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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] Quarterly Report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 2000
[ ] Transition Report pursuant to 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to __________
Commission File Number 0-30375
LAS VEGAS GAMING, INC.
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(Exact name of Small Business Issuer as specified in its charter)
Nevada 88-0392994
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(State or other jurisdiction of (IRS Employer
incorporation Identification No.)
3261 S. HIGHLAND, SUITE 613 LAS VEGAS, NEVADA 89109-5403
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(Address of principal executive offices)
702-733-9703
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(Issuer's telephone number)
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_________________________________________________________________
(Former name, former address and former fiscal year if changed
since last report)
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
2,965,113 shares of Common Stock as of October 25, 2000.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
GENERAL
The Company's unaudited financial statements for the nine months
ended September 30, 2000 are included with this Form 10-QSB. The
unaudited financial statements for the nine months ended
September 30, 2000 include:
(a) Balance Sheets as of September 30, 2000 and December
31, 1999;
(b) Statements of Operations- nine months and three months
ended September 30,2000 and September 30, 1999 and
inception to September 30, 2000;
(c) Statements of Stockholders' Equity - Inception to
September 30, 2000;
(d) Statements of Cash flows - Nine months ended September
30, 2000 and September 30, 1999 and inception to September
30, 2000;
(e) Notes to Unaudited Financial Statements.
The unaudited financial statements have been prepared in
accordance with the instructions to Form 10-QSB and, therefore,
do not include all information and footnotes necessary for a
complete presentation of financial position, results of
operations, cash flows, and stockholders' equity in conformity
with generally accepted accounting principles. In the opinion of
management, all adjustments considered necessary for a fair
presentation of the results of operations and financial position
have been included and all such adjustments are of a normal
recurring nature. Operating results for the nine months ended
September 30, 2000 are not necessarily indicative of the results
that can be expected for the year ending December 31, 2000.
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LAS VEGAS GAMING, INC.
(A Development Stage Enterprise)
BALANCE SHEETS____________________________________________________________
Sept. 30, December 31,
2000 1999
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ASSETS
Current assets:
Cash $ 2,930,897 19,545
Accounts receivable 1,741
Note receivable 31,649
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2,962,546 21,286
Equipment and software, less accumulated
depreciation of $178,270 and $112,731 119,676 173,446
OTHER ASSETS:
Patents and other intangibles, net 337,445 196,778
Loan receivable 25,000 25,000
Deposits 1,242 1,242
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363,687 223,020
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$ 3,445,909 $ 417,752
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 32,545
Accounts payable $ 904 75,483
Loans from shareholders 50,000
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50,904 108,028
Long-term debt, less current maturities 54,937
Stockholders' equity:
Common stock, $.001 par, 25,000,000 shares
authorized, 2,965,113 and 2,619,300 shares
issued and outstanding 2,965 2,619
Preferred stock, $.001 par, 5,000,000 shares
authorized, 625,300 and 0 shares issued and
outstanding 625
Additional paid-in capital 4,759,270 1,103,013
Deficit accumulated during development stage (1,367,855) (850,845)
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3,395,005 254,787
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$ 3,445,909 $ 417,752
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See notes to financial statements.
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LAS VEGAS GAMING, INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED SEPTEMBER 30 2000 AND 1999
Three Months Ended
September 30,
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2000 1999
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Sales $ 952 $ 4,225
General and administrative expenses (205,438) (85,880)
Interest income 26,364 94
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Net loss $ (178,123) $ (81,561)
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Basic loss per common share $ (0.06) $ (0.03)
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Weighted average number of common shares
Outstanding 2,936,303 2,337,890
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See notes to financial statements.
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LAS VEGAS GAMING, INC.
