Exhibit 99.1 Form 6K May 15 2007 -LVH_FS_March 31 2007
LAS VEGAS FROM HOME.COM
ENTERTAINMENT INC.
Consolidated Interim Financial Statements
March 31, 2007
(Canadian Dollars)
(Unaudited – Prepared by Management)
Index
Page | |
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Consolidated Balance Sheets | 1 |
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Consolidated Statements of Operations and Deficit | 2 |
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Consolidated Statements of Cash Flows | 3 |
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Notes to Consolidated Financial Statements | 4 |
(These interim financial statements have not been reviewed by the Company’s Auditor)
LAS VEGAS FROM HOME.COM ENTERTAINMENT INC.
Consolidated Balance Sheets
March 31, 2007 and December 31, 2006
(Canadian Dollars)
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| March 31 |
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| December 31 |
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| 2007 |
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| 2006 |
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| (unaudited) |
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| (audited) |
ASSETS | |||||
Current |
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Cash & term deposit | $ | 8,055,899 |
| $ | 8,273,201 |
Accounts receivable (note 7) |
| 315,525 |
|
| 425,611 |
Due from related parties (note 10(a)) |
| 2,292 |
|
| 60 |
Prepaids & security deposits |
| 17,375 |
|
| 15,000 |
|
| 8,391,091 |
|
| 8,713,872 |
Equipment & Software Development (note 8) |
| 853,227 |
|
| 903,483 |
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| $ | 9,244,318 |
| $ | 9,617,355 |
| |||||
LIABILITIES | |||||
Current |
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Accounts payable & accrued liabilities | $ | 183,980 |
| $ | 472,427 |
Due to related parties (note 10 (b)) |
| 0 |
|
| 5,196 |
Obligation under capital lease |
| 0 |
|
| 1,019 |
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| 183,980 |
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| 478,642 |
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SHAREHOLDERS’ EQUITY (DEFICIENCY) | |||||
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Capital stock (note 9 (b)) |
| 29,828,174 |
|
| 29,792,819 |
Contributed Surplus (note 9 (e)) |
| 2,964,292 |
|
| 2,717,716 |
Deficit |
| (23,732,128) |
|
| (23,371,822) |
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| 9,060,338 |
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| 9,138,713 |
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Total Liabilities & Stockholders’ Equity | $ | 9,244,318 |
| $ | 9,617,355 |
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Subsequent Events (note 11)
“Bedo H. Kalpakian”
..................................................................... Director
Bedo H. Kalpakian
“Neil Spellman”
..................................................................... Director
Neil Spellman
1
See notes to consolidated financial statements.
LAS VEGAS FROM HOME.COM ENTERTAINMENT INC.
Consolidated Statements of Operations and Deficit
Three Months Ended March 31
(Canadian Dollars)
| ||||
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| March 31 2007 |
| March 31 2006 |
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Revenue | $ | 918,363 | $ | 0 |
Interest |
| 83,371 |
| 13,106 |
| $ | 1,001,734 | $ | 13,106 |
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|
|
Expenses |
|
|
|
|
Advertising and promotion |
| 22,113 |
| 65,613 |
Consulting and professional fees |
| 83,688 |
| 52,993 |
Amortization |
| 64,889 |
| 137,179 |
Donation |
| 0 |
| 1,000 |
Bank charges, interest and foreign exchange |
| 45,511 |
| 4,392 |
Legal, accounting and audit |
| 40,302 |
| 43,441 |
Management fees |
| 90,000 |
| 90,000 |
Office |
| 91,443 |
| 63,457 |
Regulatory and transfer agent fees |
| 2,210 |
| 1,470 |
Rent |
| 46,800 |
| 51,025 |
Salaries and benefits |
| 897,119 |
| 501,255 |
Telephone |
| 15,777 |
| 14,282 |
Travel, meals and entertainment |
| 74,557 |
| 62,577 |
| $ | 1,474,409 | $ | 1,088,684 |
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Gain (loss) before other items |
| (472,675) |
| (1,075,578) |
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Other items |
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|
Gain (loss) from Discontinued Operations |
| 0 |
| 1,431,833 |
Gain on settlement of debt |
| 112,369 |
| 0 |
Write down of securities |
| 0 |
| (41,127) |
|
| 112,369 |
| 1,390,706 |
Net gain (loss) for period | $ | (360,306) | $ | 315,128 |
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Deficit, beginning of period |
| (23,371,822) |
| (18,778,394) |
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Deficit, end of period | $ | (23,732,128) | $ | (18,463,266) |
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Weighted average number of shares |
| 100,456,936 |
| 93,114,908 |
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Net and fully diluted gain (loss) per common share | $ | (0.004) | $ | 0.003 |
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2
See notes to consolidated financial statements.
