SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q

(Mark One)

   ( X )  QUARTERLY  REPORT  PURSUANT  TO SECTION 13 OR 15(D) OF THE  SECURITIES
          EXCHANGE ACT OF 1934

                  For the quarterly period ended June 30, 1997

                                       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 33-13789 LA




                           YOU BET INTERNATIONAL, INC.
             (Exact name of Registrant as specified in its charter)

              Delaware                                       87-042246
              (State or other jurisdiction                   (I.R.S. employer
              of  incorporation or organization)             identification no.)


                            1950 Sawtelle, Suite 180
                              Los Angeles, CA 90025
                                 (310) 444-3300

                  (Address, including zip code, of Registrant's
                    principal executive offices and telephone
                          number, including area code)



Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days. Yes X No

The number of shares outstanding of the Registrant's  Common Stock on August 15,
1997 was 8,288,333 shares.


<PAGE>


                           YOU BET INTERNATIONAL, INC.

                                      INDEX

PART I   FINANCIAL INFORMATION                                          Page No.

Item 1.  Financial Statements

         Consolidated Balance Sheets as of June 30, 1997
         and December 31, 1996                                              3
         Consolidated Statements of Operations for the Three and Six
         Months Ended June 30, 1997 and 1996                                4
         Consolidated Statements of Cash Flows for the Six
         Months ended June 30, 1997 and 1996                                5

         Notes to Consolidated Financial Statements                         6

Item 2.  Management's Discussion and Analysis of Results of Operations
         and Financial Condition                                            10


PART II  OTHER INFORMATION


Item 6.  Exhibits and Reports on Form 8-K                                   11





<PAGE>


PART I            FINANCIAL INFORMATION
Item 1.           Financial Statements
<TABLE>

                                              YOU BET INTERNATIONAL, INC.
                                             CONSOLIDATED BALANCE SHEETS
                                         JUNE 30, 1997 AND DECEMBER 31, 1996
 
                                                                 June 30, 1997                December 31, 1996
<S>                                                              <C>                          <C>    
ASSETS

     Current Assets
         Cash and cash equivalents                                     $63,000                        $  87,000
         Accounts Receivable                                             7,000                                -
         Prepaid Expenses                                              108,000                          156,000
                                                            -------------------        -------------------------

     Total Current Assets                                              178,000                          243,000

     Long Term Assets

           Property and Equipment                                    1,132,000                        1,128,000
           Accumulated Depreciation                                  (266,000)                        (115,000)
                                                            -------------------        -------------------------
             Property and Equipment - Net of Depreciation              866,000                        1,013,000
             Other Assets                                               55,000                           55,000
                                                            -------------------        -------------------------

       Total Long Term Assets                                          921,000                        1,068,000
                                                            -------------------        -------------------------

Total Assets                                                        $1,099,000                     $  1,311,000
                                                            ===================        =========================

LIABILITIES AND STOCKHOLDERS EQUITY

LIABILITIES

     Current Liabilities
         Accounts Payable                                             $857,000                       $  828,000
         Accrued Salaries and related items                            657,000                          192,000
         Other accrued expenses                                        186,000                          265,000
         Bridge Loan payable                                         1,760,000                          200,000
         Interest Payable                                              101,000                            1,000
         Income Taxes payable                                            2,000                            4,000
         Current portion of capitalized lease obligations              195,000                          129,000
                                                            -------------------        -------------------------

     Total Current Liabilities                                       3,758,000                        1,619,000

       Capitalized lease obligations                                    97,000                           97,000
                                                            -------------------        -------------------------
     Total Liabilities                                               3,855,000                        1,716,000
                                                            -------------------        -------------------------

STOCKHOLDERS' EQUITY

     Common Stock (par value $ .001)                                     8,000                            8,000
     Additional Paid-in Capital                                      4,411,000                        4,411,000
     Retained Deficit Balance                                      (6,949,000)                      (4,547,000)
     Deferred Expenses                                               (226,000)                        (277,000)
                                                            -------------------        -------------------------

