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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 31, 2000
REGISTRATION NO. 333-39488
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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YOUBET.COM, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4627253
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1950 SAWTELLE BOULEVARD, SUITE 180
LOS ANGELES, CALIFORNIA 90025
(310) 444-3300
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive office)
ROBERT M. FELL
CHIEF EXECUTIVE OFFICER
1950 SAWTELLE BLVD., SUITE 180
LOS ANGELES, CALIFORNIA 90025
(310) 444-3300
(Name, address, including zip code, and telephone number, including
area code, of agent of service)
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Copies to:
TERRY N. CHRISTENSEN, ESQ.
CHRISTENSEN, MILLER, FINK, JACOBS,
GLASER, WEIL & SHAPIRO, LLP
2121 AVENUE OF THE STARS, 18TH FLOOR
LOS ANGELES, CALIFORNIA 90067
(310) 553-3000
<PAGE>
Approximate date of commencement of proposed sale to the public: From
time to time after the date of this registration statement, as determined by
market conditions and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than the securities offered only in connection with dividend or
interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number on the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
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Calculation of Registration Fees
<TABLE>
<CAPTION>
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Proposed Proposed maximum
Title of each class of Amount to maximum offering aggregate offering Amount of
securities to be registered be registered (1) price per unit (2) price (2) registration fee (3)
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<S> <C> <C> <C> <C>
Common Stock, par value $.001 per share. 4,393,134 shares $3.75 $16,474,253 $4,473.95
===================================================================================================================================
</TABLE>
(1) All 4,393,134 shares are issuable upon exercise of outstanding
warrants.
(2) Estimated solely for purposes of calculating the registration fee on the
basis of the average high and low sale price of the common stock on the
Nasdaq National Market on June 13, 2000.
(3) Previously paid.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until this Registration Statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
===============================================================================
<PAGE>
Subject to completion, dated July 31, 2000
The information in this prospectus is not complete and may be changed. The
selling stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell nor does it seek an offer to buy these
securities in any jurisdiction where the offer or sale is not permitted.
YOUBET.COM, INC.
4,393,134 SHARES
COMMON STOCK
Certain selling stockholders are offering up to 4,393,134 shares of
common stock and common stock issuable on exercise of outstanding stock purchase
warrants. Youbet.com will not receive any proceeds from the offering. However,
to the extent selling stockholders exercise stock purchase warrants, Youbet.com
may receive proceeds from the exercise of warrants, except in such cases where
the warrants have "cashless" exercise features and such features are invoked.
Youbet.com's common stock is currently traded on the Nasdaq National
Market under the symbol "UBET." The closing sale price for Youbet.com's common
stock on July 28, 2000 on the Nasdaq National Market was $2.81 per share.
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INVESTING IN YOUBET.COM'S COMMON STOCK INVOLVES RISKS.
SEE "RISK FACTORS" BEGINNING ON PAGE 5.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS , 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Prospectus Summary............................................... 3
Risk Factors..................................................... 5
Recent Developments.............................................. 14
Use of Proceeds.................................................. 15
Selling Stockholders............................................. 15
Plan of Distribution............................................. 15
Legal Matters.................................................... 16
Experts.......................................................... 16
Incorporation of Documents by Reference.......................... 16
Available Information............................................ 17
</TABLE>
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PROSPECTUS SUMMARY
BECAUSE THIS IS ONLY A SUMMARY, IT DOES NOT CONTAIN ALL THE INFORMATION
THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS, INCLUDING
"RISK FACTORS" AND THE MORE DETAILED INFORMATION AND THE FINANCIAL STATEMENTS
AND THE RELATED NOTES WHICH ARE INCORPORATED BY REFERENCE IN THIS PROSPECTUS.
YOUBET.COM
Youbet.com, Inc. intends to establish itself as the leading global
brand name for online live event sports entertainment and wagering and other
forms of online gaming. Wagering on live events, such as horse racing, car
racing, soccer, football, etc., is a very large global industry that adapts
well to the Internet. Youbet.com has initially focused on the United States
horse wagering market. Youbet's principal product, the You Bet Network, a
PC-based system, allows a subscriber to legally transmit information and
thereby facilitate online wagering in the United States. Concurrently,
Youbet.com is working to expand the Youbet.com brand, product and services in
the United States and overseas market. Youbet.com currently provides its
United States network members the ability to watch and in most states, the
ability to wager on a wide selection of coast-to-coast thoroughbred and
harness horse racing, via its exclusive closed-loop network. In addition,
Youbet.com provides access to a comprehensive database of handicapping
information and The You Bet Network is completely interactive and provides a
real-time environment. Youbet.com does not actually accept or place any
wagers. Wagers are accepted and placed only by a state licensed wagering
entity, currently Mountain Laurel Racing, Inc., and Washington Trotting
Association, both of which are subsidiaries of Ladbroke USA (collectively
"Ladbroke").
Youbet.com believes it is an innovator in the online live event wagering
industry and intends to fully exploit the opportunities available to it in the
United States and to aggressively pursue international markets. Future
developments include enhancement and improvement of its existing products and
technologies, development of new products and international expansion. To
enhance and improve the You Bet Network, Youbet.com intends to replace the CD
download currently used with a web-based product. Additionally, Youbet.com looks
to improve its web content management and explore other revenue streams, such as
advertising.
Youbet.com believes that wagering on most forms of live sporting events
is legal in many parts of Europe, Asia, Australia and Latin America. The amount
wagered on horse racing, which is Youbet.com's initial target market, is
substantially larger overseas. For example, Youbet.com believes that in Japan
and Hong Kong, per capita wagering levels are significantly higher than in the
United States.
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Sports wagering includes not only horse wagering, but also sporting
events such as football, basketball, baseball, hockey, soccer, boxing, golf, car
racing, dog racing and jai alai. Except for horse racing, dog racing and jai
alai ("pari-mutuel wagering") in the United States, other sports wagering is
currently legal only in the State of Nevada. Sports event wagering is estimated
to be significantly greater overseas than in the United States.
While many people associate horse racing with horse track betting, in
1998 more than 77% of United States horse wagering came from off-track betting.
This movement to off-track betting began after off-track betting was introduced
in the 1970s. During the past 15 years, off-track betting in the United States
has grown by more than 600% and wagering on domestic horse racing owes its
current growth principally to off-track sources. Off-track wagering currently
includes inter-track simulcasts, off-track betting facilities, telephone account
wagering and with the introduction of the You Bet Network, online wagering. This
dramatic shift from on-track to off-track betting was driven by the public's
desire to have convenient access to racing, the racing industry's ability to
provide a service that met this need and the development of a system called
"account wagering."
Account wagering is accomplished by establishing an account with a state
licensed account wagering entity and depositing funds into that account for
purposes of wagering. Once these funds have cleared, the bettor is free to use
the funds and any resulting winnings for wagering. Many entities in the United
States and worldwide are in the business of establishing such accounts and
placing wagers at the request of bettors.
Youbet.com's executive offices are located at 1950 Sawtelle Boulevard,
Suite 180, Los Angeles, CA 90025. Youbet.com's telephone number is (310)
444-3300 and its World Wide Web site is http://www.youbet.com. INFORMATION
CONTAINED IN YOUBET.COM'S WEB SITE SHOULD NOT BE CONSIDERED A PART OF THIS
PROSPECTUS.
THE OFFERING
<TABLE>
<CAPTION>
<S> <C>
Common Stock offered 4,393,134 shares
Common Stock to be outstanding after the
offering(1) 23,828,943 shares
Common Stock fully diluted after the offering(2) 31,991,029 shares
Use of Proceeds Youbet.com will not receive any of the proceeds from the offering.
