UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF
SECURITIES Pursuant to Section 12(b) or (g) of the
Securities Exchange Act of 1934
BINGO.COM, INC.
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(Exact name of registrant as specified in its charter)
Florida Not Applicable
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
702-543 Granville Street
Vancouver, B.C. V6C 1X8
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (604) 687-2000
Securities to be registered under Section 12(b) of the Act:
NONE None
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Title of each class to be so registered Name of each exchange on which each
class is to be registered
Securities to be registered under Section 12(g) of the Act:
Common Shares, Par Value $.001 Per Share
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(Title of Class)
Not Applicable
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(Title of Class)
PAGE 1 OF _______ PAGES.
THE EXHIBIT INDEX APPEARS ON
SEQUENTIALLY NUMBERED PAGE _____.
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TABLE OF CONTENTS
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Item 1. Business...............................................................................................1
Item 2. Financial Information.................................................................................33
Item 3. Properties............................................................................................42
Item 4. Security Ownership of Certain Beneficial Owners and Management........................................42
Item 5. Directors and Executive Officers......................................................................43
Item 6. Executive Compensation................................................................................45
Item 7. Certain Relationships and Related Transactions........................................................46
Item 8. Legal Proceedings.....................................................................................47
Item 9. Market Price of and Dividends on Registrant's Common Equity and Related Stockholder Matters...........47
Item 10. Recent Sales of Unregistered Securities...............................................................47
Item 11. Descriptions of Registrant's Securities to be Registered..............................................49
Item 12. Indemnification of Directors and Officers.............................................................55
Item 13. Financial Statements and Supplementary Data...........................................................56
Item 14. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure..................56
Item 15. Financial Statements and Exhibits.....................................................................56
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PART I
Item 1. Business.
Introduction
We, Bingo.com, Inc., are a holding company with two subsidiaries:
o Bingo.com (Canada) Enterprises Inc. is a British Columbia corporation; and,
o Bingo.com (Antigua), Inc. is an Antigua Corporation
We intend to organize a wholly owned subsidiary under the name Bingo.com
(Wyoming), Inc. as a Wyoming corporation.
Our corporate structure after we form Bingo.com (Wyoming) will be as follows:
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Bingo.com, Inc.
(a Florida corporation)
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Bingo.com (Canada) Enterprises Inc.(1) Bingo.com (Antigua), Inc. (2) Bingo.com (Wyoming), Inc. (3)
(a British Columbia corporation) (an Antigua Corporation) (a Wyoming corporation)
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(1) Bingo.com (Canada) was incorporated in the Province of British
Columbia on February 10, 1998 as 559262 B.C. Ltd., which by
Certificate of Change of Name dated February 11, 1999 changed its name
to Bingo.com (Canada) Enterprises Inc.
(2) Bingo.com (Antigua) was incorporated under the laws of Antigua and
Barbuda on April 7, 1999 as Star Communications Ltd., which by
Certificate of Amendment dated April 21, 1999 changed its name to
Bingo.com. (Antigua), Inc.
(3) We intend to incorporate Bingo.com (Wyoming) in the State of Wyoming
on or about June 15, 1999. We intend to form Bingo.com (Wyoming) for
the purposes of restructuring our corporate organization.
Two of our subsidiaries intend to design, develop, operate, promote and
commercialize two Internet related businesses:
(1) Bingo.com (Canada) intends to develop and operate an Internet portal, which
will focus exclusively on the entertainment and lifestyle vertical market
sectors; and
(2) Bingo.com (Antigua) intends to develop and operate a bingo gaming web-site,
which will be offered on-line and which will be accessible worldwide over
the Internet (except in jurisdictions that prohibit Internet gaming). (3)
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Our Company - Bingo.com, Inc.
We were incorporated in the State of Florida on January 12, 1987 under the name
"Progressive General Lumber Corp." with an authorized share capital of 7,500
shares of common stock with $1.00 par value per share. We were for the most part
inactive until July 1998.
On July 17, 1998, we filed Articles of Amendment to amend our Articles of
Incorporation and increase our authorized share capital to 50,000,000 common
shares with a $0.001 par value per share. We also authorized a forward stock
split (or a stock dividend) to increase the number of then issued and
outstanding shares on a 200-for-1 basis.
In January 1999, our management changed, and we began to implement our current
business strategy. On January 13, 1999, we filed Articles of Amendment to amend
our Articles of Incorporation and change our name to "Bingo.com, Inc.",
effective January 22, 1999.
On January 18, 1999, we finalized an agreement to purchase the right to use the
domain name "Bingo.com".
We organized Bingo.com (Canada) in February 1999 and Bingo.com (Antigua) in
April 1999 to facilitate the implementation of our business plan.
The Reorganization
In June 1999, our Board of Directors unanimously approved, subject to the
approval of the holders of more than 50% of the outstanding shares of our common
stock, a corporate reorganization pursuant to which we will organize and merge
with and into a Wyoming subsidiary, and immediately thereafter, we plan to
obtain Articles of Continuance from the Director of International Business
Corporations, Antigua, to become an Antigua international business corporation
called "Bingo.com, Inc." After the consummation of the reorganization, we will
be an Antigua corporation, which will be the holding company of our
subsidiaries, and our subsidiaries will continue to conduct the businesses in
which they are now engaged.
We contemplate that the reorganization will be completed in two steps:
1. We will merge with and into our to be formed Wyoming subsidiary resulting in
the following corporate structure:
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Bingo.com (Wyoming), Inc. (1)
(a Wyoming corporation)
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Bingo.com (Canada) Enterprises Inc. Bingo.com. (Antigua), Inc.
(a British Columbia corporation) (an Antigua Corporation)
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(1) Bingo.com (Wyoming) will take our place as a holding company for
Bingo.com (Canada) and Bingo.com (Antigua). Your shares will become
shares of Bingo.com (Wyoming).
2. Bingo.com (Wyoming) will continue out of Wyoming into Antigua and become an
Antigua International Business Corporation resulting in the following
corporate structure:
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Bingo.com, Inc. (1)
(an Antigua International Business Corporation)
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Bingo.com (Canada) Enterprises Inc. Bingo.com. (Antigua), Inc.
(a British Columbia corporation) (an Antigua Corporation)
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(1) We, as Bingo.com (Wyoming), will file an Application for Certificate
of Transfer with the Secretary of State of the State of Wyoming and we
will become an Antigua International Business Corporation using our
current name, Bingo.com, Inc. Your shares will then become shares of
our newly continued Antigua corporation.
Your basic voting rights will not change as a result of the reorganization.
We intend to file a registration statement on Form S-4 with the SEC relating to
the registration of our Antigua shares to be issued in connection with the
reorganization. The reorganization will require the approval of a majority of
our shareholders.
Our common shares are currently quoted on the National Association of Securities
Dealers' Over-The-Counter Bulletin Board (also known as the "OTCBB") and trade
under the symbol "BIGG." We anticipate that the Antigua shares you receive in
connection with the reorganization will be quoted on the OTCBB under the "BIGG"
trading symbol. We cannot, however, assure you that we will continue to qualify
for quotation on the OTCBB or that the National Association of Securities
Dealers will approve our Antigua shares for OTCBB quotation or assign the BIGG
symbol to our Antigua shares after the reorganization.
We have not been subject to any bankruptcy, receivership or other similar
proceeding.
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Bingo.com Domain Name
We recently finalized an agreement to purchase the right to use the domain name
"Bingo.com" from Bingo, Inc. for (i) $200,000, (ii) 500,000 shares of our common
stock and (iii) an agreement to pay, on an ongoing basis, royalties in the
amount of 4% of our gross revenues with a total minimum guarantee of $1,100,000.
The Business of Bingo.com
Overview
We intend to develop, through our subsidiaries, leading positions as:
(1) a niche Internet portal focused on the worldwide entertainment and
lifestyle vertical markets; and
(2) a market leader in on-line bingo gaming.
We believe our subsidiaries will pioneer concepts based on the broad global
recognition of the word "bingo," the association and acceptance of the name
Bingo within our target markets and the global appeal of the game of bingo.
We believe this may provide our subsidiaries with a competitive market advantage
that will enable them to establish a superior market position and differentiate
their products and services from the larger or more established portals or web
sites whose product and service offerings are more generic and targeted to
broader markets.
Each of our subsidiaries is in the process of developing its respective segment
of our business - the entertainment and lifestyle portal and the bingo gaming
web-site.
The Business of Bingo.com (Canada) - Portal Site
Overview
Our primary objective through our Canadian subsidiary, Bingo.com (Canada), will
be to provide Internet users with an engaging vertical market focused portal
site that can be easily designated by the Internet user as their default home
page and that will be a unique gateway to the Internet's entertainment and
lifestyle web-sites. We anticipate that the portal will incorporate appealing
design and content characteristics, be user friendly in the sense that it will
be have a less technical/more more intuitive feel to it, and offer free
services, products, hot-links and prizes. Bingo.com (Canada)'s strategy is
intended to create a relationship of trust and loyalty between
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the portal and the user. We anticipate that Bingo.com (Canada) will develop a
measurable audience that will justify and permit it to generate revenues from
the sale of banner advertising and e-commerce. The unique requirements of
developing and operating a portal will require Bingo.com (Canada) to be managed
by its own management team and organization principally located in Vancouver,
Canada. The entertainment aspect of Bingo.com (Canada)'s portal will not include
adult content.
The Global Portal Market
The portal industry was started by Yahoo!, a search engine company that brought
organization to the chaos of the Web. It began as a simple classification or
index of Web sites and kept growing. As a result of the explosive popularity of
the Web and the Web surfer's demand for quick access to well-organized
information, many companies such as Excite, Infoseek and Lycos soon followed
Yahoo!'s lead. The search engine companies responded to the market demand for
better organization and increased service and have evolved into what are today
referred to as portals or content channels.
Today, a constant stream of traffic is directed to the portals and from there,
out into the Web. Web portals are targeted at both businesses and consumers and
typically contain a search engine. Portals offer a multitude of free services in
an attempt to capture the attention of passing traffic and encourage the
passersby to stay and use their services. All of this activity (such as, how
many users enter the site, how long they stay and where they go to within the
portal) is tracked by sophisticated software. When a site can state that it has
numerous hits or page views, it can generally attract advertisers and generate
revenues by selling advertising or virtual real estate space on its site, not
unlike billboards on a highway. Portal operators like America Online Inc.,
Excite Inc., and Yahoo! Inc., generate revenues by selling advertising space to
advertisers seeking to target the millions of people each day who visit these
portals as the starting point for daily surfing.
Vertical Market Focus
We believe the market for major portal companies that have launched sites with a
broad appeal is becoming crowded. These 'macro portals' are often viewed as
being cluttered and, although they seek to position themselves as being unique
from their competitors, there is little apparent brand differentiation between
them. Although comprehensive, we believe that these sites can be confusing to
the user as they present many more alternatives than the consumer wants to deal
with to solve their current need within the time constraints that they face. As
consumers are becoming more comfortable with using, interacting with and
transacting commerce over of the Internet and the Web, they are also looking for
more direct access to their specific areas of interest or need. This has lead to
the development of a new class of portal that focuses only on the content and
links that deal with the issues of specific vertical markets or categories of
interest.
Bingo.com (Canada)'s business strategy will be to create, develop and operate a
portal whose content and links are focused on entertainment and lifestyle
issues. Some examples of entertainment content could include movies, music,
videos, computer games, sports, or the
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performing arts. Lifestyle content might include health, travel, consumer
reports, retirement financial planning, environment, or cooking.
E-commerce
The term "e-commerce" encompasses business to consumer transactions conducted
over the Internet and the World Wide Web. As interest in the Web exploded during
the mid-1990's and, as the number of consumers with access to the Internet at
work or at home grew, companies that originally had established Web sites for
marketing purposes (to promote their corporate or brand identity or to provide
information about their products) soon became interested in using those sites
for sales purposes. Businesses identified the Internet as a means to shorten the
sales cycle. The information that is presented on a Web site is delivered in a
focused manner to targets who are intentionally looking for that specific
information. The Internet can reduce costs and level the playing field for small
and large businesses, allowing them to extend their reach globally. As well, the
availability of sophisticated Internet and Web technology, stronger security
mechanisms, and the increasing acceptance of the new communications medium are
fueling the use of e-commerce by businesses and consumers. We believe that
consumers' trust will increase with the number of successfully completed
transactions. Studies are demonstrating that the consumers' attitudes are
rapidly changing and that they are rapidly gaining confidence with transacting
business over the Internet.
We believe that the way in which products and services will be directly or
indirectly sold in the future will increasingly shift toward the Internet.
