UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 10 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: November 30, 1997
Commission file number: 33-68570
BETTING, INC.
(Exact name of registrant as specified in its charter)
MISSOURI 43-1239043
(State of incorporation)(IRS Employer Identification number)
31310 Eaglehaven Center, Suite 10
Rancho Palos Verdes, California 90275
(Address of principal executive offices and Zip Code)
(310) 541-4393
(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 No X
Number of shares of common stock outstanding as of November 30,
1997: 10,712,234
Transitional Small Business Disclosure Format (Check one): Yes
No X
PART I-FINANCIAL INFORMATION
Item 1. Financial Statements
BETTING, INC.
(formerly Leggoons, Inc.)
BALANCE SHEETS
November 30, August 31, 1997
1997 (Unaudited) (Audited)
ASSETS
Total Assets $36 $45
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Due to stockholder $0 $35,135
Accounts payable 262,178 283,178
Due to related party 12,094 0
Commissions payable 18,399 18,399
Total current liabilities 292,671 336,712
Commitments and Contingencies
Stockholders' Equity:
Common stock, $.01 par value,
authorized
10,000,000 shares; issued and 107,122 78,432
outstanding,10,712,234 and
7,843,234
Preferred stock, $.01 par value, - -
authorized 5,000,000 shares;
issued and outstanding - none
Additional paid-in capital 4,965,570 4,855,535
Accumulated deficit (5,365,327) (5,270,634)
Total stockholders' equity (292,635) (336,667)
$36 $45
See accompanying notes to interim financial statements
BETTING, INC.
(formerly Leggoons, Inc.)
STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Three Months
Ended November Ended November
30, 1997 30, 1996
General and Administrative $94,693 $20,026
expenses
Loss from continuing (94,693) (20,026)
operations
Net loss $(94,693) $(20,026)
Net loss per common share $(.01) $(.01)
Weighted average shares 9,917,734 2,787,000
outstanding
See accompanying notes to interim financial statements
BETTING, INC.
(formerly Leggoons, Inc.)
STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Three Months
Ended November Ended November
30, 1997 30, 1996
Cash Flows From Operating Activities
Net loss (Note 9) $(12,103) $(20,026)
Changes in assets and liabilities:
Accounts payable 0 5,579
Commissions payable 0 0
Cash Used in Operating Activities (12,103) (14,447)
Cash Flows From Financing Activities:
Proceeds from additional borrowings 0 14,447
from stockholder
Proceeds from issuance of common
stock 0 0
Proceeds from borrowings from
related party 12,094 0
Cash provided by financing
activities 12,094 14,447
Net decrease in cash (9) 0
Cash at beginning of period 45 0
Cash at end of period $36 $0
Supplemental Disclosures:
The Company paid $0 and $0 for interest for the three months
ended November 30, 1997 and 1996, respectively.
The following summarizes noncash investing and financing
transactions:
Three Months Ended November 30, 1997
Issuance of 1,769,000 shares of common stock for $82,590
services rendered
Issuance of 750,000 shares of common stock for 35,135
due to stockholder
Issuance of 350,000 shares of common stock for 21,000
accounts payable
See accompanying notes to interim financial statements.
BETTING, INC.
(formerly Leggoons, Inc.)
NOTES TO INTERIM FINANCIAL STATEMENTS
1. Unaudited Interim Periods:
The information furnished herein relating to interim periods has
not been audited by independent Certified Public Accountants. In
the opinion of the Company's management, the financial
information in this report reflects any adjustments that are
necessary for a fair statement of results for the interim periods
presented in accordance with generally accepted accounting
principles. All such adjustments are of a normal and recurring
nature. The accounting policies followed by the Company, and
additional footnotes, are set forth in the audited financial
statements included in the company's Annual Report Form 10-KSB/A
filed with the SEC in February 1999.
2. Initial Public Stock Offering:
On November 18, 1993, the Company completed an initial public
offering in which it sold 900,000 Units at $3.125 per Unit. Each
Unit consisted of one share of Common Stock and one Class A
Warrant. Three Warrants entitled the holder thereof to purchase
one share of Common Stock at $3.75 per share and expired on
November 18, 1997. The warrants were callable in total by the
Company after November 18, 1994, at a redemption price of $.05
per warrant upon 60 days prior notice if the common stock has
traded above $3.75 for at least 20 out of the 30 trading days
preceding the date of the notice of redemption.
