U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED AUGUST 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
______________ TO ______________
COMMISSION FILE NUMBER: 33-68570
BETTING, INC. (1)
(Exact name of registrant as specified in its charter)
Missouri (2) 43-1239043
(State or jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
31310 Eaglehaven Center
Suite 10, Rancho Palos Verdes, California 90275
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (310) 541-4393
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common
Stock, $0.01 Par Value; Class A Warrants
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) been subject to such filing requirements for
the past 90 days. Yes No X .
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference
in Part III of this Form 10-KSB or any amendment to this Form 10-KSB
[ ].
The aggregate market value of the voting stock held by non-
affiliates of the registrant as of August 31, 1998: Common Stock,
par value $0.01 per share -- $1,785,000. As of August 31, 1998, the
registrant had 14,284,234 shares of common stock issued and
outstanding.
(1) Effective on June 4, 1999, the name was changed to eConnect.
(2) Effective on June 1, 1999, the jurisdiction of organization was
changed to Nevada.
TABLE OF CONTENTS
PART I PAGE
MEMORANDUM SUMMARY 7
RISK FACTORS 9
USEOFPROCEEDS 16
DILUTION 16
PLAN OF DISTRIBUTION 18
LITIGATION 19
MEMORANDUM SUMMARY 7
RISK FACTORS 9
USEOFPROCEEDS 16
DILUTION 16
PLAN OF DISTRIBUTION 18
LITIGATION 19
PART I.
ITEM 1. BUSINESS.
(a) Business Development
Betting, Inc., was organized under the laws of the State of
Missouri on September 1, 1981, as HANDY-TOP, INC. On April 20,
1983, the Articles of Incorporation were amended to change the name
of the corporation to HTI Corporation. On May 28, 1993, the
Articles of Incorporation were amended to change the name of the
corporation to Leggoons, Inc. In addition to changing the company's
name, the May 28,1993, amendment to the Articles of Incorporation
increased the number of authorized shares of common stock from
40,000 to 10,000,000 and decreased the par value of the common stock
from $1.00 per share to $.01 per share. Also on May 28, 1993,
Leggoons, Inc., declared a 14-for-1 stock split. Unless otherwise
indicated, all share and per share data are reflected on a post
split basis throughout this Form 10-KSB.
On June 12, 1996, Leggoons, Inc., transferred all of its
assets and liabilities to a third party assignee, under an
"Assignment for the Benefit of Creditors" (the "Assignment"). An
Assignment is a business liquidation device available as an
alternative to bankruptcy. The third party assignee, a Nebraska
corporation, also named Leggoons, Inc. (the "Assignee"), will be
required to properly, timely, and orderly dispose of all remaining
assets for the benefit of creditors. Leggoons, Inc., continued to
maintain its' status as a shell corporation.
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.
Thomas S. Hughes, Chairman of HPOS, became Chairman and
President of Leggoons, Inc., 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.
A search is presently being conducted to locate a CEO/COO for the
Company. The CEO/COO will assemble a team of professionals to
develop the procedures and policies of home ATM card and SMART card
wagering. This development process will include a close focus on
the political and the instant taxation of home winnings issues
associated with home ATM card and SMART card wagering.
Thomas S. Hughes, Chairman of HPOS, will remain as Chairman
and President of the Leggoons, Inc. Leggoons, Inc., intends to seek
shareholder ratification of its name change from Leggoons, Inc. to
Betting, Inc.
(b) Business of Issuer
Betting, Inc. (the "Company") 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 types 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 internet gaming industry is an industry that has developed
significantly in recent years. The internet gaming industry as a
whole is under increasing governmental scrutiny as the industry
develops. It is possible that at some point in the future there
could be legislation against gambling on the internet or other
similar methods.
Leggoons, Inc., was engaged in the design, manufacture and
distribution of apparel and related accessories which are sold to
better specialty and department stores nationwide under the brands:
Leggoons, CPO by Leggoons, John Lennon Artwork Apparel and Snooggel.
On January 19, 1996, Leggoons, Inc., entered into a Licensing
Agreement with Robert Tamsky, a former director and employee of the
Leggoons, Inc. Pursuant to the terms of the Licensing Agreement,
the Leggoons, Inc., granted Mr. Tamsky effective January 1, 1996,
the right to use the LEGGOONS trademark in connection with the
design, production, marketing, sales and sublicensing of all
clothing, wearing apparel and accessories bearing the "LEGGOONS"
symbol. This right will continue until December 31, 1998, and may
be extended thereafter each year for an additional year. In
consideration for the license, Mr. Tamsky, according to the
Licensing Agreement, shall pay to the Leggoons, Inc. a royalty of
five percent of the net sales of "LEGGOONS" products.
Also on January 19, 1996, the Leggoons, Inc., adopted a formal
plan to discontinue the designing, selling, manufacturing and
distribution of its apparel products. As part of such plan,
Leggoons, Inc., discontinued production on April 30, 1996, and
intended to either sell or liquidate the operations within twelve
months of that date. On June 12, 1996, Leggoons, Inc., transferred
all of its assets and liabilities to a third party assignee,
under an "Assignment for the Benefit of Creditors." Included in the
Assignment were the rights and obligations of the Licensing
Agreement.
Item 2. Description of Property.
