SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended : April 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number 0-21278
LAS VEGAS ENTERTAINMENT NETWORK, INC
(Exact name of small business issuer as
specified in its Charter)
Delaware 94-3125854
----------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
1801 Century Park East, Los Angeles, California 90067
-------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(310) 551-0011
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13, or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Registrant
was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No ___
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date.
Common Stock, $.001 par value 34,898,349
- ----------------------------- ----------
Title of Class Number of Shares outstanding at
June 15, 1997
DOCUMENTS INCORPORATED BY REFERENCE: NONE
<PAGE>
LAS VEGAS ENTERTAINMENT NETWORK INC. AND
SUBSIDIARIIES
CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
APRIL 30, October 31,
1997 1996
---- ----
(UNAUDITED) (DERIVED FROM
AUDITED
FINANCIAL
STATEMENTS)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
CASH AND CASH EQUIVALENTS ..... $ 3,605,791 $ 10,385,292
MARKETABLE SECURITIES ......... 1,000,000
NOTE RECEIVABLE, NPD - Note 3 . 2,994,875
--------- ----------
TOTAL CURRENT ASSETS 7,600,666 10,385,292
NOTE RECEIVABLE, ITB - Notes 2
and 6 ............................ 5,900,000 5,900,000
INVESTMENTS & ADVANCES - Note 4 1,544,621 1,024,312
NOTES RECEIVABLE - LAKE
TROPICANA ........................ 806,489 806,489
PROGRAMING AND FILM COSTS, Net
of Amortization ............... 180,000 180,000
PROPERTY AND EQUIPMENT
net of accumulated
depreciation of
$215,900 (1997) and
$180,981 (1996) .............. 147,053 171,397
OTHER ASSETS................... 49,955 10,770
------------ -----------
$16,228,784 $18,478,260
============ ===========
LIABILITIES AND STOCKHOLDERS'EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE AND ACCRUED
EXPENSES ....................... $ 196,959 $ 144,649
NOTES PAYABLE................... 778,126 1,056,444
ACCRUED INTEREST PAYABLE........ 115,240 102,346
ACCRUED OFFICER'S SALARIES &
BENEFITS ....................... 727,622 645,622
------------ -----------
TOTAL CURRENT LIABILITIES 1,817,947 1,949,061
STOCKHOLDERS' EQUITY:
PREFERRED STOCK - SERIES A,
AUTHORIZED 30,000,000 SHARES,
ISSUED AND OUTSTANDING - NONE -- --
COMMON STOCK - AUTHORIZED
50,000,000 SHARES, .001 PAR VALUE;
ISSUED AND OUTSTANDING 34,898,349
SHARES (1997 and 1996) ........... 34,895 34,895
ADDITIONAL PAID-IN CAPITAL 47,445,080 47,280,080
DEFICIT (33,069,138) (30,785,776)
------------ -----------
TOTAL STOCKHOLDERS' EQUITY
14,410,837 16,529,199
------------ -----------
$16,228,784 $18,478,260
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
LAS VEGAS ENTERTAINMENT NETWORK, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED APRIL 30, SIX MONTHS ENDED APRIL 30,
---------------------------- --------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES $ 75,000 $ 75,000 $ 150,000 $ 141,200
COSTS AND EXPENSES
Research & Development -
Note 5 .................... 679,630 679,630
General & Administrative..... 847,884 938,664 1,515,692 1,961,361
------------ ------------ ------------ ------------
Total Costs and Expenses
1,527,514 938,664 2,195,322 1,961,361
LOSS BEFORE OTHER
INCOME AND (CHARGES) (1,452,514) (863,664) (2,045,322) (1,820,161)
OTHER INCOME AND (CHARGES):
Interest Income............ 111,584 197,224 235,155 233,830
Other Charges - Note 7 .... (267,800) (646,875) (432,800) (666,875)
Interest and Finance Costs. (19,406) (200,298) (40,394) (599,677)
------------ ------------ ------------ ------------
TOTAL OTHER INCOME AND
(CHARGES) .................. (175,622) (649,949) (238,039) (1,032,722)
------------ ------------ ------------ ------------
NET LOSS ................... $(1,628,136) $(1,513,613) $ (2,283,361) (2,852,883)
============= ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
SHARES OF COMMON STOCK
OUTSTANDING 34,898,349 35,024,532 34,898,349 31,879,502
=========== ========== ========== ==========
LOSS PER SHARE OF COMMON
STOCK ....................... $(0.05) $(0.04) $(0.07) $(0.09)
============ ============ ============ ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
LAS VEGAS ENTERTAINMENT NETWORK, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
SIX MONTHS ENDED APRIL 30, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
Common
Stock
--------------- Additional
Number Paid-in
of Shares Amount Capital Deficit Total
--------- ------ ------- ------- -----
<S> <C> <C> <C> <C> <C>
BALANCE - NOVEMBER 1, 1996 34,898,349 $34,895 $47,280,080 $(30,785,777) $16,529,198
Issuance of Options- Note 7 165,000 165,000
Net Loss for the Six Months
Ended April 30, 1997 (2,283,361) (2,283,361)
----------- -------- ---------- ------------ ----------
BALANCE - April 30, 1997 34,898,349 $34,895 $47,445,080 $(33,069,138) $14,410,837
========== ======= =========== ============ ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
LAS VEGAS ENTERTAINMENT NETWORK, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED APRIL 30, SIX MONTHS ENDED APRIL 30,
---------------------------- -------------------------
1997 1996 1997 1996
----------- ---------- ---------- -------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(1,628,136) $(1,513,613) $(2,283,361) $(2,852,883)
Depreciation 17,698 57,516 34,919 67,516
Allowances for valuation accounts 167,800 167,800
Adjustments to reconcile net loss to net
cash used in operating activities:
(Increase) Decrease in;
Prepaid Expenses -- 309,750 (309,750)
Other Assets (39,185) (8,730) (39,185) (8,730)
Increase (Decrease) in;
Accounts Payable 15,506 (450,713) 52,309 (478,504)
Accrued Officer's Salaries 68,500 (137,500) 82,000 (65,000)
Interest Payable 19,406 (231,265) 12,893 (221,359)
----------- ---------- ---------- ------------