Total Stockholders' Equity                                         (2,756,000)                        (405,000)
                                                            -------------------        -------------------------

Total Liabilities and Stockholders' Equity                          $1,099,000                    $   1,311,000
                                                            ===================        =========================
</TABLE>
                                           
<PAGE>
<TABLE>
     
                                             YOU BET INTERNATIONAL, INC.
                                       CONSOLIDATED STATEMENTS OF OPERATIONS
                             FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996


                                                      Three Months Ended June 30,             Six Months  Ended June 30,
                                                        1997               1996                1997               1996
<S>                                                <C>                <C>                  <C>                <C>  
                                         
                                         

CONSULTING INCOME                                      $2,000               $3,000             $4,000            $3,000

EXPENSES
         Research and Development /                   528,000              360,000            980,000           570,000
         Operations
         Sales and Marketing                          151,000               74,000            322,000           148,000
         General and Administrative                   514,000              318,000            979,000           507,000
                                                    -------------------------------------------------------------------
                                       
                                       

     Total Expenses                                 1,193,000              752,000          2,281,000         1,225,000
                                                    -------------------------------------------------------------------
                                         
                                         

     LOSS FROM OPERATIONS                         (1,191,000)            (749,000)        (2,277,000)       (1,222,000)

     INTEREST EXPENSE                                (91,000)                    -          (125,000)           (3,000)

     INTEREST INCOME                                        -               25,000                  -            55,000
                                                   --------------------------------------------------------------------
                                         
                                         

     LOSS BEFORE PROVISION FOR
         INCOME TAXES                             (1,282,000)            (724,000)        (2,402,000)       (1,170,000)

     PROVISION FOR INCOME TAXES                             -                    -                  -                 -
                                                   --------------------------------------------------------------------
                                        

     NET LOSS                                    $(1,282,000)           $(724,000)       $(2,402,000)      $(1,170,000)
                                                   --------------------------------------------------------------------




     WEIGHTED AVERAGE COMMON
         SHARES OUTSTANDING                         8,283,333            8,283,333          8,283,333         8,248,333
                                         ===================== ==================== ================== ==================

     NET LOSS PER COMMON SHARE                        $(0.15)              $(0.09)            $(0.29)           $(0.14)
                                         ===================== ==================== ================== ==================

</TABLE>

<PAGE>
<TABLE>


                                            YOU BET INTERNATIONAL, INC.
                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996


                                                                             June 30, 1997              June 30, 1996
<S>                                                                          <C>                        <C>    

     CASH FLOWS FROM OPERATING ACTIVITIES                                     $(2,402,000)           $    (1,170,000)
         Net Loss
         Adjustments  to  reconcile  net loss to net cash  (used  in)  
         operating activities:
              Depreciation                                                         151,000                     25,000
              Amortization of deferred compensation                                 51,000                     52,000
              Disposition of equipment                                               3,000                          -
              Accounts Receivable                                                    1,000                    (5,000)
              Prepaid Assets                                                        19,000                  (188,000)
              Other current assets                                                  22,000                          -
              Accounts Payable                                                      29,000                     96,000
              Interest payable                                                     100,000                          -
              Other Current Liabilities                                            385,000                   (24,000)
                                                                      ---------------------     ----------------------

                  Net cash used in operating activities                        (1,641,000)                (1,214,000)
                                                                      ---------------------     ----------------------

     NET CASH USED IN INVESTING ACTIVITIES:
         Acquisition of equipment                                                  (8,000)                  (433,000)
                                                                      ---------------------     ----------------------

     CASH FLOWS FROM FINANCING ACTIVITIES:
         Proceeds from issuance of stock                                                 -                    350,000
         Proceeds from capitalized lease obligation                                150,000                          -
         Payments on capitalized lease obligations                                (85,000)                          -
         Proceeds from bridge loan facility                                      1,560,000                          -
                                                                      ---------------------     ----------------------