Not Applicable
Item 3. Legal Proceedings.
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders.
Not Applicable
PART II.
Item 5. Market for Common Equity and Related Stockholder Matters.
(a) Market Information
The Common Stock is traded in the over-the-counter market and
the range of closing bid prices shown below is as reported by the
OTC Bulletin Board. The quotations shown reflect inter-dealer
prices, without retail mark-up, mark-down or commission and may not
necessarily represent actual transactions.
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended August 31, 1998
High Low
First Quarter 0.12 0
Second Quarter 0.08 0
Third Quarter 0.15 0.03
Fourth Quarter 0.20 0.06
Per Share Common Stock Bid Prices by Quarter
For the Fiscal Year Ended August 31, 1997
High Low
First Quarter 8 5.875
Second Quarter 8.125 7.625
Third Quarter 0.8125 0.0625
Fourth Quarter 0.5625 0.06
(b) Holders of Common Equity
As of August 31, 1998, the Company estimates there were 400
beneficial shareholders of the Company's Common Stock.
(c) Dividends
The Company has not declared or paid a cash dividend to
stockholders since it became a "C" corporation on November 18,
1993. The Board of Directors presently intends to retain any
earnings to finance Company operations and does not expect to
authorize cash dividends in the foreseeable future. Any payment of
cash dividends in the future will depend upon the Company's
earnings, capital requirements and other factors.
Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Comparison of Fiscal 1998 and 1997
The loss for the year ended August 31, 1998, was $196,968.
The Company recognized $0 in revenue while preparing the setup of
the Company to commence operations as a facilitator of same as cash
ATM card or smart card transactions that are originating from bank
host processing centers and are being sent to gaming operators. The
loss was due to consulting fees of $122,020 and general and
administrative expenses of $74,948.
During the period September 1, 1996, through February 28,
1997, the Company was operating as Leggoons, Inc. (a public shell
available for merger or acquisition). During this six month period
the net loss from continuing operations was $35,912. This loss was
due to general and administrative expenses of $35,912. The primary
general and administrative expenses incurred during the six month
period ended February 28, 1997, were legal expenses related to the
HPOS license agreement, accounting fees for the audit of Leggoons,
Inc., financial statements as of and for the year ended August 31,
1996, and stock expenses required to maintain Leggoons, Inc., public
shell status. During the period March 1, 1997, through August 31,
1997, the Company was maintaining operations as Betting, Inc.
During this six month period the net loss from continuing operations
was $1,663,533. This loss was due to operating expenses of
$1,663,533. The operating expenses were consulting fees of
$565,740, research and development expenses of $450,331, software
development costs of $507,600 and general and administrative
expense of $139,862.
Liquidity and Capital Resources
During the period September 1, 1997, through August 31, 1998,
the Company issued 6,441,000 shares of common stock for services
rendered and payments on accounts payable and due to stockholder.
For the shares of common stock issued for services rendered and
payments on accounts payable during the period September 1, 1997,
through August 31, 1998, the following valuation policies were used
so that a financial value could be assigned to the stock issuance
transactions: the closing "market" stock price on the day of each
common stock issuance was used to determine "fair market value" of
the 1,369,000 unrestricted common shares issued; the closing
"market" stock price on the day of each common stock issuance less
a 50% discount was used to determine "fair market value" of the
2,322,000 restricted common shares issued. Common shares that were
issued and for which no performance was received, 2,750,000 shares,
were valued at par value, $.01 per share. For the 2,750,000 shares
of common stock issued for which no performance was received a stop
has been placed on the stock certificates with the Company's stock
transfer agent.
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, $153,160, has primarily
been expensed as $122,020 in consulting fees and $31,140 in general
and administrative expenses during the year ended August 31, 1998.
Some of the common stock shares issued were registered with the
Securities and Exchange Commission using Form S-8 Registration
Statements.
During the six month period from September 1, 1996, through
February 28, 1997, Leggoons, Inc., principal stockholder, James S.
Clinton, provided the operating capital needed to fund operations.
During the six month period from March 1, 1997, through August 31,
1997, operations were funded via advances from HPOS and by issuing
common stock for funds and services rendered. During the period
March 1, 1997, through August 31, 1997, the Company issued 4,710,234
shares of common stock for services rendered. For the 2,999,734
shares of common stock issued for services rendered during the
period March 1, 1997, through May 31, 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 on
the day of each common stock issuance was used to determine "fair
market value" of the 520,000 unrestricted common shares issued; the
closing "market" stock price on the day of each common stock
issuance less a 50% discount was used to determine "fair market
value" of the 1,725,734 restricted common shares issued. Common
shares that were issued and for which no performance was received,
754,000 shares, were valued at par value, $.01 per share. For the
1,710,500 shares of common stock issued for services rendered during
the period June 1, 1997, through August 31, 1997, an average closing
stock price of $.20 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, $1,297,805, has primarily
been expensed as $304,240 in consulting fees, $445,128 in research
and development costs, $500,000 in software development costs and
$48,437 in general and administrative expenses during the year ended
August 31, 1997. Some of the common stock shares issued were
registered with the Securities and Exchange Commission using Form S-
8 Registration Statements.
The common shares of stock issued for noncash consideration
were, in some cases, given for past services rendered to HPOS in
developing its' product.