Leading businesses throughout the world are developing their Web strategies to
take advantage of this shift in the way consumers will receive product and
service related information, and purchase goods and services. We believe that an
increasing percentage of businesses advertising budgets will be allocated to the
funding their Web strategy. Bingo.com (Canada) believes advertisers are and will
increasingly be looking for portals that have the volume of users that match the
demographic and psychographic profile of their target consumer.
We anticipate that the breadth of Bingo.com (Canada)'s focus on entertainment
and lifestyle content will cross most demographic and psychographic consumer
profiles. As a result, we anticipate that Bingo.com (Canada) will be able to
sell banner advertising and enter into promotional joint ventures with a broad
spectrum of businesses.
Bingo.com (Canada) Marketing Strategy
Our goal is for Bingo.com (Canada)'s portal to become the default browser for
those seeking information with respect to entertainment and lifestyle issues.
Bingo.com (Canada) intends to build an Internet community that we anticipate
will support strong advertising revenues and e-commerce sales for Bingo.com
(Canada).
Consumers have a number of alternatives as to how to spend their disposable
income. In a general sense they can invest for the future or they can spend
their funds on entertainment or lifestyle activities. The Bingo.com (Canada)
portal will be directed to the user who wants to improve the quality of their
life through gaining information on or participating in entertainment
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or lifestyle activities that they identify through the Internet. We believe
entertainment or lifestyle related searching is generally a pleasant experience.
As such, the core vertical markets that the Bingo.com portal will target are
areas that people instinctually consider non-threatening and fun. Through
advertising, Bingo.com (Canada) will attempt to create strong branding of its
recognizable logo, name and category. Many of the existing portals do not
incorporate unique design features capable of differentiating themselves from
the competition. Bingo.com (Canada)'s strategy will be to focus on unique design
that will incorporate Flash technology, with full motion, 3D graphics, music and
sound effects. We believe this is consistent with the entertainment focus of the
portal and the expectation of the user, and will add to the user's Internet
experience. Our goal is to capture the users initial and future attention in
order to create curiosity and loyalty. In addition, Bingo.com (Canada)'s portal
will be designed to be more user friendly and less technical in the eyes of the
user.
We anticipate the Bingo.com (Canada) portal will offer many services to its
visitors that will aid in establishing the desired loyalty and trust required to
create an "Internet community." We anticipate many of these services will be
available to the public free of charge and will include web pages, e-mail, news
and other entertainment features, all designed to maintain and enhance the
portal's appeal and brand and instill trust and build a relationship with the
visitors to its portal. We believe free promotions are one of the most
successful Internet marketing techniques.
Portal Revenue - Advertising
We believe the Internet is rewriting the rules within the advertising community.
The Internet is causing a major change in the way companies can reach their
desired customer base. Online advertising is creating a faster, more focused,
and dynamic method to reach customers who have personally selected their area of
interest. The global proliferation of computers in businesses and the home and
the increasing connectivity through the Internet has presented the advertising
community with a new medium through which to communicate their client's
messages. As rapidly evolving Internet technologies permit more interactions
between business and the consumer, the Internet is becoming an accepted medium
for advertising and e-commerce. As a result advertising will be focused at
specific target groups. In order to better understand the demographics and
psychographics of the site visitor, companies are asking customers to first
provide information about themselves. Thus, in addition to determining customer
needs based on their actual preferences, Web sites are an effective media to
poll customers quickly, precisely and cost-effectively. This allows the web-site
to make changes rapidly that will attract more target customers and generate
greater advertising revenue through customized advertising and promotions.
The key for the ad-based Internet business model (wherein the Internet is viewed
as an accepted mass media) is the ability of marketers to measure the Web
audience on a competitive basis with other media such as broadcasting, cable or
print. The new measurement criteria will focus on unique users, page views and
duration as being roughly comparable to the conventional existing criteria,
frequency and reach. Several existing and new companies have been founded to
provide this service.
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We anticipate that an integral component of the Bingo.com (Canada) portal will
be our ability to analyze on a statistical basis our user base profiles. The
Bingo.com (Canada) portal site currently tracks a number of monthly, daily and
hourly statistical criteria. We intend to use this information to justify the
advertising rate structure used by Bingo.com (Canada) and to market our portal
advertisers.
Bingo.com (Canada) Business Development and Startup Costs
As of May 15, 1999, Bingo.com (Canada) has expended approximately $156,250 on
portal research and development activities. Effective February 3, 1999,
Bingo.com and Stratford Internet Technologies ("Stratford") entered into an
agreement (the "Stratford Agreement") pursuant to which we retained Stratford to
assist in designing and to develop the first phase of the portal site. Pursuant
to the terms of the Stratford Agreement, Stratford has assigned to us all right,
title and interest in the portal site. Pursuant to the Stratford Agreement, we
made payments of $15,000 and have allotted and agreed to issue Stratford
two-hundred and fifty thousand (250,000) shares of our common stock as payment
for the services rendered to assist in designing and to develop first phase of
the portal site. The parties are in the process of amending the terms of the
Stratford Agreement.
Bingo.com (Canada) Employees
As of May 31, 1999, Bingo.com (Canada) had five full-time employees or
consultants and two part-time employees. From time to time, Bingo.com (Canada)
may also retain consultants and consulting firms to provide Bingo.com (Canada)
with special expertise in developing marketing, software and telecommunications
technologies.
Bingo.com (Canada) Competition
Bingo.com (Canada) will face competition primarily from established North
American based branded portals such as Yahoo, AOL, AltaVista, Excite, Hotbot,
Infoseek, Lycos, MSN, Netscape and others. There are also a number of smaller
companies that target the entertainment segment of the market and a number of
companies that may be in the process of developing Internet portals that may
directly compete with the Bingo.com (Canada) portal.
Portals are well established and compete fiercely for market share based on
offering a continually increasing number of free features and content. The free
features, such as personalization tools, e-mail, stock updates, tailored news
headlines and news services, message boards, chat areas, enhanced reference and
search tools, and shopping guides are intended to instill trust and establish a
bond between the portal and the surfer.
The convergence of multimedia communications (voice, data, video, Web) and the
constantly increasing capability of technologies to deliver these media will
permit increasing interactivity and allow for more media rich content to be
delivered over the Web. This is the driving force behind the joint ventures or
acquisitions of portals with branded media companies such as Time Warner, Walt
Disney Co. or AT&T, or industry consolidation as was the case with America
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Online's buyout of Netscape Communications or Yahoo!'s acquisition of GeoCities.
These portals are well financed and the strength of the combined entities will
further enhance their ability to attract the considerable amounts of capital
that will be required to keep pace with the market demand and technology
advances.
Bingo.com (Canada) Trademarks
We anticipate Bingo.com (Canada) will apply for trademark registration and
protection for its logo and various phrases in Canada and the United States.
However, Bingo.com (Canada) has not submitted any applications for trademark
registration. In the event that Bingo.com (Canada) determines that it has
created an asset whose value can be protected it will attempt to protect its
proprietary asset by applying for patents, copyrights or trademarks. In
addition, Bingo.com (Canada) will endeavor to rely on trade secret laws and
non-disclosure and confidentiality agreements with its employees and consultants
who have access to its proprietary technology.
The Business of Bingo.com (Antigua) - Bingo Gaming
Overview
Our Antigua subsidiary's primary objective is intended to be the development and
management of one of the largest on-line bingo games in the world. We anticipate
that Bingo.com (Antigua)'s bingo game will incorporate dynamic design features,
surprise jackpots and prizes, chat rooms and a jackpot of up to $1,000,000. We
also anticipate that Bingo.com (Antigua) will contribute 1% of its gross
revenues from the sale of bingo cards to charity. Bingo.com (Antigua)'s strategy
will be to create a comfortable environment, which players will return to on a
regular basis to play virtual bingo. The unique requirements of developing and
operating an Internet based gaming site will require the operations of Bingo.com
(Antigua) to be directed by a Board of Directors separate from our Board of
Directors and to be managed by a separate experienced management team and
organization located in Antigua.
Bingo.com (Antigua) - Licensing
In March 1999, Bingo.com (Antigua) applied to the Antigua and Barbuda Free Trade
and Processing Zone for a license to operate an offshore virtual casino wagering
business. On April 16, 1999, the license was granted to Bingo.com (Antigua) to
operate an Offshore Virtual Casino Wagering business in Antigua. The license was
granted under the authority and jurisdiction of the Antigua and Barbuda Free
Trade and Processing Zone in accordance with Statutory Instruments 1997 No.
20-Virtual Casino Wagering and Sports Book Wagering Regulations, made by the
Minister under Section 27 of the Free Trade and Processing Zone Act No. 12 of
1994. The license permits Bingo.com (Antigua) to conduct operations, subject to
Bingo.com (Antigua) commencing operations within 3 months of the date of payment
of the License Fee of $100,000, which was made to and accepted by the Antigua
and Barbuda Free Trade and Processing Zone on April 16, 1999. An annual payment
of $100,000 is required to be paid in order to continue operations under the
terms of the license.
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On-line Bingo Gaming Software
Bingo.com (Antigua)'s proprietary software is anticipated to allow patrons to
play a variety of bingo games over the Internet in two modes: (1) wagering mode,
and (2) free mode.
The on-line bingo game developed by Bingo.com (Antigua) is designed to be
entertaining and captivating. Bingo.com anticipates that it will adapt the
on-line bingo game to the idiosyncrasies of the Internet to minimize the risks
associated with "noise" on telephone lines or other unpredictable technical
glitches that may cause connections between the player's computer and the
Antigua based on-line bingo game server to terminate. The software is
anticipated to keep track of the precise status of the game. If a game is
interrupted, the patron needs only to return to the Bingo.com (Antigua) web-site
in order to determine the status or outcome of the game they were playing.
Bingo.com (Antigua) began beta testing its proprietary gaming software and
server in April 1999 and continued beta testing through June 1999. The server
systems and software have performed well in test mode and we believe the
software will be ready for commercial use after we complete testing and debug
any remaining software problems. Bingo.com (Antigua) anticipates that during the
duration of the beta test period, players will provide Bingo.com (Antigua) with
valuable comments and feedback, which can be incorporated by Bingo.com (Antigua)
into the improvement of its software and product offerings.
Bingo.com (Antigua) Equipment Capacity
Bingo.com (Antigua) owns a primary server and a backup server. The primary
server is located in a secure third party Antigua based facility. It is
anticipated that Bingo.com (Antigua) will install the back up server in a secure
third party Antigua based facility in June 1999. We believe the server is
capable of handling 20,000 simultaneous connections (users). The backup server
is intended to provide Bingo.com (Antigua) with the capacity required to operate
in the event the primary server's operation is temporarily interrupted.
Bingo.com (Antigua) Operations
Our on-line bingo game will be accessible to players over the Internet (also
known as the World Wide Web). As the name `World Wide Web' suggests, people
located throughout the world who have a computer and access to the WWW will be
able to play our on-line bingo game. Internet based commerce, including on-line
wagering, is a relatively new industry that transcends the concept of
traditional state and national borders. Many countries and jurisdictions are
currently struggling to determine how to deal with issues related to Internet
commerce, and more specifically, whether to prohibit, regulate or tax the
transactions that flow over the WWW.
Bingo.com (Antigua) has been granted a license from the Antigua and Barbuda Free
Trade Processing Zone to operate its on-line bingo game. However, the laws of
certain jurisdictions, including Canada and the United States, either directly
do not permit or are indirectly being interpreted as not permitting on-line
wagering. The management of Bingo.com (Antigua) is in
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the process of identifying and reviewing legal issues related to on-line
wagering in certain jurisdictions and is in the process of considering different
strategies for complying with the laws of each jurisdiction where the on-line
bingo game may be played. One of these strategies would include blocking access
to the wagering mode with respect to residents of jurisdictions where the
legality of gaming is uncertain, including the United States and Canada, by (i)
screening applicant and (ii) blocking credit card transactions. Bingo.com
(Antigua) intends to "go live" with its on-line bingo game in June 1999, and we
believe by then Bingo.com (Antigua)'s management will have defined its policy
with respect to accessibility to the wagering mode.
In the event that Bingo.com (Antigua)'s management decides to implement a
blocking strategy, we anticipate that they will publish on the on-line bingo
game web-site a legal notice that notifies the players of its policies and the
player's responsibility with respect to the laws of the jurisdiction within
which they are resident. The following is an example of the legal notice that
may be publish on the on-line bingo game web site is:
Only those individuals over the legal age under the laws of their
jurisdiction are allowed to play for real money at the Bingo.com on-line
bingo game web site. If you are playing for real money, be aware that
authorities in some jurisdictions do not currently permit gambling over the
Internet. Before playing you should appraise yourself of which laws are
applicable to you and act in accordance with those laws. You should verify
that you are in compliance with the laws applicable to you in your
jurisdiction before registering. We reserve the right to cancel the
privileges of anyone playing our on-line bingo game for real money that is
found to be violating the law.
