American Wagering reports major 2Q net loss

September 25, 2007 5:50 AM
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American Wagering Inc. (BETM) revenues were lower and expenses were higher during the three months ending on July 31 resulting in a net loss of $978,373, according to a company filing with the Securities and Exchange Commission.

The company said revenues fell to $3,990,170 from last year’s $4,853,660, a decline of $17.79%. But costs and expenses which last year were $4,053,357 rose to $4,951,688.

For the six months of fiscal 2007, the company reported a drop in revenue of $1.2 million and an increase in costs and expenses of $1.5 million. This resulted in the company’s loss for the period reaching $2.8 million.

However, the company said in its filing statement that "we will be able to satisfy our operating cash requirements for at least the next 12 months from existing cash balances and anticipated cash flow. We plan to accumulate cash liquidity during the current fiscal year (ending Jan. 31 2008) to help us fund the following: litigation expenses and judgments, potential purchase of kiosks, volatility and seasonality effects of sports betting, volatility and timing of system sales, compliance costs associated with Section 404 of the Sarbanes-Oxley Act of 2002, and the possible effects of legislation to ban wagering on amateur athletic events."

Due to the losses incurred, the company reported, it had accumulated more than $4 million in net loss carryforwards that can be used to reduce future tax obligations.

In detailing the financial experience, the company said its wagering segment revenues for the six month period increased $460,560 which resulted from increased handle during the baseball season. However, costs and expenses for the wagering segment increased $1.4 million which was attributed to a number of different factors.

Showing a decline during the period was the Systems Segment which decreased 48% to $1.9 million due to a reduction in number of system sales. Last year, there were 27 installations while during the reporting period there were eight.

The company also warned that if any of a number of factors were to affect the company’s inability to file another financial report on time it could face delisting from the OTC Bulletin Board.