However, to the extent selling stockholders exercise stock purchase
warrants, Youbet.com may receive proceeds from the exercise of
warrants, except in such cases where the warrants have "cashless"
exercise features and such features are invoked. See "Use of Proceeds."
Market Symbol UBET
</TABLE>
(1) Assumes that the selling stockholders will exercise all of their warrants.
However, none of the selling stockholders may sell shares of common stock
registered hereunder in excess of 25% of the shares of common stock underlying
their warrants during any three month period.
(2) Assumes the exercise or conversion of all outstanding warrants, stock
options and 11% Senior Convertible Discount Notes.
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RISK FACTORS
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY
CONSIDER THE RISKS DESCRIBED BELOW BEFORE DECIDING WHETHER TO INVEST IN SHARES
OF COMMON STOCK OF YOUBET.COM. THIS PROSPECTUS CONTAINS FORWARD-LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THESE STATEMENTS REFER TO
FUTURE PLANS AND MAY USE WORDS SUCH AS "EXPECT," "INTEND," "ANTICIPATE" AND
"PLAN". ANY SUCH FORWARD-LOOKING STATEMENTS INVOLVE RISKS AND UNCERTAINTIES, AND
ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE IN THE FORWARD-LOOKING
STATEMENTS AS A RESULT OF MANY UNCERTAINTIES AND OTHER FACTORS.
RISKS RELATED TO WAGERING STATUTES AND REGULATIONS
LEGAL ISSUES CONCERNING ONLINE WAGERING MAY ADVERSELY AFFECT YOUBET.COM
To the extent that Youbet.com's facilities are used by subscribers to
place intrastate or interstate wagers or Youbet.com receives commissions derived
from such wagers, various federal and state statutes and regulations could have
a direct and material adverse effect on Youbet.com's business and indirectly
could have a material adverse effect on the public's demand for Youbet.com's
services. Gaming activities are subject to extensive statutory and regulatory
regulation by both state and federal authorities, and are likely to be
significantly affected by any changes in the political climate and changes in
economic and regulatory policies. Such effects could be materially adverse to
Youbet.com.
All 50 states currently have statutes or regulations regarding gaming
activities, and three states have no gaming at all. In most states it is illegal
to place or accept a wager, with specific state-by-state statutory exceptions.
For example, pari-mutuel wagering of some kind is permitted in 42 states. Nine
of these 42 states have statutes which provide for account wagering, and six of
these nine states allow accounts for pari-mutuel wagers to be established from
bettors outside of their state. The adoption of laws or regulations affecting
pari-mutuel wagering or adoption of anti-pari-mutuel wagering policies by any
jurisdiction could have a material adverse effect on Youbet.com's business.
The Federal Interstate Wire Act contains provisions which make it a
crime for anyone in the business of gaming to use an interstate or international
telephone line to transmit information assisting in the placing of wagers,
unless the wagering is legal in the jurisdictions from which and into which the
transmission is made. Other federal laws impacting gaming activities include the
Interstate Horse Racing Act, the Interstate Wagering Paraphernalia Act, the
Travel Act and the Organized Crime Control Act. In addition, the United States
Justice Department is in the process of taking action against selected companies
that it deems to be operating without proper licensing and regulatory approval.
Other governmental and quasi-governmental bodies are reviewing interstate and
interactive wagering, and may reach influential anti-gaming conclusions that
could form the basis for new laws, regulations, or enforcement policies that
could have a material adverse effect on Youbet.com's business.
Federal legislation has been proposed which could limit either the
intrastate or interstate activities Youbet.com engages in or the type of
activities associated with such wagering. Any change in either the substance or
the enforcement of the applicable rules and regulations in these areas could
have an adverse effect on Youbet.com's business and prospects.
Youbet.com believes that its activities are in compliance with all
applicable gaming laws and regulations as currently applied. Youbet.com has been
advised by counsel that a reasonable conclusion can be drawn that Youbet.com's
activities do not violate the gaming laws of the United States or the 40 states
(plus the District of Columbia) in which it operates. However, because there is
little clear statutory and case law authority, this conclusion is not free from
doubt. While it is possible to compare Youbet.com's activities to applicable
statutes, the wording of many such statutes is ambiguous. Furthermore, there is
little case law to rely upon for
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interpretation of these ambiguities. Thus, it is possible that Youbet.com may be
alleged to be in violation of an applicable statute based on an interpretation
of the statute which differs from Youbet.com's and its counsel's or based on a
future change of law or interpretation or enforcement policy. Such allegations
could result in either civil or criminal proceedings brought by governmental or
private litigants. As a result of such proceedings, Youbet.com could incur
substantial litigation expense, fines, diversion of the attention of key
Youbet.com employees, and injunctions or other prohibitions preventing
Youbet.com from engaging in various anticipated business activities. Also, if it
were finally determined that Youbet.com did violate applicable law, then civil
damages or criminal penalties could be imposed and Youbet.com might be barred
from pursuing that activity. Such an outcome would have a material adverse
effect on Youbet.com.
Specifically on October 13, 1999, a search warrant was served on
Youbet.com by the Los Angeles Police Department in connection with an
investigation by the Los Angeles Police Department and the Los Angeles District
Attorney's Office. In cooperation with the investigation, effective November 10,
1999, Youbet.com voluntarily suspended reception and transmission of wagering
information from California residents and accelerated its implementation of a
new data center outside the state of California. On January 14, 2000 Youbet.com
reached a civil resolution with the Los Angeles County District Attorney and the
Los Angeles Police Department. Youbet.com entered into a stipulation with the
District Attorney resulting in the entry of a civil judgment and injunction in
which Youbet.com admitted no wrongdoing and no factual or legal findings were
made. As part of the settlement, Youbet.com agreed that until California law is
clarified, California subscribers will not be allowed to place wagers on the You
Bet Network. There can be no assurance that similar actions will not be brought
by other jurisdictions who may experience changes of law, interpretation or
enforcement policy. Such actions may have a material adverse effect on
Youbet.com.
INCREASED GOVERNMENT REGULATION OF INTERNET COMMERCE AND GAMING MAY ADVERSELY
AFFECT YOUBET.COM
Various state legislatures, Congress, and federal and state executive
authorities have proposed laws and regulations directly applicable to online
and Internet gaming which could have a material adverse effect on Youbet.com.
Most prominently, in 1998, a bill sponsored by U.S. Senator Jon Kyl of
Arizona and adopted by a wide margin in the Senate (but ultimately not
enacted) would have prohibited online and Internet gaming, with specified
exceptions, including exceptions for certain horse race wagering and certain
"closed-loop" online systems. However, the latter exceptions were narrow and
this 1998 bill, had it been enacted, would have had a material adverse effect
on Youbet.com's business. Other online and Internet gaming bills have been
considered in recent years in both the Senate and the House of
Representatives. Senator Kyl has reintroduced a new version of his Internet
Gambling Prohibition Act of 1999. This 1999 Kyl bill (S. 692) contains more
broadly drafted exceptions than the 1998 Kyl bill. If it were enacted in the
form in which it was approved by the Senate on November 11, 1999, Youbet.com
does not believe that the bill would have a material adverse effect on
Youbet.com's business. On October 21, 1999, Representative Goodlatte
introduced a bill in the House of Representatives (H.R. 3125) with similar
language as the Kyl bill. On April 6, 2000 the House Judiciary Committee
passed the Goodlatte bill. On July 18, 2000 the full House of Representatives
failed to pass a version of the Goodlatte bill under a "suspension of rules"
procedure. Although a majority of the members of the House voted in favor of
the bill, it failed to receive the two-thirds vote necessary to pass the bill
using this procedure. The version of the bill considered by the House would
have allowed the states to regulate or prohibit on-line para-mutuel wagering.