LAS VEGAS FROM HOME.COM ENTERTAINMENT INC.
Consolidated Statements of Cash Flows
Three Months Ended March 31
(Canadian Dollars)
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| March 31 2007 |
| March 31 2006 |
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Cash provided by (used for) |
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Operations |
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Net gain (loss) | $ | (360,306) | $ | 315,128 |
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Items not affecting cash |
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Amortization |
| 64,889 |
| 142,608 |
Write down of securities |
| 0 |
| 41,127 |
Stock based compensation |
| 246,575 |
| 74,770 |
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Operating Cash Flow |
| (48,842) |
| 573,633 |
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Changes in non-cash working capital: |
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Accounts receivable |
| 110,086 |
| 409,598 |
Prepaids and security deposits |
| (2,375) |
| (15,431) |
Due from related party |
| (2,232) |
| 4,740 |
Accounts payable and accrued liabilities |
| (288,447) |
| 224,952 |
Due to related parties |
| (5,196) |
| 38,066 |
|
| (188,164) |
| 661,925 |
|
| (237,006) |
| 1,235,558 |
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Cash provided by Financing Activities |
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|
Common shares issued, net of issue costs |
| 35,355 |
| 139,715 |
Payment of capital lease |
| (1,019) |
| (5,740) |
|
| 34,336 |
| 133,975 |
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Investing |
|
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Equipment |
| (14,632) |
| (10,607) |
Proceeds on sale of marketable securities |
| 0 |
| 248,916 |
Additions to software development |
| 0 |
| (130,976) |
|
| (14,632) |
| 107,333 |
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Outflow of Cash |
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Increase/(Decrease) in cash and cash equivalents |
| (217,302) |
| 1,476,866 |
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Cash and cash equivalents, beginning of period | $ | 8,273,201 | $ | 8,408,620 |
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Cash and cash equivalents, end of period | $ | 8,055,899 | $ | 9,885,486 |
3
See notes to consolidated financial statements.
LAS VEGAS FROM HOME.COM ENTERTAINMENT INC.
Notes to Consolidated Interim Financial Statements
Three Months Ended March 31, 2007
(Canadian Dollars)
1.
Nature of Operations
The principal business of the Company and its Antiguan subsidiary, Action Poker Gaming Inc. (“Action”) was the development and marketing of software for on-line multi-player interactive card games.
On September 29, 2006, both Houses of the U.S. Congress passed the Safe Port Act, onto which was attached theUnlawful Internet Gambling Enforcement Act of 2006 (the “UIGE Act”). The UIGE Act prohibits the acceptance or use of any payment instrument in any financial transaction involving Internet gambling. Consequently, the Company decided that its licensed operating Antiguan subsidiary, Action Poker Gaming Inc. (“Action”), cease taking deposits from U.S. based players as of October 13, 2006 and sold Action, which included all of the Action Poker brands, the operating infrastructure of Action, APG Enterprises Costa Rica S.A., Action Commerce Limited, Guardian Commerce Limited and an undivided interest in the software that is used by Action to run the Action Poker Network (collectively referred to as the “APGN”) for a selling price of US$2,600,000 to Playsafe Holding Ltd. (“Playsafe”), a whol ly owned subsidiary of Playsafe Holding AS (Norway), a public company listed in Norway. On November 24, 2006, the Company received TSX Venture Exchange (“TSX”) approval and closed the sale. In respect to this arm’s length transaction, a finder’s fee of US$75,000 was paid to an arm’s length third party. As a result of this sale, the Company no longer has any online gaming interests in the North American market.
As of December 31, 2006, the Company was not operating any card rooms, and therefore it had not sought another hosting facility for its servers.