The management of the Company is continuing its search for
additional private investors to provide the funds needed to fund day
to day operations. It is also the goal of management to register
and complete additional public stock offerings of its common stock.
The Company has an accumulated deficit of $5,467,602. The
Company's losses from operations and inability to generate
sufficient cash flow from normal operations to meet its obligations
as they come due raise substantial doubt about the Company's ability
to continue as a going concern. The Company's ability to continue
in existence is dependent upon future developments, including
obtaining financing and achieving a level of profitable operations
sufficient to enable it to meet its obligations as they become due.
Plan of Operations
The plan of the Company is to establish partners in countries
including, but not limited to, the United Kingdom, China, Mexico,
Australia and South Africa with the stated goal being the
establishment of the wagering gate between the bank hosts in that
country and the gaming operators. The second phase will be the
connection between the various countries Company wagering gates so
that same day per play between countries will be possible.
Establishing the wagering gate presence involves the linking
of Betting, Inc. to both the gaming operators and the bank hosts.
In effect, the Company will be a data host processing center whose
business is the passing of messages back and forth between the bank
hosts and the gaming operators.
The Company is currently satisfying its cash requirements by
issuing Betting, Inc. common stock for services rendered. The
Company intends to issue Betting, Inc. common stock at some point in
the future to satisfy a $237,000 obligation to the designer and
developer of the Merchant Response Software used with the Company's
hardware products. The $237,000 obligation is included in accounts
payable at August 31, 1998.
On May 22, 1996, Leggoons, Inc., entered into an Addendum to
the Stock Purchase Agreement it initially entered into on September
5, 1995, with Infinitron Investments International, Inc. of
Vancouver B.C. ("Infinitron"). Pursuant thereto 100% of the shares
of common stock of Infinitron would be exchanged for approximately
4,797,500 shares of common stock of Leggoons, Inc., which would
represent approximately 95% of the post-split Leggoons, Inc.,
outstanding common stock. The Addendum provided, among other
things, that Leggoons, Inc., would use its best efforts to obtain
SEC clearance of its proxy statement by July 22, 1996, and
Infinitron will use its best efforts to fully cooperate with
Leggoons, Inc., in obtaining such clearance.
On July 3, 1996, counsel for Infinitron informed Leggoons,
Inc., that Infinitron does not intend to proceed with the
transactions contemplated by the Stock Acquisition Agreement.
Counsel for Infinitron stated that the basis for that action was
that he noted "a number of irregularities in the relationships
and dealings among the principals of Leggoons and Infinitron, "
however he did not provide any specifics relating to that
allegation. Leggoons, Inc., believes these claims to be baseless
and without merit.
Settlement negotiations have been completed, including verbal
approval by Infinitron and Leggoons, Inc., of the settlement
documents. Generally, under the terms of the settlement, Leggoons,
Inc. shareholders are to receive 186,721 shares of Infinitron common
stock, which represents approximately 3% of Infinitron's outstanding
shares of common stock on August 5, 1996. The 186,721 shares of
common stock of Infinitron will be held for the benefit of the
Leggoons, Inc., stockholders as their "loss of the bargain" under
the proposed merger.
As of March 31, 1999, the settlement agreement has not been
executed by all parties. If, and when, this settlement agreement is
executed the Company will be able to determine how any proceeds of
the settlement agreement affect its plan of operations for the next
twelve months. There can be no assurance that a settlement
agreement will be executed and the shareholders will receive any
proceeds.
Year 2000 Issue
Most companies have computer systems that use two digits to
identify a year in the date field (e.g. "99" for 1999). These
systems must be modified to handle turn-of-the century calculations.
If not corrected, systems failures or miscalculations could occur,
potentially causing disruptions of operations, including, among
other things, the inability to process transactions or engage in
other normal business activities. This creates potential risk for
all companies, even if their own computer systems are Year 2000
compliant.
The Company is in the process of developing an ongoing program
of communication with suppliers and vendors to determine the extent
to which those companies are addressing Year 2000 compliance issues.
There can be no assurance that the Company will be able to develop
a contingency plan that will adequately address issues that may
arise in the Year 2000.
In 1999, a contingency plan will be developed in the event key or
critical suppliers or vendors are unable to meet the Year 2000
compliance. The timeframe for completing or documenting contingency
plans has not been finalized.
The Company's Year 2000 plans are based on management's best
estimates. Based on currently available information, management
does not believe that the Year 2000 issues will have a material
adverse impact on the Company's financial condition or results of
operations; however, because of the uncertainties in this area, no
assurances can be given in this regard.
Item 7. Financial Statements.
Financial statements as of and for the year ended August 31,
1998, and for the year ended
August 31, 1997 are presented in a separate section of this report
following Part IV.
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure.
Not Applicable
PART III.
Item 9. Directors, Executive Officers and Compliance With Section
16(a) of the Exchange Act.
(a) Directors and Executive Officers
Thomas S. Hughes, President/Director.
Mr. Hughes, Age 52, has been President of the Company since
March 1997. From 1993 to the present, he has also served as the
President of Electronic Transactions & Technologies, a privately
held Nevada corporation which developed terminals for wireless home
and internet applications.
Jack M. Hall, Secretary/Director.