CASH USED IN OPERATING ACTIVITIES (1,378,411) (1,974,555) (1,972,625) (3,868,710)
CASH FLOWS FROM INVESTING ACTIVITIES:
Investments & Advances 511,612 (753,500) (688,109) (753,500)
Loan to NPD (71,942) (2,994,875)
Sale of El Rancho and Capitalized Costs -- 34,795,310
Issuance of Notes and Loans Receivable -- (12,400,000)
Collections on Notes and Loans -- 6,500,000 6,500,000
Purchase of Marketable Securities (1,000,000) (1,000,000)
Acquisition of Property and Equipment (8,530) (8,255) (10,575) (13,280)
----------- ---------- ---------- -----------
CASH PROVIDED BY (USED IN) INVESTING
ACTIVITIES; (568,860) 5,738,245 (4,693,559) 28,128,530
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Notes Payable -- (1,403,086) -- 850,000
Repayment of Notes Payable (295) (278,317) (2,904,498)
Issuances and Sales of Common Stock -- 27,125 3,024,135
Repurchase of stock -- (155,000) 155,000
Issuances of Options and Warrants -- 165,000 65,272
Repayment of Loans and interest payable
- El Rancho -- (14,094,895)
----------- ------------ --------- ------------
CASH USED IN FINANCING ACTIVITIES (295) (1,530,961) (113,317) (12,904,986)
INCREASE (DECREASE) IN CASH (1,947,566) 2,232,729 (6,779,501) 11,354,834
CASH BALANCE - BEGINNING 5,553,357 9,911,443 10,385,292 789,338
---------- ----------- ----------- --------------
CASH BALANCE - ENDING $3,605,791 $12,144,172 $3,605,791 $12,144,172
=========== =========== ========== ==============
NON-CASH TRANSACTIONS
Conversion of Notes Payable and Accrued
Interest to Equity $260,000
Accrued Interest and Fees - El Rancho 695,832
CASH PAID FOR
Interest $27,500 84,473
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
LAS VEGAS ENTERTAINMENT NETWORK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Background and Business and Basis of Presentation - Las Vegas
Entertainment Network, Inc. ("LVEN" or "the Company") was incorporated in
October 1990, and is engaged in the business of acquiring, developing and
operating media and gaming facilities and businesses. The Company's primary
project to date was the renovation, expansion and redevelopment of the El
Rancho Hotel & Casino located in Las Vegas, Nevada (the "El Rancho" or the
"Property"), which was acquired on November 24, 1993. On January 22, 1996, the
Company sold the El Rancho to International Thoroughbred Breeders Inc. (ITB)
for $43,500,000 of cash, notes and assumption of debt. The Company also
received a continuing interest in the cumulative adjusted cash flow (as
defined) from the Property of up to $160,000,000 once the Property has been
developed and certain invested amounts have been recouped (see Note 2). In
connection with the sale, the Company's Las Vegas Communications Corporation
subsidiary was granted the exclusive contract to provide entertainment at the
Property site, and accordingly, will begin developing Las Vegas style
entertainment shows once the Property site has been developed. Subsequent to
April 30,1997, the Company and ITB have agreed to (i) exchange the remaining
note receivable from the sale for shares of ITB common stock to be registered
and, (ii) finalize a similar exchange for the continuing cash flow interest
(see Note 2).
The Company is also developing media related opportunities, including
formulating a business plan to develop, produce, market and distribute
television and video programming, Internet access, and telephony through the
development of a new technology to be owned by the Company's majority owned
subsidiary, Electric Media Company Inc. The Company is also investigating other
potential businesses for acquisition in the entertainment, gaming, lodging, and
communications industries.
The accompanying financial statements include the accounts of Las Vegas
Entertainment Network Inc. (LVEN), and its wholly-owned subsidiaries; Las Vegas
Communications Corp. ("LVCC"), Casino-Co Inc. and Pacific DNS, Inc; and its
majority owned subsidiary, Electric Media Company Inc. (EMC). All significant
intercompany transactions and balances have been eliminated.
Basis of Presentation - The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-QSB. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included. Operating results for the three and six month periods ended April 30,
1997 are not necessarily indicative of the results that may be expected for the
year ended October 31, 1997. The unaudited consolidated financial statements
should be read in conjunction with the consolidated financial statements and
footnotes thereto included in the Company's Form 10-KSB for the year ended
October 31, 1996.
2. NOTE RECEIVABLE, ITB, AND CONTINUING INTEREST IN EL RANCHO PROPERTY
Note Receivable, ITB, represents the remaining 8% promissory note, in the
principal amount of $10,500,000, arising from the sale of the El Rancho
Property. The note is secured by a subordinated junior position in the assets of
the El Rancho (which may be further subordinated if additional borrowing is made
against the property), and is due upon the successful raising of financing to
develop the Property, or upon the ultimate sale of the Property. As of April 30,
1997 and October 31, 1996, the Company has provided an allowance of $4,600,000
against this note. On May 22, 1997, LVEN and ITB agreed, subject to Board of
Director approval of both companies, to convert the $10,500,000 note receivable
and accrued interest thereon of $1,100,000 into 2,093,868 shares of ITB Common
Stock to be registered (the "Conversion Shares"). The Company has yet to
determine the value of the shares to be received, which is initially subject to
certain restrictions described below, but expects the value will
6
<PAGE>
LAS VEGAS ENTERTAINMENT NETWORK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
exceed the $5,600,000 carrying value presently reflected in the April 30,1997
financial statements. Management in the future may consider distributing all or
a portion of these shares to the shareholders of the Company as a dividend.