Action’s operations were located at the facilities of Mohawk Internet Technologies Inc. ("Mohawk"), which acted as its hosting facility for its servers, located on the Kahnawake Mohawk Reserve ("Kahnawake") in Canada.
The gaming and entertainment operations were carried on by Action. The principal revenues of Action were from collecting rakes, licensing fees and royalties.
During 2005, Action licensed from an arm’s length third party, an online Casino Software (”Online Casino”), which was operated by Action under the URLwww.playvegasfromhome.com and which was sold to Playsafe as part of the APGN.
During 2006, the Company incorporated MT Ventures Inc. (“MTV”) a 100% wholly owned Antiguan subsidiary, which is in the business of developing and licensing its online Asian multi-player interactive card games software.
On November 10, 2006, the Company caused to incorporate MT Commerce Limited, a United Kingdom corporation. It is the Company’s intention that MT Commerce Limited (UK) act as payment processor for the Company and its subsidiaries. Furthermore, the Company changed the name of its Cypriot subsidiary, APG Enterprises Ltd. to MTO Commerce Ltd.
Although management believes that the Internet gaming related activities of MTV will represent a lawful business, there is the risk that the legality of the Internet gaming related activities of MTV may be challenged by Canadian or other legal authorities. If the legality of the Internet gaming related activities is challenged and the challenge is sustained, it may have a material adverse impact on the financial affairs of the Company.
4
LAS VEGAS FROM HOME.COM ENTERTAINMENT INC.
Notes to Consolidated Interim Financial Statements
Three Months Ended March 31, 2007
(Canadian Dollars)
2.
Going-Concern
These financial statements have been prepared on the basis of accounting principles applicable to a "going-concern" basis, which assumes that Las Vegas From Home.com Entertainment Inc., (the “Company” or “LVFH”) will continue to be in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of operations.
These financial statements do not reflect adjustments that would be necessary if the "going concern" assumption were not appropriate because management believes that the actions already taken or planned will mitigate the adverse conditions and events, which raise doubts about the validity of the "going-concern" assumption used in preparing these financial statements.
If the "going concern" assumption were not appropriate for these financial statements, then adjustments would be necessary in the carrying values of assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used.
3.
Basis of Presentation
The financial statements have been prepared in accordance with accounting principles generally accepted in Canada and all amounts are expressed in Canadian dollars. These principles differ in certain respects from those that the Company would have followed had its financial statements been prepared in accordance with accounting principles generally accepted in the United States of America.
The sale of the Company’s APGN to Playsafe Holding Ltd. on November 24, 2006 was accounted for as a discontinued operation under Canadian generally accepted accounting principles (GAAP) and therefore, the APGN results of operations have been removed from the Company's results of continuing operations for all periods presented in this document (note 4).
4.
Discontinued Operations
On November 24, 2006, the Company sold all of the Action Poker brands, the operating infrastructure of Action, APG Enterprises Costa Rica S.A., Action Commerce Limited, Guardian Commerce Limited, the Online Casino and an undivided interest in the software that is used by Action to run the APGN for a selling price of US $2,600,000 to Playsafe, a wholly owned subsidiary of Playsafe Holding AS (Norway), a public company listed in Norway. In respect to this arm’s length transaction, a finder’s fee of US$75,000 was paid to an arm’s length third party. As a result of this sale, the Company no longer has any online gaming interests in the North American market. The results of discontinued operations, less applicable income taxes, have been reported as a separate element of net gain (loss) before extraordinary items for both current and prior periods.
The operations and cash flows of the component have been eliminated from the ongoing operations of the enterprise as a result of the disposal transaction; and the enterprise will not have any significant continuing involvement in the operations of the component after the disposal transaction.
5
LAS VEGAS FROM HOME.COM ENTERTAINMENT INC.
Notes to Consolidated Interim Financial Statements
Three Months Ended March 31, 2007
(Canadian Dollars)
5.
Significant Accounting Policies
(a)
Principles of consolidation
These consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, APG Enterprises Limited (Cyprus), MT Ventures Inc. (Antigua), MT Commerce Limited (UK) and APG Enterprises (Armenia). All inter-company balances and transactions have been eliminated.
(b)
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand and Government of Canada Bonds with maturities of less than one year at the date of acquisition.