We intend to comply with the laws of those jurisdictions that either directly do
not permit or are indirectly being interpreted as not permitting on-line
wagering and to notify the players of their responsibilities. However, we cannot
guarantee that players will not find methods of disguising the identity of their
residence, which would allow them to wager on our on-line bingo games.
Any player will be able to play the on-line bingo game in the free mode.
We anticipate Bingo.com (Antigua) will operate its on-line bingo game according
to the following guidelines:
o accept several forms of payment to process customer financial transactions,
including e-cash, credit cards, wire-transfers, money-orders and personal
account debits;
o use the services of an experienced third party company, which will process
the authentication of players' credit cards, process the financial wagering
transactions that occur while playing our the on-line bingo game, and
distribute the funds to the player;
o process (accept or reject), in a short period of time, the relevant
personal and financial information when a patron decides to register and
open an account;
o allow patrons to elect to play any Bingo.com (Antigua) games and wager on
their accounts;
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o allow patrons to review their accounts and cash-out at any time;
o not extend credit services to the players;
o implement procedures and policies designed to protect customer data and
information with high-level security systems and password encryption
software;
o offer a 24 hour 7 days a week support line to the players, which is
anticipated to be staffed by a minimum of two knowledgeable persons at all
times, and increased when traffic increases;
o offer its customers access to customer service to answer questions or to
take customer comments through a 1-800 telephone service and e-mail; and
o provide solid support for customer satisfaction and accessibility to
customers.
Players who desire to play the Bingo.com (Antigua) on-line bingo game must
download proprietary software and agree to play under the rules and guidelines
established by Bingo.com (Antigua).
We anticipate the players who play the on-line bingo game in the free mode will
be required to register with Bingo.com (Antigua) for screening and marketing
purposes, but will not be subject to the scrutiny that is applied to players
playing in the wagering mode.
We anticipate that Bingo.com (Antigua) will establish its operations base and
staff in Antigua and begin operation of its on-line bingo game in June 1999.
Bingo.com (Antigua) Fulfillment and Security
Bingo.com (Antigua) has entered into an agreement with Global Payment Systems or
"GPS" to process the wagering financial transactions. GPS has significant
experience in processing credit card transactions and offers a real-time payment
processing system. In addition, GPS has experience in the wagering industry. GPS
has been in the business of processing and administering financial transactions
for several years and we believe GPS will offer the benefits of reliable, secure
payment processing functionality. The player will be protected, as their funds
will be on deposit with a recognized international bank, while Bingo.com
(Antigua) is anticipated to benefit from GPS's low incidence of player
charge-backs and credit card fraud. A further benefit to Bingo.com (Antigua) is
that they will not have to bear the cost of developing and maintaining complex
systems, infrastructure, and overhead to process credit card transactions.
We believe the benefits of the GPS service are: (1) secure communication lines
between Bingo.com (Antigua) and GPS; (2) the customer payment information is
encrypted to prevent alteration or tampering; and, (3) the messages are
authenticated to verify the identity of the
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parties sending and receiving the payment processing request. Access to GPS's
servers is secure, monitored and controlled 24 hours a day, seven days a week.
Bingo.com (Antigua) Market Strategy
Wagering over the Internet represents a category of e-commerce. While some forms
of business to consumer e-commerce have been slow to be accepted by the
consumer, we believe that wagering over the Internet has grown rapidly. There
are many forms of Internet wagering including casinos offering poker, blackjack
and other games of chance, and sports and pari-mutuels betting and lotteries. We
estimate that there are currently approximately 300 wagering web sites.
We believe that bingo is a widely accepted form of wagering, stemming from its
association with churches and charities and its more social character when
compared to poker and other similar games of chance. Bingo has been transformed
during the last two decades from being played in bingo halls with paper cards to
the use of electronic bingo boards to the current offering of bingo over the
Internet. We believe that there are approximately 30 Internet sites that offer
web-based bingo, including, among others, IBingo, Bingomania and Bingo Zone.
Bingo.com (Antigua)'s target market will consist of individuals located
throughout the world, who are current on-line users and at least 18 years of age
(or such age as is applicable in their jurisdiction of residence). Bingo.com
(Antigua)'s target market for its wagering mode on-line bingo game will be
subject to Bingo.com (Antigua)'s policy regarding blocking in certain
jurisdictions, if any. We estimate that there are currently 60 to 80 million
people worldwide who regularly access the Internet, and that Internet use is
expected to grow.
We anticipate that Bingo.com (Antigua) will attract patrons to its service by
providing the innovative use of multimedia design and a unique on-line bingo
game that will create a dynamic environment. The Bingo.com (Antigua) bingo game
web-site has been designed to be simple and user-friendly.
In order to create interest and awareness, Bingo.com (Antigua) will focus its
marketing efforts primarily on traditional media advertising, public relations
programs, on-line promotions, business development, third-party relationships
and social programs. While Bingo.com (Antigua) is not currently conducting any
marketing programs, Bingo.com (Antigua) is preparing a detailed marketing and
advertising program which will begin with the launch of the on-line bingo game.
To ensure the creation of an effective advertising program, Bingo.com (Antigua)
is currently negotiating with an established marketing communications firm and a
media buying company to oversee Bingo.com (Antigua)'s promotional efforts and
advertising needs.
Bingo.com (Antigua) does not currently intend to limit its marketing and
advertising program to particular jurisdictions.
Anticipated Gaming Revenue
We believe Bingo.com (Antigua) may derive revenue from four sources:
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- Online wagering - gaming revenues;
- Memberships;
- Licensing - An initial license fee from the sale of licenses to third
party gaming companies to use the proprietary bingo gaming software
and an on-going royalty based on the third party gaming companies'
revenue; and,
- Banner and advertising revenues.
Bingo.com (Antigua) Business Development and Start-up Costs
As of May 15, 1999, we have expended approximately $548,000 on research and
development activities related to the on-line bingo game. Effective February 3,
1999, we entered into an understanding with Mindquake Software for the design
and development of bingo gaming software. Pursuant to the terms of our
understanding, we anticipate we will enter into a definitive agreement, under
which Mindquake will assign to Bingo.com (Antigua) all right, title and interest
in the software designed and developed for Internet bingo. As of May 15, 1999,
we have paid Mindquake approximately $392,000 related to the development and
installation of gaming software.
Bingo.com (Antigua) Employees
As of May 31, 1999, Bingo.com (Antigua) had one full-time consultant. From time
to time, Bingo.com (Antigua) may also retain additional consultants and
consulting firms to provide expertise in financing, marketing and developing
software and telecommunications technologies related to its business.
Bingo.com (Antigua) Competition
The Internet wagering business is highly competitive, and Bingo.com (Antigua)
will face competition from North American and foreign casino and bingo
operators. Bingo.com (Antigua) has defined its competition as those Web sites
specifically dedicated to offering the visitor a chance to play bingo or
lotteries online or online casinos that allow the visitor to play other games of
chance such as roulette, blackjack, poker or slot machines. We do not believe
that Bingo.com (Antigua) will compete with traditional bingo halls offering
paper based games, electronic bingo systems or land-based casinos, as the
players who wish to participate in those venues have made a decision to play in
a tangible rather than a virtual environment.
Generally, Internet gaming sites can be accessed through any of the established
branded portals by using a key word search. We believe that gaming sites compete
on the basis of:
o Site design;
o Ease and use;
o The variety of games that a player can play;
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o Accessibility;
o The number of games that a player can play at any one time;
o Size of the pay-outs;
o Confidentiality and security of information and account status;
o Reputation of the web site;
o Prompt payment of winnings, new game software development, chat
groups;
o Speed of the games; and
o 24-hour 7-days per week customer service.
We believe there are over 300 on-line casinos offering gaming on the Internet
and approximately 30 on-line casinos with bingo or keno. Ibingo, Bingomania and
Bingo Zone are a few examples of competitors whose sites are specifically
dedicated to online bingo while MaPau Casino, Sands of the Caribbean and English
Harbour Casino are examples of online casino competitors.
We believe there are substantial market barriers facing potential providers of
Internet gaming, such as Bingo.com (Antigua), including technology, commerce,
regulation, management and reputation. We believe that each of these market
barriers must be overcome to establish and maintain a successful Internet gaming
operation.
Bingo.com (Antigua) Patents, Copyrights and Trade Secrets
As of the date of this registration statement, Bingo.com (Antigua) does not own
or otherwise control any registered patents, copyrights or trademarks. However,
on April 29, 1999, we filed a Provisional Application, to seek patent protection
for our proprietary bingo gaming software, with the United States Patent Office
on behalf of Bingo.com (Antigua). The Provisional Application, as a result of
the anticipated assignment of the right, title and interest in the on-line bingo
gaming software designed and developed by Mindquake to Bingo.com (Antigua), will
allow one year to prepare and submit a formal patent application to the United
States Patent Office. In addition to this protection, we may attempt to protect
our proprietary technology by relying on trade secret laws and non-disclosure
and confidentiality agreements with their employees and consultants who have
access to their proprietary technology.
Internet Gaming Regulation
Many countries are currently struggling with issues surrounding wagering and
gambling over the Internet. More specifically, they are considering the merits,
limitations and enforceability of prohibition, regulation or taxation of
wagering and gambling transactions that are carried out
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over the Internet. There are significant differences of opinion and law between
countries such as the United States, Canada, Australia, Liechtenstein and
Antigua.
In the United States, the ownership and operation of land-based gaming
facilities has traditionally been regulated on a state by state basis, although
the vast majority of states have legalized some form of gaming activities. 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. It should
also be noted that certain of Bingo.com (Antigua)'s competitors have been the
subject of criminal complaints at the state level in Minnesota (Minnesota v.
Granite Gate Resorts, Inc., 568 N.W.2d 715 (1997)), Missouri (Missouri v.
Interactive Gaming & Communications Corp., No. CV 97-7808 (Mo.Cir.Ct. 6/16/97)),
and New York (New York v. World Interactive Gaming Corporation (action filed
7/13/98)).
The United States 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. There are other federal laws impacting gaming
activities including the Interstate Wagering Paraphernalia Act, the Travel Act
and the Organized Crime Control Act. However, it remains unresolved whether
these other laws apply to gaming conducted over the Internet.
Various U.S. regulatory and legislative agencies are conducting studies of
interstate and interactive wagering and one, the National Gambling Impact Study
Commission, has stated that it will recommend the prohibition of Internet
gambling within the United States and the development of enforcement strategies
by the Department of Justice.
In addition, the United States Congress is considering the 1999 Kyl bill
(S-692), which could prohibit or limit either the intrastate or interstate
activities Bingo.com (Antigua) engages in or the type of activities associated
with such wagering. In May 1999, the Senate Judiciary subcommittee on
technology, terrorism and government information passed the Kyl bill by a voice
vote. We believe that any change in either the substance or the enforcement of
the applicable or proposed rules and regulations in these areas could have an
adverse effect on our business and prospects.
In other areas of the world, there are countries and states that are legalizing
Internet gaming and moving toward regulation and licensing of operators. For
example:
o Queensland, Australia, has chosen to protect gaming consumers who play
games offered over the Internet through regulation embodied in the
Interactive Gambling (Player Protection) Act 1998. The primary aim of
the Act is to regulate Internet gaming, and to provide players with
protection mechanisms in a secure regulatory environment. The Act
requires all players to be registered, subject to providing
satisfactory proof of identity, residence and age. The Queensland
Office of Gaming Regulation is administering the Act to ensure that
interactive gambling is conducted in accordance with a consistently
high level of probability and integrity.
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o The United Kingdom is sponsoring a web site for its national lottery.
o One of the biggest Internet lotteries `One Billion Through Millions
2000' is sponsored by the principality of Liechtenstein under contract
with the International Red Cross.
o Dominica sponsors its own Internet gambling web site.
o A number of Caribbean countries accept Internet gambling as legal.
Bingo.com (Antigua) Regulatory Compliance
On April 16, 1999, Bingo.com (Antigua) was granted a license to operate its
Internet casino by the Antigua government, under the "Virtual Casino Wagering
and Sports Book Wagering Regulations" promulgated under Section 27 of the
Antigua Free Trade and Processing Zone Act, 1994. Bingo.com (Antigua) must
adhere to the legal requirements of each jurisdiction in which it operates or
offers its services or is deemed to operate or offer its services.
We anticipate Bingo.com (Antigua) may take measures to block players certain
jurisdictions from wagering where the regulatory environment is uncertain.