3. Earnings (loss) Per Share:
Net earnings (loss) per share are computed using the weighted
average number of common and common equivalent shares outstanding
during the period. The Class A Warrants issued during the public
offering are anti-dilutive and have not been included in the
computation of common equivalent shares outstanding. Fully
diluted net earnings (loss) per share for all periods presented
is not materially different from primary net earnings (loss) per
share.
4. Income Taxes:
Effective September 1, 1987, the Company elected to be taxed
under Subchapter S of the Internal Revenue Code. As such, the
Company's taxable income or loss was included in the individual
tax returns of its shareholders for Federal and State income tax
purposes. Upon the closing of the public stock offering on
November 18, 1993, the Company terminated its Subchapter S
election.
Betting, Inc., has unused net operating loss (NOL) carryforwards
of approximately $2,800,000 at August 31, 1997, that were
generated by Leggoons, Inc. The unused net operating losses
expire in various amounts from 2009 to 2012. However, due to
change of ownership rules of section 382 of the Internal Revenue
Code some or all of these NOL carryforwards may be unavailable to
offset any future income of Betting, Inc. The Company generated
losses of approximately $1,658,000 during the six month period
ended August 31, 1997, and losses of approximately $94,000 during
the three months ended November 30, 1997. These losses may not
qualify as federal and state NOL carryforwards due to the
possible nondeductibility of the noncash service costs incurred
and the change of ownership rules of section 382 of the Internal
Revenue Code. The Company provides an allowance for the entire
amount of any deferred tax assets that are applicable to the NOL.
5. Due to Stockholder
The Company has a due to stockholder payable to James S. Clinton,
former Chairman of Leggoons, Inc., in the amount of $35,135 for
advances made to Leggoons, Inc., prior to March 1, 1997. This
payable was paid during the three months ended November 30, 1997,
by the issuance of 750,000 shares of restricted common stock.
6. Due to Related Party
The Company utilized cash advances from HPOS/E.T.T. to fund day
to day operations of the Company. Thomas S. Hughes is the
Chairman of both the Company and HPOS/E.T.T. The amount advanced
during the three months ended November 30, 1997, was $12,094.
7. Accumulated Deficit:
As a result of the termination of the Company's S Corporation
status on November 18, 1993, the accumulated deficit of
$1,168,375 incurred through that date was closed out against
additional paid-in capital. The $5,365,327 of deficit on the
balance sheet at November 30, 1997, is the result of operations
from November 18, 1993, to November 30, 1997.
8. Stockholders Equity:
During the period September 1, 1997, through November 30, 1997,
the Company issued 2,869,000 shares of common stock for payments
on accounts payable and services rendered. For the 1,769,000
shares of common stock issued for services rendered during the
period September 1, 1997, through November 30, 1997, the
following valuation policies were used so that a financial value
could be assigned to the stock issuance transactions: the closing
"market" stock price was used to determine "fair market value" of
the 569,000 unrestricted common shares issued; the closing
"market" stock price less a 50% discount was used to determine
"fair market value" of the 1,200,000 restricted common shares
issued. For the 1,769,000 shares of common stock issued for
services rendered during the period September 1, 1997, through
November 31, 1997, the closing stock price of the last day of
each month was used to determine "fair market value" of each
share issued so that a financial value could be assigned to the
stock issuance transactions.
The financial value of the common stock issued for no cash
consideration is required to be expensed by the Company. The
"fair market value" of such common stock issued, $82,590, has
primarily been expensed as $63,450 in consulting fees, $7,140 in
legal fees, and $12,000 in general and administrative expenses
during the three months ended November 30, 1997. Some of the
common stock shares issued were registered with the Securities
and Exchange Commission using Form S-8 Registration Statements.
9. Cash Flow and Income Statement Reconciliation
The following reconciles noncash financing transactions for the
three months ended November 30, 1997:
Net loss $12,103
Issuance of 1,769,000 shares of common stock for 82,590
Consulting Fees, and General and Administrative
Expense
Income Statement Loss $94,693
10. Contingencies
Going Concern
The Company's financial statements are presented on the going
concern basis, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. As
shown in the accompanying financial statements, the Company has
shown a significant loss from operations and has negative working
capital and a stockholders' deficit.
The Company's continued existence is dependent upon its ability
to resolve its liquidity problems, principally by obtaining
additional debt financing and equity capital and ultimately upon
achieving profitability. While pursuing additional debt and
equity funding, the Company must continue to operate on limited
cash flow. Management is committed to developing the product and
continues to receive small amounts of funding from private
investors. It is the goal of management to receive additional
funding from an additional public offering of its common stock
within twelve months.