(c)
Amortization
Amortization of software and development costs and equipment is calculated on the following bases and annual rates:
Software and development costs
- 5 years straight-line
Computer equipment
- 30% declining-balance
Automobile
- 30% declining-balance
Office furniture
- 20% declining-balance
(d)
Software development costs
Research costs are expensed as incurred. Costs related to the development of software are expensed as incurred unless such costs meet the criteria for deferral and amortization under Canadian generally accepted accounting principles. The criteria include identifiable costs attributable to a clearly defined product, the establishment of technical feasibility, identification of a market for the software, the Company’s intent to market the software, and the existence of adequate resources to complete the project. Software development costs are amortized over an estimated useful life of five years or prorated over its expected revenue stream whichever is higher, commencing in the year when commercial sales of the products commence. Capitalized software development is evaluated in each reporting period to determine whether it continues to meet the criteria for continued deferral and amortization.
(e)
Stock-based compensation
Effective January 2004, the Company adopted the requirements of the Canadian Institute of Chartered Accountants (“CICA”) Handbook Section 3870, which requires an expense to be recognized in the financial statements for all forms of stock-based compensation including stock options. Previously, the Company did not record any compensation cost on the granting of stock options, as the exercise price was equal to or greater than the market price at the date of the grants. Options granted are accounted for using the fair value method where compensation expense is calculated using the Black-Scholes option pricing model.
6
LAS VEGAS FROM HOME.COM ENTERTAINMENT INC.
Notes to Consolidated Interim Financial Statements
Three Months Ended March 31, 2007
(Canadian Dollars)
5.
Significant Accounting Policies (Continued)
(f)
Revenue recognition
The Company recognizes revenues from licensees and customers on an accrual basis according to the terms and conditions of each individual license agreement. Allowances for non-collection of revenues are made when collectibility becomes uncertain.
Prior to the sale of Action Poker, recognition of revenue for each type of revenue was as follows:
(i)
License fees for all licensees
License fees were one-time non-refundable fees, which were for entering into the license agreements. License fees were recognized when received.
(ii)
Rake percentages from licensees
Rake revenue earned by the Company was based on negotiated percentages of gross rake revenue as specified in the agreements with licensees, which varied from agreement to agreement. The Company recognized its percentage of rake revenue at the end of the month based on the rake collected on behalf of the licensees; the balance was then paid out to the licensees in the subsequent month.
(iii)
Administration fees
Administration fees revenue earned by the Company was based on negotiated percentages as specified in the agreements with certain licensees, which varied from agreement to agreement. The fees charged were for administrative services provided by the Company. The Company recognized these fees as a percentage of the rake collected on behalf of the licensee on a monthly basis.
(iv)
Rake revenue
Rake revenue from customers coming through the websites of the Company’s subsidiary was collected when a player joined a table, and was non-refundable. As such, revenue was recognized when a player joined a table.
(v)
The Company had an agreement with Bronx Ventures Inc. (“Bronx”), a related company, whereby Bronx received 40% of the revenue from certain card games. LVFH reduced its revenue by these amounts (see notes 9(b)(ii) and 10(b)).
(vi)
The Company recognized revenues/losses from its subsidiary’s Online Casino once a player lost or won a wager.
7
LAS VEGAS FROM HOME.COM ENTERTAINMENT INC.
Notes to Consolidated Interim Financial Statements
Three Months Ended March 31, 2007
(Canadian Dollars)
5.
Significant Accounting Policies (Continued)
(g)
Income taxes
The Company follows the asset and liability method based on the accounting recommendations for income taxes issued by CICA. Under the asset and liability method future income tax assets and liabilities are computed based on differences between the carrying amounts of assets and liabilities on the balance sheet and their corresponding tax values, using the enacted income tax rates at each balance sheet date. Future income tax assets can also result by applying unused loss carry-forwards and other deductions. The valuation of any future income tax assets is reviewed annually and adjusted, if necessary, by use of a valuation allowance to reflect the estimated realizable amount.
