<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Date of Report (Date of earliest event reported): December 6, 1995
YOU BET INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-13789 LA 87-0422246
------------- ----------------- ----------
State of Commission File I.R.S. Employer
Incorporation No. Identification No.
1950 Sawtelle Boulevard, Suite 180
Los Angeles, California 90025
Address of principal executive offices
Registrant's Telephone Number: (310) 444-3300
Continental Embassy Acquisitions, Inc.
(Former Name)
311 South State Street, Suite 460, Salt Lake City, Utah 84111
(Former Address)
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBIT
The Registrant hereby amends its report on Form 8-K filed on December
15, 1995 by filing audited financial statements for MTC for its two
most recent fiscal years.
(a) The following Financial Statements are attached hereto as part of the
Registrant's November 22, 1995, Proxy Statement. (included in (b)
below).
(1) Pro Forma Unaudited Combined Financial Statements*
(2) The Company's Audited Financial Statements for the years
1994-93*
(3) The Company's Unaudited Financial Statements at September 30,
1995*
(4) YBI's Unaudited Financial Statements at September 30, 1995*
(5) YBI's Audited Financial Statements for the Years 1994, 1993
and 1992*
(6) MiddleWare Telecom Corporation unaudited financial statements
at September 30, 1995*
(7) Middleware Telecom Corporation audited financial statements
for the years ended December 31, 1993 and 1994 (1)
(b) Exhibits. The following exhibits are filed herewith.
(1) Agreement and Plan of Reorganization dated effective as of
November 30, 1995 with exhibits.*
(2) Business description of YBI contained in November 22, 1995
Proxy Statement.*
(3) Form of Certificate of Amendment to Certificate of
Incorporation of the Registrant.*
(4) November 22, 1995 Notice of Special Shareholders' Meeting and
Proxy Statement of Registrant with exhibits.*
*Previously Filed
1. Filed herewith
2
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SIGNATURES
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.
YOU BET INTERNATIONAL, INC.
(formerly Continental Embassy Acquisitions, Inc.)
Date: August 21, 1996 By: /s/
--------------------------------
Its: President
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3
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MIDDLEWARE TELECOM CORPORATION
FINANCIAL STATEMENTS FOR THE
YEARS ENDED DECEMBER 31, 1994 AND 1993 AND
INDEPENDENT AUDITORS' REPORT
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INDEPENDENT AUDITORS' REPORT
To the Stockholders of
Middleware Telecom Corporation
Los Angeles, California
We have audited the accompanying balance sheets of Middleware Telecom
Corporation (the "Company") as of December 31, 1994 and 1993 and the related
statements of operations, stockholders' deficit, and cash flows for the years
then ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we 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 incudes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1994 and
1993 and the results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles.
As described in Note 5 to the financial statements, in December 1995, the
shareholders of the Company contributed their shares in the Company to P.C.
Totes, Inc., thereby becoming a wholly owned subsidiary of P.C. Totes, Inc.
/s/ DELOITTE & TOUCHE LLP
Deloitte & Touche LLP
Los Angeles, California
June 14, 1996
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MIDDLEWARE TELECOM CORPORATION
BALANCE SHEETS
DECEMBER 31, 1994 AND 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS 1994 1993
<S> <C> <C>
Cash $ 54,484 $ 25,637
Accounts receivable 30,000
-------- ---------
TOTAL $ 84,484 $25,637
======== =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable $ 2,858
Due to officers/stockholders (Note 2) $ 13,406 48,159
Loan payable:
Related party (Note 2) 65,000 65,000
Individual (Note 3) 50,000 50,000
Other (Note 5) 20,000
Accrued interest (Notes 2 and 3) 17,079 4,505
-------- ---------
Total liabilities 165,485 170,522
-------- ---------
COMMITMENTS AND CONTINGENCIES (Notes 2, 3 and 5)
STOCKHOLDERS' DEFICIT:
Common stock, $1 par value; 100,000,000 shares
authorized, 2,000 shares issued and outstanding 2,000 2,000
Accumulated deficit (83,001) (146,885)
-------- ---------
Total stockholders' deficit (81,001) (144,885)
-------- ---------
TOTAL $ 84,484 $ 25,637
======== =========
</TABLE>
See independent auditors' report and notes to financial statements.
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MIDDLEWARE TELECOM CORPORATION
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
YEARS ENDED DECEMBER 31, 1994 AND 1993
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
CONSULTING INCOME (Note 5) $ 185,531 $ 750
--------- ---------
OPERATING EXPENSES (Note 2):
Consulting fees 21,482 21,202
Office supplies and expenses 24,017 25,784
Professional fees 8,833 14,000
Rent 5,392 7,587
Research and development 1,700 19,619
Travel 16,399 28,475
Utilities 16,746 17,417
Other 13,703 8,246
--------- ---------
Total operating expenses 108,272 142,330
--------- ---------
NET OPERATING INCOME (LOSS) 77,259 (141,580)
INTEREST EXPENSE (Notes 2 and 3) 12,575 4,505
--------- ---------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES 64,684 (146,085)
PROVISION FOR INCOME TAXES (Note 4) 800 800
--------- ---------
NET INCOME (LOSS) 63,884 (146,885)
ACCUMULATED DEFICIT:
Beginning of period (146,885)
--------- ---------
End of period $ (83,001) $(146,885)
========= =========
</TABLE>
See independent auditors' report and notes to financial statements.