Mr. Hall, age 72, founded and is currently President of Hall
Developments, a real estate development company he founded in 1991,
which employs a staff of 10 people. Mr. Hall spends approximately
20 hours per week searching out strategic alliances for the Company.
Diane Hewitt, Treasurer/Director.
Ms. Hewitt, age 51, has been an interior designer since 1991.
Currently she owns and manages her own firm, D. Diane Hewitt
Designs. This firm's expertise is churches and employs a staff of
five people. Ms. Hewitt currently devotes approximately 25 hours
per week in working with the Company's image development and
consulting with the Company's advertising firm.
(b) Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's directors, certain officers and persons holding 10%
or more of the Company's common stock to file reports regarding
their ownership and regarding their acquisitions and dispositions of
the Company's common stock with the Securities and Exchange
Commission. The Company is unaware that any required reports were
not timely filed.
Item 10. Executive Compensation.
The following table sets forth information concerning
compensation paid by BETTING, INC. for services rendered during
fiscal year 1998, 1997, and 1996 for the Chief Executive Officer and
for each of the Company's other executive officers whose annual
salary and bonus exceeds $100,000.
Summary Compensation Table
Name and
Principal
Position
Year Salary Bonus Other Stock SARs Option Compensation
($) ($) ($) ($) (#)($) ($)
Thomas Hughes
1998 -0- -0- -0- -0- -0- -0- -0-
Thomas Hughes
1997 -0- -0- -0- 375,000 -0- -0- -0-
James S. Clinton, President and Chief Executive Officer
1996 -0- -0- -0- -0- -0- -0- -0-
Perquisites and other personal benefits are omitted because they do
not exceed either $50,000 or 10% of the total of annual salary and
bonus for the named executive officer.
Item 11. Security Ownership of Certain Beneficial Owners and
Management.
The following table sets forth, as of August 31, 1998, the
beneficial ownership of the Company's Common Stock by each person
who is known by the Company to own beneficially more than 5% of the
issued and outstanding shares of the Company's Common Stock.
Name and Address Amount and Nature Percent of Class
of Beneficial Owner of Beneficial Ownership1
James S. Clinton
30 Ginger Cove Road
Valley, NE 68064 1,417,000 18.0%
Thomas S. Hughes
31310 Eaglehaven Circle
Rancho Palos Verdes, CA 90275 1,000,000 12.7%
1On January 24, 1996, Mr. Larry Langston entered into an Option
Agreement with Steven Walters, a former officer and director of
Leggoons, Inc., which grants Mr. Walters an option to purchase
261,500 of Mr. Langston's common stock shares. The option price is
$100,000, the option may not be exercised prior to November 23,
1996, and expires on July 24, 1997. Mr. Walters, in turn, has
assigned the right to purchase 130,750 of such shares to the Claude
E. Clinton Family Trust for which Mr. Clinton, an officer and
director of Leggoons, Inc., acts as Trustee (Mr. Clinton is not the
beneficiary of the trust but has the right to vote the shares) in
consideration of $50,000 cash and a loan to Mr. Walters in the
amount of $50,000. The option was exercised by Mr. Walters.
However, the shares are not included in the total shares for James
S. Clinton due to the additional shares being issued after August
31, 1998.
The following table shows, as of August 31, 1998, certain
information with respect to BETTING, INC. Common Stock beneficially
owned by directors and executive officers of the Company. Unless
otherwise noted, all shares are owned directly or indirectly with
sole voting and investment power.
Name and Address Amount and Nature Percent of Class
of Beneficial Owner of Beneficial Ownership1
James S. Clinton
30 Ginger Cove Road
Valley, NE 68064 1,417,000 18.0%
Thomas S. Hughes
31310 Eaglehaven Circle
Rancho Palos Verdes, CA 90275 1,000,000 12.7%
1 Shares reported include shares owned by spouses of officers and
directors. No options to acquire any BETTING, INC. common stock are
owned by any officer or director.
Item 12. Certain Relationships and Related Transactions.
During the past two fiscal years, certain transactions which
occurred between the Company and its officers and directors are set
forth below. With respect to each such transaction, the Company
believes that the terms of each transaction were approximately as
favorable to the Company as could have been obtained from an
unrelated third party:
(1) The Company utilized cash accounts maintained by ET&T to
fund day to day operations of the Company over the period of March
1998 through September 1998. At August 31, 1998, the net result of
these transactions is a payable to ET&T of $18,969.
(2) The Company issued 1,000,000 shares of restricted common
stock to Thomas S. Hughes during May 1997 in exchange for service
rendered to the Company. The Company did not receive any cash
consideration for this common stock issuance and has treated this as
an expense to the Company of $375,000.
(3) On February 18, 1997, Leggoons, Inc. entered into an
Agreement to License Assets from Home Point of Sales, Inc.("HPOS")
(now know as Electronic Transactions & Technology - "ET&T")) (this
agreement is incorporated by reference at Exhibit 10.1 to this Form
SB-2). ET&T is a privately held corporation 70% owned by Thomas S.
Hughes, President of the Company, which is focused on the emergence
of the Personal Encrypted Remote Financial Electronic Card
Transactions industry (although this agreement was entered into
prior to Mr. Hughes becoming affiliated with the Company, it is
included here since certain of the conditions under that agreement
have not been completely fulfilled, as discussed below).