(h)
Foreign currency translation
The Company’s functional currency is the Canadian dollar; therefore, amounts recorded in foreign currency are translated into Canadian dollars as follows:
(i)
Monetary assets, liabilities and long-term monetary assets and liabilities, at the rate of exchange in effect as at the balance sheet date;
(ii)
Non-monetary assets and liabilities, at the exchange rates prevailing at the time of the acquisition of the assets or assumption of the liabilities; and
(iii)
Revenues and expenses (excluding amortization, which is translated at the same rate as the related asset), at the rates in effect at the time of the transaction.
Gains and losses arising from this translation of foreign currency are included in net income.
(i)
Earnings (loss) per share
Earnings (loss) per share is calculated using the weighted average number of common shares outstanding during the year.
Diluted earnings per share amounts are calculated giving effect to the potential dilution that would occur if securities or other contracts to issue common shares were exercised or converted to common shares. The treasury stock method is used to determine the dilutive effect of stock options and other instruments. The treasury stock method assumes that proceeds received from the exercise of stock options and warrants are used to repurchase common shares at the prevailing market rates. Stock options and warrants that are anti-dilutive are not included in the calculation.
The dilutive effect of options and warrants was not reflected in loss per share for Q1 2007 as the effect would have been anti-dilutive.
8
LAS VEGAS FROM HOME.COM ENTERTAINMENT INC.
Notes to Consolidated Interim Financial Statements
Three Months Ended March 31, 2007
(Canadian Dollars)
5.
Significant Accounting Policies (Continued)
(j)
Use of estimates
The preparation of financial statements in conformity with Canadian generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates made in the preparation of these financial statements include accrued liabilities, assumptions of the determination of fair value of stock-based compensation expense, rates of amortization for equipment and software development and determination of valuation allowance for future income tax assets. Management believes the estimates are reasonable; however, actual results could differ from those estimates and would impact future results of operations and cash flows.
(k)
Consolidation of variable interest entities
The Company has adopted Accounting Guideline 15,“Consolidation of Variable Interest Entities”, issued by the CICA for annual and interim periods beginning on or after November 1, 2004. This guideline addresses the application of consolidation principles to entities that are subject to control on a basis other than ownership of voting interests. The adoption of this guideline did not have any impact on the Company’s consolidated financial statements.
(l)
Intangible assets
The Company has registered and regularly renews several domain names. These amounts are insignificant and are expensed when incurred.
6.
Financial Instruments
(a)
Fair value
The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, amounts due to and from related parties, and obligation under capital lease approximate their fair values because of the short-term maturity of these financial instruments.
(b)
Interest rate risk
The Company is not exposed to significant interest rate risk due to the short-term maturity of its monetary current assets and liabilities.
(c)
Credit risk
The Company is exposed to credit risk with respect to its accounts receivable and amounts due from Licensees.
(d)
Foreign currencies
The Company considers the Canadian dollar to be its functional currency and translates the results of foreign operations into Canadian currency using approximately the average exchange rate for the year. The exchange rate may vary from time to time. This risk is minimized to the extent that all non-Canadian source revenues and expenses are in US dollars.
9
LAS VEGAS FROM HOME.COM ENTERTAINMENT INC.
Notes to Consolidated Interim Financial Statements
Three Months Ended March 31, 2007
(Canadian Dollars)
7.
Accounts Receivable
Accounts receivable is comprised of the following:
|
| March 31 2007 |
| December 31 2006 |
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Due from licensees | $ | 261,012 | $ | 338,374 |
Accounts receivable |
| 54,513 |
| 87,237 |
|
|
|
|
|
| $ | 315,525 | $ | 425,611 |
8.
Equipment and Software Development
|
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| Accumulated |
| March 31 2007 |
| December 31 2006 |
|
| Cost |
| Amortization |
| Net |
| Net |
|
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|
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|
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|
Software and development costs | $ | 526,577 | $ | 171,254 | $ | 355,323 | $ | 381,654 |
Computer equipment |
| 818,306 |
| 320,402 |
| 497,904 |
| 521,829 |
|
|
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|
|
| |||
| $ | 1,344,883 | $ | 491,656 | $ | 853,227 | $ | 903,483 |
During 2006, the amount of $130,976 consisting of salaries was capitalized as software development costs. Amortization expense for the three month period ended March 31, 2007 of $26,331 has been applied to the costs capitalized during the year ended December 31, 2006.
9.