In connection with the original sale agreement dated January 22, 1996,
the Company also received a continuing interest in the cumulative adjusted cash
flow (as defined) from the EL Rancho Property of up to $160,000,000 once the
Property has been developed and certain invested amounts have been recouped. On
May 22, 1997, LVEN and ITB agreed that, as soon as practicable, ITB may acquire
from LVEN the Company's continuing interest in the adjusted cumulative cash flow
of the El Rancho. In order to effect the Acquisition, ITB will be required to
issue shares of ITB Common Stock to be registered (the "Acquisition Shares") to
LVEN in an amount equal to the result of (i) of a Fairness Opinion Value from a
nationally recognized investment banking firm respective to the fair market
value of the El Rancho Cash Flow Interest, divided by (i) the average bid price
for ITB Stock during the 20 trading days prior to the closing date. The shares
of ITB common stock received will initially be subject to certain restrictions
described below. Management in the future may consider distributing all or a
portion of these shares to the shareholders of the Company as a dividend.
ITB has also agreed that the $55 Million of financing provided to it by
Credit Suisse First Boston MortgageCapital ("CSFB") on May 22, 1997 has been
arranged by LVEN's subsidiary, Casino-Co, as the "Alternative Financing"
contemplated by, pursuant to, and in satisfactory of, the provisions of El
Rancho Sale Agreement dated January 22, 1996. ITB has informed the Company that
a portion of these proceeds will be used to begin the renovation and
redevelopment of the El Rancho Property as a country western themed resort
destination called "CountryLand ".
As a condition precedent to the consummation of the exchange of ITB
shares for the Company's continuing interest in the cash flow from the Property,
LVEN shall have received one or more opinions from one or more investment
banking firms satisfactory to LVEN respecting the fair market value of the
continuing cash flow interest. If LVEN is unsatisfied with the fair market value
of the continuing cash flow interest of the El Rancho Property as established by
the greater of the opinions, then LVEN shall have the right, within 180 days of
the date thereof, to make a secured first mortgage loan to ITB, and ITB must
then repay the CSFB Loan in full. If LVEN were to make such a loan to ITB, the
loan would mature on the date that the CSFB Loan is scheduled to mature and
would bear interest at the rate applicable to CSFB Loan, and LVEN would have the
right to develop the property.
The Company has agreed to execute and deliver an irrevocable proxy
respecting both the Conversion Shares and Acquisition Shares in favor of Mr.
Nunzio DeSantis, Chairman of the Board of ITB, which proxy shall be irrevocable
until the earlier of (i) the date on which the CSFB Loan and all of the other
obligations of ITB owing to CSFB under the Loan under the Loan Agreement have
been repaid in full, (ii) the date on which LVEN distributes the Acquisition
Shares to its shareholders generally, (iii) the date on which LVEN sells the
Conversion Shares or Acquisition Shares to, or LVEN is acquired by, or merged
with or into, a person or entity that is not affiliated with LVEN, and (iv) the
date on which Mr. DeSantis dies or becomes mentally incompetent. LVEN and ITB
have agreed to enter into a registration rights agreement respecting the
Conversion Shares and the Acquisition Shares providing for demand rights,
unlimited piggyback rights, and other customary provisions.
Additionally, in accordance with the El Rancho Sale Agreement dated
January 22, 1996 and commencing with the development of the Property, the
Company's LVCC subsidiary was granted an exclusive contract to provide
entertainment at the Property site, subject to meeting certain profitability
criteria. This would include; (i) responsibility for management and oversight of
booking all acts, performers, entertainers, movies, virtual reality rides, and
other non-gaming attractions, of any kind or nature at the property site, (ii)
arranging all advertising for all of the properties needs, and (iii), managing
all other entertainment venues. The term of the agreement is for ten (10) years
commencing on the date which is six (6) months prior to the opening date of the
property, and LVCC
7
<PAGE>
LAS VEGAS ENTERTAINMENT NETWORK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
shall have the option to renew the agreement for two consecutive five-year
terms. The agreement provides LVCC with an annual fee of $800,000 subject to
annual increases. LVCC will also receive an additional; (i) twenty- five percent
(25%) of profits from entertainment activities, (ii) ten percent (10%) of the
cost of all advertising placed, and (iii) booking fee equal to ten percent (10%)
of gross compensation paid to talent. LVEN and ITB may amend this agreement to
include food and beverage and a lease by LVEN of retail space at the Property.
3. NOTE RECEIVABLE, NPD
On January 15, 1997, the Company, through its wholly-owned Nevada
subsidiary Casino-Co, made a secured loan of $2,900,000 to NPD, Inc, ("NPD"), in
order to enable NPD to close the acquisition from Robert Brennan (" the Seller")
of 2,904,016 shares (the "Shares") of the common stock of International
Thoroughbred Breeders, Inc. ("ITB"), representing twenty-five percent (25%) of
the outstanding stock of ITB. At the closing of such purchase and sale, the
shareholders of NPD, Nunzio DeSantis and Anthony Coelho, became the Chairman of
the Board and Chief Executive Officer, respectively, of ITB. The sale of the
Shares was instrumental to the Company, as the Company believes it will allow
ITB (i) to meet the requirements for funding the renovation of the Property
site, and (ii) meet the requirements of The New Jersey Racing Commission and
Division of Gaming Enforcement for continued racing licencing at ITB's New
Jersey facilities. The Company believes that the sale of the Shares will also
facilitate ITB's application for Nevada Gaming Licencing. The loan to NPD and
all accrued interest due, which is evidenced by a 10% Secured Promissory Note
was due on April 15, 1997.