Other proposals similar to the Kyl bill and the Goodlatte bill could emerge
in Congress; many states have considered and are considering interactive and
Internet gaming legislation and regulations which may or may not be worded so
as to permit Youbet.com's business to continue in such states; and
anti-gaming conclusions and recommendations of other governmental or
quasi-governmental bodies could form the basis for new laws, regulations, or
enforcement policies that could have a material adverse effect on
Youbet.com's business.
International expansion of the You Bet Network may be subject to
regulation in those countries in which it is made available. Youbet.com believes
that it can operate or license technology in numerous jurisdictions that allow
telephone and account wagering, such as South America, Australia, Asia and
Europe. However, Youbet.com may not be able to obtain the approvals necessary to
market its services in such jurisdictions.
TAXES ON WAGERS MAY BE IMPOSED
If one or more governmental authorities successfully asserts that
Youbet.com should collect taxes on
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wagers it could adversely affect Youbet.com's business. Youbet.com does not
currently collect taxes for wagers, as all wagering transactions by Youbet.com
subscribers are currently processed by Ladbroke at its facility in Pennsylvania.
Ladbroke pays all applicable taxes to the State of Pennsylvania. However, one or
more local, state or foreign jurisdictions may seek to tax online and Internet
wagering when a subscriber is physically within their jurisdiction at the time
the wager is placed. Such taxes, if imposed, might have a materially adverse
effect on Youbet.com's business.
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RISKS RELATED TO YOUBET.COM'S OPERATIONS
YOUBET.COM HAS A LIMITED OPERATING HISTORY
Youbet.com's limited operating experience may not form a sufficient
basis on which to predict future results. Youbet.com commenced development in
1995 of PC-based proprietary communications software for online entertainment.
Its first service, the You Bet Network, has only been available since 1998 and
it is a new business in a rapidly changing field.
YOUBET.COM HAS A HISTORY OF LOSSES AND ANTICIPATES FUTURE LOSSES
Youbet.com has experienced significant losses since its inception and
has financed its operations from the sale of its securities and short-term debt.
Youbet.com incurred net losses of approximately $24.5 million and $3 million for
the fiscal year ended December 31, 1999 and the three months ended March 31,
2000 respectively. Youbet.com expects operating losses and negative cash flow to
continue at least through 2000 and possibly later. These losses may increase as
Youbet.com increases its levels of spending in implementing its business plan
and expanding its operations and it is possible that such increases in spending
may not generate sufficient increases in revenue to permit profitable
operations.
YOUBET.COM'S FUTURE OPERATING RESULTS ARE UNPREDICTABLE
Due to Youbet.com's short operating history, results are unpredictable
and may vary on a quarterly basis as a result of a variety of factors. Many of
these factors are outside of Youbet.com's control. These factors include:
- Youbet.com may not be able to attract and retain subscribers to
the You Bet Network;
- Youbet.com may not be successful in maintaining good relations
with horse tracks and other content and information suppliers;
- The introduction of competing wagering services from interactive
gaming or leisure companies may have an adverse effect on
Youbet.com's business;
- Youbet.com may not succeed in its brand-building and marketing
campaigns;
- Price competition from competing services may become more
intense;
- The level of use of online and Internet interactive services,
both domestically and internationally, may not grow as expected;
- There may be a lack of consumer confidence in, and acceptance
of, online and interactive services for leisure and wagering;
- Youbet.com may not experience the expected increases in volume,
size, timing and completion rates for wagers transmitted through
the You Bet Network;
- There may be technical difficulties or lengthy interruptions in
the You Bet Network;
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- Youbet.com may not be able to adequately update and upgrade the
You Bet Network with technological innovations and
infrastructure to accommodate growth;
- Federal or local governmental controls and regulation may change
and become less favorable; and
- General economic conditions and economic conditions specific to
online and Internet interactive activity may be depressed.
YOUBET.COM MAY NEED ADDITIONAL CAPITAL
Youbet.com intends to establish Youbet.com as a brand name by
significantly increasing expenditures on marketing, advertising and product
development both domestically and internationally. To the extent that such
increases in expenditures are not followed by increases in revenues, Youbet.com
will be adversely affected financially. In the event additional capital is
required to fund operating losses or other capital needs, Youbet.com may not be
able to obtain such capital or such capital may be available on terms which are
unfavorable to Youbet.com or its stockholders.
YOUBET.COM FACES STRONG COMPETITION FROM THE TELEVISION GAMES NETWORK AND OTHERS
Youbet.com believes that its principal domestic competitor in the
interactive pari-mutuel gaming market is the Television Games Network, which
is owned by TV Guide, Inc. The Television Games Network is a 24-hour national
racing channel for distribution over cable and DirecTV, along with an in-home
pari-mutuel wagering system that is either accessible through a dedicated
television set-top box or through the Television Games Network website. The
system has undergone testing in Kentucky, has been available to the public in
limited release since November 1998 and is currently available in Kentucky,
Maryland, Oregon and Louisiana. The Television Games Network has announced
that it has formed exclusive relationships with a number of major United
States horse tracks. Further expansion of the Television Games Network's
product and expansion of exclusive relationships may make it difficult for
Youbet.com to grow its subscriber base and to obtain quality racing content
to supply the You Bet Network. Additionally, if exclusive relationships
account for a significant number of horse tracks, the Television Games
Network may be able to secure additional horse tracks on more favorable terms
than Youbet.com.
TrackPower.com is another domestic competitor which offers live video
and wagering services to U.S. residents. TrackPower.com has formed non-exclusive
relationships with many of the same tracks which Youbet.com offers on the You
Bet Network, allows wagering via the telephone, and plans to offer wagering
capability on both PC and WebTV. TrackPower.com offers video coverage of horse
racing seven days per week through its relationship with the DISH Network.
Further expansion of TrackPower.com and the possibility that Youbet.com may not
be able to distinguish its products from those offered by TrackPower.com may
also make it difficult for Youbet.com to grow its subscriber base and compete
effectively.
Worldwide, numerous Internet and other interactive ventures have been
announced. Youbet.com expects to compete with these entities, as well as other
established companies which may enter the interactive, pari-mutuel gaming
market. Many of Youbet.com's other current and potential competitors have far
greater resources than Youbet.com.
YOUBET.COM CURRENTLY RELIES HEAVILY ON ITS RELATIONSHIP WITH LADBROKE
Youbet.com expects to obtain a majority of its future revenues from fees
derived as a percentage of Ladbroke's net commissions on amounts wagered through
the You Bet Network. Accordingly, Youbet.com is highly dependent on maintaining
its online connection with Ladbroke's wagering system. Any system interruption
or malfunction at Ladbroke which inhibits its ability to process wagers from the
You Bet Network may adversely affect Youbet.com's business. Additionally,
Ladbroke's termination of its agreement with Youbet.com, whether due to an
intentional breach or due to Ladbroke's inability to comply with its terms,
would
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also adversely affect Youbet.com's business.
CREDIT CARD COMPANIES MAY REFUSE TO PROCESS YOUBET.COM ACCOUNTS OR WAGERING
ACCOUNTS
Due to perceived legal uncertainty surrounding online, live event
wagering, credit card companies may as a policy refuse to process wagering
account transactions for Ladbroke or any other account wagering entities with
whom Youbet.com has a relationship. Additionally, although Youbet.com does not
actually accept or place any wagers, credit card companies may also be hesitant
to process fees and online transactions by Youbet.com subscribers for the You
Bet Network and other handicapping products. This would limit the methods of
payment available to Youbet.com subscribers, lowering the convenience of the You
Bet Network and may make competitive services more attractive. This may
adversely affect Youbet.com's business and its relationship with account
wagering entities.