Capital Stock
At the Annual and Special General Meeting of the Company’s shareholders, which was held on June 30, 2005, the shareholders approved the deletion of the pre-existing Company Provisions in the Notice of Articles of the Company and, in substitution, the shareholders approved the adoption of a new form of Articles for the Company pursuant to theBusiness Corporations Act (British Columbia). Furthermore, the shareholders approved the increase of the Company’s authorized capital stock to an unlimited number of common shares and an unlimited number of preferred shares, issuable in series, in each case without nominal or par value.
(a)
Authorized: Unlimited number of common shares and an unlimited number of preferred shares, in each case without par value. There are no preferred shares issued.
10
LAS VEGAS FROM HOME.COM ENTERTAINMENT INC.
Notes to Consolidated Interim Financial Statements
Three Months Ended March 31, 2007
(Canadian Dollars)
9.
Capital Stock(Continued)
(b)
Issued:
(i)
Changes in Capital Stock:
| March 31, 2007 |
| December 31, 2006 | ||||
Number of Shares |
| Amount |
| Number of Shares |
| Amount | |
Balance beginning of period | 100,234,270 | $ | 29,792,819 |
|
92,514,678 | $ | 27,096,835 |
Exercise of stock options for cash | 266,500 |
| 35,355 |
|
584,592 |
| 93,755 |
Exercise of warrants for cash | 0 |
| 0 |
|
465,000 |
| 99,000 |
Reclassification of contributed surplus on exercise of options | 0 |
| 0 |
|
0 |
| 102,029 |
Acquisition of three card Games Software | 0 |
| 0 |
|
6,670,000 |
| 2,401,200 |
Balance end of period | 100,500,770 | $ | 29,828,174 |
| 100,234,270 | $ | 29,792,819 |
(ii)
On November 4, 2002, the Company entered into a licensing Agreement with Bronx Ventures Inc., a related company, for the joint development of certain gaming software consisting of three card games (the “three card games software”), as a result of which, the three card games software was equally owned by the Company and Bronx. On May 5, 2006, Bronx sold its interest in the three card games software to the Company for a consideration of 6,670,000 fully paid and non-assessable common shares of the Company at a deemed price of $0.36 per share determined by the market value of the Company’s common shares, for a total acquisition cost of $2,401,200, determined by an independent valuation. The 6,670,000 common shares of the Company, which have been issued to Bronx, are restricted from trading until May 1, 2007.
(iii)
The Company received TSX approval on October 30, 2006 to commence a normal course issuer bid. Under the bid, which would be conducted pursuant to the rules of the TSX, the Company may purchase up to 8,913,000 of its common shares (the "Common Shares") representing approximately 8.9% of the Company's issued and outstanding Common Shares. The Company has until November 3, 2007 to purchase any or all its Common Shares. The price at which the Company may purchase its Common Shares will be the market price thereof at the time of acquisition. Purchases of Common Shares will be made in the open market through the facilities of the TSX. Any Common Shares acquired by the Company will be cancelled. Purchases under the bid will be made on behalf of the Company by Scotia McLeod. As of March 31, 2007, the Company has not commenced acquiring any of its Common Shares.
(iv)
During the three month period ended March 31, 2007, the Company issued 266,500 common shares of the Company to employees as a result of exercising stock options at prices ranging from $0.12 to $0.27 per common share for total proceeds to the Company of $35,355.
11
LAS VEGAS FROM HOME.COM ENTERTAINMENT INC.
Notes to Consolidated Interim Financial Statements
Three Months Ended March 31, 2007
(Canadian Dollars)
9.
Capital Stock(Continued)
(c)
Warrants
During the three month period ended March 31, 2007, no warrants were issued or exercised, however an aggregate of 1,700,000 warrants with an exercise price of $0.25 expired on January 7, 2007.
The following summarizes the warrants that have been granted, exercised, cancelled or expired during the three month period ended March 31, 2007:
|
| Weighted |
|
| Average |
| Number | Exercise |
| of Warrants | Price |
|
| |
Balance, December 31, 2006 |
7,942,750
$ 0.84
Expired
(1,700,000)
$ 0.25
Balance, March 31, 2007
6,242,750
$ 1.00
At March 31, 2007, the following warrants are exercisable and outstanding. Each warrant entitles the holder to purchase one common share of the Company at the exercise price per common share with the following expiry dates:
Expiry Date | Exercise Price | Number of Warrants March 31, 2007 |
|
|
|
May 13, 2007 (expired subsequent to Q1) | $ 1.00 | 6,242,750 |
|
|
|
|
|
|
Total warrants outstanding | $ 1.00 | 6,242,750 |
All of the warrants outstanding at March 31, 2007 subsequently expired on May 13, 2007.