4. INVESTMENT AND ADVANCES
Investments and advances consist of the following as of April 30, 1997 and
October 31, 1996;
<TABLE>
<CAPTION>
<S> <C> <C>
April 30, October 31,
1997 1996
---- ----
(A) Malbec, Inc. $ 464,606 $ 462,606
(B) Tee One Up, Inc 100,000 300,000
(C) ITB Inc 980,015 261,706
----------- ----------
$1,544,621 $1,024,312
</TABLE>
========== ==========
(A) The Company has made advances to Malbec, Inc., an unaffiliated company, of
$912,606 as of April 30, 1997 and October 31, 1996, respectively, for the
purpose of developing and operating a hotel project in Miami Beach,
Florida. The advances accrue interest at the rate of 8% per annum, are due
July 31, 1997, and are secured by a first security interest in a cash
escrow account (which has a balance of $667,000 as of June 15, 1997). The
Company has re-evaluated this project and has decided not to pursue
development, and expects the escrow account to be liquidated with the net
amounts, after payment of all expenses, to be returned to the Company. The
Company has provided a $450,000 allowance against this advance, for a net
investment of $462,606 as of April 30, 1997 and October 31, 1996,
respectively.
(B) The Company loaned $300,000 to Tee One Up, Inc., an unaffiliated company
developing television footage of actual golf "hole in ones" at selected
golf courses. The loan is secured by the assets of Tee One Up. Principal
and interest at a rate of 17% per annum was to be paid in monthly
installments of $14,832 until maturity, November 1, 1998. In March 1997,
Tee One Up became delinquent in making its monthly payments. As of April
30,1997, the principal balance due under this note was $267,00 for which
the Company has provided a $167,00 reserve to reflect the underlying value
of the security interest, for a net receivable of $100,000.
8
<PAGE>
LAS VEGAS ENTERTAINMENT NETWORK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(C) Advances to ITB Inc. represent amounts currently due the Company for
monthly property management fees, and for the reimbursement for certain
operational and financing advances made for the El Rancho Property.
5. RESEARCH AND DEVELOPMENT - EMC
The Company has formed a new subsidiary, Electric Media Company Inc. (EMC),
which is developing technology, that if successful, of which the Company can
give no assurance can be achieved, will allow delivery of video voice and/or
data communications over electric power lines or other forms of transmission
including cable, telephone and microwave. EMC is 75% owned by the Company and
25% owned by Mr. Nunzio DeSantis, Chairman of the Board of ITB.
EMC has entered into two agreements for the development of this technology
with two joint venture partners/developers. The agreements are for a term of 25
years, and can be extended to successive 25-year terms at the election of EMC.
The first agreement calls for the development of video, voice and data
communication over existing power lines. Field testing of this technology will
occur during 1997. Upon successful completion of all field tests, EMC will begin
worldwide marketing of this technology, including the sale and distribution of
addressable receiver boxes that are necessary to receive the data communication.
LVEN will receive, in perpetuity, a $25 per unit royalty for each receiver box
sold, if any. In accordance with the joint venture agreement, EMC is committed
to deliver to the joint venture partner/developer; (i) 500,000 restricted shares
of LVEN common stock upon successful completion of the field test, (ii) monthly
renumeration of $25,000 upon successful completion of the field test (iii) an
additional 500,000 restricted shares of LVEN common stock each time the sale of
these units generates $10,000,000 of net after tax profits to LVEN, up to a
maximum of 2,500,000 shares, and (iv) 20% of the net profits once EMC has
recouped all its costs, plus a return of 6% thereon.
The second agreement calls for the development of a communications network
in Guatemala and Central America for the provision of telephone, video, voice
and/or data communications. Field testing of this technology will occur during
1997. In accordance with the joint venture agreement, if EMC proceeds, it will
deliver to the joint venture partner/developer; (i) up to $500,00 for general
start up and market costs, (ii) 500,000 restricted shares of LVEN common stock
upon successful completion of the field test and demonstration of its economic
viability, (iii) monthly renumeration of $15,000 upon successful completion of
the field test and demonstration of its economic viability, (iv) an additional
500,000 restricted shares of LVEN common stock for each 150,000 telephones
installed, up to a maximum of 2,500,000 shares, and (v) 20% of the net profits
once EMC has recouped all its costs, plus a return of 6% thereon. The Company
has engaged an investment banking firm to raise $15 million, for which it can
give no assurance can be achieved, for the full implementation of this project.
To date, the company has expended $679,630 in developing this technology.
Such amounts have been reflected as research and development costs for the three
and six month periods ended April 30, 1997.
6. SUBSEQUENT EVENT
On May 23, 1997, the Company provided a refundable advance of $182,000 on
behalf of Mr. Nunzio DeSantis, which funds were utilized to acquire an 80%
interest in an Ontario, Canada company (the "Canadian Company"). The Company's
Chairman of the Board, Mr. Joseph A. Corazzi, as a bonus for services rendered
in negotiating the potential acquisition of the operations of the Canadian
Company as described below, may be allocated a portion of the ownership as
agreed to by Mr. DeSantis and the LVEN Board of Directors. The remaining 20% of
the Canadian Company is owned by individuals not affiliated by the Company. It
is the intention of the Canadian Company to use these funds as an advance
deposit to acquire from the Ontario Jockey Club (OJC), certain real property and
assets known as the "Fort Erie Racetrack" which is situated on 143 acres in Fort
Erie, Canada. Management of the race track anticipates during the next six
months the introduction of up to 500 to 1,000 video lottery gaming terminals
that were proposed in the 1995 Province of Ontario Budget.
9
<PAGE>
LAS VEGAS ENTERTAINMENT NETWORK INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
As an inducement to LVEN to make the advance deposit, LVEN acquired an
option to acquire from Mr. DeSantis his interest in the Canadian Company. The
exercise price, subject to further evaluation and appraisal, shall be payable
(i) $1,000,000 cash at closing, (ii) $3,600,000 payable in equal monthly
installments of $100,000 commencing on the last date of the month on which the
closing occurs, and (iii) at or as soon as after the closing as practicable, the
number of registered shares of LVEN common stock having a value, based on the
average closing price for the twenty trading days proceeding payment of the
Exercise Price, equal to the difference between (a) the fair value of the
interest as set forth in a fairness opinion prepared by an investment banking
firm retained by LVEN and (b) the sum of the cash payments specified above.