The assets included under this agreement are the following:
(a) The name "Betting, Inc.", as trademarked by HPOS; (b) The
Wagering Gate (receive incoming data transfer commands from the Host
Center and other competitive Host Centers who have received ATM and
SMART card wagering payment from off site home or office locations
and then who command the Wagering GATE to alert the recipient gaming
companies that they have been paid and to respond back with an
acknowledgement of such payment; and, the general promotion and
education of home ATM and SMART card wagering over the Internet
through the HPOS Secure Computer Keyboard or over the telephone
through the HPOS stand alone Infinity unit); (c) the specific
application of Wagering with an ATM card or SMART card with the
Secure Computer Keyboard (any other uses of the Secure Computer
Keyboard, such as Bill Pay or Impulse Purchase that are not Wagering
transactions, are not included); (d) the HPOS developed Merchant
Response Software for the specific application only of transacting
Off Site ATM and Smart card Wagering through the Wagering Gate; and
(e) HPOS' interest in the use of and revenue from the HPOS Personal
Encrypted Remote Financial Electronic Card transaction relating to
the Wagering Business in all HPOS partner countries.
Under terms of this licensing agreement, the Company is to
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 were
placed in escrow 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
(this escrow agreement is incorporated by reference at Exhibit 10.2
to the Form SB-2).
As of the date of this Form 10-KSB, 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. All conditions 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.
(4) On April 28, 1997, the Company entered into a Host
Processing Agreement with ET&T for the purpose of having ET&T act as
the bank host processing for all Company transactions that are sent
by terminals that read credit cards or ATM cards (this agreement is
incorporated by reference at Exhibit 10.3 to this Form SB-2). ET&T
is to charge the Betting, Inc. a fee of $0.25 per transaction or
2.5% of the wager being sent by Betting, Inc. to gaming operators.
These transactions are to originate from globally placed Betting,
Inc. equipment and/or Betting, Inc. licensed operators.
(5) On March 27, 1998, the Company entered into a License
Agreement with ET&T for the purpose of licensing additional
technology for processing electronic banking transactions (this
agreement is incorporated by reference at Exhibit 10.4 to this Form
SB-2). This licensing supplements the technology licensed under the
Agreement date February 18, 1997. This agreement states that ET&T
licenses the following ET&T products to Betting, Inc. for the
exclusive global usage of wagering by PERFECT originated ATM cards,
credit cards, and smart cards:
The PayMaster, defined as a stand alone terminal that attaches to
phone lines and which calls the ET&T host processing center with
bank data.
The SLICK, defined as a stand alone keyboard terminal that attaches
to phone lines and call the ET&T host processing center with bank
data that has bypassed the Internet.
The PocketPay, defined as a pocket sized terminal and telephone that
sends bank data by wireless transmission to the ET&T host processing
center.
The TV Pin Pad Remote, defined as a set top box and TV remote that
sends bank data by landline dial up transmission to the ET&T host
processing center.
Each ET&T product is exclusively licensed to Betting, Inc. on a
global basis for the application of PERFECT wagering at a licensing
fee of $2,000,000 each. This fee is being paid by the Company at
the rate of $30,000 per month. The duration of the exclusive
license is 20 years.
PART IV.
ITEM 13. Exhibits, Financial Statement Schedules, and Reports on
Form 8-K.
(a) Index to Financial Statements and Schedules Page
Report of Independent Accountants . . . . . . . . . . . 16
Balance Sheets of the Company as
of August 31, 1998 and August 31, 1997 . . . . . . . . . . 17
Statements of Operations for the year
ended August 31, 1998, the year ended
August 31, 1997, and the year ended August 31, 1996 . . . . . 18
Statement of Shareholders' Equity (Deficiency)
for the year ended June 30, 1998, the year ended
June 30, 1997, and the year ended June 30, 1996 . . . . . . 19
Statements of Cash Flows for the year
ended June 30, 1998, the year ended
June 30, 1997, and the year ended June 30, 1996 . . . . . 20
Notes to Financial Statements . . . . . . . . . . . . . . 21
(b) Reports on Form 8-K. There are no reports on Form 8-K filed
during the last quarter of the fiscal year covered by this report.
(c) Exhibits included or incorporated by reference herein: See
Exhibit Index
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
eConnect (formerly known as
Betting, Inc.)
Dated: June 18, 1999 By: /s/ Thomas S, Hughes
Thomas S. Hughes, President
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following persons
in the capacities and on the date indicated:
Signature Title Date
/s/ Thomas S. Hughes
Thomas S. Hughes
President, Chief Executive Officer,
Director
June 18, 1999
/s/ Jack M. Hall
Jack M. Hall
Director
June 18, 1999
/s/ Diane Hewitt
Diane Hewitt
Director
June 18, 1999
George Brenner
CERTIFIED PUBLIC ACCOUNTANT
9300 WILSHIRE BOULEVARD, SUITE 490
BEVERLY HILLS CALIFORNIA 90212
AUDITOR'S REPORT
Board of Directors
Betting, Inc.