There is no assurance that the Company can achieve the
profitability and positive liquidity discussed above. The
financial statements do not include any adjustments to reflect
the possible future effects on the recoverability and
classification of assets or the amounts and classification of
liabilities that may result from the possible inability of the
Company to continue as a going concern.
Common Stock Issued
During the three months ended November 30, 1997, the Company
issued 2,869,000 common shares. This has resulted in the total
issued common shares exceeding the 10,000,000 common shares
authorized by 712,234 common shares. Management of the Company
intends to increase the number of authorized shares or to convert
the common shares issued in excess of 10,000,000 to preferred
stock.
Item 2. PLAN OF OPERATIONS
General:
The primary general and administrative expenses incurred during
the quarterly period ended November 30, 1997, were consulting
fees, legal fees, office expenses and stock expenses.
HPOS License Agreement
On February 18, 1997, Leggoons, Inc., entered into an Agreement
to License Assets from Home Point of Sales, Inc.(HPOS). HPOS is
a privately held corporation focused on the emergence of the
Personal Encrypted Remote Financial Electronic Card Transactions
industry. This industry provides consumers with the option to
instantly pay bills or impulse purchase from home with real time
cash transactions. Management believes the proprietary technology
and the large demand for wagering opportunities in today's
marketplace will combine to generate substantial sales for
Leggoons, Inc., over the medium term.
Under terms of the Licensing Agreement, the Company will issue
2,900,000 shares of restricted common stock to HPOS in exchange
for licensing home ATM card and SMART card wagering technology
developed by HPOS. Of this amount, 2,755,000 shares will be
placed in escrow and are subject to cancellation on February 10,
1998, in the event the bid price of the common stock of the
Company is not at least $3.00 per share for any twenty
consecutive day period as reported on the NASD's Electronic
Bulletin Board or NASDAQ's Small Cap Market from the date of the
agreement through February 10, 1998.
As of the date of these financial statements the terms of the
Licensing Agreement have not been met by the Company. However,
the Company has entered into amendment(s) of the original
agreement that provide for an extension of the cancellation
deadline from February 10, 1998, to September 1, 1999, subject to
certain conditions specified in the agreement. As of the date of
these financial statements, none of the conditions have been met.
All condtions set forth in the original agreement need to be met
on or before September 1, 1999.
The License Agreement also provides that in the event that the
bid price for the common stock of the Company is more than $3.00
per share for any twenty consecutive day period, then HPOS shall
have the option to purchase up to 13,822,000 additional shares of
the Company common stock at an exercise price of $.30 per share.
Thomas S. Hughes, Chairman of HPOS, became Chairman and President
of Leggoons on March 1, 1997. He will focus on procedures,
policies and state approvals to begin home lottery, off track
betting, casino and sports ATM card and SMART card wagering.
Thomas S. Hughes, Chairman of Home Point Sale, Inc., will remain
as Chairman and President of Leggoons, Inc. The Company intends
to seek shareholder approval of its name change from Leggoons,
Inc. to Betting, Inc.
Betting, Inc. is positioning itself to facilitate same as cash
ATM card or smart card transactions that are originating from
bank host processing centers and are being sent to gaming
operators. These transactions are being effected with electronic
equipment that allows self service pay per play and no actual
communications between the player and the gaming operator. These
type of transactions will be originating from homes, offices, and
public walk in locations. The Company will act as the interface
that will communicate data to the gaming operators, receive back
their acknowledgment of the transaction and then pass on this
gaming acknowledgment to the bank host processing center that has
been standing by for this information and has already completed
the bank authorization of the pay per play transaction. The
business model of the Company is to receive a fee per transaction
paid to Betting, Inc. by the bank host processing center at the
moment of the transaction. In general, this fee will be from
between 2% to 6% of the wager placed on a pay per play or a $6
flat fee in the case of an account being opened. The Company.
has many characteristics commonly associated with a development
stage company. A development stage company devotes substantially
all of its efforts to establishing a new business and its planned
principal operations either (a) have not commenced or (b) have
commenced, but have not produced any significant revenue.
However, due to the company's previously established operation as
a public shell a development stage company presentation is not
appropriate for these financial statements.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a)Exhibits - None.
(b)Reports on Form 8-K - None
SIGNATURE:
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
BETTING, INC.
By: /s/ Thomas S. Hughes
Thomas S. Hughes
President
Date: March 31, 1999