YOUBET.COM RELIES ON CONTENT PROVIDERS
Youbet.com is largely dependent upon negotiating and maintaining
agreements with third party information providers and horse tracks for much of
the audio, video and other content presented on the You Bet Network. Youbet.com
does not have exclusive relationships with any content providers. Youbet.com and
Ladbroke may not be able to negotiate or renew acceptable agreements with such
third parties on a timely basis or under acceptable terms and conditions.
As of the date of this prospectus, Youbet.com and Ladbroke have
agreements which allow a subscriber to obtain simulcast audio and video signals
from 60 horse tracks. These horse tracks may terminate the agreements.
Youbet.com strives to improve its content and may not be able to obtain such
agreements for such additional content from other providers or may lose
providers, especially in light of the efforts of competitors, such as the
Television Games Network, to enter into exclusive contracts with such providers.
YOUBET.COM MAY HAVE DIFFICULTY MAINTAINING ITS TECHNOLOGICAL POSITION
Youbet.com's performance depends on its ability to develop, license or
acquire new technologies to enhance its existing services in a time effective
manner. Youbet.com may not be able to maintain its competitive technological
position against current and potential competitors, especially those with
greater financial resources. Youbet.com relies on its software technology to
give it a competitive advantage. This software operates the You Bet Network and
runs on subscribers' PCs. Although Youbet.com is exploring the possibility of
additional intellectual property protection, its software is not currently
protected by patents or copyrights. Youbet.com's main technological advantage
versus potential competitors is its software lead-time in the market and
Youbet.com's experience in operating a wagering network. Therefore, if
competitors introduce new products and services which are based on the You Bet
Network, Youbet.com may have little recourse and its business could be adversely
affected.
INTERNATIONAL EXPANSION EFFORTS MAY NOT SUCCEED
Youbet.com is exploring international relationships and joint ventures
to facilitate the international deployment of sports wagering networks similar
to the United States launch of the You Bet Network. However, there are many
risks in doing business on an international basis, including:
- Potential online live wagering networks, offered by competitors
with greater resources;
- Satisfying different and possibly conflicting regulatory
requirements;
- Foreign currency exchange rate fluctuations;
- Legal uncertainty regarding liability;
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- Tariffs, and other trade barriers;
- Difficulties in staffing and managing foreign operations;
- Longer payment cycles and problems in collecting account
receivables;
- Different accounting practices;
- Political instability;
- Seasonal reductions in business activity; and
- Potentially adverse tax consequences.
Any of these risks could affect the success of Youbet.com's international
expansion. Also, Youbet.com may not be able to successfully establish itself
internationally.
SYSTEM DAMAGE OR FAILURE MAY ADVERSELY AFFECT YOUBET.COM
Youbet.com's systems are vulnerable to damage from earthquake, fire,
floods, power loss, telecommunications failures, break-ins and other unforseen
events. Youbet.com's business is dependent upon its communications hardware and
computer hardware, substantially all of which are located at a leased facility
in Los Angeles, California. Youbet.com has built in certain redundancies in its
systems in case of a system failure or damage, but does not have duplicate
geographic locations for its site of operations. A substantial interruption in
its systems would adversely affect Youbet.com's business.
Youbet.com has property and business interruption insurance covering
damage or interruption of Youbet.com's systems. However, this insurance may not
compensate Youbet.com for all losses that may occur.
YOUBET.COM IS SUBJECT TO ONLINE SECURITY RISKS
If Youbet.com's systems and controls are unable to handle online
security risks, its business will be adversely affected. Youbet.com uses packet
filters, fire walls, and proxy servers which are all designed to control and
filter the data allowed to enter Youbet.com's data center. However, advances in
computer capabilities, new discoveries in the field of cryptography, or other
events or developments may make it easier for someone to compromise or breach
the technology used by Youbet.com to protect subscribers' transaction data. If
such a breach of security were to occur, it could cause interruptions in service
and loss of data or cessation in service to subscribers of Youbet.com. This may
also allow someone to introduce a "virus," or other harmful component to the You
Bet Network causing an interruption or malfunction.
To the extent that activities of Youbet.com involve the storage and
transmission of information such as credit card numbers, security breaches could
damage Youbet.com's reputation and expose Youbet.com to a risk of loss or
litigation and possible liability. Youbet.com's insurance policies may not be
adequate to reimburse Youbet.com for losses caused by such security breaches.
YOUBET.COM DEPENDS ON THE COMMUNICATIONS INFRASTRUCTURE OF THE INTERNET FOR
TRANSMITTING WAGERING INFORMATION
Youbet.com utilizes electronic communications and the Internet
infrastructure to send and receive information to and from subscribers, Ladbroke
and other suppliers. Youbet.com's future success will depend, in significant
part, upon the maintenance and growth of this infrastructure and any failure or
interruption may have a material adverse effect on Youbet.com's business. This
infrastructure is necessary to economically transmit the large amounts of audio
and video data which comprise a broadcast of a horse racing event. To the extent
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that this infrastructure continues to experience increased numbers of users,
increased frequency of use or increased bandwidth requirements of users,
Youbet.com cannot be certain that this infrastructure will be able to support
the demands placed on it, or that the performance or reliability of this
infrastructure will not be adversely affected.
Outages and delays in sending or receiving data as a result of damage to
portions of this infrastructure could also affect Youbet.com's subscribers
ability to transmit wagering information or Ladbroke's ability to process such
information. This will also have an adverse effect on Youbet.com's business.
YOUBET.COM MAY FACE LIABILITY FOR CONTENT AND INFORMATION TRANSMITTED ON THE YOU
BET NETWORK
Youbet.com may face potential direct and indirect liability for
negligence, copyright, patent or trademark infringement, and other claims based
upon the content and data which Youbet.com makes available or sells to
subscribers. If Youbet.com were to be found liable, it would have an adverse
effect on Youbet.com's business. For example, by distributing an incorrect past
performance report, a subscriber may claim he relied on such information and
suffered a monetary loss. Computer failures may also result in incorrect data
being distributed. In these and other instances, Youbet.com may be required to
engage in long and expensive litigation, which could have the effect of
diverting management's attention and require the expenditure of significant sums
of money. Youbet.com's liability insurance may not cover all of these claims or
may not be adequate to protect against all liability that may be imposed. Any
such claims or resulting litigation could have a material adverse effect on
Youbet.com's business.
YOUBET.COM MAY EXPERIENCE PROBLEMS WITH RAPID GROWTH
In order to grow the You Bet Network, Youbet.com will be required to
improve existing transaction processing and operational systems and to train and
grow its number of employees. Youbet.com's current and planned management
systems and controls may not be adequate to support such growth. Additionally,
Youbet.com's management may not succeed in expanding and exploiting existing and
potential strategic relationships and market opportunities. The failure of
Youbet.com to expand effectively could have a material adverse effect on
Youbet.com's business, results of operations and financial condition.
YEAR 2000 RISKS MAY ADVERSELY AFFECT YOUBET.COM
To address the year 2000 issue, in October 1998, Youbet.com established
an in-house project team and initiated a comprehensive plan to assess, remediate
and test Youbet.com's software programs, both those developed internally and
purchased form material outside vendors, hardware and processes, including key
operational, manufacturing and financial systems. The plan also included steps
to verify that all key third-party suppliers and customers were taking measures
to ensure their own readiness and timely implementation. All phases of the year
2000 readiness plan were completed as scheduled. To date, Youbet.com has not
experienced any year 2000 issues with its internal operating systems or with its
third party customers and suppliers. However, there can be no assurance that any
future unforeseen year 2000 issues or year 2000 issues relating to possibly
non-compliant software products will not materially adversely affect
Youbet.com's results of operations, liquidity and financial position or
adversely affect Youbet.com's relationships with customers, vendors or others.