However, it is the intention of LVEN to only exercise its option based upon its
due diligence; a valuation of the ongoing operations of the property, and; the
valuation of potential revenue from the addition of video lottery terminals. If
the Company does exercise its option to acquire the 80% interest in the Canadian
Corporation, and if it decides to maintain full racing operations and proceeds
with its option, it would be responsible for maintaining operations at the track
through the end of the 1998 racing season which is currently operating at an
annual cash flow deficit of approximately $3,200,000 for a full one hundred day
racing schedule. The Company may advance funds to the Canadian Company prior to
the exercise of the option. It is expected such advances would be secured by a
first security interest in the race track property. The Company will engage an
investment banking firm to raise up to $35 Million, for which it can give no
assurance can be achieved, to develop over a twenty-four month period, the race
track property into an entertainment destination that would supplement the
introduction of video lottery gaming.
8. OTHER
On March 1, 1997, the Company extended, until March 1, 2000, the warrants
of Mr. Joseph A. Corazzi, Chairman of the Board of the Company, to acquire
4,000,000 shares of common stock of its subsidiary, CountryLand Properties Inc.
(CLND). The 4,000,000 CLND warrants are fully transferable and convertible into
options to purchase LVEN common shares at $1.00 per share.
The Corporation has adopted the disclosure only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." Accordingly, no compensation cost has been recognized for the
stock options. If the Company had elected to recognize compensation cost based
upon the fair value of the options granted at the grant date as prescribed by
SFAS No. 123, the Company's net loss and net loss per share would have been
reduced to the pro forma amounts listed below:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
April 30,1997 April 30,1997
------------- -------------
<S> <C> <C>
Net loss, as reported $1,628,136 $2,283,361
Net loss, pro forma $1,628,136 $3,723,361
Loss per share, as reported $.05 $.07
Loss per share, pro forma $.05 $.11
</TABLE>
On December 11, 1996, Mr. Nunzio DeSantis, now the Chief Operating Officer
of ITB, was granted 1,500,000 options to acquire shares of the Company's Common
Stock at an exercise price of $1 per share, which expire in December 1999 as
part of consideration for providing a $6,000,000 standby funding commitment. In
accordance with Statement of Financial Standards No. 123, these options have
been valued at their fair value per the Black Scholes Valuation Model at
$165,000 ($.11 per share), and have been included in other charges for the six
months ended April 30, 1997.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Important Factors Relating to Forward Looking Statements. - In connection
with certain forward-looking statements contained in this Form 10-QSB and those
that may be made in the future by or on behalf of the Company which are
identified as forward-looking, the Company notes that there are various factors
that could cause actual results to differ materially from those set forth in any
such forward-looking statements. The forward- looking statements contained in
this Form 10-QSB were prepared by management and are qualified by, and subject
to, significant business, economic, competitive, regulatory and other
uncertainties and contingencies, all of which are difficult or impossible to
predict and many of which are beyond the control of the Company. Accordingly,
there can be no assurance that the forward-looking statements contained in this
Form 10-QSB will be realized or the actual results will not be significantly
higher or lower. These forward looking statements have not been audited by,
examined by, compiled by or subjected to agreed-upon procedures by independent
accountants, and no third-party has independently verified or reviewed such
statements. Readers of this Form 10-QSB should consider these facts in
evaluating the information contained herein. In addition, the business and
operations of the Company are subject to substantial risks which increase the
uncertainty inherent in the forward-looking statements contained in this Form
10-QSB. The inclusion for the forward-looking statements contained in this Form
10-QSB should not be regarded as a representation by the Company or any other
person that the forward-looking statements contained in this Form 10-QSB will be
achieved. In light of the foregoing, readers of this Form 10- QSB are cautioned
not to place undue reliance on the forward-looking statements contained herein.
General
Background. On November 24, 1993, the Company acquired the El Rancho, a
1,006-room hotel with 90,000 square feet of casino and ancillary space and a
52-lane bowling alley, located on the Las Vegas Strip. The purchase price for
the El Rancho was $36.5 million, including cash of $21.5 million, an 8%
promissory note in the face amount of up to $12 million purchase money mortgage
secured by a deed of trust on the Property, and 2.3 million shares of LVEN
common stock valued at $3 million to a third party finder. On January 22, 1996,
the Company sold the El Rancho to International Thoroughbred Breeders, Inc.(ITB)
for $43,500,000 of cash, notes and assumption of debt. It is the current
intention of the new owners of the El Rancho (the "Property") to develop and
open the Property as "CountryLand, USA", a major hotel and casino destination.
As part of the sale agreement, once the Property is opened and invested amounts
have been recouped by ITB and the Company, of which there can be no assurance
will be achieved, the Company will also receive a continuing fifty percent (50%)
interest in the adjusted cumulative cash flow (as defined) from the operation of
the Property as so developed for a period of six (6) years following the opening
of the first casino on the Property, and thereafter a twenty-five percent (25%)
interest in adjusted cash flow until such time as the Company has received an
aggregate of $160,000,000. In addition, commencing with the development of the
Property, the Company's LVCC subsidiary was granted an exclusive contract for up
to twenty (20) years to provide entertainment at the Property site which will
provide for minimum annual fees of $800,000 plus additional fees. Subsequent to
April 30,1997, the Company and ITB have agreed to (i) exchange the remaining
note receivable from the sale for Common Shares of ITB stock to be registered
and, (ii) explore a similar exchange for the continuing cash flow interest (See
Sale of ITB Note Receivable and Continuing Interest in El Ranch below).
Management in the future may consider distributing all or a portion of these
shares to the shareholders of the Company as a dividend.
The Company's current operations include; actively assisting ITB in
obtaining the financing necessary to redevelop and renovate the El Rancho
Property; managing the preliminary construction activities on the Property site
under an interim entertainment and property management agreement with ITB;
overseeing the collection and realization of certain investments and notes
receivables, and; the development of certain gaming, media and communication
properties, including certain limited development and production of television
and video programming, Internet access, and telephony to be distributed through
the development of a new technology to be owned by the Company's EMC subsidiary.
