrease in advertising to promote the SportXction(tm)
game; expenses associated with the Company s application for an OILS license
which decreased by $140,631 to $0, reflecting a non-recurring expense; bad
debt expense which decreased by $48,389 to $0, also reflecting a non-recurring
expense; depreciation expenses, which decreased by $20,358 from the prior year
to $81,381; salary expenses, which increased by $7,987 to $268,850; a decline
in interest income which decreased by $23,414 to $42,108 due to reduced
investments; and rent expense which increased by $2,880 to $16,086 due to
increased lease rates.
9
The Company incurred approximately $185,493 in research and development
costs for the three months ended December 31, 1998, compared with
approximately $263,963 for the comparable prior period.
The Company continues to be in the development stage, with limited revenues
generated from the System. As of December 31, 1998, the Company had cumulative
net losses since inception of $6,720,039. It expects to continue to incur
substantial losses and negative cash flow at least through fiscal year ended
September 30, 1999. Contributing to this are the fact that revenues currently
being generated since the resumption of the operation of the System in mid-
May, 1998 have been insignificant and the Company's expectation that it will
continue to incur substantial research and development expenses for further
product enhancement and development activities. As of December 31, 1998 the
Company had liquid resources totaling $2,875,815. These include cash and cash
equivalents in the amount of $394,811, and short term investments in the
amount of $2,481,004 Investments are limited to investment grade marketable
securities with maturities of less than 18 months. Based upon its current
proposed plans and assumptions relating to its operations, the Company
anticipates that existing resources will be sufficient to satisfy its
contemplated cash requirements for approximately 15 months. Capital
expenditures are expected to be limited to purchase of additional computer
equipment and leasing additional computer equipment, most of which will be
required in connection with its activities relating to legal wagering from
home in Nevada. Existing resources will fund these requirements.
On December 11, 1996, the Company's Registration Statement on Form SB-2
(Reg. No. 333-15005) relating to its IPO was declared effective, pursuant to
which it sold 1,725,000 units (including over-allotments) consisting of one
share of Common Stock and one redeemable warrant to purchase Common Stock at
an exercise price of $7.20 per share, for gross proceeds of $10,350,000.
After underwriting discounts and commissions, expenses paid to or for the
benefit of underwriters, and other costs of the IPO, net proceeds were
approximately $8,576,000.
At or subsequent to the closing of the IPO, the Company expended
approximately $659,000 for repayment of the Bridge Notes; approximately
$1,320,000 for the purchase of computer equipment including PBSs;
approximately $366,000 for professional fees; approximately $341,000 for
directors and officers liability insurance premiums; approximately $542,000
for marketing the System; approximately $132,000 for the purchase of a
condominium in Henderson, Nevada for use by its employees while traveling on
business in Nevada; and approximately $100,000 for a loan to an officer, of
which approximately $28,000 was outstanding as of December 31, 1998. After
other expenses, including product enhancement and development, sales and
administration, approximately $2,876,000 remained in cash and short-term,
interest-bearing, investment grade securities as of December 31, 1998.
Utilization of the SportXction(tm) sports wagering system in casinos and
other gaming establishments has been disappointing to date. The Company
believes this is due to a variety of factors including players having to learn
a new game, lack of cost effective advertising means to address tourists during
10
their average three day stay, the disinclination of local players to visit
major casinos in Las Vegas and the fact that after the System had been
operational from late September 1997 to January 1998, the System ceased
operating for four months when Yarlow, the then Hub Operator, suffered
financial difficulties. In order to encourage more potential players to wager
through the System, the Company adapted the System to permit limited time
periods of free play and practice betting during the course of a sporting
event. It also introduced other new features and enhancements to the System
to attract additional players and increase wagering. Despite these new
features and enhancements, the revenue generated by the casino based PBSs
remains small, and is likely to remain insufficient to avoid continuing loses
by the Company for the foreseeable future.
On November 2, 1998, the Nevada State Gaming Commission adopted amendments
to several of its regulations, including Regulation 22 "Race Books and Sports
Pools." This revised regulation disallows the acceptance of wagers by race
and sports books made by means of telephone or other communications' systems,
unless they "... can demonstrate to the chairman's satisfaction that the
wagering communications originate from within the State of Nevada." This new
regulation is effective on March 1, 1999. It may have the effect of
preventing race and sports books, which currently accept telephone wagers,
from taking such wagers after March 1, 1999 unless they are able to fulfill
the requirements of Regulation 22. The purpose of the RAVE(tm) technology is to
fulfill the requirements of the new regulation.