Rancho Palos Verdes
I have audited the accompanying balance sheet of Betting, Inc. as of
August 31, 1998 and the related statements of operations, changes in
stockholders' equity, (deficit), and cash flows for the years ended
August 31, 1998 and 1997. These financial statements are the
responsibility of the Company's management. My responsibility is to
express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit
to obtain reasonable assurance about whether the financial
statements are free of material misstatements. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. I believe that my audit provides a
reasonable basis for my opinion.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Betting,
Inc. as of August 31, 1998, and the results of its operations and
its cash flows for the years ended August 31, 1998 and 1997, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As more fully
described in Note 8A ("Continued Existence") to the financial
statements, the Company's recurring losses from operations and
inability to generate sufficient cash flow from normal operations
raise substantial doubt about its ability to continue as a going
concern. Management's plans in regard to these matters are also
described in Note 8A. 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.
As discussed in Note 8B ("Common Stock Issued in Excess of
Authorized Shares") the Company is attempting to convert excess
shares of common shares issued to preferred shares. The effect, if
any, of this uncertainty on the future operations of the Company
cannot presently be determined.
Very truly yours,
/s/ George Brenner
George Brenner, CPA
April 7, 1999
Beverly Hills, California
BETTING, INC.
(formerly Leggoons, Inc.)
BALANCE SHEET
August 31, 1998
ASSETS
Current Assets:
Cash $0
Total current assets 0
Total Assets $0
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable $283,971
Due to related party 18,969
Commissions payable 21,400
Total current liabilities 324,340
Contingencies (Note 8)
Stockholders' Equity (Deficit):
Common stock, $.01 par value,
authorized 10,000,000 shares;
issued and outstanding,
14,284,234 (Note 8b) 142,842
Preferred stock, $.01 par value,
authorized 5,000,000 shares;
issued and outstanding - none
(Note 8b)
Additional paid-in capital 5,000,420
Accumulated deficit (5,467,602)
Total stockholders' equity (deficit) (324,340)
Total Liabilities and Stockholders'
Equity (Deficit) $0
See accompanying notes to financial statements and accompanying
auditor's report
BETTING, INC.
(formerly Leggoons, Inc.)
STATEMENTS OF OPERATIONS
Year Ended Year Ended
August 31, 1998 August 31, 1997
Revenue $0 $0
Operating Expenses
(Note 4)
Consulting Fees 122,020 565,740
General and
Administrative Expenses 74,948 175,774
Research and Development
Expenses 0 450,331
Software Development
Costs 0 507,600
Total Operating
Expenses (196,968) (1,699,445)
Net Loss (Note 1) $(196,968) $(1,699,445)
Net Loss per
Common Share $(.02) $(.41)
Weighted Average Common
Shares Outstanding 10,994,465 4,106,620
See accompanying notes to financial statements and accompanying
auditor's report
BETTING, INC.
(formerly Leggoons, Inc.)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Number of Par value Preferred Additional Accumulated Stockholders'
Common Stock Paid-In Deficit Equity
Shares Capital (Deficit)
Balance at
August 31, 1997
7,843,234 $78,432 $0 $4,855,535 ($5,270,634) ($336,667)
Issuance of 6,441,000 shares of Common
stock at various $ per share [1] (Non-Cash Transactions)
6,441,000 64,410 0 144,885 0 209,295
Net loss
0 0 0 0 (196,968) (196,968)
Balance at August 31, 1998
14,284,24 $142,842 $0 $5,000,420 ($5,467,602)($324,340)
(1) S-8 common shares valued at market value on day of issuance;
Restricted common shares valued at market value on day of issuance
less 50% discount; Common shares for which no performance was
received valued at par value of $.01 per common share.
See accompanying notes to financial statements and accompanying
auditor's report
BETTING, INC.
(formerly Leggoons, Inc.)
STATEMENTS OF CASH FLOWS
Year Ended Year Ended
August 31, 1998 August 31, 1997
Operating Activities
Continuing operations:
Net loss (Note 7) $(43,808) $(401,640)
Changes in assets and
liabilities:
Accounts payable 21,793 270,839
Commissions payable 3,001 18,399
Cash Used in Operating
Activities (19,014) (112,402)
Financing Activities
Continuing operations:
Proceeds from
additional borrowings
from stockholder 18,969 26,947
Proceeds from issuance
of common stock 0 85,500
Cash Provided by
Financing Activities 18,969 112,447
Net Increase (Decrease)
in Cash (45) 45
Cash at Beginning of
Year 45 0
Cash at End of Year $0 $45
Supplemental Disclosures:
The Company paid $0 and $0 for interest for the years ended August
31, 1998 and 1997, respectively. The following summarizes noncash
investing and financing transactions:
Year Ended August 31, 1998
Issuance of 5,341,000 shares of common
stock for services rendered $153,160
Issuance of 750,000 shares of common stock for
payment on due to stockholder 35,135
Issuance of 350,000 shares of common stock for
payment on accounts payable 21,000
Year Ended August 31, 1997
Issuance of 4,710,234 shares of common stock for
services rendered $1,297,805
See accompanying notes to financial statements
and accompanying auditor's report
BETTING, INC.
(formerly Leggoons, Inc.)
NOTES TO FINANCIAL STATEMENTS
Years ended August 31, 1998 and 1997
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
Betting, Inc. (the "Company") 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.