(A Development Stage Enterprise)
STATEMENTS OF OPERATIONS
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999 AND
THE PERIOD FROM INCEPTION (APRIL 28, 1998) TO SEPTEMBER 30, 2000
From
Inception
Nine Months Ended (April 1998)to
September 30, September 30,
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2000 1999 2000
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Sales $ 172,248 $ 30,029 $ 237,988
General and administrative
expenses (715,622) (302,843) (1,443,751)
Write-down of patents
and intangibles (120,000)
Write-off of purchase option (75,000)
Interest income 26,364 604 32,909
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Net loss $ (517,010)$ (272,210)$ (1,367,855)
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Basic loss per common share $ (0.19)$ (0.13)$ (0.70)
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Weighted average number of
common shares outstanding 2,793,704 2,019,773 1,957,589
============= =============== =============
See notes to financial statements.
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LAS VEGAS GAMING, INC.
(A Development Stage Enterprise)
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM INCEPTION (APRIL 28, 1998) TO DECEMBER 31,
1999, AND THE NINE MONTHS ENDED SEPT. 30, 2000
Deficit
Accumulated
Additional during
paid-in development
Shares Par value capital stage Total
---------- --------- --------- ------------ -----------
Common shares sold to:
Officers and
Directors 1,050,277 $ 1,050 $ 178,250 $ 179,300
Others 1,569,023 1,569 1,034,631 1,036,200
Offering costs (109,868) (109,868)
Net loss $ (850,845) (850,845)
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Balances,
December 31, 1999 2,619,300 2,619 1,103,013 (850,845) 254,787
Common shares sold to:
Officers and
Directors 82,000 82 195,918 196,000
Others 263,813 264 401,392 401,656
Preferred shares sold: 625,300 625 3,125,876 3,126,501
Offering costs (66,929) (66,929)
Net loss (517,010) (517,010)
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Balances,
September 30, 2000 3,590,413 $ 3,590 $4,759,270 $(1,367,855) $3,395,005
========== ========= ========== =========== ==========
See notes to financial statements.
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LAS VEGAS GAMING, INC.
(A Development Stage Enterprise)
STATEMENTS OF CASH FLOWS
FOR THE NINE-MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999 AND
THE PERIOD FROM INCEPTION (APRIL 28, 1998) TO SEPTEMBER 30, 2000
From
Inception
Nine Months Ended (April 1998)to
September 30, September 30,
-----------------------------
2000 1999 2000
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Operating activities:
Net cash used in operating
Activities (348,025) (172,103) (739,917)
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Investing activities:
Deferred offering costs (66,929) (176,797)
Purchase of equipment (11,769) (56,015) (126,295)
Purchase option acquisition (75,000)
Purchase of intangible assets (350,000)
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Net cash used in investing
Activities (78,698) (56,015) (728,092)
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Financing activities:
Proceeds from sale of
common stock 149,056 260,400 1,256,556
Proceeds from sale of
preferred stock 3,126,501 3,126,501
Repayment of borrowings (87,482) (33,387) (134,151)
Loan to seller of purchase
option (25,000)
Borrowing from stockholder 150,000 175,000
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Net cash provided by
financing activities 3,338,075 227,013 4,398,906
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Increase in cash 2,911,352 (1,105) 2,930,897
Balance, beginning of period 19,545 9,253
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Balance, end of period $ 2,930,897 $ 8,148 $ 2,930,897
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See notes to financial statements.
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LAS VEGAS GAMING, INC.
(A Development Stage Enterprise)
NOTES TO UNAUDITED FINANCIAL
STATEMENTS_____________________________________
1. Basis of Presentation:
The accompanying financial statements have been prepared by the
company pursuant to the rules and regulations of the Securities
and Exchange Commission relating the interim financial
statements. Accordingly, certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have
been condensed or omitted. For further information, please refer
to the financial statements of the Company, and the related
notes, included within the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1999, previously filed
with the Securities & Exchange Commission.
In the opinion of management, all necessary adjustments
(consisting only of normal recurring adjustments) have been made
to present fairly, in all material respects, the financial
position, results of operations and cash flows of the Company at
September 30, 2000, and for all periods presented. The results
of development stage operations for the nine-month period ended
September 30, 2000 are not necessarily indicative of the results
to be expected for a full year.
2. Nature of Business:
The Company is in the business of developing, marketing and
distributing casino games and related supplies. Currently the
company owns the rights to a number of games, including, among
others, "Nevada Numbers", "B2B Roulette", and "4-Play Amore".