              Net cash provided by financing activities                          1,625,000                    350,000
                                                                      ---------------------     ----------------------

     NET INCREASE IN CASH AND CASH EQUIVALENTS                                    (24,000)                (1,297,000)

     CASH AND CASH EQUIVALENTS
         BEGINNING OF YEAR                                                          87,000                  3,298,000
                                                                      ---------------------     ----------------------

     CASH AND CASH EQUIVALENTS, END OF YEAR                                        $63,000             $    2,001,000
                                                                      =====================     ======================

</TABLE>

<PAGE>


                           YOU BET INTERNATIONAL, INC.

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1

         The  unaudited  consolidated  financial  statements of the Company have
been prepared in accordance with generally  accepted  accounting  principles for
the interim  financial  information,  and  accordingly,  they do not include all
information and footnotes required by generally accepted  accounting  principles
for complete  financial  statements.  The  accompanying  consolidated  financial
statements  should be read in  conjunction  with the more detailed  consolidated
financial  statements  and related  footnotes  included in the Company's  Annual
Report  on Form  10-K  for the year  ended  December  31,  1996  filed  with the
Securities and Exchange Commission.

         In the opinion of management,  the accompanying  unaudited consolidated
financial   statements  contain  all  adjustments  (which  include  only  normal
recurring  accruals),  necessary to present fairly the financial position of the
Company as of June 30, 1997 and the results of its operations and its cash flows
for the three and six months  ended June 30,  1997 and 1996,  respectively.  The
results of  operations  for the  periods  ended  June 30,  1997 and 1996 are not
necessarily  indicative  of the  results  expected  for the entire  year  ending
December 31, 1997.

NOTE 2

         In November  1995, the Company's  Board of Directors  approved the 1995
Stock  Option  Plan and the 1995 Stock  Option Plan for  Non-employee  Directors
(collectively  the "1995  Plans").  The 1995 Plans  provide for the  granting of
awards  of  incentive  stock  options,  nonqualified  stock  options,  and stock
appreciation  rights.  The aggregate  number of shares of common stock available
for issuance under the 1995 Plans is 15% of the total number of shares of common
stock  outstanding  from  time  to  time.  A  total  of  1,166,508  options  are
outstanding  from December 1995 through June 30, 1997 which are  exercisable  at
$2.50-$4.00  per  share  through  June  2007 and  generally  vest in four  equal
installments.  A  total  of  233,524  options  have  vested  at June  30,  1997.
Compensation  totaling  $417,825 was  recorded  upon the issuance of the options
which is being amortized over the vesting period of the options.


           ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
                   AND FINANCIAL CONDITION

         The information set forth below should be read in conjunction  with the
unaudited interim condensed  financial  statements and notes thereto included in
Part I - Item 1 of this Quarterly  Report and with  Management's  Discussion and
Analysis of  Financial  Condition  and Results of  Operations  contained  in the
Company's  Annual  Report on Form 10-K for the year ended  December 31, 1996, as
filed with the Securities and Exchange Commission.

GENERAL

Management Changes

         On May 30, 1997,  the Company  elected  Steve Molnar to the position of
Chief Executive Officer and Ron Luniewski to the position of President and Chief
Operations Officer of You Bet, Inc., the Company's operating  subsidiary.  Prior
to his  promotion,  Mr. Molnar held the position of Executive  Vice President of
Racing for the Company. Prior to his promotion,  Mr. Luniewski held the position
of Chief Operations Officer for the Company for the last year.