Bingo.com (Antigua) may place a legal notice on the web site advising players of
their responsibility to comply with the laws of their jurisdiction of residency.
Although Bingo.com (Antigua) may implement policies and procedures designed to
comply with the laws of each jurisdiction where its on-line bingo game is
offered, we cannot guarantee that players will not use methods of disguising
their identity, residency or age, which would allow them to wager on our on-line
bingo games. To accommodate the regulatory schemes of various jurisdictions, we
expect that Bingo.com (Antigua) may offer two versions of its online bingo game:
free mode and wager mode.
Residents in jurisdictions where the legality of Internet gaming is uncertain
will be allowed to play our on-line bingo game in free mode. The free mode is
intended promote and generate traffic to our on-line bingo web site which in
turn, is expected to create a demand for banner advertisements.
We believe that Bingo.com (Antigua)'s activities will conform to current gaming
laws and regulations. However, there is little case law authority related to the
interpretation of gaming statutes as they relate to the Internet and the wording
of many of the applicable statutes is ambiguous. Consequently, it is possible
that Bingo.com (Antigua)'s planned activities may be alleged to violate an
applicable statute based on an interpretation of the statute, which differs from
ours, 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,
we or Bingo.com (Antigua) could incur substantial litigation expense, fines,
diversion of the attention of key employees, and injunctions or other
prohibitions preventing Bingo.com (Antigua) from engaging in various anticipated
business activities. Also, if it were finally determined that Bingo.com
(Antigua) did violate applicable law, then civil damages or criminal penalties
could be imposed and Bingo.com (Antigua) might be barred from pursuing that
activity. Such an outcome would have a material adverse effect on our business
and our results of operations.
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Development of the Business of Bingo.com, Bingo.com (Canada) and Bingo.com
(Antigua)
Since January 1999, we have taken the following steps to implement our business
plans:
o Incorporated our operating subsidiaries;
o Completed a first and second round of funding in the amounts of
US$1,000,000 and US$5,000,000;
o Purchased the right to use the domain name "Bingo.com";
o Retained experienced senior management and consultants;
o Conducted market research for the development and marketing of the
Bingo.com (Canada) portal;
o Began developing a cross-functional plan to implement our business
strategy;
o Retained Stratford Internet Technologies Inc. to develop the Bingo.com
(Canada) portal Web site;
o Completed phase one of the development of the Bingo.com (Canada)
portal and launched the Bingo.com (Canada) portal;
o Obtained the license to operate on-line bingo gaming in Antigua;
o Retained Mindquake Software Inc. to develop the on-line bingo gaming
software;
o Substantially completed beta testing of the on-line bingo gaming
software;
o Installed the servers in Antigua for the on-line bingo gaming web
site;
o Substantially completed establishing the on-line bingo gaming
operations in Antigua;
o Implemented internal financial controls;
o Filed a Provisional Application with the United States Patent Office;
and
o Initiated the filing process for trademark protection of various brand
logos and phrases related to our business.
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RISK FACTORS
We have included information in this registration statement that contains
"forward looking statements." Our actual results may materially differ from
those projected in the forward looking statements as a result of risks and
uncertainties. Although we believe that the assumptions made and expectations
reflected in the forward looking statements are reasonable, we cannot assure you
that the underlying assumptions will, in fact, prove to be correct or that
actual future results will not be different from the expectations expressed in
this report. An investment in our securities is speculative in nature and
involves a high degree of risk. You should read this registration statement
carefully and consider the following risk factors.
General
We have a Limited Operating History and a History of Losses, which Makes Our
Ability to Continue as a Going Concern Questionable
We are a development stage company and our operations and the operation of our
subsidiaries are subject to all of the risks inherent in light of the expenses,
difficulties, complications and delays frequently encountered in connection with
the formation of any new business. We have incurred net losses since our
inception and anticipate that we will continue to incur losses for the
foreseeable future. During the fiscal years ended December 31, 1996, 1997 and
1998 and the first quarter of 1999, we incurred cumulative net losses of
$265,517, including a net loss of $258,713 for the first quarter 1999. You
should evaluate us in light of the delays, expenses, problems and uncertainties
frequently encountered by companies developing markets for new products and
technologies. Due to a number of factors, we do not believe that revenues
generated by our subsidiaries will be sufficient to support our operations in
fiscal 1999. Therefore, in the foreseeable future, we believe that such expenses
will increase our net losses, and we cannot assure you that we will ever be
profitable.
You should evaluate our business in light of the risks and difficulties
frequently encountered by early stage companies engaged in Internet commerce.
These risks include:
- our significant dependence on services with only limited market
acceptance;
- our ability to develop and upgrade our infrastructure, including
internal controls, transaction processing capacity, data storage and
retrieval systems and Web site;
- competition;
- our need to manage changing operations;
- our reliance upon the Internet for commerce;
- our reliance upon general economic conditions; -
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- our reliance upon strategic relationships;
- regulatory risks associated with our business; and
- our dependence upon and need to hire key personnel.
Because we have only recently begun operations, it is difficult to evaluate our
business and our prospects. Our revenue and income potential is unproven and our
business model is still emerging. We cannot assure you that Bingo.com (Canada)
will attract new registered users, advertisers, consumers and network affiliates
or achieve significant revenues or operating margins in future periods. We also
cannot assure you that Bingo.com (Antigua)'s Internet on-line bingo game will
attract players or that Bingo.com (Antigua) will successfully overcome the
technical and regulatory requirements to operate its planned business or
establish a sizable market share. We cannot guarantee we will ever achieve
commercial success.
As of May 15, 1999, we had approximately $4,950,000 in cash, and we will, on
average, expend approximately $400,000 per month. While we anticipate raising
additional capital through private placements of our common stock, we cannot
assure you that we will be able to obtain adequate financing to support our
operations. Even if we are unable to raise additional capital, we believe that
we will have sufficient funds to commence and conduct our operations for at
least the next 12 months, without considering any revenues generated from the
operations of our subsidiaries.
We Cannot Assure You that there will be a Continued Market for Our Shares
Currently, our common shares are traded on the OTCBB under the symbol "BIGG". On
January 4, 1999, the SEC approved eligibility rules for issuers quoted on the
OTCBB and established minimum eligibility requirements for all securities quoted
on the OTCBB. As a result of the eligibility rules, we must (i) register our
shares with the SEC under Section 12 of the Exchange Act, and (ii) be current in
our required filings to remain eligible for quotation on the OTCBB.
We cannot assure you we will be able to fully comply with its eligibility
requirements on or before our phase-in date. Although we have filed this
registration statement to become a reporting company under the Exchange Act,
there can be no assurance that we will maintain eligibility for quotation on the
OTCBB or that an active public market for our shares will be sustained.
Our Foreign Operations are Subject to Risks
Bingo.com (Antigua) and Bingo.com (Canada) may derive substantially all of their
revenues from non-United States sources. Risks inherent in foreign operations
include loss of revenue, property and equipment from such hazards as
expropriation, nationalization, war, insurrection and other political risks,
risks of increase in taxes and governmental royalties, renegotiations of
contracts with governmental entities, as well as changes in laws and policies
governing
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operations of foreign based companies. Other risks inherent in foreign
operations are the possibility of realizing foreign currency exchange losses
when transactions are completed in currencies other than United States dollars
and our subsidiaries' ability or lack of same to freely repatriate their
earnings under foreign exchange control laws.
Furthermore, Bingo.com (Antigua) may have to comply with the local laws and
regulations in those foreign jurisdictions in which they elect or are deemed to
elect to offer products and services. We cannot assure you that our subsidiaries
will be able to comply with such laws and regulations. See "Regulation". In the
past, there have been significant fluctuations in the exchange rates between the
dollar and the currencies in many of the countries in which we or our
subsidiaries anticipate our doing business. Further, foreign countries may
impose limitations on the amount of currency that may be withdrawn or
repatriated from such countries. Such limitations, if imposed, could adversely
affect our liquidity and business.
We Depend on Our Key Personnel and the Personnel of Our Subsidiaries for Success
The future success of Bingo.com (Antigua), Bingo.com (Canada) and us will depend
on certain key management, marketing, sales and technical personnel. Our
subsidiaries primarily rely upon consultants and advisors who are not employees.
The loss of key personnel by our subsidiaries could have an adverse effect on
our operations. We do not maintain key-man life insurance on any of our key
personnel, and our subsidiaries do not insure their key personnel. Our
subsidiaries also plan to hire additional key employees in 1999. Competition for
qualified employees is intense, and an inability to attract, retain and motivate
additional, highly skilled personnel required for expansion of operations and
development of technologies could adversely affect our business, financial
condition and results of operations. Our subsidiaries' ability to retain
existing personnel and attract new personnel may also be adversely affected by
their current financial situation. We cannot assure you that our subsidiaries
will be able to retain their existing personnel or attract additional, qualified
persons when required and on acceptable terms.
We May be Required to Sell Additional Common Stock or Parties May Exercise
Options and Warrants that Cause Dilution of Your Shares
The number of shares of our outstanding Common Stock held by non-affiliates is
large relative to the trading volume of the Common Stock. Any substantial sale
of our Common Stock or even the possibility of such sales occurring may have an
adverse effect on the market price of the Common Stock.
As of May 31, 1999, we had outstanding warrants to purchase an aggregate of
916,668 shares of Common Stock.
We have also reserved up to an additional 1,145,000 shares of Common Stock for
issuance upon exercise of options which have not yet been granted under a stock
option plan, which we intend to approve and adopt. Holders of such warrants and
options are likely to exercise them when, in all likelihood, we could obtain
additional capital on terms more favorable than those provided by the options
and warrants. Further, while our warrants and options are outstanding, our
ability to obtain additional financing on favorable terms may be adversely
affected.
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We have Capacity Constraints and System Development Risks that could Damage Our
Customer Relations or Inhibit Our Possible Growth, and We May Need to Expand Our
Management Systems and Controls Quickly
Our success and, in particular, our subsidiaries' abilities to provide high
quality customer service, largely depends on the efficient and uninterrupted
operation of our computer and communications systems and the computers and
communication systems of our third party vendors in order to accommodate any
significant numbers or increases in the numbers of consumers and advertisers
using our service. Our success also depends upon the subsidiaries' and our
vendors' abilities to rapidly expand transaction-processing systems and network
infrastructure without any systems interruptions in order to accommodate any
significant increases in use of our service.
Although we anticipate that our subsidiaries and our vendors will enhance and
expand their transaction-processing systems and network infrastructure as they
grow, they may experience periodic systems interruptions and infrastructure
failures, which we believe may cause customer dissatisfaction and may adversely
affect our results of operations. Limitations of our subsidiaries' and vendors'
technology infrastructure may prevent us from maximizing our business
opportunities.
While we believe that our subsidiaries' and vendors' data repositories,
financial systems and other technology resources will be secure from security
breaches or sabotage, we cannot assure you that this will continue to be true as
technology changes and becomes more sophisticated. In addition, we expect that
many of our subsidiaries' and vendors' software systems may be custom-developed
and that our subsidiaries and vendors may rely on employees and certain
third-party contractors to develop and maintain these systems. If certain of
these employees or contractors become unavailable, our subsidiaries and vendors
may experience difficulty in improving and maintaining these systems.
Furthermore, we expect that our subsidiaries and vendors may continue to be
required to manage multiple relationships with various software and equipment
vendors whose technologies may not be compatible, as well as relationships with
other third parties to maintain and enhance their technology infrastructures.
Our subsidiaries' and our vendors' failure to achieve or maintain high capacity
data transmission and security without system downtime and to achieve
improvements in their transaction processing systems and network infrastructure
could adversely affect our business and results of operations.
Increased Security Risks of Online Commerce May Deter Future Use of Our
Subsidiaries' Services
Concerns over the security of transactions conducted on the Internet and the
privacy of consumers may also inhibit the growth of the Internet and other
online services generally, and online commerce in particular. Our subsidiaries'
or vendors' failure to prevent security breaches could significantly harm our
business and results of operations. We cannot be certain that advances in
computer capabilities, new discoveries in the field of cryptography, or other
developments will not result in a compromise or breach of the algorithms used to
protect our vendors' and subsidiaries' transaction data. Anyone who is able to
circumvent our subsidiaries'
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or vendors' security measures could misappropriate proprietary information,
cause interruptions in their operations or damage our brand and reputation. Our
subsidiaries may be required to incur significant costs to protect against
security breaches or to alleviate problems caused by breaches. Any
well-publicized compromise of security could deter people from using the
Internet to conduct transactions that involve transmitting confidential
information or downloading sensitive materials.
Our Subsidiaries Face the Risks of System Failures
A disaster could severely damage our business and results of operations because
our services could be interrupted for an indeterminate length of time. Our
operations depend upon our ability to maintain and protect our computer systems,
most of which are located in our principal business headquarters and at a
third-party facility in Antigua.
