FORM 10-QSB










July 31, 2004


















000-20685





AMERICAN WAGERING, INC.







Nevada       88-0344658










675 Grier Drive, Las Vegas, Nevada 89119


(Address of principal executive offices)





702-735-0101


(Issuers telephone number)





























1


AMERICAN WAGERING, INC. AND SUBSIDIARIES


TABLE OF CONTENTS

















PART I - FINANCIAL INFORMATION












































PART II - OTHER INFORMATION
































2


PART I - FINANCIAL INFORMATION







Item 1. Financial Statements







AMERICAN WAGERING, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES


CONSOLIDATED BALANCE SHEETS





**ASSETS**

**July 31,**
**2004**
**(Unaudited**)****
****
****
****

**January 31,**
**2004**CURRENT ASSETSCash and equivalents
$
2,478,791

$
4,113,196Restricted cash

1,130,021


1,060,869Accounts receivable, net of allowances for doubtful accounts

500,700


294,538Inventories

724,041


957,174Deferred tax asset, net

440,481


440,481Note receivable

320,000


--Prepaid expenses and other current assets

344,228


336,4915,938,262


7,202,749PROPERTY AND EQUIPMENT, net

3,368,549


3,255,629GOODWILL

103,725


103,725OTHER ASSETS

271,259


337,816$
9,681,795

$
10,899,919**LIABILITIES AND STOCKHOLDERS EQUITY**CURRENT LIABILITIESCurrent portion of long-term debt
$
97,349

$
131,834Accounts payable

645,162


448,331Accrued expenses

509,918


504,306Unpaid winning tickets

371,320


687,073Customer deposits and other current liabilities

574,726


1,621,9562,198,475


3,393,500LIABILITIES AND REDEEMABLE PREFERRED STOCK OBLIGATION SUBJECT TO COMPROMISEAccounts payable

241,065


169,940Accrued expenses

403,653


382,331Litigation payable, including accrued interest

3,100,310


3,100,310Redeemable Series A preferred stock obligation - 3,238 shares

323,800


323,8004,068,828


3,976,381LONG-TERM DEBT, less current portion

1,527,470


1,567,226OTHER LONG-TERM LIABILITIES

45,008


25,0001,572,478


1,592,2267,839,781


8,962,107STOCKHOLDERS EQUITYSeries A preferred stock - 10% cumulative; $.01 par value; authorized:
25,000,000 shares; issued and outstanding: 10,924 shares

1,092,400


1,092,400Common stock - $.01 par value; authorized: 25,000,000 shares;
issued: 7,897,946 shares

78,979


78,979Additional paid-in capital

12,738,889


12,738,889Deficit

(11,740,761
)

(11,644,963)Less 61,100 common shares in treasury, at cost

(327,493
)

(327,493)1,842,014


1,937,812$
9,681,795

$
10,899,919





**See notes to consolidated financial statements.**





3








AMERICAN WAGERING, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS


FOR THE THREE MONTHS ENDED JULY 31


(UNAUDITED)





**2004**


**2003**REVENUES****    Wagering
$
1,325,554

$
1,146,438Systems sales and service

1,716,219


957,3093,041,773


2,103,747OPERATING COSTS AND EXPENSES****    Direct costs:****        Wagering****

1,159,125


1,065,517****        System**s**

776,123


423,2251,935,428


1,488,742****    Research and development

234,497


238,712****    Selling, general and administrative

525,368


486,628****    Depreciation and amortization

90,736


86,2542,785,849


2,300,336OPERATING INCOME (LOSS)

255,924


(196,589)OTHER INCOME (EXPENSE)Interest income

4,521


8,565Interest expense

(34,133
)

(37,025)Reorganization

(299,045
)

--Litigation judgment

--


(800,082)Other, net

25,226


34,155(303,431
)

(794,387)NET LOSS
$
(47,507
)
$
(990,976)BASIC AND DILUTED LOSS PER SHARE
$
(0.01
)
$
(0.13)





See notes to consolidated financial statements.





4






AMERICAN WAGERING, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF OPERATIONS


FOR THE SIX MONTHS ENDED JULY 31,


(UNAUDITED)





**2004**


**2003**REVENUES****        Wagering
$
2,941,061

$
2,560,776Systems sales and service

2,604,764


2,144,9165,545,825


4,705,692OPERATING COSTS AND EXPENSES****    Direct costs:****        Wagering****

2,334,584


2,132,771****        System**s**

1,220,776


975,5723,555,360


3,108,343****    Research and development

462,605


468,580****    Selling, general and administrative

1,051,018


970,787****    Depreciation and amortization

180,471


227,0725,249,454


4,774,782OPERATING INCOME (LOSS)

296,371


(69,090)OTHER INCOME (EXPENSE)Interest income

8,583


13,328Interest expense

(69,591
)

(75,349)Litigation judgment

--


(800,465)Reorganization

(307,295
)

--Other, net

(50,731
)

75,247(317,572
)

(787,239)LOSS BEFORE INCOME TAX

(21,201
)

(856,329)INCOME TAX

3,000


--NET LOSS
$
(24,201
)
$
(856,329)BASIC AND DILUTED LOSS PER SHARE
$
(0.01
)
$
(0.13)





See notes to consolidated financial statements.