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MIDDLEWARE TELECOM CORPORATION
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1994 AND 1993
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<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 63,884 $(146,885)
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
(Decrease) increase in:
Accounts receivable (30,000)
Accounts payable (2,858) 2,858
Due to officers/stockholders (34,753) 48,159
Accrued interest 12,574 4,505
-------- ---------
Net cash provided by (used in) operating activities 8,847 (91,363)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock 2,000
Proceeds from note payable:
Related party 65,000
Individual 50,000
Other 20,000
-------- ---------
Net cash provided by financing activities 20,000 117,000
-------- ---------
NET INCREASE IN CASH 28,847 25,637
CASH, BEGINNING OF PERIOD 25,637
-------- ---------
CASH, END OF PERIOD $ 54,484 $ 25,637
======== =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION -
Cash paid during the period for:
Interest $ - $ -
Income taxes $ 800 $ 800
</TABLE>
See independent auditors' report and notes to financial statements.
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MIDDLEWARE TELECOM CORPORATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1994 AND 1993
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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Activity - Middleware Telecom Corporation (the "Company") is a
California corporation incorporated in 1993 that provided software
consulting services in the Southern California area (see Note 5). The
Company was also developing a pari-mutual wagering software package.
Software Development Costs - The Company's initial software development
costs are charged to operations as research prior to the development of
a detailed program design or a working model. Costs incurred subsequent
to the working model will be capitalized and amortized over the
estimated product life.
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 revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
Fair Value of Financial Instruments - The Company's financial
instruments consist primarily of accounts receivable and payable and
loans payable. The carrying values of all financial instruments other
than the loans payable are representative of their fair values due to
their short-term maturities. The fair value of loans payable to an
individual and related party cannot be determined because of the lack of
quoted market prices on similar debt and the related party nature of the
loans. The loan payable - other was forgiven subsequent to December 31,
1994 and as such has no fair value (see Note 5).
Revenue Recognition - Revenue is primarily derived from various software
consulting agreements and is recognized upon rendering of services.
2. RELATED-PARTY TRANSACTIONS
Loan Payable - Related Party - At December 31, 1994 and 1993, loan
payable to a related party consisted of the following:
<TABLE>
<S> <C>
Loan payable, stockholder's father, interest accrues
at 10% per annum, principal due upon demand $65,000
=======
</TABLE>
Due to Officers/Stockholders - Included in due to officers/stockholders
are expenses incurred by officers/stockholders on behalf of the Company.
These expenses are due to be reimbursed as funds become available to do
so.
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3. LOAN PAYABLE - INDIVIDUAL
At December 31, 1994 and 1993, loan payable to an individual consisted
of the following:
<TABLE>
<S> <C>
Loan payable, individual, interest accrues at 10%
per annum, principal due upon demand $50,000
=======
</TABLE>
4. INCOME TAXES
For the years ended December 31, 1994 and 1993, the provision for income
tax consists of the following:
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
Current - state $ 800 $ 800
Deferred taxes 11,000 56,000
Change in deferred tax asset valuation allowance (11,000) (56,000)
-------- --------
Provision for income taxes $ 800 $ 800
======== ========
</TABLE>
Deferred income taxes are computed annually for differences between
financial statement and income tax bases of assets and liabilities that
will result in taxable or deductible amounts in the future. Such
deferred income tax asset and liability computations are based on
enacted laws and rates applicable to periods in which the differences
are expected to reverse. Valuation allowances are established, when
necessary, to reduce deferred tax assets to the amount expected to be
realized. Income tax expense is the income tax payable or refundable
for the period plus or minus the change during the period in deferred
income tax assets and liabilities. Net deferred tax assets, consisting
primarily of time differences in the recognition of software development
costs for income tax purposes and net operating loss carryforwards, have
been reduced to zero by valuation allowances, due to the uncertainty of
their recoverability.
5. SUBSEQUENT EVENTS
In 1995, the Company relinquished its development of its pari-mutual
wagering software to P.C. Totes, Inc. ("P.C. Totes"), a company related
through common ownership. In addition, in December 1995, the
shareholders in the Company contributed their shares in the Company to
P.C. Totes, thereby becoming a wholly owned subsidiary of P.C. Totes.
In December 1995, PC Totes raised $3,225,000 through a private placement
of its common stock and changed its name to You Bet!, Inc. ("You Bet!").
Concurrent with this transaction, You Bet! was acquired for stock in a
reverse acquisition by Continental Embassy Acquisition, Inc., a publicly
held Utah corporation. The subsequent consolidated entities are
currently developing proprietary interactive software that will provide
individual personal computer users with both race handicapping and other
sports odds making information, and the ability to place bets on horse
racing and other sports contests, as well as recreational games and
contest related to such information.
In May 1995, the Company initiated a settlement with IWN, Inc. ("IWN").
The Company had been performing consulting services for IWN in
connection with the joint development of certain interactive wagering
software. In connection with this arrangement, the Company was paid
$119,000 by IWN in 1994, and was loaned $20,000 by IWN. On May 18, 1995
the Company and IWN entered into a separation and settlement agreement
whereby the loan was forgiven and certain software was delivered by the
Company to IWN. The Company was granted joint rights to use the
software for developments in future projects by either party. Included
in revenues is $119,000 for the consulting services rendered.
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