The systems and operations of our subsidiaries are vulnerable to damage or
interruption from fire, floods, earthquakes, hurricanes, power loss,
telecommunications failures, break-ins, sabotage and similar events. The
occurrence of a natural disaster or unanticipated problems at our principal
business headquarters or at a third-party facility could cause interruptions or
delays in our business, loss of data or render us unable to provide our
services. In addition, failure of a third-party facility to provide the data
communications capacity required by us, as a result of human error, natural
disaster or other operational disruptions, could cause interruptions in our
service. The occurrence of any or all of these events could adversely affect our
reputation, brand and business.
We Face Risks of Claims from Third Parties for Intellectual Property
Infringement that Could Adversely Affect Our Business
We anticipate that all of the services of our subsidiaries will operate in part
by making Internet services and content available to our users. This creates the
potential for claims to be made against us, either directly or through
contractual indemnification provisions with third parties. These claims might,
for example, be made for defamation, negligence, copyright, trademark or patent
infringement, personal injury, invasion of privacy or other legal theories. We
receive correspondence alleging some of these types of claims from time to time.
Any claims could result in costly litigation and be time consuming to defend,
divert management's attention and resources, cause delays in releasing new or
upgrading existing services or require us to enter into royalty or licensing
agreements.
Litigation regarding intellectual property rights is common in the Internet and
software industries. We expect that Internet technologies and software products
and services may be increasingly subject to third-party infringement claims as
the number of competitors in our industry segment grows and the functionality of
products in different industry segments overlaps. There can be no assurance that
our services do not infringe the intellectual property rights of third parties.
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Royalty or licensing agreements, if required, may not be available on acceptable
terms, if at all. A successful claim of infringement against us and our failure
or inability to license the infringed or similar technology could adversely
affect our business.
Our success and ability to compete are substantially dependent upon our
technology and data resources, which we intend to protect through a combination
of patent, copyright, trade secret and/or trademark law. We have no patents or
trademarks issued to date on our technology.
Bingo.com (Antigua)'s bingo gaming software was developed by Mindquake. Although
we believe that the software does not infringe on intellectual property rights
of others, we cannot assure you that we will not be subject to third-party
infringement claims as the number of competitors in our industry segment
increase.
We May Not be Able to Protect Our Internet Domain Name
We anticipate that the Internet domain name, "Bingo.com," will be an extremely
important part of our business and the business of our subsidiaries.
Governmental agencies and their designees generally regulate the acquisition and
maintenance of domain names. The regulation of domain names in the United States
and in foreign countries may be subject to change in the near future. Governing
bodies may establish additional top-level domains, appoint additional domain
name registrars or modify the requirements for holding domain names. As a
result, we may be unable to acquire or maintain relevant domain names in all
countries in which we conduct business. Furthermore, the relationship between
regulations governing domain names and laws protecting trademarks and similar
proprietary rights is unclear. Therefore, we may be unable to prevent third
parties from acquiring domain names that are similar to, infringe upon or
otherwise decrease the value of our trademarks and other proprietary rights.
Third parties have acquired domain names that include "bingo" or variations
thereof both in the United States and elsewhere.
We Anticipate Our Subsidiaries' Markets May Undergo Rapid Technological Change
and Our Future Success May Depend on Our Subsidiaries' Ability to Meet the
Changing Needs of Their Industries
To remain competitive, our subsidiaries must be capable of enhancing and
improving the functionality and features of their online services. The Internet
portal, the on-line advertising industry and the Internet gaming industry are
rapidly changing. If competitors introduce new products and services embodying
new technologies, or if new industry standards and practices emerge, our
subsidiaries' existing services, technology and systems may become obsolete.
Our future success will depend on our subsidiaries' abilities to accomplish the
following:
o license and develop leading technologies useful in our business;
o develop and enhance our planned products and services;
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o develop new services and technologies that address the increasingly
sophisticated and varied needs of prospective consumers; and
o respond to technological advances and emerging industry standards and
practices on a cost-effective and timely basis.
Developing Internet services and other proprietary technology entails
significant technical and business risks, as well as substantial costs. Our
subsidiaries may use new technologies ineffectively, or they may fail to adapt
their services, transaction-processing systems and network infrastructure to
user requirements or emerging industry standards. If our subsidiaries'
operations face material delays in introducing new services, products and
enhancements, their users may forego the use of their services and use those of
their competitors.
We Do Not Intend to Declare Dividends
We have never declared or paid any cash dividends on our capital stock. We
currently intend to retain any future earnings for funding growth and,
therefore, do not expect to pay any dividends in the foreseeable future.
Our Shares are Considered Penny Stocks and are Subject to the Penny Stock Rules
Rules 15g-1 through 15g-9 promulgated under the Exchange Act impose sales
practice and disclosure requirements on certain brokers-dealers who engage in
certain transactions involving "a penny stock." Subject to certain exceptions, a
penny stock generally includes any non-NASDAQ equity security that has a market
price of less than $5.00 per share. Our shares are expected to be deemed penny
stock for the purposes of the Exchange Act. The additional sales practice and
disclosure requirements imposed upon brokers-dealers may discourage
broker-dealers from effecting transactions in our shares, which could severely
limit the market liquidity of the Shares and impede the sale of our shares in
the secondary market.
Under the penny stock regulations, a broker-dealer selling penny stock to anyone
other than an established customer or "accredited investor" (generally, an
individual with net worth in excess of $1,000,000 or an annual income exceeding
$200,000, or $300,000 together with his or her spouse) must make a special
suitability determination for the purchaser and must receive the purchaser's
written consent to the transaction prior to sale, unless the broker-dealer or
the transaction is otherwise exempt. In addition, the penny stock regulations
require the broker-dealer to deliver, prior to any transaction involving a penny
stock, a disclosure schedule prepared by the Commission relating to the penny
stock market, unless the broker-dealer or the transaction is otherwise exempt. A
broker-dealer is also required to disclose commissions payable to the
broker-dealer and the registered representative and current quotations for the
securities. Finally, a broker-dealer is required to send monthly statements
disclosing recent price information with respect to the penny stock held in a
customer's account and information with respect to the limited market in penny
stocks.
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Risks Associated with the Bingo.com (Canada) Portal
The Results of Operations for the Bingo.com (Canada) Portal Will Vary Depending
on a Number of Factors
We anticipate the operating results of Bingo.com (Canada)'s Portal will vary
widely depending on a number of factors, some that are beyond the control of
Bingo.com (Canada). These factors are likely to include:
o demand for our online services by registered users, advertisers and
consumers, including the number of searches performed by registered
users, consumers and the rate at which they click-through to paid
search listing advertisements;
o prices paid by advertisers using the Bingo.com (Canada) service, which
are not determined by Bingo.com (Canada);
o our costs of attracting consumers to the Bingo.com (Canada) Web site,
including costs of receiving exposure on third-party Web sites and
advertising costs;
o costs related to forming strategic relationships;
o loss of strategic relationships;
o the mix of paying vs. non-paying search results on the Bingo.com
(Canada) service;
o our ability to significantly increase our distribution channels;
o competition;
o the amount and timing of operating costs and capital expenditures
relating to expansion of our operations;
o costs and delays in introducing new Bingo.com (Canada) services and
improvements to existing services;
o changes in the growth rate of Internet usage and acceptance by
consumers of electronic commerce;
o technical difficulties, system failures or Internet downtime;
o government regulations related to our business and to the Internet;
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o our ability to upgrade and develop our information technology systems
and infrastructure;
o costs related to acquisitions of technologies or businesses; and
o general economic conditions, as well as those specific to the Internet
and related industries.
Because Bingo.com (Canada) has no operating history, it is difficult to
accurately forecast the revenues that will be generated by our subsidiaries.
We plan to significantly increase our operating expenses to expand our marketing
and sales operations related to Bingo.com (Canada), establish customer support
capabilities and fund the development of the Bingo.com (Canada) portal. We have
based our current and future expense levels on the operating plans and estimates
of future revenue for Bingo.com (Canada). We anticipate that the expenses
related to Bingo.com (Canada) may increase. The revenue and operating results
for Bingo.com (Canada) are difficult to forecast because they generally depend
upon the volume of the searches conducted on the Bingo.com (Canada) portal, the
amounts paid by advertisers for keyword search listings on the portal and the
number of advertisers that bid on the service, none of which are under our
control. As a result, we may be unable to adjust our spending in a timely manner
to compensate for any unexpected revenue shortfall. We also may be unable to
increase our spending and expand our operations in a timely manner to adequately
meet user demand to the extent it exceeds our expectations.
The Success of Our Bingo.Com (Canada) Portal May Depend Upon Achieving a
Critical Mass of Registered Users, Advertisers and Consumers
The success of our portal may be dependent upon achieving significant market
acceptance of our portal by registered users, advertisers and consumers. Our
portal has achieved very limited market acceptance to date. Internet advertising
in general is at an early stage of development. Most potential advertisers have
only limited experience advertising on the Internet and have not devoted a
significant portion of their advertising expenditures to Internet advertising.
Advertising through priority placement on our search service in particular will
be introduced in the future, and we cannot predict the level of its acceptance
as an advertising medium, even if we achieve initial market acceptance. Although
we believe that our portal will offer a cost-effective advertising solution, our
competitors and potential competitors may offer more cost-effective advertising
solutions, which could damage our business. In addition, although we believe our
portal will provide more relevant search results than those provided by
traditional search methods, our service may not achieve significant acceptance
by registered users and consumers. Failure to achieve and maintain a critical
mass of registered users; advertisers and consumers would seriously harm our
business.
Our Portal May be Dependent Upon Online Marketing Partners, and Our Future
Success is Dependent Upon Developing a Relationship with a Network of Affilates.
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We anticipate that our portal may depend on traffic from a limited number of
third party Web sites. We anticipate Bingo.com (Canada) will obtain traffic from
these sources pursuant to short term agreements. Bingo.com (Canada) currently
has no agreements in place and there can be no assurance that they will be
successful in obtaining any of these agreements on commercially acceptable
terms.
We also believe that our future success in penetrating our target markets
depends in part on Bingo.com (Canada)'s ability to further develop and maintain
relationships with network affiliates. These network affiliates provide their
users with the Bingo.com (Canada) portal search capabilities on their sites or
direct their traffic to the Bingo.com (Canada) Web site. We believe these
relationships are important in order to facilitate broad market acceptance of
our service and enhance Bingo.com (Canada)'s sales. Our future ability to
attract consumers to our portal service may be dependent upon the growth of our
network affiliates, which has not yet been established. If we are unable to
obtain agreements or arrangements for traffic on commercially acceptable terms
or to establish a relationship with a network of affiliates, our portal business
may never be successfully launched.
The Portal Industry is Highly Competitive, and We Cannot Assure You that We will
be Able to Compete Effectively
The market for Internet products, services and advertising is new, rapidly
evolving and intensely competitive. Our portal will potentially compete with
many other providers of Web directories, search and information services as well
as traditional media for consumer attention and advertising expenditures. We
expect competition to intensify in the future. Barriers to entry may not be
significant, and current and new competitors may be able to launch new Web sites
at a relatively low cost. Accordingly, we believe that our success may depend
heavily upon achieving significant market acceptance before our competitors and
potential competitors introduce competing services.
We anticipate that Bingo.com (Canada) will compete with online services, other
Web sites and advertising networks, as well as traditional offline media such as
television, radio and print for a share of advertisers' total advertising
budgets. We believe that the number of companies selling Web-based advertising
and the available inventory of advertising space has recently increased
substantially. Accordingly, Bingo.com (Canada) may face increased pricing
pressure for the sale of advertisements and direct marketing opportunities,
which could adversely affect our business and operating results.
Bingo.com (Canada) will also compete with providers of Web directories, search
and information services, all of whom offer advertising, including, among
others, America Online, Inc. (AOL.com, NetFind and Netscape Netcenter),
AskJeeves, Inc., CNET, Inc. (Snap), Excite, Inc. (including WebCrawler and
Magellan), LookSmart, Ltd., Lycos, Inc. (including HotBot), Microsoft
Corporation (LinkExchange, Inc. and msn.com), The Walt Disney Company/Infoseek
Corporation (including the Go Network), Goto Net and Yahoo! Inc. In addition, we
expect that other companies will offer directly competing services in the
future. For example, we expect AltaVista, a division of Compaq Computer
Corporation, to offer such a service.