11
<PAGE>
Sale of ITB Note Receivable and Continuing Interest in El Rancho. On May
22, 1997, LVEN and ITB agreed, subject to approval of Board of Directors of both
Companies, to convert the ITB Note Receivable remaining from the sale of the El
Rancho of $10,500,000 and accrued interest thereon of $1,100,000 into 2,093,868
shares of restricted ITB common Stock to be registered (the "Conversion"). On
May 22, 1997, LVEN and ITB also agreed that, subject to approval of Board of
Directors of both Companies, that as soon as practicable, ITB may acquire from
LVEN the Company's continuing interest in the adjusted cumulative cash flow of
the El Rancho. In order to effect the Acquisition, ITB will be required to issue
shares of ITB Stock to be registered (the "Acquisition Shares") to LVEN in an
amount equal to the result of (i) a Fairness Opinion Value to be obtained from a
nationally recognized investment banking firm respective to the fair market
value of the El Rancho Cash Flow Interest, divided by (ii) the average bid price
for ITB Stock during the 20 trading days prior to the closing date. Both the
Conversion and Acquisition shares are subject to certain restrictions as
described below. Management in the future may consider distributing all or a
portion of these shares to the shareholders of the Company as a dividend.
ITB has also agreed that the $55 Million of financing provided to it by
Credit Suisse First Boston MortgageCapital ("CSFB") on May 22, 1997 has been
arranged by LVEN's subsidiary, Casino-Co, as the "Alternative Financing"
contemplated by, pursuant to, and in satisfactory of, the provisions of El
Rancho Sale Agreement dated January 22, 1996. ITB has informed the Company that
a portion of these proceeds will be used to begin the renovation and
redevelopment of the El Rancho Property as a country western themed resort
destination known as "CountryLand ".
As a condition precedent to the consummation of the exchange of ITB shares
for the Company's continuing interest in the cash flow from the Property, LVEN
shall have received one or more opinions from one or more investment banking
firms satisfactory to LVEN respecting the fair market value of the continuing
cash flow interest. If LVEN is unsatisfied with the fair market value of the
continuing cash flow interest of the El Rancho Property as established by the
greater of the opinions, then LVEN shall have the right, within 180 days of the
date thereof, to make a secured first mortgage loan to ITB, and ITB must then
repay the CSFB Loan in full. If LVEN were to make such a loan to ITB, the loan
would mature on the date that the CSFB Loan is scheduled to mature and would
bear interest at the rate applicable to CSFB Loan, and LVEN would have the right
to develop the property.
The Company has agreed to execute and deliver an irrevocable proxy
respecting both the Conversion Shares and Acquisition Shares in favor of Mr.
Nunzio DeSantis, Chairman of the Board of ITB, which proxy shall be irrevocable
until the earlier of (i) the date on which the CSFB Loan and all of the other
obligations of ITB owing to CSFB under the Loan under the Loan Agreement have
been repaid in full, (ii) the date on which LVEN distributes the Acquisition
Shares to its shareholders generally, (iii) the date on which LVEN sells the
Conversion Shares or Acquisition Shares to, or LVEN is acquired by, or merged
with or into, a person or entity that is not affiliated with LVEN or Mr. Joe
Corazzi, Chairman of the Board of LVEN, and (iv) the date on which Mr. DeSantis
dies or becomes mentally incompetent. LVEN and ITB have agreed to enter into a
registration rights agreement respecting the Conversion Shares and the
Acquisition Shares and providing for demand rights, unlimited piggyback rights,
and other customary provisions.
Results of Operations
- ---------------------
Three Months Year Ended April 30, 1997 Compared to Three Months Ended April 30,
- -------------------------------------------------------------------------------
1996
----
REVENUES for each of the three month periods ended April 30, 1997 and 1996
consisted of $75,000 of fees earned under an interim property and entertainment
management agreement with ITB.
GENERAL AND ADMINISTRATIVE expenses decreased $90,780 to $847,884 during
the three months ended April 30, 1997 as compared to $938,664 in the
corresponding period in 1996. The majority of the decrease relates to a decrease
in professional, legal and accounting costs which decreased $255,000 to $137,000
for the three months ended April 30, 1997 as compared to $392,000 for the
corresponding period in 1996. This decrease was offset by an increase of travel
and entertainment costs of $196,000 to $281,000 for the three months ended April
30, 1997 as compared to $85,000 for the corresponding period in 1996.
12
<PAGE>
Significant general and administrative expenses are expected to continue
while the Company seeks new acquisitions and projects.
RESEARCH AND DEVELOPMENT expenses relating to the development of voice,
video and data communication technology by the Company's EMC subsidiary were
$679,630 for the three months ended April 30, 1997. There were no such costs
incurred in the corresponding period in 1996.
INTEREST INCOME AND EXPENSE. Interest income earned on cash balances
decreased $85,639 to $111,584 for the three months ended April 30, 1997 as
compared to $197,224 for the corresponding period in 1996. The majority of this
decrease relates to interest income of $75,000 earned on the $6,500,000 ITB Note
Receivable outstanding only during the three months ended April 30, 1996.
Interest expense and finance costs decreased $180,892 to $19,406 for the three
months ended April 30, 1997 as compared to $200,298 for the corresponding period
in 1996. The majority of the decrease related to a decrease in finance costs,
which were $151,000 in the three months ended April 30, 1996 as compared to none
for the comparable period in 1997. The remaining decrease in interest and
finance costs related to a $29,691 decrease in interest expense to $19,406 for
the three months ended April 30, 1997 as compared to $49,097 for the comparable
period in 1996. The decrease in interest expense is consistent with the decrease
in the average indebtedness outstanding during the three months ended April 30,
1997 as compared to the corresponding period in 1996.
OTHER INCOME AND CHARGES for the three months ended April 30, 1997 consists
of: (i) $167,800 charge to reflect the estimated carrying value of the note
receivable from Tee One Up (See "Notes Receivable"), and (ii) $100,000
settlement agreement entered into with a third party (See "Legal Proceedings").