The Company is currently expanding the capabilities of the System to allow
other types of wagers, in addition to the play-by-play SportXction(tm) wagers,
including traditional pre-game side and totals wagering, parlays, teasers,
futures, and other exotic wagers. Future enhancements could include the
ability to allow pari-mutuel wagers on races. The Company believes that these
expanded capabilities, in conjunction with the RAVE(tm) technology, will provide
an acceptable method for taking telephone wagers. The Company intends to
market this modified System for use for legal sports wagering from home in the
State of Nevada.
Because of the difficulty of introducing and attracting SportXction(tm) to
tourists, which represent the major potential player population for this type
of game, the Company s major source of income in the short term cannot be
expected to come from players of SportXction(tm) within casinos. The Company
has therefore intensified its focus in five areas; (i) SportXction(tm) for
wagering from home within the State of Nevada using the RAVE(tm) technology,
if it is approved by the Nevada Gaming Authorities, (ii) pre-game betting from
home using the Rave(tm) technology, which is currently under development and
also requires Nevada Gaming Authorities approval, (iii) non-wagering applica-
tions, including games and contests nationally, over the Internet, in all
sports, where the Company intends to derive revenue from advertising, merchan-
dising, and data-mining, (iv) SportXction(tm) for wagering on the Internet or
private networks in those foreign countries where it is legal, and (v) pre-
game betting in those foreign countries where it is legal. The Company has
recently added soccer, the most popular foreign sport, to the list of sports
contests supported by the System.
11
Year 2000 Issue
The term "Year 2000 ('Y2K') Issue" is a general term used to describe the
various problems that may result from the improper processing of dates and
date-sensitive calculations by computers and other machinery as the year 2000
is approached and reached. These problems generally arise from the fact that
most of the world's computer hardware and software have historically used only
two digits to identify the year in a date, often meaning that the computer
will fail to distinguish dates in the "2000's" from the date in the "1900's."
These problems may also arise from other sources as well, such as the use of
special codes and conventions in software that make use of the date field.
The Y2K computer software compliance issues may affect the Company and most
companies in the world. The Company's SportXction(tm) sports wagering System
was designed and developed during the past several years. As such, the
Company recognized Y2K problem and has attempted to write all of its propri-
etary software utilizing four digits in order to avoid a Y2K problem. The
Company also utilizes a variety of software products in its database manufac-
tured by Microsoft Corporation, all of which are reported to be Y2K compliant.
The Company's technical staff of software engineers and programmers are
continuing to analyze and test the hardware and peripheral products that it
utilizes in its System to determine whether they are Y2K compliant. The
Company's staff attempts to identify any hardware or software with potential
Y2K problems; assess the magnitude of such problems, if any; remedy any such
problems that are found and test the solutions; and plan for any
contingencies.
Based upon its efforts to date, the Company does not believe that its
System requires any material modifications or replacements in order to be Y2K
compliant. The Company does not believe that the readiness of its customers
and suppliers to be Y2K compliant will have a material impact on the Company.
The Company is in the process of developing contingency plans relating to the
Y2K problems to the extent such plans are possible. Such plans are expected
to be developed by July 1, 1999. These plans will attempt to mitigate both
internal risks of the Y2K problem with any risks that may be impacted by the
Company's customers and suppliers. The Company believes, however, that due to
the widespread nature of potential Y2K issues, the contingency planning
process is an ongoing one which may require further modifications as the
Company obtains additional information regarding any Y2K problems affecting
the Company's systems and equipment and regarding the status of its suppliers
and customers regarding their becoming Y2K compliant.
Through December 31, 1998 the Company estimates that it has spent
approximately $35,000 in its efforts to achieve Y2K compliance, all of which
has been recognized as an expense in the Company's Statement of Operations.
The Company does not expect that any additional costs to be incurred in its
efforts to achieve Y2K compliance will have a material effect on its liquidity
or financial condition. The Company intends to fund the costs of becoming Y2K
compliant from its available liquid assets.