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Most providers of Web directories and search and information services offer
additional features and content that Bingo.com (Canada) has elected not to
offer. Also, many of these competitors, as well as potential entrants into our
market, have longer operating histories, larger customer or user bases, greater
brand recognition and significantly greater financial, marketing and other
resources than we do. Many of these current and potential competitors can devote
substantially greater resources to promotion and Web site and systems
development than we can. In addition, as the use of the Internet and other
online services increases, larger, well-established and well-financed entities
may continue to acquire, invest in or form joint ventures with providers of Web
directories, search and information services or advertising solutions, and
existing providers of Web directories, search and information services or
advertising solutions may continue to consolidate. In addition, providers of
Internet browsers and other Internet products and services who are affiliated
with providers of Web directories and information services in competition with
the Bingo.com (Canada) portal service may more tightly integrate these
affiliated offerings into their browsers or other products or services. Any of
these trends may increase the competition we face and could adversely affect our
business and operating results.
Our Portal Business May be Subject to Government Regulation and Legal
Uncertainties
There are currently few laws or regulations directly applicable to access to, or
commerce on, the Internet. Due to the increasing popularity and use of the
Internet, it is possible that laws and regulations may be adopted, covering
issues such as user privacy, defamation, pricing, taxation, content regulation,
quality of products and services, and intellectual property ownership and
infringement. Such legislation could expose Bingo.com (Canada) to substantial
liability as well as dampen the growth in use of the Internet, decrease the
acceptance of the Internet as a communications and commercial medium, or require
Bingo.com (Canada) to incur significant expenses in complying with any new
regulations. The European Union has recently adopted privacy and copyright
directives that may impose additional burdens and costs on international
operations. In addition, several telecommunications carriers, including
America's Carriers' Telecommunications Association, are seeking to have
telecommunications over the Internet regulated by the Federal Communications
Commission, or FCC, in the same manner as other telecommunications services.
Because the growing popularity and use of the Internet has burdened the existing
telecommunications infrastructure and many areas with high Internet usage have
begun to experience interruptions in phone services, local telephone carriers,
such as Pacific Bell, have petitioned the FCC to regulate the Internet and to
impose access fees. Increased regulation or the imposition of access fees could
substantially increase the costs of communicating on the Web, potentially
decreasing the demand for our service. A number of proposals have been made at
the federal, state and local level that would impose additional taxes on the
sale of goods and services through the Internet. Such proposals, if adopted,
could substantially impair the growth of electronic commerce and could adversely
affect us. Also, Congress recently passed (and the President has signed into
law) the Digital Millenium Copyright Act, which is intended to reduce the
liability of online service providers for listing or linking to third-party Web
sites that include materials that infringe copyrights. Congress also recently
passed (and the President has signed into law) the Children's Online Protection
Act and the Children's Online Privacy Act, which will
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<PAGE>
restrict the distribution of certain materials deemed harmful to children and
impose additional restrictions on the ability of online services to collect user
information from minors. Further, Congress recently passed (and the President
has signed into law) the Protection of Children from Sexual Predators Act, which
mandates that electronic communication service providers report facts or
circumstances from which a violation of child pornography laws is apparent.
Bingo.com (Canada) is currently reviewing various pieces of legislation, and
cannot currently predict the effect, if any, that this legislation will have on
our business. There can be no assurance that this legislation will not impose
significant additional costs on our business or subject Bingo.com (Canada) to
additional liabilities. Moreover, the applicability to the Internet of existing
laws governing issues such as property ownership, copyright, defamation,
obscenity and personal privacy is uncertain. Bingo.com (Canada) may be subject
to claims that our services violate such laws. Any new legislation or regulation
in the United States or abroad or the application of existing laws and
regulations to the Internet could damage our business.
Due to the global nature of the Internet, it is possible that the governments of
other states and foreign countries might attempt to regulate its transmissions
or prosecute Bingo.com (Canada) for violations of their laws. Bingo.com (Canada)
might unintentionally violate such laws. Such laws may be modified, or new laws
may be enacted, in the future. Any such development could damage our business.
Risk Related to Internet Bingo
The Gaming Industry has Great Risks
We cannot assure you that we will be able to realize revenues and attain
profitability in the future. Gaming projects are speculative by their nature and
involve a high degree of risk. The gaming business is subject to a number of
factors beyond our control including changes in economic conditions, industry
competition, management risks, changes in gaming products, variability in
operating costs, changes in government and changes in laws and in regulatory
authorities' rules and regulations. Most Internet markets, including the gaming
segment, are growing rapidly and a large number of competitors are entering the
market. We believe there are certain market barriers that could affect Bingo.com
(Antigua)'s ability to enter the market and compete effectively, including
technology, commerce, regulation, management and reputation. In order to
compete, Bingo.com (Antigua) must:
o utilize sophisticated systems to manage its on-line bingo operations,
process financial transactions, encrypt information and provide an
attractive user interface;
o maintain its casino license to offer Internet gaming services to the
public;
o assemble and retain a team made up of employees, consultants and
contractors of software, hardware, telecommunications, marketing,
management and gaming specialists to develop its on-line bingo
operations;
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o attract a sufficient number of players to conduct its on-line bingo
games; and
o develop and maintain an impeccable reputation in order to attract and
retain customers.
We cannot assure you that Bingo.com (Antigua) will be able to compete
effectively or that Bingo.com (Antigua) will be able to earn a profit. Bingo.com
(Antigua) may be required to raise additional financing or to borrow funds for
its operations. We cannot assure you that we will be able to raise additional
financing to fund Bingo.com (Antigua)'s development. We anticipate that
Bingo.com (Antigua) will be a major part of our business and the inability of
Bingo.com (Antigua) to earn a profit will have a material adverse effect on our
business and results of operations.
Bingo.com (Antigua)'s Business Is Subject To Changing Technologies and
Substantial Competition
Bingo.com (Antigua)'s primary competition includes, but is not limited to,
CryptoLogic Inc., Venturetech Inc., Internet Casinos Ltd., Interactive Gaming
and Communications Corp. (formerly Sports International - USA), Wager Net Inc.,
Casinos of the South Pacific, World Wide Web Casinos and Virtual Vegas. Many of
our competitors have established client bases and have greater capital resources
and technical resources than Bingo.com (Antigua) and us.
The industry of offering gaming services and casino style games over the
Internet is characterized by rapid and significant technological change in the
computer, software and telephony services. Many entities are engaged in research
and development with respect to offering gaming services on the Internet. A
significant number of companies, organizations and individuals are currently
offering or purporting to offer casino gambling services on the Internet similar
to those developed by the Bingo.com (Antigua). We cannot assure you that
Bingo.com (Antigua)'s competitors will not develop technologies and products
that are more effective and efficient than Bingo.com (Antigua)'s technology and
products or that Bingo.com (Antigua)'s technology and products will not be
rendered obsolete by such developments. There can be no assurance that other
companies with greater financial and technological resources will not develop
gaming services over the Internet with better capabilities than those offered by
Bingo.com (Antigua).
There are Several Risks Related to the Regulation of Internet Gaming that May
Affect Our Business.
There is a risk that the operations of Bingo.com (Antigua) will be illegal if
conducted or if the operations are deemed to be conducted in the United States
or other jurisdictions. Internet gaming may be subject to government regulation
in the future. We cannot assure you that we will be allowed to operate in the
markets in which we plan to offer our services or that we will be able to
generate sufficient interest and revenues where our services are permitted. In
addition, there are several jurisdictions that are proposing legislation to
prohibit Internet gaming or make conducting an Internet gaming business less
profitable.
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The Proposed Internet Gambling Prohibition Act (Kyl Bill) May Potentially Impact
Our Operations
The laws, rules, regulations and policies of the United States may have a
material adverse effect on our business and results of operations. Other
jurisdictions may also adopt laws modeled after laws of the United States or
players in the United States may find ways to circumvent the blocking and
screening mechanisms we may implement to play the Bingo.com game in the wagering
mode. We cannot assure you that any blocking or screening mechanism will be
effective or that our subsidiaries or we will not be subject to enforcement
action in the United States or other jurisdictions.
As such, particular legislation in the United States and enforcement actions by
courts in the United States poses a risk to our business. Below is a description
of the current regulatory environment in the United States:
o On July 23, 1998, the Senate passed an appropriations bill containing
an amendment by Senator John Kyl of Arizona, which would prohibit
gaming on the Internet in the United States (the "Kyl Bill"). If
enacted into law, the Kyl Bill would classify gaming over the Internet
as a federal offense. Although the Kyl Bill allows certain intrastate
wagering, it prohibits operation of most other Internet gaming
businesses, as well as use of the Internet to place, receive or
otherwise make a bet or wager. Individuals convicted of operating an
Internet gaming business in the United States could be punished by up
to four years in jail and a fine equal to the greater of $20,000 or
the aggregate amount of bets received by the operator. Under the Bill,
Internet gaming would be a federal crime even if the states in which
bets are placed had legalized the practice.
o The Attorneys General for at least three states (Florida, Minnesota
and Texas) have issued either formal opinions or warnings that certain
Internet gaming activities are illegal in those states. The Attorney
General for the state of Wisconsin has also taken action against
Internet gaming companies.
o The Federal Interstate Wire Act contains provisions which may make it
a crime for anyone in the business of gambling to use an interstate or
international telephone line to transmit information in the placing of
bets, unless the betting is legal in the jurisdictions from which and
into which the transmission is made. In March 1998, the United States
Attorney for the Southern District of New York filed several criminal
complaints against the owners and managers of six Internet sports
betting companies headquartered in the Caribbean or Central America
under the Wire Act.
o In September 1997, the Minnesota Court of Appeals considered a state
civil consumer protection complaint and concluded that a Belize-based
Internet gambling business was subject to personal jurisdiction in
Minnesota because the company conducted commercial activities in the
state over the Internet. See Minnesota v. Granite Gate Resorts, Inc.,
568 N.W.2d 715 (1997), aff'd, 576 N.W.2d 747 (Minn. 1998).
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o In March 1998, the United States District Court for the Western
District of Texas concluded that a California casino that maintained a
web site was subject to jurisdiction in Texas since the site was
available in Texas and the casino accepted business from Texas
residents. See Thompson v. Handa-Lopez, Inc., 1998 WL 142300 (W.D.
Tex. Mar. 28, 1998).
There are Substantial Requirements and Licensing Jurisdictional Issues that may
Affect Bingo.com (Antigua)
The gaming industry is highly regulated in many parts of the world where the
ownership and operation of land-based gaming facilities (i.e., not including
sports wagering) of the type to be conducted by Bingo.com (Antigua) have
traditionally been regulated on both the federal and local levels. Bingo.com
(Antigua) must adhere to the legal requirements of each jurisdiction in which it
operates and offers services or is deemed to operate and offer services.
Bingo.com (Antigua) currently intends to offer its services internationally
where such services are permitted. Bingo.com (Antigua) does not currently intend
to seek licenses to operate its Internet casino in any other jurisdiction nor
does Bingo.com (Antigua) intend to restrict or control access to its web site
based on user citizenship or location. However, access to the site to play the
on-line bingo game in the wagering mode may be restricted based on the laws of a
particular jurisdiction.
The law of the Internet is not well developed and there can be no assurance that
authorities will not successfully assert jurisdiction over Bingo.com (Antigua)
for its activities in the event a player plays the on-line bingo game in a
jurisdiction where Internet gaming is prohibited. In the event that it is
determined that Bingo.com (Antigua) is subject to the laws of jurisdictions
other than Antigua, Bingo.com (Antigua) would have to obtain a license in order
to offer its gaming services to customers within these jurisdictions. There can
be no assurance that any such licenses could be obtained. Moreover, if it is
determined that Bingo.com (Antigua) is operating gaming operations in a
jurisdiction without a license, Bingo.com (Antigua) and its officers and
directors may become subject to criminal and civil penalties imposed by such
jurisdiction for violating its laws. The occurrence of any of these events could
have a material adverse effect on our business and, if many jurisdictions were
successful in asserting jurisdiction over Bingo.com (Antigua), Bingo.com
(Antigua) could be forced to cease all gaming operations.
Bingo.com (Antigua) is Exposed to Risks Associated with Credit Card Fraud.
We anticipate that Bingo.com (Antigua) may suffer losses as a result of
fraudulent credit card data, even though the associated financial institution
approved payment of the orders. Under current credit card practices, a merchant
is liable for fraudulent credit card transactions when, as is the case with the
transactions we process, that merchant does not obtain a cardholder's signature.
A failure to adequately control fraudulent credit card transactions would
adversely affect our business.
There is also some uncertainty with respect to the enforceability of credit card
charges made for gaming debts.
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Item 2. Financial Information.
Selected Financial Data
The following table sets forth selected financial data regarding our
consolidated operating results and financial position. The data has been derived
from our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States
("US GAAP"). See "Management's Discussion and Analysis of Financial Condition
and Results of Operation." The following selected financial data is qualified in
its entirety by, and should be read in conjunction with, the consolidated
financial statements and notes thereto included elsewhere in this Registration
Statement.