         On July 15, 1997,  Barry Peters,  the Chief  Financial  Officer of the 
Company,   resigned.   Mr.   Peters   has  agreed  to  maintain  a   consulting
relationship  for a ninety day period  from  August 1, 1997 to October  31,1997.
<PAGE>


Public Relations Firm Hired

         On May 11, 1997,  the Company  entered into an agreement  with McKinley
Capital to provide  assistance in developing and  implementing  a  comprehensive
Public  Relations  program in anticipation of beta testing and limited  release.
McKinley Capital will also provide  financial  advisory  services.  McKinley has
been  remunerated  by  issuance  of 1 million  warrants,  consisting  of 500,000
warrants at a per share exercise  price of $3.125 and 500,000  warrants at a per
share  exercise  price of $5.25,  with an  exercise  period of three  years.  In
addition,  the Company agreed to allocate 10% of the net proceeds  received from
the June private  placement and the exercise of warrants to public relations and
marketing activities.

Long-Term Communication And Facilitation Agreement Signed

On July 11,  1997,  the  Company  entered  into a long-term  Communications  and
Facilitation agreement with Ladbroke Racing Pennsylvania.  The Company,  through
the You Bet! Racing Network,  will facilitate  interactive and personal computer
telecommunications  between  Ladbroke and its customers.  Implementation  of the
agreement  will be  forthcoming  subject  to  certain  contingencies,  including
regulatory approval.

Company Operations

         The  Company  has for the  past  year  used its  resources  to focus on
developing  its product  software,  computer  network  service and  establishing
alliances  inside of horse racing.  The Company's  computer  network  service is
being readied for deployment,  key  partnerships  have been  established and the
product is in Alpha testing. However the Company continues to experience working
capital difficulties, which has impacted the ability of the Company to implement
its business plan.

         Management believes that the historical financial  information relating
to the Company is not  indicative of the operations of the Company in the future
for the following reasons:

        * In fiscal year 1996 the Company  focused  exclusively  on the research
         and  development of You Bet!  Racing Network and the recruitment of key
         employees.

        * As the Company  enters  product  offering,  the  percentage of product
         development  costs will  decrease as compared  to  operation  costs and
         revenues will begin.

EXPENSES

Research and Development / Operations

         Research and Development  costs increased  $168,000 to $528,000 for the
three  months  ending June 30, 1997 as compared to $360,000 for the three months
ending June 30,  1996.  Research and  Development  costs  increased  $410,000 to
$980,000 for the six months ending June 30, 1997 as compared to $570,000 for the
six months ending June 30, 1996. The increases are primarily due to the build-up
of staff needed for the continued development of the software and graphic design
and service  operations  for the  Company's  You Bet!  Racing  Network  service.
Network  costs  recorded in the second  quarter  1997  reflected  both the first
quarter  and second  quarter  costs.  Network  costs in future  periods  will be
reflected in the period they are incurred.  Salaries  increased $368,000 for the
six month period ending June 30, 1997,  as a result of new  employees  hired for
product development,  network operations and service operations.  Other areas of
increase  include   consulting,   computer   supplies  to  support  the  product
development staff and service operations.

Sales and Marketing

         Sales and Marketing costs  increased  $77,000 to $151,000 for the three
month  period  ending  June 30,  1997 as compared to $74,000 for the three month
period ending June 30, 1996.  Sales and Marketing  costs  increased  $174,000 to
$322,000 for the six month  period  ending June 30, 1997 as compared to $148,000
for the six month  period  ending  June 30,  1996.  The  increases  in costs are
primarily  due to the hiring of a  Vice-President  of Marketing  and a marketing
staff to establish corporate marketing strategies.  Additional increases include
advertising, product packaging, market research, and travel expenses.
<PAGE>

General and Administrative

         General and Administrative costs increased $196,000 to $514,000 for the
three month  period  ending June 30, 1997 as compared to $318,000  for the three
month period ending June 30, 1996.  General and  Administrative  costs increased
$473,000 to $979,000 for the six month  period  ending June 30, 1997 as compared
to $506,000 for the six month period ending June 30, 1996. The increase in costs
is primarily  due to  additional  financial  advisory and legal costs related to
fundraising.  Other costs incurred are the executive management team's salaries,
staffing salaries, depreciation and deferred compensation amortization.