(d)
Stock options
From time to time the Company grants stock options to employees, officers, directors and consultants pursuant to the rules and regulations of the TSX. During the year ended December 31, 2006, 5,549,000 stock options expired unexercised and as a result the Company granted 9,815,000 stock options to directors, officers and employees.
12
LAS VEGAS FROM HOME.COM ENTERTAINMENT INC.
Notes to Consolidated Interim Financial Statements
Three Months Ended March 31, 2007
(Canadian Dollars)
9.Capital Stock(Continued)
(d) Stock options (Continued)
During 2004, the Company’s shareholders adopted and approved the Company’s 2004 Stock Option Plan (the “2004 Plan”). The 2004 Plan, which has received the approval of the TSX, reserved 11,290,154 common shares for issuance representing 20% of the Company’s issued and outstanding common shares on April 12, 2004. At the Annual and Special General Meeting of the Company’s shareholders, which was held on June 30, 2005, the shareholders approved the amendment to the Company’s 2004 Plan by increasing the maximum number of common shares that may be reserved for issuance pursuant to the Stock Option Plan to 15,866,936 common shares (the “Company’s Amended 2004 Stock Option Plan”). Pursuant to the Company’s Amended 2004 Stock Option Plan which has received TSX approval, the Company grants stock options to employees, directors, officers and consultants. As at March 31, 2007, t here are 2,866,844 stock options available for granting. The number available for granting is based on the difference between the reserved number of options available for issuance (15,866,936) less outstanding stock options at March 31, 2007 (11,554,500) less the number of stock options exercised since May 12, 2005 up to and including March 31, 2007 (1,445,592); (15,866,936 less 11,554,500 less 1,445,592 equals 2,866,844).
The following summarizes the officer, director, employee and consultant stock options that have been granted, exercised, cancelled and expired during the three month period ended March 31, 2007. The options vest 25% on grant and thereafter 25% every six months.
(e)
Stock option compensation
The Company applies the fair value method using the Black-Scholes option pricing model in accounting for its stock options granted. Accordingly, compensation expense of $246,575 for the three month period ended March 31, 2007 (March 31, 2006: $74,770) was recognized as salaries expense. These amounts are credited to contributed surplus and then subsequently transferred to capital stock on exercise of the options.
13
LAS VEGAS FROM HOME.COM ENTERTAINMENT INC.
Notes to Consolidated Interim Financial Statements
Three Months Ended March 31, 2007
(Canadian Dollars)
10.
Related Party Transactions
(a)
Due from related parties
|
| March 31 2007 |
| December 31 2006 |
|
|
| ||
Advance on expenses receivable from a director. | $ | 2,292 | $ | 60 |
(b)
Due to related parties
|
| March 31 2007 |
| December 31 2006 |
|
|
| ||
Bronx Ventures Inc. | $ | 0 | $ | 5,196 |
|
|
| ||
| $ | 0 | $ | 5,196 |
The Company shares office space and certain expenses with Bronx, a company related by common management, officers and certain directors. Rent for the office premises is paid by the Company and Bronx is charged for its proportionate share.
Amounts payable to directors are for expenses incurred on behalf of the Company and are payable on demand with no interest.
On May 5, 2006 Bronx sold its interest in the three card games software to the Company for consideration of 6,670,000 fully paid and non-assessable common shares in the capital of the Company at a deemed price of $0.36 per share for a total acquisition cost of $2,401,200 (see notes 3, 5(g)(v) and 9 (b)(ii)).
(c)
Related party transactions are measured at the exchange amount and comprised of the following:
i
management fees paid to a company related by common management and directors in the amount of $90,000 (2006: $90,000);
ii
the Company paid $0 (2006: $146,304) to Bronx for its share of revenues generated from its investment in the three card games software;
iii
rent and office expense received from Bronx for shared offices in the amount of $2,500 (March 31, 2006: $1,500);
iv
reimbursed Bronx for payroll in the amount of $0 (2006: $90,155);
14
LAS VEGAS FROM HOME.COM ENTERTAINMENT INC.