<TABLE>
- ---------------------------------------------------------------------------------------------------------------
Quarter Ended Year Ended
March 31, December 31,
- ----------------------------------------------------- --------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
----------- --------- ---------- ----------- ---------- ----------- ----------
$ $ $ $ $ $ $
<S> <C> <C> <C> <C> <C> <C> <C>
Operating Revenues nil nil 100 nil nil nil nil
General & Administrative 232,713 1,904 1,904 nil nil nil 5,000
Expenses
Net (Loss) from Continuing (258,713) (1,904) (1,804) nil nil nil (5,000)
Operations
Net Loss per Share (0.03) (0.38) nil nil nil nil (1.00)
- ---------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------
Quarter Ended Year Ended
March 31, December 31,
----------- --------- ---------- ----------- ---------- ----------- --------
1999 1998 1998 1997 1996 1995 1994
----------- --------- ---------- ----------- ---------- ----------- --------
$ $ $ $ $ $ $
Working Capital (Deficiency) 341,775 (1,904) (1,804) nil nil nil nil
Total Assets 2,358,910 nil 157,600 nil nil nil nil
Total Liabilities 53,070 1,904 159,404 nil nil nil nil
Shareholders' Equity 2,305,840 (1,904) (1,804) nil nil nil nil
Long-term Obligations nil nil nil nil nil nil nil
Cash Dividends nil nil nil nil nil nil nil
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
During the first quarter ended March 31, 1999, we completed a number of
transactions related to implementing our new business plan. These transactions
included a private placement in the amount of $1,000,000 and the acquisition of
our Bingo.com domain name for 500,000 shares of our common stock (at a deemed
value of $2.00 per share) and $200,000 in cash.
Subsequent to March 31, 1999, we completed a private placement of 416,668 shares
at $12.00 per share for proceeds of $5,000,016.
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Management's Discussion and Analysis of Financial Condition and Results of
Operation
The information contained in this Management's Discussion and Analysis of
Financial Condition and Results of Operation contains "forward looking
statements." Actual results may materially differ from those projected in the
forward looking statements as a result of certain risks and uncertainties set
forth in this report. Although management believes that the assumptions made and
expectations reflected in the forward looking statements are reasonable, there
is no assurance that the underlying assumptions will, in fact, prove to be
correct or that actual future results will not be different from the
expectations expressed in this Registration Statement.
Overview
Bingo.com, Inc.
We intend to develop, through our subsidiaries, leading positions as: (1) a
niche Internet portal focused on the worldwide entertainment and lifestyle
vertical markets and (2) a market leader in on-line bingo gaming.
Each of our subsidiaries is in the process of implementing its start-up business
plan (the entertainment and lifestyle portal and the bingo gaming web site).
Our primarily focus is as a holding company and to provide legal, financial,
securities regulatory and investor relations support to our subsidiaries.
We were incorporated in the State of Florida on January 12, 1987 under the name
"Progressive General Lumber Corp." with an authorized share capital of 7,500
shares of common stock with $1.00 par value per share. On July 17, 1998, we
increased our share capital to 50,000,000 common shares with $0.001 par value,
and on January 13, 1999, we changed our name to "Bingo.com, Inc." to reflect the
focus of our business.
Bingo.com (Canada)
We organized Bingo.com (Canada) in the Province of British Columbia on February
10, 1998, as 559262 B.C. Ltd., and on February 11, 1999 changed its name to
Bingo.com (Canada) Enterprises Inc.
Bingo.com (Canada) is our wholly owned subsidiary.
Bingo.com (Canada)'s primary objective will be to provide Internet users with an
engaging vertical market focused portal site that can be easily designated by
the Internet user as their default browser and home page and a unique gateway to
the Internet's entertainment and lifestyle web-sites. We anticipate that
Bingo.com (Canada) will develop a measurable audience that will justify and
permit it to generate revenues from the sale of banner advertising and
e-commerce. The unique requirements of developing and operating a portal
requires Bingo.com (Canada) to
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be managed by its own management team and organization principally located in
Vancouver, Canada.
During the next twelve months, Bingo.com (Canada) intends to initiate the
development of the second phase of its entertainment and lifestyle portal. We,
through Bingo.com (Canada), have spent approximately $156,250 on the development
and launch of the first phase of the entertainment and lifestyle portal.
Bingo.com (Antigua)
We incorporated Bingo.com (Antigua) under the laws of Antigua and Barbuda on
April 7, 1999 as Star Communications Ltd., and changed its name to Bingo.com.
(Antigua), Inc on April 21, 1999. The registered owners of the shares of
Bingo.com (Antigua) are Arthur G. B. Thomas of Antigua (registered owner of 9%
of the issued common shares), Kelvin John of Antigua (registered owner of 9% of
the issued common shares) and Douglas McLeod a resident of Japan (registered
owner of 82% of the issued common shares). The registered owners have executed
Trust Agreements acknowledging that we are the sole beneficial owners of the
shares and that all right, title and interest in Bingo.com (Antigua) will accrue
to and for our benefit. We intend to effect the transfer of the shares from the
registered owners to us.
Our Antigua subsidiary's primary objective is intended to be the development and
management of one of the largest on-line bingo games in the world. We anticipate
that Bingo.com (Antigua)'s on-line bingo game will incorporate dynamic design
features, surprise jackpots and prizes, chat rooms and a jackpot of up to
$1,000,000. Bingo.com (Antigua) will contribute 1% of its gross revenue from the
sale of bingo cards to charity. Bingo.com (Antigua)'s strategy will be to create
a comfortable environment to which the player will return on a regular basis to
play virtual bingo. The unique requirements of developing and operating an
Internet based gaming site will require the operations of Bingo.com (Antigua) to
be directed by a Board of Directors separate from us and to be managed by a
separate experienced management team and organization located in Antigua.
On April 16, 1999, the Antigua government granted approval for the issuance of
an Internet gaming license to Bingo.com (Antigua).
During the next twelve months, Bingo.com (Antigua) intends to establish the
infrastructure and manage and operate an on-line bingo gaming business. We,
through Bingo.com (Antigua), have spent approximately $548,000 on developing the
on-line bingo gaming business prior to the point in time that it will `go live'
at which point in time it will managed and operated by personnel located in
Antigua.
Bingo.com (Wyoming)
We intend to form Bingo.com (Wyoming) to effect a reorganization of our company.
We intend to merge into Bingo.com (Wyoming) and then continue out of Wyoming
into Antigua as an Antigua corporation with our same name, "Bingo.com, Inc."
36
<PAGE>
Results of Operations
Bingo.com, Inc. is a holding company that owns two subsidiaries:
o Bingo.com (Canada) Enterprises Inc. is a British Columbia corporation;
and
o Bingo.com. (Antigua), Inc. is an Antigua Corporation.
We intend to organize Bingo.com (Wyoming), Inc. as a Wyoming corporation.
Bingo.com executes its primary business objectives through Bingo.com Canada and
Bingo.com Antigua (the "Operating Subsidiaries"). During the period July 1998 to
December 1998, Bingo.com was engaged in the reorganization of its corporate
structure. During the five preceding calendar reporting periods (1994 to 1998),
no material nor substantive transactions were completed by Bingo.com, or as it
was named prior thereto, Progressive General Lumber Corp. The substantive
operations of Bingo.com and its operating subsidiaries did not commence in
earnest until the first quarter of 1999.
First Quarter Ended March 31, 1999 Compared to March 31, 1998
At the end of the financial quarter ended March 31, 1999, our total assets
increased to $2,358,910 from $157,600 at December 31, 1998. The increase was due
to our completion of a $1,000,000 private placement; our investment of $183,533
(nil at December 31, 1998) primarily in office equipment and computer servers;
our acquisition of the domain name `Bingo.com' in the amount of $1,200,000 which
we paid by way of $200,000 cash and $1,000,000 by way of the issuance of 500,000
common shares (at a deemed value of $2.00 per common share); and our $500,000
investment paid by way of our commitment to issue 250,000 of our common shares
to fund the first phase of development of the portal web site. Our cash and
short-term investments were $375,206 at March 31, 1999 representing an increase
from a balance of $157,600 at December 31, 1998. This was a direct result of our
financing activities. Our current liabilities decreased to $53,070 at the end of
the financial quarter ended March 31, 1999 compared to $159,404 at December 31,
1998. This was a result of our repaying the proceeds of the cancelled private
placement that had been contemplated prior to January 1, 1999 and our
maintaining a policy in the financial quarter ended March 31, 1999 of remaining
current in our payments to our creditors.
Our general and administrative expenses increased to $192,412 while marketing
and advertising increased to $39,943 for the first financial quarter ended March
31, 1999. During the financial quarter ended March 31, 1999, we contributed
$156,250 to Bingo.com (Canada) and $548,000 to the development of the on-line
bingo gaming software.
The Bingo.com operations for the fiscal quarter ended March 31, 1999 used cash
of $4,195,000 primarily related to the funding of the acquisition of the domain
name, legal costs, staffing and office overhead expenditures.
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<PAGE>
The funds contributed to Bingo.com (Canada) were primarily used to fund the
development of the first phase of the portal web site, legal work, marketing and
sales, staffing and office overhead expenditures.
The funds contributed to the development of the on-line bingo gaming software
were primarily used to fund the design and alpha development phases of the
on-line bingo gaming software, marketing and sales, legal staffing and office
overhead expenditures.
During the financial quarter ended March 31, 1998, we had no active business
operations. As a result, we had no material transactions or results of
operations that require a comparison to our operations during the financial
quarter ended March 31, 1999.
Year Ended December 31, 1998 Compared to December 31, 1997
During the first half of the year ended December 31, 1998, we had no active
business operations. In July 1998, we commenced the reorganization of our
corporate structure. On July 17, 1998, the State of Florida approved our
restated Articles of Incorporation, which increased our capitalization from
7,500 common shares to 50,000,000 common shares, and changed the par value from
$1.00 to $0.001. We also forward split our common stock 200-for-1, thus
increasing the number of outstanding common shares from 5,000 common shares to
1,000,000 common shares. We incurred expenses in the amount of $6,904 during the
year ended December 31, 1998. We had no revenues from operations during the year
ended December 31, 1998.
At December 31, 1998, we had total assets of $157,600, which represented the
proceeds of a private placement that we subsequently did not accept, and which
we returned funds to the investor subsequent to the 1998 year end. We recorded
the liability for this transaction as an accounts payable.
During the year ended December 31, 1997, we had no active business operations.
As a result, we had no material transactions or results of operations that would
require a comparison to our operations during the year ended December 31, 1998.
Year Ended December 31, 1997 Compared to December 31, 1996
During the years ended December 31, 1997 and December 31, 1996, we had no active
business operations. As a result, we had no material transactions or results of
operation.
Liquidity and Capital Resources
Since July 1998, we have raised an aggregate of $ 6,075,016 in capital through
private placements. We believe this financing will be sufficient to satisfy our
cash requirements through January 31, 2000.
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<PAGE>
From these proceeds and until May 31, 1999, we have contributed approximately
$156,250 to Bingo.com (Canada) to pay for the product, service and software
related costs associated with the development of Bingo.com (Canada) and the
portal. This includes approximately $4,000 for legal and accounting services;
approximately $33,000 for sales and marketing activities; and approximately
$119,250 in general overhead and administrative services.
We have also expended approximately $548,000 to develop and test the on-line
bingo gaming software and for expenses related to the products and services
related to such development, which we intend to contribute to Bingo.com
(Antigua).
During the financial quarter ended March 31, 1999, we issued 500,000 common
shares to acquire the domain name `Bingo.com (at a deemed value of $2.00 per
common share). We also agreed to issue 250,000 common shares to fund the first
phase of development of the portal web site.
We estimate, however, that the total amount of capital required to proceed with
current operations and to bring our subsidiaries' products and services to
market will be approximately $10,000,000, including approximately $2,000,000 for
research and development, approximately $4,000,000 for advertising, marketing
and promotional efforts, and approximately $3,000,000 for working capital. We
anticipate that we may need to raise additional capital through additional sales
of unregistered shares of our common stock conducted under exemptions provided
by the Securities Act or by the rules of the SEC in order to meet Bingo.com's
capital requirements.
In May 1999, we closed a private placement in the amount of $5,000,016. We
believe this financing will be sufficient to satisfy Bingo.com's cash
requirements through January 31, 2000.