3. Stock-related transactions:
Purchase of Bonus Keno game. During February 2000, the Company
issued 100,000 shares of common stock for the purchase of the
rights to "Bonus Keno".
Purchase of Match Pair Bingo game. In May 2000, the Company
purchased a Class II table game called Match Pair Bingo for 10,000
shares of common stock valued at $3.00 per share ($30,000). In
this game, the house or casino pulls two balls with five possible
outcomes: "B", "I", "N", "G", and "O". Each player antes a fixed
amount to play, which is taken by the house, and then bets on the
outcome. The player choosing the right outcome wins the bets
placed.
Stockholders' loan. During March and June 2000, a
stockholder/officer/director loaned the Company $150,000.
$100,000 of this amount has been settled for 50,000 shares of
common stock and warrants to purchase 25,000 shares of the
Company's common stock at a price of $2.00 per share. The
warrants will expire in May 2005. The stockholder/officer/director
can also elect to receive an additional 25,000 shares of common stock
and warrants to purchase 25,000 shares of the Company's common stock
at $2.00 per share for a period of one year in settlement of his
remaining $50,000 receivable from the Company.
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Preferred Stock. In June 2000, the Company filed an amendment to
its articles of incorporation with the Nevada Secretary of
State's office to allow for the creation of preferred stock.
Holders of preferred shares can elect to convert (one to one
basis) any time after one year from the issue date if the trading
price of the Company's common stock has remained at $5.00 per
share or greater for a period of 60 days. Holders of these
shares are restricted from selling more than 25% of their
holdings per calendar quarter. The Company can call and convert
the shares into common stock or purchase the shares for $5.00 per
share beginning four years from the date of issue. The Company
is currently offering its unregistered preferred stock for sale
privately to accredited investors to raise a maximum of
$10,000,000 on a "best efforts" basis. The offering is intended
to be exempt from registration pursuant to Rule 506 of Regulation
D of the Securities Act of 1933.
4. Contingencies:
Gaming regulations and licensing. The Company is currently not
subject to regulation in jurisdictions in which its products are
leased or used by persons or entities licensed to conduct gaming
activities. However, the Company is seeking licensure in several
gaming jurisdictions including Nevada, among others, so that the
Company may participate in the gaming revenues produced by its
products. Failure to obtain and retain the necessary licenses
would prevent the Company from fully implementing its business
plans and have a material adverse effect on the Company.
In January, 2000, the Company submitted an application for
licensure in Nevada. Throughout 2000, the Company has made
several deposits with the State of Nevada totaling $185,000 in
connection with the application for licensure.
Additionally, many of the Company's games must be licensed in
various jurisdictions. Failure to obtain and retain the
necessary licenses would prevent the Company from fully
implementing its business plans and have a material adverse
effect on the Company.
Item 2. Management's Discussion and Analysis of Plan of
Operations
This report on Form 10-Q contains certain forward-looking
statements within the meaning of section 21e of the Securities
Exchange Act of 1934, as amended, and other applicable securities
laws. All statements other than statements of historical fact
are "forward-looking statements" for purposes of these
provisions, including any projections of earnings, revenues, or
other financial items; any statements of the plans, strategies,
and objectives of management for future operation; any statements
concerning proposed new products, services, or developments; any
statements regarding future economic conditions or performance;
statements of belief; and any statement of assumptions underlying
any of the foregoing. Such forward-looking statements are
subject to inherent risks and uncertainties, and actual results
could differ materially from those anticipated by the forward-
looking statements.
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Overview
The Company is in the development stage with regard to marketing
and distributing casino games and related supplies. Operating
revenues to date have been insignificant. Currently, the Company
owns the rights to a number of games, including, among others,
"Nevada Numbers", "Las Vegas Numbers", Match Pair Bingo and "4-
Play Amore". In addition, the Company has purchased the assets
of Back to Back Gaming, Inc. ("B2B"), which included the rights
to "B2B Roulette".
Plan of operations over the next 12 months
The Company currently intends to focus its efforts on the
development and operation of its keno games and routes in Nevada.