YOUBET.COM DEPENDS ON KEY PERSONNEL
Youbet.com depends on the services of its senior management, which if
not available might have a material adverse effect on Youbet.com. While certain
members of senior management are parties to
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employment or services agreements with Youbet.com, none of these agreements are
long-term, and none prohibit an employee from terminating such an agreement.
Additionally, Youbet.com has not yet filled certain key positions in its
management team, which management believes are crucial to Youbet.com's
development. Youbet.com's future success depends on its ability to identify,
attract, hire, train, retain and motivate highly skilled technical, managerial,
marketing and customer service personnel. Competition for such personnel is
intense and Youbet.com may not be able to retain and attract such employees.
RISKS RELATED TO DEBT
YOUBET.COM HAS A SIGNIFICANT AMOUNT OF DEBT
Youbet.com has a significant amount of debt outstanding, consisting
approximately of $23 million principal amount of 11% Senior Convertible Discount
Note. The degree to which Youbet.com is leveraged could have important
consequences to the stockholders, including the following:
- Youbet.com's ability to obtain additional financing for working
capital, capital expenditures, acquisitions or general corporate
purposes may be impaired;
- Commencing in October 2001, Youbet.com must pay interest on its
notes leaving less funds for other purposes;
- Youbet.com may be at a competitive disadvantage to its less
leveraged competitors; and
- Youbet.com may be more vulnerable to a downturn in general
economic conditions.
If Youbet.com were to be in default under the notes for any reason, there can be
no assurance that any assets will remain for Youbet.com's stockholders after
payment of amounts owed to the noteholders.
WARRANTHOLDERS MAY ASSERT CLAIMS REGARDING THEIR REGISTRATION RIGHTS
Certain of the warrantholders have or may have registration rights with
respect to their warrants and/or shares of common stock underlying such warrants
and may assert claims against Youbet.com in connection with such rights.
Specifically, on June 4, 1999, a holder of 400,000 warrants filed a complaint
against Youbet.com alleging Youbet.com breached its obligation to register the
400,000 shares underlying such warrants. Youbet.com filed its answer on July 15,
1999. The holder moved for summary judgment on the issue of liability and
Youbet.com opposed the motion. On June 2, 2000, the court denied the holder's
motion for summary judgement. Youbet.com is proceeding with discovery and has
noticed the deposition of the holder. As the litigation is in its initial stage,
Youbet.com cannot predict its outcome, although if the claim is determined
adversely to Youbet.com, it could have a material adverse effect on Youbet.com.
YOUBET.COM DOES NOT INTEND TO PAY DIVIDENDS
Youbet.com does not anticipate paying any cash dividends on its common
stock to its stockholders for the foreseeable future. Youbet.com intends to
retain future earnings, if any, for use in the operation and expansion of its
business. In addition, the 11% Senior Convertible Discount Notes contain, and it
is probable that any debt financing agreements entered into by Youbet.com in the
future will contain, restrictions on Youbet.com's ability to declare dividends.
YOUBET.COM'S COMMON STOCK MAY EXPERIENCE EXTREME PRICE AND VOLUME FLUCTUATIONS
The stock markets in general, the Nasdaq National Market and the market
for Internet/online companies in particular, have experienced extreme price and
volume fluctuations that have often been unrelated or disproportionate to the
operating performance of such companies. These trading prices and valuations may
not
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be sustainable. In the past, following periods of volatility in the market price
of a company's securities, securities class action litigation has often been
instituted against such a company. Such litigation, if instituted against
Youbet.com, could result in substantial costs which would have a material
adverse effect on Youbet.com's business.
SHARES ELIGIBLE FOR FUTURE SALE MAY NEGATIVELY AFFECT TRADING PRICE
Sales of Youbet.com's common stock in the public market (including on
the exercise of stock options and warrants or the conversion of 11% Senior
Convertible Discount Notes), may negatively affect the market price of the
common stock. This could also lessen Youbet.com's ability to sell equity or
equity related securities at a future time.
As of May 1, 2000, Youbet.com has outstanding 3,487,632 stock options.
Youbet.com's outstanding 11% Senior Convertible Discount Notes may be
converted into approximately 2.3 million shares at the present conversion rate,
assuming conversion on April 5, 2001. This number of shares issuable upon
conversion is subject to change under the terms of the First Amendment to Note
Purchase Agreement dated February 2000. This amendment, which all of the holders
of the 11% Senior Convertible Discount Notes agreed to, provides that in return
for certain modifications to the agreement, the conversion price on the 11%
Senior Convertible Discount Notes will be reset as of June 30, 2001, if
Youbet.com acquires the stock or assets of any additional business on or prior
to September 30, 2000. See "Recent Developments."
Additionally, the holders of the 11% Senior Convertible Discount Notes
may call the notes due and payable upon a "change in control" of Youbet.com.
"Change in control" includes a sale of substantially all of Youbet.com's assets,
an acquisition of 20% or more of the voting power of Youbet.com by a "group" of
affiliated persons within the meaning of Section 13(d) of the Securities and
Exchange Act of 1934, as amended, the acquisition by Youbet.com of more than 30%
of its capital stock outstanding immediately prior to such acquisition, the
payment of a dividend or other distribution to Youbet.com's stockholders in an
amount that is 30% or more of the fair market value of Youbet.com's outstanding
capital stock immediately prior to such distribution or dividend, or the
acquisition by a person or affiliated group of the power to elect or appoint the
majority of Youbet.com's board of directors.
Delaware law provisions which are not opted out of by Youbet.com's
Certificate of Incorporation and Bylaws could make it more difficult for a third
party to acquire Youbet.com, even if doing so would be beneficial to
Youbet.com's stockholders. Additionally, Youbet.com's Certificate of
Incorporation authorizes the board of directors to issue up to 1,000,000 shares
of preferred stock, in one or more series and permits the board of directors to
fix the rights, preferences, powers and designations of such series without a
stockholders vote. Depending on the terms of any such series, such preferred
stock may discourage attempts to acquire Youbet.com.
RECENT DEVELOPMENTS
On March 14, 2000, Youbet.com signed a letter of intent to acquire
from the betting and gaming division of Hilton Group plc, its subsidiaries
which own and operate six off-track betting and two bingo operations based in
Argentina. The purchase price is estimated to be approximately $26 million,
payable in cash and notes. This acquisition is expected to be completed in
fiscal 2000 subject to negotiation, execution and closing of a definitive
purchase agreement, completion of Youbet.com's due diligence, receipt of
applicable regulatory approvals and absence of adverse changes in the
financial condition of the business.
On May 24, 2000 Youbet.com announced the buyback and retiring of
approximately $17.3 million or 46% of its outstanding 11% Senior Convertible
Discount Notes at a cost of approximately $9.9 million, which will result in
a gain of approximately $6.9 million. After this buyback, approximately $23
million in principal amount of the notes will remain outstanding.
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USE OF PROCEEDS
The shares of common stock being offered are solely for the accounts of
the selling stockholders. Youbet.com will not receive any proceeds from the sale
of the common stock. However, to the extent selling stockholders exercise stock
purchase warrants, Youbet.com may receive proceeds from the exercise of
warrants, except in such cases where the warrants have "cashless" exercise
features and such features are invoked.
SELLING STOCKHOLDERS
Youbet.com entered into letter agreements dated March 11, 1999, with
warrantholders who, as of May 1, 2000 represent 4,393,134 shares of common
stock. These agreements require Youbet.com to file a registration statement
covering the common stock issuable upon exercise of such warrants. This
prospectus is a part of such registration statement.