Six Months Ended April 30, 1997 Compared to Six Months Ended April 30, 1996
- ---------------------------------------------------------------------------
REVENUES for the six months ended April 30, 1997 increased by $8,800 to
$150,000 as compared to $141,200 for the corresponding period in 1996. Revenues
for the six months ended April 30, 1997 consisted of $150,000 of fees earned
under an interim entertainment management agreement with ITB. Revenues for six
months ended April 30,1996 consisted of $66,200 of revenues earned in connection
with renting out the parking facilities at the El Rancho Hotel property site
which was previously owned by the Company, and $75,000 of fees earned under an
interim entertainment management agreement with ITB (such agreement did not
exist in the first quarter of fiscal 1996).
GENERAL AND ADMINISTRATIVE expenses decreased $445,669 to $1,515,692 during
the six months ended April 30, 1997 as compared to $1,961,361 in the
corresponding period in 1996. The majority of the decrease relates to a decrease
in; (i) professional, legal and accounting costs which decreased $310,000 to
$200,000 for the three months ended April 30, 1997 as compared to $510,000 for
the corresponding period in 1996, and; (ii) general and administrative costs
relating to the El Rancho Property which decreased by $319,000 in the current
period as compared to the corresponding period in 1996 due to the cessation of
operations when the Property was sold on January 22, 1996. These decreases were
offset by an increase of travel and entertainment costs of $258,000 to $408,000
for the six months ended April 30, 1997 as compared to $150,000 for the
corresponding period in 1996
RESEARCH AND DEVELOPMENT expenseS relate to the development of voice, video
and data communication technology by the Company's EMC subsidiary, and were
$679,630 for the six months ended April 30, 1997. There were no such costs
incurred in the corresponding period in 1996.
OTHER INCOME AND CHARGES for the six months ended April 30, 1997 consists
of: (i) a $167,800 charge to reflect the estimated
carrying value of the note receivable from Tee One Up (See "Notes Receivable"),
(ii) $100,000 settlement agreement entered into with a third party (See "Legal
Proceedings") and (iii) $165,000 to reflect the value of options granted to Mr.
Nunzio DeSantis, now the Chief Operating Officer of ITB, to acquire 1,500,000
shares of the Company's Common Stock at an exercise price of $1 per share, which
expire in December 1999, as part of consideration for providing a $6,000,000
standby funding commitment.
13
<PAGE>
Liquidity and Capital Resources
- -------------------------------
CASH REQUIREMENTS. The Company's current monthly operating cash
requirements are approximately $200,000, composed of general and administrative
expenses, salary and consulting fees and legal and professional fees. The
Company is also responsible for managing and paying the operating costs of the
Property, but is reimbursed by ITB on a monthly basis for these costs in amounts
sufficient to cover the company's cash outlay, which currently approximates
$60,000 per month but may increase to a greater amount as the renovation of this
property begins. In addition to the above, (i) the Company is evaluating funding
$500,000 of general start up costs for its EMC projects, and may be required to
fund additional amounts if the field tests prove successful, and (ii) if the
Company elects to exercise its option to acquire the Fort Erie Race Track and
elects to maintain current track operations, the track would operate at a
projected annual cash flow deficit of approximately $3,200,000. The Company may
advance funds to the Canadian Company prior to the exercise of the option. It is
expected such advances would be secured by a first security interest in the race
track property. In addition, if the Company elects to exercise its option, it
will engage an investment banking firm to raise up to $35 Million, for which it
can give no assurance can be achieved, to develop over a twenty-four month
period, the race track property into an entertainment destination that would
supplement the introduction of video lottery gaming. The Company may also incur
other consulting and professional fees in the development and financing of its
business activities. During the six months ended April 30, 1997, the Company
made approximately $849,721 in advances and deposits to certain businesses,
individuals or others to secure potential acquisitions or investments, and
$679,630 for research and development costs. Subsequent to April 30, 1997, the
Company has made an additional $235,000 of such advances. The Company is
currently in the process of evaluating these potential acquisitions or
investments for future development. The Company will continue to make deposits
or advances as it deems necessary to secure potential investments or business
acquisitions.
As of June 15, 1997, the Company had approximately $7,600,000 in cash,
marketable securities and current notes receivable and believes that its current
cash and receivables (including funds expected to be received by July 31, 1997
by the repayment of the NPD Note Receivable) will be sufficient to meet its cash
requirements for the next 12 months, as well as the repayment of existing debt
of $781,248 at June 15, 1997. However, these sources of cash may not be
sufficient to enable the Company to fund the expansion and commencement of
operations of its planned television programming, full deployment of its
Electric Media Joint Ventures, or operating and developing the Fort Erie Race
Track if the Company elects to exercise its option to acquire the race track.
The Company may obtain such funds, if required, from a public offering or the
issuance of additional debt. If a public offering or raising of debt is not
successful, the Company will be required to seek other sources of funding. There
can be no assurance such other funding will be available on terms satisfactory
to the Company or at all.
OUTSTANDING NOTES PAYABLE AND GUARANTEES. As of April 30, 1997, the Company
had outstanding $778,421 of notes and loans payable which are currently due and
payable. The Company intends to repay the remaining outstanding notes, along
with all accrued interest, during the current year from its current cash
balances.
NOTES RECEIVABLE. In connection with the sale of the El Rancho, the Company
received an 8% promissory note in the principal amount of $10,500,000, secured
by a subordinated junior position in the deed of trust on the El Rancho Hotel
and Casino Property. This note was due upon the successful raising of financing
to develop the Property, or upon the ultimate sale of the Property. As of April
30, 1997 the Company had provided an allowance of $4,600,000 against the note.