5





AMERICAN WAGERING, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF CASH FLOWS


FOR THE SIX MONTHS ENDED JULY 31,


(UNAUDITED)





**2004**


**2003**OPERATING ACTIVITIESNet cash used in operating activities
$
(888,136
)
$
(832,968)INVESTING ACTIVITIESInvestment in restricted cash

(70,966
)

(1,005,926)Withdrawals of restricted cash

--


102,256Note receivable

(320,000
)

--Purchase of property and equipment

(304,070
)

(122,793)Net cash used in investing activities

(695,036
)

(1,026,463)FINANCING ACTIVITIESRepayment of borrowings

(97,328
)

(56,028)Proceeds from borrowings

46,095


--Dividends paid

--


(71,203)Other

--


100Net cash used in financing activities

(51,233
)

(127,131)NET DECREASE IN CASH AND CASH EQUIVALENTS

(1,634,405
)

(1,986,562)CASH AND CASH EQUIVALENTS
BEGINNING OF PERIOD

4,113,196


4,329,654END OF PERIOD
$
2,478,791

$
2,343,092





See notes to consolidated financial statements.
  6


AMERICAN WAGERING, INC. (DEBTOR-IN-POSSESSION) AND SUBSIDIARIES


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(UNAUDITED)




1.     Basis of Presentation















2.     Chapter 11 Filing







7


































3.     Liabilities and redeemable preferred stock obligation subject to compromise as of July 31, 2004





Description

AWI


Leroys


TotalAccounts payable
$
183,442

$
57,623

$
241,065Accrued expenses

332,623


71,030


403,653Judgment payable - Racusin

1,972,249


--


1,972,249Judgment payable - LVGI

1,128,061


--


1,128,061Redeemable Series A preferred stock obligation

323,800


--


323,800$
3,940,175

$
128,653

$
4,068,828





4.     Reorganization costs







8  5.     Supplemental unaudited condensed financial statements of debtor-in-possession





**AWI**


**Leroys****Balance Sheets as of July 31, 2004**AssetsCash
$
316,073

$
1,944,499Restricted cash and investments

--


1,120,349Deferred tax asset

440,481


--Prepaid expenses and other current assets

97,152


185,132853,706


3,249,980Property and equipment, net

20,445


317,439Due from affiliates*

3,809,953


3,203,346Investment in subsidiaries*

1,553,007


--Other assets

136,053


1,200$
6,373,164

$
6,774,465Liabilities and EquityAccounts payable
$
385,918

$
301,603Accrued expenses

66,074


66,253Unpaid winning tickets

--


371,320Customer deposits and other current liabilities

--


619,734451,992


1,358,910Due to affiliates, subject to compromise*

2,877,337


1,429,204Other liabilities subject to compromise

3,940,175


128,653Equity

(896,340
)

3,863,350$
6,373,164

$
6,774,465







**Statements of Operations**
**for the six months ended July 31, 2004**Revenues
$
1,196,482

$
2,941,061Costs and expenses

875,938


3,172,897Income from operations

320,544


(231,863)Other income (expense)

(320,544
)

(20,943)Net loss
$
--

$
(210,893)














6. Net income (loss) per share







9





**Three months ended July 31,****2004**


**2003**Net income (loss)
$
(47,507
)
$
134,646Preferred stock dividends

(36,192
)

(35,011)Net income (loss), as adjusted
$
(83,699
)
$
99,635Basic weighted average shares outstanding

7,836,846


7,836,846Diluted weighted average shares outstanding

7,836,846


8,151,304







**Six months ended July 31,****2004**


**2003**Net loss
$
(24,201
)
$
(856,329)Preferred stock dividends

(71,597
)

(71,203)Net loss, as adjusted
$
(95,798
)
$
(927,532)Basic weighted average shares outstanding

7,836,846


7,836,846Diluted weighted average shares outstanding

7,836,846


7,836,846





7. Business segments















**Three months ended July 31,****2004**
****
****
**2003**Operating incomeWagering
$
107,368

$
21,918Systems

558,246


155,570Unallocated

(409,690
)

(374,077$
255,924

$
196,589




**Six months ended July 31,****2004**


**2003**Operating incomeWagering
$
494,074

$
326,140Systems

646,820


392,556Unallocated

(844,524
)

(787,786)$
296,370

$
(69,090)







10


8.    Other litigation





"Accounting for Contingencies,"





9.     Regulatory Matters

















11  Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations





Forward Looking Statements










Overview










Liquidity and Capital Resources












12






















RESULTS OF OPERATIONS -Six Months ended July 31, 2004 and 2003





Revenues










Wagering Operations






13









Systems Operations







Operating Costs and Expenses










Direct Costs and Expenses







Selling, General and Administrative Expenses







Other Income and Expense







14  Item 3. Controls and Procedures















15


PART II - OTHER INFORMATION








Item 1. Legal Proceedings










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Las Vegas Gaming, Inc. (successor-in-interest to Imagineering Systems, Inc.)










Other













Item 2. Changes in securities and use of proceeds










Item 3. Defaults upon senior securities










Item 4. Submission of matters to a vote of security holders










Item 5. Other information




18


Item 6. Exhibits and reports on Form 8-K.






















Exhibit Number
Description31.1
Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 200231.2
Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14(a)/15d-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 200232.
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002




















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SIGNATURE




























/s/   Timothy Lockinger














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