Interest Income and Expense

         Interest  income  decreased  $25,000 for the three month period  ending
June 30, 1997,  and  decreased  $55,000 for the six month period ending June 30,
1997,  primarily  as the result of a lack of excess  funds to  invest.  Interest
expense  increased  $91,000 for the three month period  ending June 30, 1997 and
increased  $122,000 for the six month period ending June 30, 1997 as a result of
interest payable on bridge loans totaling $1,760,000.


LIQUIDITY AND CAPITAL RESOURCES

Current Cash Position

         The  Company is  currently  experiencing  liquidity  problems  that are
expected  to  continue  until  the  Company  completes  some  form of long  term
financing (see Private  Placement).  In response to this situation,  the Company
has reduced the number of its employees, agreed to defer compensation to certain
of  its  senior   officers,   and  otherwise   reduced   operating  and  capital
expenditures.  The  Company  has  $150,000  in cash  and  cash  equivalents  and
$3,238,000 of short-term payables as of August 15, 1997. The short term payables
include  $1,760,000 in bridge notes of which there are $1,110,000 in commitments
confirmed to be converted to the private  placement  (See Bridge  Offering) with
additional $150,000 pending but not confirmed.

         The Company is dependent  upon the proceeds of long term financing (see
Private  Placement) for the  continuation  of its current  testing and marketing
efforts  relating  to You  Bet!  Racing  Network  (YBRN)  software  and  for the
continuation and expansion of the Company's  development  activities and planned
marketing  expenditures.   If  adequate  funds  are  not  available  to  satisfy
short-term or long-term requirements,  management will be required to consider a
variety of other options including  seeking joint venture  partners,  selling or
licensing all or a portion of its  proprietary  technology,  curtailing  product
development  and delaying the  roll-out of its first  product,  as well as other
cost cutting actions, including suspending all or a portion of its activities.

         The Company  expects  that the cash on hand coupled with the cash to be
raised from the new private placement,  assuming it will be successful,  will be
sufficient for operating expenses and capital expenditures through at least June
1998.  No assurance  can be given that the Company will be successful in raising
additional funds.

         The  Company's  need  for  capital  (beyond  that  contemplated  in the
anticipated private placement) during the next year or more will vary based upon
a number of factors,  including  the rate at which demand for products  expands,
the level of sales and marketing  activities for its products,  and the level of
effort needed to develop and commercialize additional applications. In addition,
the Company's  business  plans may change or  unforeseen  events may occur which
require  the  Company to raise  additional  funds.  Additional  funds may not be
available on terms  acceptable to the Company when the Company needs such funds.
The unavailability of additional funds when needed could have a material adverse
effect on the Company.

Bridge Offering

         Commencing  December 1996, the Company offered to accredited  investors
(the "Bridge  Offering")  certain Bridge Notes. The Bridge Notes were structured
as units,  consisting  of $50,000  principal  amount of 15% Secured  Convertible
Notes (the "15%  Notes" or "Bridge  Notes")  and 20,000  Common  Stock  Purchase
Warrants (the "Warrants").  No minimum subscription was required and the Company
<PAGE>

intended to accept any qualified  subscriptions.  The  principal  amount of, and
interest  on, the 15% Notes is due and  payable on the earlier to occur of (i) a
public or private financing raising in excess of $5,000,000 of net cash proceeds
to the  Company or (ii) the first  anniversary  of the Initial  Closing  Date of
December  12,  1996 and is  secured  by  substantially  all of the assets of the
Company.  Each Warrant (the "Bridge  Warrants")  entitles the holder  thereof to
acquire one share (each such share,  a "Warrant  Share") of Common  Stock at the
exercise price per share of $2.50 during the period commencing two business days
following  the  effective  date  (the  "Effective  Date")  of  the  registration
statement relating to a sale of the Company's  securities.  To date, the Company
has been able to  complete  the sale of  $1,760,000  principal  amount of Bridge
Notes, $200,000 of which were closed in December 1996.