Leggoons, Inc., was engaged in the design, manufacture and
distribution of apparel and related accessories which were sold to
better specialty and department stores nationwide under the brands:
Leggoons, CPO by Leggoons, John Lennon Artwork Apparel and Snooggel.
On January 19, 1996, Leggoons, Inc., adopted a formal plan to
discontinue the designing, selling, manufacturing and distribution
of its apparel products. As part of such plan, Leggoons, Inc.,
discontinued production on April 30, 1996, and intended to either
sell or liquidate the operations within twelve months of that date.
On June 12, 1996, Leggoons, Inc., transferred all of its assets and
liabilities to a third party assignee, under an "Assignment for
Benefit of Creditors." An Assignment is a business liquidation
device available as an alternative to bankruptcy. The third party
assignee, a Nebraska corporation named Leggoons, Inc. II, is
required to properly, timely and orderly dispose of all remaining
assets for the benefit of creditors. Leggoons, Inc., continued to
maintain its status as a shell corporation.
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 conditions
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.
The Company intends to seek shareholder approval of its name change
from Leggoons, Inc. to Betting, Inc.
REVENUE RECOGNITION
Revenue from product sales is recognized upon consummation of
a transaction
CASH AND CASH EQUIVALENTS
Cash and cash equivalents includes cash on hand, demand
deposits, and short-term investments with original maturities of
three months or less.
RESEARCH AND DEVELOPMENT COSTS
Research and development costs are charged to expense when
incurred. Costs incurred to internally develop software, including
costs incurred during all phases of development, are charged to
expense as incurred.
STOCKHOLDERS' EQUITY
The following valuation policies were used so that a financial
value can be assigned to stock issuance transactions: the closing
"market" stock price on the day of each common stock issuance was
used to determine "fair market value" of unrestricted common shares
issued; the closing "market" stock price on the day of each common
stock issuance less a 50% discount was used to determine "fair
market value" of restricted common shares issued. Common shares
that were issued and for which no performance was received were
valued at par value, $.01 per share.
EARNINGS (LOSS) PER COMMON SHARE
Net earnings (loss) per common share is computed using the
weighted average number of common and common equivalent shares
outstanding during the period. Shares issuable pursuant to
outstanding stock warrants have been excluded from the computation
as the effect is antidilutive. Fully diluted net loss per share for
all periods presented is not materially different from primary loss
per share.
DEFERRED INCOME TAXES
Deferred income taxes are recognized for temporary differences
between the bases of assets and liabilities for financial statement
and income tax purposes. If it is more likely than not that all or
some portion of a deferred tax asset will not be realized, a
valuation allowance is recorded. (See Note 2)
USE OF ESTIMATES
The preparation of financial statements in conformity with
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
revenue and expenses during the reporting period. Actual results
could differ from those estimates.
(2) INCOME TAXES
Betting, Inc., has unused net operating loss (NOL)
carryforwards of approximately $2,800,000 at August 31, 1998, 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 $197,000 during the year ended
August 31, 1998. These losses, totaling $4,655,000 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.
(3) COMMON STOCK WARRANTS
The Company had outstanding warrants to purchase approximately
900,000 shares of common stock. The warrants were exercisable at
$3.75 per share and expired on November 18, 1997.
(4) STOCKHOLDERS' EQUITY (DEFICIT)
During the period September 1, 1997, through August 31, 1998,
the Company issued 6,441,000 shares of common stock for services
rendered and payments on accounts payable. For the shares of common
stock issued for services rendered during the period September 1,
1997, through August 31, 1998, the following valuation policies were
used so that a financial value could be assigned to the stock
issuance transactions: the closing "market" stock price on the day
of each common stock issuance was used to determine "fair market
value" of the 1,369,000 unrestricted common shares issued; the
closing "market" stock price on the day of each common stock
issuance less a 50% discount was used to determine "fair market
value" of the 2,322,000 restricted common shares issued. Common
shares that were issued and for which no performance was received,
2,750,000 shares, were valued at par value, $.01 per share. For the
2,750,000 shares of common stock issued for which no performance was
received a stop has been placed on the stock certificates with the
Company's stock transfer agent.
For the period September 1, 1997, through August 31, 1998, 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, $153,160, has primarily been expensed
as $122,020 in consulting fees and $31,140 in general and
administrative expenses during the year ended August 31, 1998. Some
of the common stock shares issued were registered with the
Securities and Exchange Commission using Form S-8 Registration
Statements.
During the period March 1, 1997, through August 31, 1997, the
Company issued 4,710,234 shares of common stock for services
rendered. For the 2,999,734 shares of common stock issued for
services rendered during the period March 1, 1997, through May 31,
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 on the day of each common stock
issuance was used to determine "fair market value" of the 520,000
unrestricted common shares issued; the closing "market" stock price
on the day of each common stock issuance less a 50% discount was
used to determine "fair market value" of the 1,725,734 restricted
common shares issued. Common shares that were issued and for which
no performance was received, 754,000 shares, were valued at par
value, $.01 per share. For the 1,710,500 shares of common stock
issued for services rendered during the period June 1, 1997, through
August 31, 1997, an average closing stock price of $.20 was used to
determine "fair market value" of each share issued so that a
financial value could be assigned to the stock issuance
transactions.