On May 22, 1997, LVEN and ITB, subject to approval of the Board of Directors of
both Companies, agreed to convert the $10,500,000 Note Receivable and accrued
interest thereon of $1,100,000 into 2,093,868 shares of restricted ITB common
stock The Company has yet to determine the value of the shares to be received,
which are initially subject to certain restrictions, but expects the value will
exceed the $5,600,000 carrying value presently reflected in the April 30,1997
financial statements.
As of April 30, 1997, the Company has outstanding two (2) separate notes
receivable of $1,868,000 ($3,736,000 in total) from MPTV, Inc. arising from the
sale of the Company's Lake Tropicana investment. The first note bears interest
at a rate of 8% per annum, is payable monthly, and is secured by a fifth
position in a deed of trust on the underlying time-share project. The first
interest payment is due one month after the borrower has
14
<PAGE>
completed certain refinancing currently in process. The second note is
unsecured and non-interest bearing. Principal payments for both notes will be at
a rate of $205 ($410 for both notes) as each time-share interval is sold until
August 1, 1998, when any remaining outstanding principal is due in full. The
notes contain a cross-default provision so that a default under one note shall
also be deemed a default on the other. The joint venture has reorganized its
debt position, and with such financing, is anticipated to have the funds to
commence development and sale of the time share units. As a result of such
reorganization, the Company's secured note receivable moved up to a second
position. The Company has provided an allowance of $2,929,511 against these
notes (including an allowance for imputed interest on the non-interest bearing
note) as of April 30, 1997, for a net receivable of $806,489.
As of April 30, 1997, the Company had made advances of $912,606 to Malbec,
Inc., an unaffiliated company, for the purpose of developing and operating a
hotel project in Miami Beach, Florida. The advances accrue interest at the rate
of 10% per annum, are due July 31, 1997, and are secured by a first security
interest in a cash escrow account, after payment of all expenses (which has a
balance of $667,000 as of June 15, 1997). The Company has re-evaluated this
project and has decided not to pursue development, and expects the escrow
account to be liquidated with the net amounts, after payment of all expenses, to
be returned to the Company. The Company has provided a $450,000 allowance
against this advance, for a net investment of $462,606 as of April 30, 1997.
The Company loaned $300,000 to Tee One Up, Inc., an unaffiliated company
developing television footage of actual golf "hole in ones" at selected golf
courses. The loan is secured by the assets of Tee One Up. Principal and interest
at a rate of 17% per annum are payable in monthly installments of $14,832 until
maturity, November 1, 1998. In March 1997, Tee One Up became delinquent in
making its monthly payments. As of April 30,1997, the principal balance due
under this note receivable was $267,000, for which the Company has provided a
$167,00 reserve to reflect the underlying value of the security interest, for a
net receivable of $100,000.
On January 15, 1997, the Company, through it's wholly-owned Nevada
subsidiary Casino-Co, made a secured loan of $2,900,000 to NPD, Inc, ("NPD"), in
order to enable NPD to close the acquisition from Robert Brennan ("the Seller")
of 2,904,016 shares (the "Shares") of the common stock of International
Thoroughbred Breeders, Inc. ("ITB"), representing twenty-five percent (25%) of
the outstanding stock of ITB. At the closing of such purchase and sale, the
shareholders of NPD, Nunzio DeSantis and Anthony Coelho, became the Chairman of
the Board and Chief Executive Officer, respectively, of ITB. The sale of the
Shares was instrumental to LVEN, as it will allow ITB to (i) meet the
requirements for funding proposal the renovation of the Property site, and (ii)
meet the requirements of The New Jersey Racing Commission and Division of Gaming
Enforcement for continued racing licencing at ITB's New Jersey facilities. The
Company believes that the sale of the Shares will also facilitate ITB's
application for Nevada Gaming Licencing. The loan to NPD and all accrued
interest due, which is evidenced by a 10% Secured Promissory Note and was due on
April 15, 1997. The Company expects repayment to be made by July 31, 1997.
15
<PAGE>
PART 11. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On October 18, 1996, an unaffiliated third party filed a complaint against
the company in California Superior Court, County of Los Angeles, seeking damages
of $1,800,000, plus attorney fees, for breach of contract, breach of implied
contract, and certain damages the individual claims are due him under terms of a
1992 retainer agreement. This case was settled for $100,000. Additionally, the
Company has commenced action against the owners of Patmore Broadcasting relating
to an option to acquire a radio station in Las Vegas, and intends to
aggressively pursue the Company's position that it still has a valid option to
purchase the radio station.
The Company is not involved in, or a party to, any other material legal
proceedings at this time. At various times, the Company and its subsidiaries are
involved in various matters of litigation, including matters involving
settlement of fees and outstanding invoices, and consider these legal
proceedings not to be material and in the ordinary course of business.
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The Company filed a current report on Form 8-K dated January 15, 1997 to
report the loan to NPD. No financial statements were filed with the Form 8-K.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused the report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: June 15, 1997
By: /s/ Carl Sambus
---------------------
Carl Sambus Executive Vice President and
Chief Financial Officer (chief financial
officer and accounting officer and duly
authorized officer)
17
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000872588
<NAME> Las Vegas Entertainment Network Inc.
<S> <C>
<PERIOD-TYPE> 6-Mos
<FISCAL-YEAR-END> Oct-31-1997
<PERIOD-END> Apr-30-1997
<CASH> 3,605,791
<SECURITIES> 1,000,000
<RECEIVABLES> 2,994,875
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 7,600,666
<PP&E> 362,953
<DEPRECIATION> 215,900
<TOTAL-ASSETS> 16,228,784
<CURRENT-LIABILITIES> 1,817,947
<BONDS> 0
0
0
<COMMON> 34,895
<OTHER-SE> 14,375,942
<TOTAL-LIABILITY-AND-EQUITY> 16,228,784
<SALES> 150,000
<TOTAL-REVENUES> 150,000
<CGS> 0
<TOTAL-COSTS> 2,195,322
<OTHER-EXPENSES> 432,800
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<INTEREST-EXPENSE> 40,394
<INCOME-PRETAX> (2,283,361)
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