Private Placement

         On June 11, 1997 the Company  commenced a private  placement to replace
the previously reported March 17, 1997 offering. The Company is seeking to raise
up to $10,000,000 in gross proceeds before deduction of expected  placement fees
and expenses,  through a private  placement of Units to persons who are not U.S.
persons, as defined in offshore transactions, as defined in Regulation S.

         Concurrently,  the Company is offering in the United  States  identical
Units as is offered  for this  Offering  to domestic  accredited  investors,  as
defined in Rule 501 of Regulation D promulgated  under the Securities  Act. Each
Unit is being  offered at a price of $25,000  per Unit.  Each Unit  consists  of
10,000 Shares of the Company's  $.001 par Common Stock and 5,000 callable Series
D Warrants, each Warrant allowing its holder to purchase a Share of Common Stock
for $5.25 per Share for a period of up to two years from the date of issue. This
is a "best efforts" offering with no minimum amount of Units required to be sold
before subscriptions are accepted by the Company.

         The net proceeds  available for use by the Company from the sale of the
Units will vary depending on the number of Units sold. If the maximum  aggregate
number of Units is sold,  the net cash  proceeds to the Company are estimated to
be $8,875,000  after  deducting  the placement fee and expenses  estimated at an
aggregate of $1,125,000.  The net proceeds are expected to be used for the final
stage  development of the You Bet!  Racing  Network  software;  Private  Network
installation,  expansion and usage; marketing activities such as service launch,
customer  acquisition,   web-site  creation  and  maintenance,  and  promotional
programs for frequent  users,  repay  short-term  loans;  certification  for the
product software and service;  new accounting and management  software;  and for
general corporate purposes.

          As of August 15,  1997,  the Company has raised $2.1  million from the
Offering, which includes $1,110,000 of bridge conversions.


Use of Cash for the Quarter ending June 30, 1997

         During the six month period ending June 30, 1997,  the  Company's  cash
position  decreased  $24,000 to $63,000 as compared  to $87,000 at December  31,
1996 from amount expended for operating activities in excess financing.

         Cash used in operating activities consisted of research and development
costs of $980,000,  marketing costs of $322,000,  and general and administrative
costs of $979,000.  In addition,  prepaid expenses decreased $19,000 as a result
of  prepaying  the office  lease,  and  accounts  payable and other  liabilities
increased by $500,000.  Other operating  activities generated $2,000. As of June
30, 1997 the Company had cash and cash  equivalents  of  approximately  $63,000.
Cash flows from financing  activities totaled  $1,560,000,  used principally for
operating expenditures.


         The  Company  has  entered  into a capital  lease that  provides  for a
$100,000 sale and leaseback of equipment previously purchased by the Company and
a $150,000 line for new equipment purchases in the third quarter 1996. The lease
terms are 30 month,  20%  security  deposit of which 1/3 is returned  after each
year with an effective interest rate of approximately 15% per annum.




<PAGE>


The Company also entered into a capital  lease that provides a $160,000 line for
new equipment purchases in the first quarter 1997. The lease terms are 30 month,
with no security  deposits and an effective  interest rate of approximately  15%
per annum.



<PAGE>


Part II:          OTHER INFORMATION

Item 6:           Exhibits and Reports on Form 8-K:

                  8K filed on March 2, 1997
                  8K filed on May 9, 1997

(a)      Exhibits

         The following exhibits are filed herewith:

         Exhibit 27 - Financial Data Schedule



<PAGE>


                                   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.


                                           By:/s/ David Marshall
                                             -------------------
                                              DAVID MARSHALL
                                              Chairman of the Board,
                                              President, and Chief
                                              Executive Officer



Signature                           Capacity                           Date


/s/ David Marshall             Chairman of the Board,            August 15, 1997
------------------             President, Chief Executive
DAVID M. MARSHALL              Officer and Director
        


/s/ Barry Peters               Acting Chief Accounting           August 15, 1997
----------------               Officer
BARRY PETERS              


<PAGE>