For the period September 1, 1996, through August 31, 1997, 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, $1,297,805, has primarily been expensed
as $304,240 in consulting fees, $445,128 in research and development
costs, $500,000 in software development costs and $48,437 in general
and administrative expenses during the year ended August 31, 1997.
Some of the common stock shares issued were registered with the
Securities and Exchange Commission using Form S-8 Registration
Statements.
(5) RELATED PARTY TRANSACTIONS
COMMON STOCK ISSUED
The Company issued 1,000,000 shares of restricted common stock
to Thomas S. Hughes during the year ended August 31, 1997. The
Company did not receive any cash consideration for this common stock
issuance and was valued at $375,000. See Note (4).
The Company issued 286,234 shares of restricted common stock
to former associates of Thomas S. Hughes at a company called Betts,
Inc. The restricted common shares were valued at $41,864.
TRANSACTIONS WITH HPOS
The Company utilized cash accounts maintained by HPOS to fund
day to day operations of the Company. Thomas S. Hughes is the
Chairman of both the Company and HPOS. At August 31, 1998, the net
result of these transactions is a payable to HPOS of $18,969.
DUE TO STOCKHOLDER
The Company had 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
was paid in full by the issuance of 750,000 shares of restricted
common stock during the year ended August 31, 1998.
(6) FOURTH QUARTER ADJUSTMENTS (UNAUDITED)
In the fourth quarter of 1998 and 1997, the Company recorded
adjustments that increased its net loss by approximately $27,500
and$1,558,000, respectively. These adjustments were primarily
related to the issuance of common stock for no cash consideration.
(7) CASH FLOW AND INCOME STATEMENT RECONCILIATION
The following reconciles noncash financing transactions for
the years ended August 31, 1998 and August 31, 1997:
1998 1997
Net loss from Continuing Operations $ 43,808 401,640
Issuance of common stock for
Consulting Fees and General and
Administrative Expenses 153,160 1,297,805
Income Statement Net Loss $196,968 $1,699,445
(8) CONTINGENCIES
(A) CONTINUED EXISTENCE
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. This raises substantial doubt
about the Company's ability to continue.
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.
(B) COMMON STOCK ISSUED IN EXCESS OF AUTHORIZED SHARES
During the year ended August 31, 1998, the Company issued a
total of 6,441,000 shares of common stock. This has resulted in the
total issued common shares exceeding the 10,000,000 common shares
authorized by 4,284,234 common shares. Most of these shares were to
have been preferred stock. Due to an error that was discovered
after the close of the year, however, all of the shares were issued
as common shares, resulting in the Company issuing more common
shares than its articles of incorporation authorize. The Company is
in the process of "recalling" these certificates totaling 4,550,000
shares and replacing them with preferred certificates. The net
result will not be significantly different. Holders of preferred
shares will have a priority over common stockholders with respect to
dividends and liquidation rights, but no dividends are required or
anticipated. The preferred stockholders will have voting rights
equal to those of the common stockholders. The stockholders' equity
(deficit) section of the balance sheet then would be restated as
follows to take into account the preferred stock:
August 31, 1998 Proforma Adjustment Restated
August 31,1998
Stockholders' Equity (Deficit):
Common stock, $.01
par value, authorized
10,000,000 shares;
issued and
outstanding,9,734,234
$142,842 $(45,500) $97,342
Preferred stock, $.01
par value, authorized
5,000,000 shares;
issued and
outstanding - 4,550,000
0 45,500 45,500
Additional paid-in
capital
5,000,420 0 5,000,420
Accumulated deficit
(5,467,602) 0 (5,467,602)
Total stockholders'
equity (deficit)
$(324,340) $0 $(324,340)
(9) SUBSEQUENT EVENTS (UNAUDITED)
CONSENT DECREE ENTERED WITH SECURITIES AND EXCHANGE COMMISSION
The Company has not, to the date of this report, filed
necessary quarterly or annual reports with the United States
Securities and Exchange Commission (the "SEC") since May 31, 1998.
This constitutes a violation by the Company of a provision of the
Securities Exchange Act of 1934, as amended. The Company entered
into a consent decree with the SEC by which the Company agreed to
file all necessary reports by April 9, 1999, and agreed to file all
required reports with the SEC on a timely basis in the future.
EXHIBIT INDEX
Number Exhibit Description
3.1 Leggoons, Inc. Articles of Incorporation and Amendments,
incorporated by reference to Exhibit 3.1 of Leggoons, Inc.
Registration Statement on Form S-1 filed on October 28, 1993.
3.2 Leggoons, Inc. Bylaws Amended, incorporated by reference to
Exhibit 3.2 of Leggoons, Inc. Registration Statement on Form S-1
filed on October 28, 1993.
4 Class A Warrant Agreement, incorporated by reference to
Exhibit 4.2 of Leggoons, Inc. Registration Statement on Form S-1
filed on October 28, 1993.
10.1 Agreement to License Assets (incorporated by reference to
Exhibit 10.16 to the Form 8-K filed on February 25, 1997).
10.2 Escrow Agreement (incorporated by reference to Exhibit 10.17
to the Form 8-K filed on February 25, 1997).
10.3 ET&T Host Processing Agreement (see below).
10.4 ET&T Licensing Agreement (see below).
27 Financial Data Schedule
/TEXT>