The table in Appendix I hereto sets forth information about the selling
stockholders and the number of shares of common stock beneficially owned by them
including upon exercise of the warrants. Except as disclosed in this prospectus,
none of the selling stockholders has, or within the past three years has had,
any position, office or other material relationship with Youbet.com or any of
its predecessors. The selling stockholders listed in the table may have sold or
transferred, in transactions exempt from the registration requirements of the
Securities Act, some or all of their warrants and common stock since the date on
which the information in the table is presented, therefore affecting the number
of shares offered by them. Information about the selling stockholders may change
over time. Youbet.com cannot estimate the amount of common stock that will be
held by the selling stockholders upon the termination of the offering since it
is possible that selling stockholders may not sell such shares or may acquire or
dispose of shares of common stock not included in this registration statement.
See "Plan of Distribution."
Youbet.com prepared the table in Appendix I based on the information
supplied to Youbet.com by the selling stockholders named in the table.
PLAN OF DISTRIBUTION
Youbet.com is registering 4,393,134 shares of common stock on behalf of
the selling stockholders. Youbet.com has agreed to maintain the effectiveness of
this prospectus for the amount of time required pursuant to the terms of the
various warrants whose underlying shares are being registered hereunder.
None of the selling stockholders may sell shares of common stock
registered hereunder in excess of 25% of the shares of common stock underlying
their warrants during any three month period. The selling stockholders may sell
the shares of common stock covered by this prospectus from time to time at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The selling stockholders may
offer their shares for sale in one or more of the following transactions:
- On the Nasdaq National Market;
- Through the facilities of any national securities exchange or
U.S. automated inter-dealer quotation system of a registered
national securities association on which any of the shares of
common stock are then listed, admitted to unlisted trading
privileges or included for quotation; and
- In privately negotiated transactions; or block transactions,
special offerings, exchange distributions and/or secondary
distributions, in negotiated transactions, in settlement of
short sales of common stock; or
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- In a combination of such methods of sale.
The selling stockholders may from time to time pledge the common stock
owned by them to secure margin or other loans made to one or more of the selling
stockholders. Thus, the person or entity receiving the pledge of any of the
shares of common stock may sell them, in a foreclosure sale or otherwise, in the
same manner as described above for a selling stockholder.
Youbet.com has not been advised of any selling arrangement at the date
of this prospectus between any selling stockholder and any broker-dealer or
agent. Youbet.com will not receive any of the proceeds from the sale of the
shares by the selling stockholders. However, to the extent selling stockholders
exercise warrants, Youbet.com may receive proceeds from the exercise of the
warrants, except in such cases where the warrants have "cashless" exercise
features and such features are invoked.
The selling stockholders and any dealer acting in connection with the
offering or any broker executing a sell order on behalf of a selling stockholder
may be deemed to be "underwriters" within the meaning of the Securities Act, in
which event any profit on the sale of shares by a selling stockholder and any
commissions or discounts received by any broker or dealer may be deemed to be
underwriting compensation under the Securities Act. In addition, the broker or
dealer may be required to deliver a copy of this prospectus to any person who
purchases any of the shares from or through the broker or dealer.
Youbet.com is bearing all fees and expenses incurred in connection with
the registration of the shares of common stock which may be sold under this
prospectus.
Youbet.com has agreed to indemnify certain of the selling stockholders
against certain liabilities which may arise in connection with this offering and
such selling stockholders have severally and not jointly agreed to indemnify
Youbet.com against certain other liabilities which may arise in connection with
this offering.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon
for Youbet.com by Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro,
LLP. As of the date of this prospectus, a partner and an attorney having an
"of counsel" relationship with Christensen, Miller, Fink, Jacobs, Glaser,
Weil & Shapiro, LLP beneficially own an aggregate of 90,000 shares of common
stock.
EXPERTS
The financial statements of Youbet.com, Inc., as of December 31, 1999
and 1998, and for each of the years in the two year period ended December 31,
1999 on Form 10-KSB, are incorporated by reference in this Prospectus have been
audited by BDO Seidman, LLP, independent certified public accountants, to the
extent and for the periods set forth in their report incorporated herein by
reference, and are incorporated herein in reliance upon such report given upon
the authority of said firm as experts in auditing and accounting.
INCORPORATION OF DOCUMENTS BY REFERENCE
The Securities and Exchange Commission allows Youbet.com to "incorporate
by reference" the information Youbet.com files with it, which means that
Youbet.com can disclose important information to prospective investors by
referring prospective investors to those documents. The information incorporated
by reference is considered to be part of this prospectus, and later information
that Youbet.com files with the Securities and Exchange Commission will
automatically update and supersede this information. Youbet.com incorporates by
reference the following:
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- Form 10-KSB for the year ended December 31, 1999;
- Form 10-Q for the first quarter ended March 31, 2000;
- Form 8-K filed on January 19, 2000 and June 26, 2000;
- The description of Youbet.com's common stock contained in the
registration statement on Form 8-A filed under Section 12(g) of
the Exchange Act on June 10, 1999; and
- Any other filings made with the Securities and Exchange
Commission under Section 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 after December 31, 1999, until
this offering is terminated.
Youbet.com will provide without charge to each person, including any
beneficial owner to whom this prospectus is delivered, upon the written or oral
request of such person, a copy of any or all of the documents referred to above
which have been incorporated by reference, other than exhibits to such
documents. Written requests for such copies should be addressed to: Youbet.com,
Inc., 1950 Sawtelle Boulevard., Suite 180, Los Angeles, CA 90025, Attention:
Phillip Hermann. Youbet.com's telephone number is (310) 444-3300.
AVAILABLE INFORMATION
Youbet.com has filed with the Securities and Exchange Commission a
registration statement (of which this prospectus is a part) on Form S-3 under
the Securities Act, with respect to the common stock offered hereby. This
prospectus does not contain all the information set forth in the registration
statement and the exhibits and schedules thereto. Statements contained in this
prospectus as to the content of any contract or other document are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the registration statement,
each such statement being qualified in all respects by such reference and the
exhibits and schedules thereto.
Youbet.com is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended and in accordance therewith files
reports and other information with the commission. The registration statement,
including the exhibits and schedules thereto, as well as any other information
filed by Youbet.com may be inspected and copied at the public reference rooms
maintained by the commission at its principal office located at 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549, the New York Regional
Office located at 7 World Trade Center, New York, New York 10048, and the
Chicago Regional Office located at Northwest Atrium Center, 500 West Madison
Street, Room 1204, Chicago, Illinois 60661-2511. Please call the commission at
1-800-SEC-0330 for further information on the public reference rooms.
Electronics filings made by Youbet.com through the commission's
Electronic Data Gathering, Analysis and Retrieval System are publicly available
through the commission's World Wide Web site (http://www.sec.gov), which
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the commission.
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PART II
Information Not Required in Prospectus
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Securities and Exchange Commission filing Fee $ 4,474
Printing and engraving fees and expenses $ 4,000
Legal fees and expenses $30,000
Accounting fees and expenses $ 5,000
-------
Total $43,474
=======
Youbet.com will bear all the foregoing expenses.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
provides that a corporation shall have the power, and in some cases is required,
to indemnify an agent, including an officer or director, who was or is a party
or is threatened to be made a party to any proceedings, against certain
expenses, judgments, fines, settlements and other amounts under certain
circumstances. Article XI of Youbet.com's Bylaws requires indemnification of
Youbet.com's officers and directors to the maximum extent permitted by the
Delaware General Corporation Law, and Youbet.com maintains insurance covering
certain liabilities of the directors and officers of Youbet.com and its
subsidiaries.
ITEM 16. EXHIBITS
2.1 Acquisition Agreement between PC Totes, Inc. and Embassy
Acquisition, Inc. dated as of December 6, 1995. (Incorporated
herein by reference to Youbet.com's Form 10-K for the year ended
December 31, 1995.)