A "route", as the term is typically used by the gaming industry,
generally refers to the situation where a company owns, operates
and services a game or games at various third-party venues
(generally casinos). In such a route, the Company would act as
the "bank" (money handler), in that it would collect the wagers
and pay out winners, and, in exchange for the use of the location
where the game is run, would pay rent to the casino and/or a
percentage of the game's revenues.
In order to be able to share in any revenues from gaming through
a route or otherwise, a person or entity must be licensed by the
state where the game is operated. The Company is currently in
the process of applying for its gaming license with the state of
Nevada. Such an application is a complicated process and
involves an extensive review of the backgrounds of the officers,
directors and large shareholders of the Company as well as other
matters relating to its operations. No assurance therefore can be
given that the Company will be able to obtain such a license and
thus while it would continue to be able to offer its games, it
would not be able to share in the revenues and operate its
planned Nevada keno route.
In June 21, 2000, the Company commenced a preferred stock private
offering seeking up to $10 million, the proceeds of which will be
used upon licensing to initiate several large jackpot games in
the state of Nevada and, possibly elsewhere, in connection with
the acquisition of Imagineering Systems, Inc. (ISI). To date,
approximately $3 million has been raised.
In addition to the state of Nevada, the Company is pursuing
licensing in Arizona, New Mexico, New York, Nebraska and
Washington.
Financing and Liquidity
CASH FLOWS. At September 30, 2000, the Company maintained $2.9
million in cash and cash equivalents. The large increase in the
cash balance is due to the $3.1 million raised by September 30,
2000 in the Company's preferred stock offering. As of October
29, 2000, the Company has raised $3,361,000 in preferred stock
sales.
CAPITAL EXPENDITURES. Generally, the Company has spent little of
its resources on capital equipment. Later, the Company may begin
to invest in keno equipment and lease it, along with its
progressive keno games, to various casinos around the world. For
these reasons and others,
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the Company may need to raise further funding, even if it completes
the sale of all of its current preferred stock offering.
WORKING CAPITAL REQUIREMENTS. Other than cash required to
support the jackpots of the various games the Company offers,
there is currently little need for additional working capital.
There are no inventory requirements and very little in the way of
account receivable needs. Absent some significant change in the
nature of the Company's business, working capital (other than
cash) is not likely to be a major use of financial resources.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
On May 1, 2000, the Company issued 50,000 shares of common stock
and 25,000 warrants to Russell Roth, the Company's President and
a member of its board of directors, in exchange for the
cancellation of a $100,000 debt. These shares were issued
pursuant to Section 4(2) of the 1933 Act and have been marked
"restricted".
On May 17, 2000, the Company issued 10,000 shares of common
stock to 2 individuals at a deemed value of $3.00 per share in
exchange for the sale of the Match Pair Bingo game to the
Company. These shares were issued pursuant to Section 4(2) of
the 1933 Act and have been marked "restricted".
On May 20, 2000, the Company issued 3,500 shares of common stock
to the Company's attorneys in partial settlement of its legal
bill at a deemed value of $3.00 per share. These shares were
issued pursuant to Section 4(2) of the 1933 Act and have been
marked "restricted".
On July 17, 2000, the Company issued 155,913 shares of common
stock to Steven Busch upon the exercise of his stock options at a
price of $0.50 per share. These shares were issued pursuant to
Rule 506 of Regulation D of the 1933 Act and have been marked
"restricted".
Through October 29, 2000, the Company issued 672,200 shares of
preferred stock to 15 investors at a price of $5.00 per share.
These shares were issued pursuant to Rule 506 of Regulation D of
the 1933 Act and have been marked "restricted".
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
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Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
Exhibit - Financial Data Schedule
(b) Reports on Form 8-K: A report on form 8-K was
filed on October 26, 2000 to announce the resignation
of Director Mark Valenti.
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SIGNATURES
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 thereunto duly authorized.
LAS VEGAS GAMING, INC.
(Registrant)
Date November 15, 2000 /s/ Russell R. Roth
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Russell R. Roth
Chairman of the Board and
Chief Executive and Financial Officer
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