12
The failure to correct a material Y2K problem could result in an
interruption in, or failure of, certain normal business activities or
operations. Such failures could materially and adversely affect the Company's
results of operations, liquidity and financial condition. Due to the general
uncertainty inherent in the Y2K problem, resulting in part from the
uncertainty of the Y2K readiness of the Company's customers and suppliers, the
Company is unable to determine at this time whether the consequences of any
Y2K failures will have a material impact on the Company's results of
operations, liquidity or financial condition.
Safe Harbor Statement
The preceding "Y2K problem" discussion contains various forward-looking
statements which represent the Company's beliefs or expectations regarding
future events. When used in the "Y2K problem" discussion, the words
"believes," "expects," "estimates" and similar expressions are intended to
identify forward-looking statements Forward-looking statements include,
without limitation, the estimated cost of becoming Y2K compliant and the
Company's belief that its Systems and equipment will be Y2K compliant in a
timely manner and that the readiness of its customers and suppliers to be Y2K
compliant will not have a material impact on the Company. All forward-looking
statements involve a number of risks and uncertainties that could cause the
actual results to differ materially from the projected results, including
problems that may arise on the part of third parties. Factors that may cause
these differences include, but are not limited to, the availability of
qualified personnel and other information technology resources; the ability to
identify and rededicate all date sensitive lines of computer code or to
replace embedded computer chips in affected systems or equipment; and the
actions of governmental agencies or other third parties with respect to Y2K
problems. If the modifications and conversions required to make the Company
Y2K compliant are not made or are not completed on a timely basis, the
resulting problems could have a material impact on the operations of the
Company. This impact could, in turn, have a material adverse effect on the
Company's results of operations and financial condition.
Except for the historical information contained herein, this quarterly
report on Form 10-QSB contains forward-looking statements, within the meaning
of Section 27A of the Securities Exchange Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such forward-looking
statements include, but are not limited to, the ability of the Company to
retain any gaming license, required in order for the Company to be able to
continue to operate the System, the ability of the Company to attract
adequate numbers of players to its SportXction(tm) game, the ability of the
Company to develop and market other opportunities for its product, the length
of time that the Company s liquid resources will last, the likelihood that the
RAVE(tm) technology will be approved by the Nevada Gaming Authorities, the
ability of the Company to generate revenue from wagering at home in Nevada or
from advertising in conjunction with non wagering applications of the
Company s technology, including contests, the ability of the Company to adapt
its System for pre-game betting and to attract a sufficient number of players
and the ability of the Company to utilize its System for wagering on the
Internet or private networks in those foreign countries where it is legal to
13
do so and to attract a sufficient number of players. Investors are cautioned
that forward-looking statements are inherently uncertain. Actual performance
and results of operations may differ materially from those projected or
suggested in the forward-looking statements due to certain risks and
uncertainties, including, without limitation, ability of the Company to
attract adequate numbers of players to the SportXction(tm) game and ability of
the Company to develop and market other opportunities for its product.
Additional information concerning certain risks or uncertainties that would
cause actual results to differ materially from those projected or suggested in
the forward-looking statements is contained in the Company s filings with the
Securities and Exchange Commission, including those risks and uncertainties
discussed in its Prospectus dated December 11, 1996 and its Form 10-KSB for
the fiscal year ended September 30, 1998. The forward-looking statements
contained herein represent the Company s judgement as of the date of this
report, and the Company cautions reader not to place undue reliance on such
matters.
14
II: Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 - Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the
Company during the quarter ended December
31, 1998.
15
SIGNATURES
In accordance with the requirements of the Securities Exchange Act or
1934, the registrant caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
International Sports Wagering Inc.
Dated: February 12, 1999 By: /s/ Barry Mindes
Barry Mindes, Chairman of the
Board of Directors
(Principal Executive Officer)
Dated: February 12, 1999 By: /s/ Bernard Albanese
Bernard Albanese, President,
Treasurer and Director
(Principal Financial Officer)
16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 394,811
<SECURITIES> 2,481,004
<RECEIVABLES> 4,357
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,037,096
<PP&E> 1,496,340
<DEPRECIATION> 773,947
<TOTAL-ASSETS> 3,772,764
<CURRENT-LIABILITIES> 220,740
<BONDS> 0
<COMMON> 7820
0
0
<OTHER-SE> 3,544,204
<TOTAL-LIABILITY-AND-EQUITY> 3,772,764
<SALES> 4,356
<TOTAL-REVENUES> 46,464
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 662,981
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (616,517)
<INCOME-TAX> 0
<INCOME-CONTINUING> (616,517)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (616,517)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