4.1 Form of Note Purchase Agreement by and among Youbet.com and the
Purchasers as defined therein, dated April 5, 1999 (Incorporated
herein by reference to Youbet.com's Registration Statement on
Form S-3 (No. 333-85675) dated September 29, 1999.)
4.1A Form of First Amendment of Note Purchase Agreement dated
February 29, 2000 (Incorporated herein by reference to
Youbet.com's 10KSB for the period ended December 31, 1999.)
4.2 Form of Warrant to purchase Youbet.com common stock, issued in
connection with the Note Purchase Agreement dated April 5 1999
(Incorporated herein by reference to Youbet.com's Prospectus
Filed Pursuant to Rule 424 dated October 4, 1999.)
4.3 Registration Rights Agreement by and among Youbet.com (formerly
You Bet International, Inc.) and the other parties listed
therein, dated June 29, 1998. (Incorporated herein by reference
to Youbet.com's Form 8-K dated June 29, 1998.)
4.4 Form of Series A Warrant to purchase Youbet.com common stock
(Incorporated herein by reference to Youbet.com's Prospectus
Filed Pursuant to Rule 424 dated October 4, 1999.)
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4.5 Form of Series B Warrant to purchase Youbet.com common stock
(Incorporated herein by reference to Youbet.com's Prospectus
Filed Pursuant to Rule 424 dated October 4, 1999.)
4.6 Form of Series C Warrant to purchase Youbet.com common stock
(Incorporated herein by reference to Youbet.com's Prospectus
Filed Pursuant to Rule 424 dated October 4, 1999.)
4.7 Form of Series D Warrant to purchase Youbet.com common stock
(Incorporated herein by reference to Youbet.com's Prospectus
Filed Pursuant to Rule 424 dated October 4, 1999.)
4.8 Form of Series E Warrant to purchase Youbet.com common stock
(Incorporated herein by reference to Youbet.com's Prospectus
Filed Pursuant to Rule 424 dated October 4, 1999.)
4.9 Form of Series M Warrant to purchase Youbet.com common stock at
$3.125 per share (Incorporated herein by reference to
Youbet.com's Prospectus Filed Pursuant to Rule 424 dated
October 4, 1999.)
4.10 Form of Series M Warrant to purchase Youbet.com common stock at
$5.25 per share (Incorporated herein by reference to
Youbet.com's Prospectus Filed Pursuant to Rule 424 dated October
4, 1999).
4.11 Warrant to purchase Youbet.com common stock issued to Robert M.
Fell, dated June 29, 1998 (Incorporated herein by reference to
Youbet.com's Form 8-K dated June 29, 1998.)
4.12 Form of Warrant to purchase Youbet.com common stock at $2.50 per
share, issued to Lorne Goldberg and Elizabeth Edlich dated
August 12, 1999 (Incorporated herein by reference to
Youbet.com's Registration Statement on Form S-3 (No. 333-85675
dated September 29, 1999.)
*5.1 Opinion of Christensen, Miller, Fink, Jacobs, Glaser, Weil &
Shapiro, LLP
*23.1 Consent of Christensen, Miller, Fink, Jacobs, Glaser, Weil &
Shapiro, LLP (included in Exhibit 5.1)
*23.2 Consent of BDO Seidman, LLP
**24 Power of Attorney
-------------
* Filed herewith
** Filed Previously
ITEM 17. UNDERTAKINGS
Youbet.com hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
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aggregate, represent a fundamental change in the information set forth in the
Registration Statement;
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
Provided, however, that the undertakings set forth in paragraphs (a)(1)(i) and
(a)(1)(ii) of this section do not apply if the information required to be
included in a post-effective amendment by those paragraphs is contained in
periodic reports filed with or furnished to the Commission by Youbet.com
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) Youbet.com hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of Youbet.com's annual
report on Form 10-KSB or 10-K pursuant to Section 13(a) or 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
Youbet.com pursuant to the foregoing provisions, or otherwise, Youbet.com has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Youbet.com of expenses
incurred or paid by a director, officer or controlling person of Youbet.com in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, Youbet.com will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication for such issue.
(i) Youbet.com hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by Youbet.com pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be part of this
registration statement as of the time it was declared effective.
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(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement related to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Youbet.com
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Los Angeles, State of California, on July 27,
2000.
YOUBET.COM, INC.
By: /s/ ROBERT M. FELL
--------------------------------------
Robert M. Fell
Chairman of the Board of Directors and
Chief Executive Officer
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 dates indicated.
<TABLE>
<CAPTION>
Name Title Date
<S> <C> <C>
/s/ ROBERT M. FELL Chairman of the Board of Directors July 27, 2000
-------------------------- and Chief Executive Officer
Robert M. Fell
/s/ PHILLIP C. HERMANN Executive Vice President July 27, 2000
-------------------------- and Chief Financial Officer
Phillip C. Hermann
*/s/ CAESAR P. KIMMEL Director July 27, 2000
--------------------------
Caesar P. Kimmel
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
*/s/ ALAN W. LANDSBURG Director July 27, 2000
---------------------------
Alan W. Landsburg
*/s/ CHARLES D. PEEBLER, JR. Director July 27, 2000
---------------------------
Charles D. Peebler, Jr.
*/s/ WILLIAM H. ROEDY Director July 27, 2000
---------------------------
William H. Roedy
</TABLE>
*By /s/ ROBERT M. FELL
--------------------------
Robert M. Fell
Attorney-in-Fact
<PAGE>
APPENDIX I
<TABLE>
<CAPTION>
SELLING STOCKHOLDERS
------------------------------------------------------------------------------------------------------------------------
Ownership of Common Stock Prior to Ownership of Common Stock
the Offering(1) After the Offering(1)
------------------------------------------------------------------------------------------------------------------------
Number Percentage Number of Shares Number Percentage of