Notes to Consolidated Interim Financial Statements
Three Months Ended March 31, 2007
(Canadian Dollars)
11.
Subsequent Events
Subsequent to March 31, 2007, a total of 1,236,250 employee stock options were exercised at prices between $0.12 and $0.16 per common share for total proceeds to the Company of $152,350. 112,000 employee stock options with an exercise price of $0.12 per common share expired and 800,000 stock options were granted to an Officer with an exercise price of $0.24 per common share and 800,000 stock options were granted to one employee with an exercise price of $0.18 per common share.
Subsequent to March 31, 2007, a total of 6,242,750 warrants with an exercise price of $1.00 per common share expired on May 13, 2007. In addition, 842,771 Brokers’ Compensation Warrants to acquire Units consisting of 842,771 common shares with an exercise price of $0.65 per common share and 421,386 warrants with an exercise price of $1.00 per common share also expired on May 13, 2007.
Subsequent to March 31, 2007, the amount of $2,292 due from a Director was repaid (see note 10 (a)).
15
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
I, David A. Shore, C.F.O. of Las Vegas From Home.com Entertainment Inc., certify that:
1.
I have reviewed the interim filings (as this term is defined in Multilateral Instrument 52-109Certification of Disclosure in Issuers’ Annual and Interim Filings) of Las Vegas From Home.com Entertainment Inc., (the Issuer) for the Interim period endingMarch 31, 2007;
2.
Based on my knowledge, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings;
3.
Based on my knowledge, the annual financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the Issuer, as of the date and for the periods presented in the interim filings;
4.
The Issuer's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures and internal control over financial reporting for the Issuer, and we have:
(a)
designed such disclosure controls and procedures, or caused them to be designed under our supervision, to provide reasonable assurance that material information relating to the Issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the interim filings are being prepared; and
(b)
designed such internal control over financial reporting, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the Issuer’s GAAP; and
(c)
evaluated the effectiveness of the Issuer’s disclosure controls and procedures as of the end of the period covered by the interim filings and have caused the Issuer to disclose in the interim MD&A our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by the interim filings based on such evaluation; and
5.
I have caused the Issuer to disclose in the interim MD&A any change in the Issuer’s internal control over financial reporting that occurred during the Issuer’s most recent interim period that has materially affected, or is reasonably likely to materially affect, the Issuer’s internal control over financial reporting.
Date: May 15, 2007
“David A. Shore”
David A. Shore
C.F.O.
16
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
I, Jacob H. Kalpakian, C.E.O. of Las Vegas From Home.com Entertainment Inc., certify that:
1.
I have reviewed the interim filings (as this term is defined in Multilateral Instrument 52-109Certification of Disclosure in Issuers’ Annual and Interim Filings) of Las Vegas From Home.com Entertainment Inc., (the Issuer) for the Interim period endingMarch 31, 2007;
2.
Based on my knowledge, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings;
3.
Based on my knowledge, the annual financial statements together with the other financial information included in the interim filings fairly present in all material respects the financial condition, results of operations and cash flows of the Issuer, as of the date and for the periods presented in the interim filings;
4.
The Issuer's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures and internal control over financial reporting for the Issuer, and we have:
(a)
designed such disclosure controls and procedures, or caused them to be designed under our supervision, to provide reasonable assurance that material information relating to the Issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which the interim filings are being prepared; and
(b)
designed such internal control over financial reporting, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the Issuer’s GAAP; and
(c)
evaluated the effectiveness of the Issuer’s disclosure controls and procedures as of the end of the period covered by the interim filings and have caused the Issuer to disclose in the interim MD&A our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by the interim filings based on such evaluation; and
5.
I have caused the Issuer to disclose in the interim MD&A any change in the Issuer’s internal control over financial reporting that occurred during the Issuer’s most recent interim period that has materially affected, or is reasonably likely to materially affect, the Issuer’s internal control over financial reporting.
Date: May 15, 2007
“Jacob H. Kalpakian”
Jacob H. Kalpakian
C.E.O.
17