Name of Selling Stockholder of Shares Ownership(2) Offered Hereby of Shares Ownership(2)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
TED ABELE 7,000 * 2,000 5,000 *
STEVEN ABRAMS 305,000 1.6% 30,000 275,000 1.4%
JAMES ACHESON 48,900 * 48,900 -- *
JAMES ACHESON & JOANNE COLONNA ACHESON 5,000 * 5,000 -- *
RAYMOND ACHESON AND JEAN ACHESON 1,000 * 1,000 -- *
DAVID H. ADAMSON 20,160 * 6,720 13,440 *
AFRICK ENTERPRISES 58,320 * 14,107 44,213 *
AFTRICK FAMILY TRUST 72,900 * 12,634 60,266 *
MICHAEL B. AFRICK 1,000 * 1,000 -- *
BENJAMIN NATHAN AFRICK 500 * 500 -- *
ALEXANDER JORDAN AFRICK 500 * 500 -- *
BRYAN ANDREW AFRICK 500 * 500 -- *
BRADY JOSEPH AFRICK 500 * 500 -- *
LAUREN TAYLOR WOLFEN 500 * 500 -- *
MATTHEW JACOB WOLFEN 500 * 500 -- *
CATE LAWRENCE WOLFEN 500 * 500 -- *
MAUREEN HJORTH 500 * 500 -- *
SPIWAK FAMILY TRUST 165,379 * 38,793 126,586 *
DONNA ARNOLD LIVING TRUST 56,533 * 56,533 -- *
GROVE ISLAND LIMITED 74,097 * 74,097 -- *
CHRISTOPHER BAUER 2,733 * 2,733 -- *
BLAIRWOOD FINANCIAL ADVISORS 4,000 * 4,000 -- *
BARBARA FRY BIRT TRUST 3,500 * 3,500 -- *
JOE BODGAN 22,151 * 19,151 3,000 *
BURTON BORMAN IRA 78,167 * 70,667 7,500 *
KERESLEY INVESTMENTS 74,400 * 44,800 29,600 *
NWT NOMINEES LIMITED 120,436 * 60,436 60,000 *
RUSALKA TRUST 15,000 * 5,000 10,000 *
MATT BRIGHT 4,000 * 4,000 -- *
PHILLIP CENTANNI 1,250 * 1,250 -- *
CAPITAL TRADE SERVICES LIMITED 15,000 * 5,000 10,000 *
CHARLIE DAVIES 20,000 * 20,000 -- *
HERITAGE FINANCE & TRUST CO 30,000 * 30,000 -- *
HENRY DICKENSON 14,200 * 4,200 10,000 *
MARK DOYLE 10,000 * 10,000 -- *
NANCY DRISKI 9,000 * 4,000 5,000 *
TIM EASTMAN 25,896 * 2,891 23,005 *
DANIEL FAGAN 3,000 * 3,000 -- *
PAUL A. FILER 10,334 * 5,000 5,334 *
STUART FINE AND MARCIA FINE 65,833 * 35,333 30,500 *
GSB HOLDINGS, LLC 107,856 * 27,063 80,793 *
JOHN GREINER 31,575 * 2,429 29,146 *
DASSITY, INC 49,000 * 49,000 -- *
THE PRESIDENT & TRUSTEES OF COLBY COLLEGE 10,000 * 10,000 -- *
JOHN L. HERSMA TRUST 19,000 * 4,500 14,500 *
FITZ HO 772 * 772 -- *
JOLLEY FAMILY TRUST 82,000 * 20,000 62,000 *
ROBERTO A. KINGSTON 150,000 * 150,000 -- *
POLINA KOMBERG 98,113 * 22,583 75,530 *
TANIA KONISHI 600 * 600 -- *
STAN KRAMER 4,000 * 2,000 2,000 *
BRUCE KURCHACK 137,795 * 90,000 47,795 *
ANTHONY LAPAGLIA 5,150 * 2,000 3,150 *
DAVID LARKIN 73,000 * 45,333 27,667 *
RICHARDS INTERNATIONAL CAPITAL HOLDINGS LTD 105,000 * 35,000 70,000 *
LAWRENCE LUCAS 110,605 * 50,333 60,272 *
</TABLE>
A-1
<PAGE>
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
Ownership of Common Stock Prior to Ownership of Common Stock
the Offering(1) After the Offering(1)
------------------------------------------------------------------------------------------------------------------------
Number Percentage Number of Shares Number Percentage of
Name of Selling Stockholder of Shares Ownership(2) Offered Hereby of Shares Ownership(2)
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
DIANNE M. LYLES 13,500 * 3,500 10,000 *
1ST ZAMORA CORPORATION 579,203 2.9% 501,500 77,703 *
STEVE MANIACI 19,775 * 14,508 5,267 *
MARSHALL GIFT TRUST 482,250 2.5% 91,333 390,917 2.0%
SID MARSHALL 870,490 4.4% 448,668 421,822 2.1%
GARY MCADAM 5,000 * 5,000 -- *
SUMMER BREEZE, LLC 425,474 2.2% 250,000 175,474 *
VISCOUNT SECURITIES, LTD 160,000 * 160,000 -- *
ROGER MEYER 40,000 * 40,000 -- *
SFM MARKETING, INC 23,500 * 22,500 1,000 *
ROBERT MODEER 6,000 * 2,000 4,000 *
IAN JENKINS MORGAN 20,160 * 6,720 13,440 *
SUMMER VENTURES, INC 57,565 * 14,000 43,565 *
BOULDER FAMILY PARTNERSHIP, LTD 510,000 2.6% 510,000 -- *
MCKINLEY CAPITAL 76,000 * 76,000 -- *
DAVID N. NEMELKA, JR 12,000 * 12,000 -- *
TRADECO 50,000 * 50,000 -- *
DONALD NEWLAND 5,288 * 288 5,000 *
DARLENE OLIVA 2,320 * 660 1,660 *
OWEN & ASSOCIATES IBG, LLC 34,000 * 34,000 -- *
OWEN & ASSOCIATES INC. PROFIT SHARING PLAN 23,500 * 6,500 17,000 *
OWEN ENTERPRISES, LLC 44,200 * 44,000 200 *
JOHN RODERICK OXLEY 18,160 * 6,720 11,440 *
PETERSON & SONS HOLDING COMPANY 7,000 * 7,000 -- *
NORMAN L. PETERSON 9,000 * 9,000 -- *
MICHELL PINDUS 109,197 * 33,667 75,530 *
MITCHELL PINDUS AND POLINA K. PINDUS 85,530 * 10,000 75,530 *
J. PAUL CONSULTING 50,000 * 50,000 -- *
AGORA COMMUNICATIONS LTD 5,000 * 5,000 -- *
ANDY RIABOKIN 2,000 * 2,000 -- *
RICHARD LIVING TRUST 5,000 * 5,000 -- *
PACESETTER TRAVEL LTD 16,000 * 16,000 -*
ANDREW KENT ROBERTSON 245,192 1.3% 160,125 85,067 *
VIRGINIA RODRIGUEZ 46,002 * 4,302 41,700 *
LEN H. ROTHSTEIN 6,000 * 1,500 4,500 *
ERWIN GERALD RUHLAND IRA 50,000 * 30,000 20,000 *
ERWIN GERALD RUHLAND 38,750 * 31,250 7,500 *
JAMES EDWARD RUHLAND 10,250 * 3,750 6,500 *
EGGER & CO 200,000 1.0% 200,000 -- *
GEORGE SHIFRIN 50,000 * 20,000 30,000 *
ROBINSON GEAR (NOMINEES) LIMITED A/L J-10 69,500 * 45,333 24,167 *
JOHN RICHARD LLOYD SMITH 61,000 * 35,333 25,667 *
JANE SNOWDEN 8,400 * 2,400 6,000 *
WINSFORD CORP 18,500 * 18,500 -- *
JOHN P. STACY 7,000 * 2,000 5,000 *
PHYLLIS TANZER 15,000 * 5,000 10,000 *
JOSEPH TARZIA 22,392 * 356 22,036 *
PETER ANTHONY THORNTON 22,720 * 6,720 16,000 *
MR. CORNELL TIMNEY AND ANN TIMNEY 5,000 * 5,000 -- *
JAMES W. TOOT 65,000 * 50,000 15,000 *
DOUG TUNG 131,437 * 1,508 129,929 *
STEVE & CHARLENE USTIN 124,000 * 44,333 79,667 *
DONALD W. WHITE MONEY PURCHASE PENSION PLAN 3,000 * 3,000 -- *
OTHER HOLDERS OF SERIES A WARRANTS (3) 15,000 * 10,000 5,000 *
OTHER HOLDERS OF SERIES C WARRANTS (3) 9,902 * 9,451 451 *
OTHER HOLDERS OF SERIES D WARRANTS (3) 22,802 * 12,351 10,451 *
OTHER HOLDERS OF SERIES M WARRANTS (3) 112,000 * 112,000 -- *
</TABLE>
* Less than 1.0%
(1) Calculated using shares of common stock beneficially owned as of
June 30, 2000, and such shares which could be acquired upon exercise
of warrants within 60 days of June 30, 2000.
(2) Calculated based on Rule 13d-3(d)(i) of the Exchange Act using
19,478,650 shares of common stock outstanding as of June 30, 2000. In
calculating this amount, Youbet.com treated as outstanding the number
of shares of common stock and the number of shares issuable upon
exercise of that particular selling stockholder's warrants. However,
Youbet.com did not assume the exercise of any other selling
stockholder's warrants.
(3) Each of these selling stockholders hold less than one percent of
Youbet.com's outstanding shares of common stock.
A-4