Recent Financings
Our business activities and operations have been funded to date through issuance
of shares of our common stock in the following transactions:
<TABLE>
Summary of Transactions
- --------------------------------------------------------------------------------------------------------------
Number of Total Price of
Shares Shares ($)
-------------------- --------------------
<S> <C> <C>
Balance of Bingo.com at December 31, 1998 1,000,000 5,000
Issued to as consideration to Bingo, Inc. for the 500,000 1,000,000
Bingo.com domain name
Issued for cash at $0.01 per share 4,500,000 45,000
Issued for cash at $0.01 per share 3,000,000 30,000
Issued for cash at $2.00 per share (1) 500,000 1,000,000
Issued for cash at $12.00 per share (2) 416,668 5,000,016
-------------------- --------------------
TOTAL 9,916,688 $7,080,016
</TABLE>
(1) We issued Units consisting of one common share and one common share
purchase warrant exercisable to acquire one additional common share at
$2.00 until February 11, 2000.
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<PAGE>
(2) We issued Units consisting of one common share and one common share
purchase warrant exercisable to acquire one additional common share at
$12.00 per share until April 22, 2000 and at $15.00 per share until April
22, 2001.
Year 2000 Compliance
The Year 2000 issue arises with the change in century and the potential
inability of information systems to correctly "rollover" dates to the new
century. To save on computer storage space, many systems were programmed with a
two-digit century (i.e. December 31, 1999 would appear as 12/31/99) assuming
that all years would be part of the 20th century. On January 1, 2000, systems
with this programming will default to 01/01/1900 instead of 01/01/2000, and
calculations using or reporting the date will not be correct and errors will
arise (the "Year 2000 Issue"). To prevent this from occurring, information
systems need to be updated to ensure they recognize dates during and after the
Year 2000.
The potential exists that we and each of our subsidiaries are exposed to a risk
that certain aspects of their businesses will fail or suffer impairment as a
result of internally operated or externally contracted hardware or software
systems and services not being able to correctly "rollover" dates to the new
century. The risk stems from our reliance on certain hardware, software and
services to carry out the daily operation of our proposed respective businesses.
The exposure may result from, amongst other things, the use of computers,
general software and servers for office purposes and data storage; connections
to and use of the services of Internet Service Providers and telephone companies
for office purposes and customer and investor relations; the software underlying
the operation of the portal web site and the on-line bingo gaming operation; and
the servers that `play and distribute' the on-line bingo game.
We and our subsidiaries have only been operating and developing our respective
businesses during the last 6 months and the office hardware, administrative
general software, custom developed special purpose software, servers and
services of Internet Service Providers and telephone companies have been
acquired during this period. As a result, and in consultation with the suppliers
of this hardware, software and services, we believe the related systems that we
intend, directly or indirectly, to use in our respective businesses are Year
2000 compliant. Our due diligence also included an evaluation of supplier
provided technology and the implementation of new policies to require our
suppliers to confirm that they have disclosed and will correct Year 2000
compliance issues. Although we are relying primarily on systems developed with
current technology and on systems designed to be Year 2000 compliant, we may
have to replace, upgrade or reprogram certain systems to ensure that all
interfacing technology will be Year 2000 compliant when running jointly.
In the event that we incur expenses associated with resolving Year 2000
compliance issues, we intend to expense the operating costs as they are incurred
and capitalize the capital costs as they are incurred. However, our purchases of
hardware and general and specific purpose software have been relatively recent,
and the more expensive of the hardware and general and specific software items
that we have purchased are covered under warranties that will extend over the
rollover period to January 1, 2000. As a result, we do not expect to incur any
major operating or
40
<PAGE>
capital expenditures that would have a material impact on our financial
condition or results of operations.
While we believe that our hardware and general and specific purpose software
applications will be Year 2000 compliant, there can be no assurance until the
Year 2000 occurs that all systems will function adequately.
We do not currently anticipate any disruption in our or our subsidiaries'
operations as the result of the Year 2000 issue. We do not have any information
concerning the Year 2000 compliance status of our suppliers and customers that
would affect our operations. Any failure of our material systems, our vendors'
material systems or the Internet to be Year 2000 compliant may have a material
adverse effect on our business and results of operations.
In order to protect against the possibility of any material disruption in our or
our subsidiaries' operations as the result of the Year 2000 issue we have taken
the following precautions:
- - developed, initiated and maintained procedures that ensure that the
information stored on the office computer hard drives are backed up on a
regular basis and stored safely;
- - copies of the source code for the special purpose software are maintained
in secure offsite locations by the developers of the software;
- - will install a backup server in Antigua; and
- - implemented a policy of acquiring name brand hardware and retained
experienced consultants upon whose warranties we believe that we can rely.
New Accounting Pronouncements
In March 1997, the Financial Accounting Standards Board or FASB issued Statement
of Financial Accounting Standards SFAS No. 128, "Earnings per Share." This
Statement establishes standards for computing and presenting earnings per share
("EPS") and applies to all entities with publicly-held common shares or
potential common shares. This Statement replaces the presentation of primary EPS
and fully-diluted EPS with a presentation of basic EPS and diluted EPS,
respectively. Basic EPS excludes dilution and is computed by dividing earnings
available to common stockholders by the weighted-average number of common shares
outstanding for the period. Similar to fully diluted EPS, diluted EPS reflects
the potential dilution of securities that could share in the earnings. The
adoption of SFAS No. 130 did not have a material effect on our reported EPS
amounts.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income,"
which is effective for fiscal years beginning after December 15, 1997. SFAS No.
130 establishes standards for reporting and display of comprehensive income and
its components in financial statements. The adoption of SFAS No. 130 did not
have a material effect on our financial statements.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," which is effective for fiscal years
beginning after December 15, 1997. SFAS No. 131 establishes standards for the
way a public business enterprise reports certain
41
<PAGE>
information about operating segments, and discloses enterprise-wide information
about its products and services, activities in different geographic areas, and
its reliance on major customers. The adoption of this Statement did not have a
material effect on our financial statements.
Statement of Financial Standards No. 132, "Employees' Disclosures About Pension
and Other Post-retirement Benefits," standardizes the disclosure requirements
for pensions and other post-retirement benefits. This statement requires
additional information on changes in benefit obligations and fair values of plan
assets. It revises prior standards and is effective for years beginning after
December 15, 1997. Because the Company does not currently have any significant
employee benefit plans nor intends to initiate any in the near-term, there
should be no impact on its financial statements.
Quantitative and Qualitative Disclosures About Market Risks
None
Item 3. Properties.
We currently lease our principal business office through our subsidiary, at
702-543 Granville Street, Vancouver, British Columbia, pursuant to a lease that
expires on April 30, 2002. The monthly rent payments under the lease are
approximately $2,380. We also pay for a pro rata share of common area expenses
such as insurance, cleaning services, maintenance related to the space we rent.
Our pro rata share of the common area expenses is currently approximately $2,120
per month.
Bingo.com (Antigua) currently leases a business office Ryan's Place, St. John's
Antigua, on a month to month basis $2,250 per month.
Other than described above, neither we nor any of our subsidiaries presently own
or lease any other property or real estate.
Item 4. Security Ownership of Certain Beneficial Owners and Management.
Security Ownership of Certain Beneficial Owners.
The following table sets forth certain information concerning the number of
shares of our common stock owned beneficially as of May 15, 1999 by: (i) each
person (including any group) known to us to own more than five percent (5%) of
any class of our voting securities, (ii) each of our directors, and (iii)
officers and directors as a group. Unless otherwise indicated, the shareholders
listed possess sole voting and investment power with respect to the shares
shown.
42
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------------------------
Title of Class Name and Address of Amount and Nature of Percentage of Class
Beneficial Owner Beneficial Ownership
- -------------- ------------------- ---------------------- -------------------
<S> <C> <C> <C>
Common Stock Bingo, Inc. 500,000 5.04%(1)
P. O. Box 1127
The ANSA Bank Bldg.
Anguilla, B.W.I.
Common Stock Dotcom Fund SA 1,000,000(2) 9.6%(2)
Box 571
Providentials Turks &
Calcosis, B.W.I.
Common Stock Goldberg Equity Fund 833,336(3) 7.75% (3)
2001 Leeward Hwy.
Providenciales Turks &
Caicos, B.W.I.
Common Stock Michael Townsend(4) 765,000 7.71%
C/o Hong Kong Bank Bldg.
Vancouver, BC V6C3H1
Common Stock Whitecliffe Investment 585,000 5.9%
Fund, Ltd
CEGEI NI 18 STE 36 SNL 3
Cancine, MX 77500
Common Stock CEDE & Co. (5) 6,239,050(6) 62.91%
P. O. Box 222
Bowling Green Station
New York, NY 10274
Common Stock Officers and Directors as 769,500 8.02%
a Group
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Based on an aggregate 9,916,668 shares outstanding as of May 15, 1998.
(2) Includes 500,000, shares of common stock that are acquirable pursuant to
the exercise of 500,000 share purchase warrants within sixty days of May
15, 1999.
(3) Includes 416,668 shares of common stock that are acquirable pursuant to the
exercise of 416,668 share purchase warrants within sixty days of May 15,
1999.
(4) Pursuant to an assignment of a Share Purchase Agreement, the beneficial
owner of these shares is Darren Little, our President.
(5) CEDE & Co. is a trust depository that holds shares for individual
shareholders.
(6) Our transfer agent's records indicate that there are nine share
certificates registered in the name of CEDE & Co. representing 6,239,050
common shares. CEDE & Co. is a trust depository that holds shares for
individual shareholders, and we do not know the identities of the
individual shareholders of such shares.
Security Ownership of Management.
We are not aware of any arrangement that might result in a change in control in
the future.
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<PAGE>
Item 5. Directors and Executive Officers.
Directors and Officers
All of our directors are elected annually by the shareholders and hold office
until the next annual general meeting of shareholders or until their successors
are duly elected and qualified, unless they sooner resign or cease to be
directors in accordance with our Articles and Bylaws. Our executive officers are
appointed by and serve at the pleasure of our Board of Directors.
As at May 31, 1999, the following persons were our directors and/or executive
officers:
- --------------------------------------------------------------------------------
Name and present office held Director since
- --------------------------------------------------------------------------------
Darren Little January 1999
President, CEO, Director
- --------------------------------------------------------------------------------
Roger Flowerdew March 1999
CFO
- --------------------------------------------------------------------------------
Chris Sargent February 1999
V.P. Investor Relations
- --------------------------------------------------------------------------------
The following is a brief biographical information on each of the officers and
directors of listed:
Darren Little, Director, CEO, President, Secretary and Treasurer
Darren Little is a Director of Bingo.com, Inc. and holds the positions of
Chairman of the Board, President, Secretary and Treasurer. Previously, Mr.
Little has spent the past 15 years in management positions in the marketing and
advertising industry. He has expertise in private and public companies, such as
Realty World Corporation, and Dollar Stores with developing and implementing
marketing strategies. He develops and implements marketing and advertising
strategies that are designed to specifically increase consumer awareness and
demand for the product or service to be marketed.
Before founding Bingo.com, Little worked as Vice President of Marketing for GIC
Global Intertainment Corp. Prior to that, he was Vice President of Marketing for
Advanced Gaming Technology Inc.
44
<PAGE>
Roger Flowerdew, Chief Financial Officer
Roger Flowerdew is a Chartered Accountant, who, has specialized in structuring
and managing the rapid growth of emerging private and high technology companies.
Flowerdew has experience in public company regulatory compliance and has
assisted in raising equity financing from institutional markets.
Prior to his joining us, Roger Flowerdew was the CFO of Xinex Networks Inc.,
from August 1992 to July 1997. He is currently a director of Zycom Corporation
and was the Executive Vice President Finance for First Cambridge Bancorp from
May 1991 to June 1992. Roger has provided financial and general management
services to companies in the telecommunications, computer based training,
emergency safety, bio-medical and environmental industries located in Canada and
the United States.
Chris Sargent, Vice President Investor Relations
Chris Sargent holds the position of Vice President Investor Relations. Mr.
Sargent has spent the past 3 years in investor relations with other companies
and with a private investor relations company. He has expertise in
communications and in public company financial markets and has developed and
implemented investor relations marketing strategies. Mr. Sargent was the Vice
President of Global Intertainment from March to December 1998; employed as an
investor relations specialist with Advance Gaming from March 1997 to March 1998
and employed as an investor relations specialist with Investor Relations Group
from March 1996 to May 1996. Mr. Sargent worked as a real estate professional at
McRae Walker Realty prior to 1996.
Other Information
The Board of Directors is elected by our shareholders. Currently, there is one
member on our Board of Directors, who reviews significant developments affecting
our company and acts on matters requiring Board approval. Although the Board of
Directors may delegate many matters to others, it reserves certain powers and
functions to itself.
None of our directors or executive officers is a party to any arrangement or
understanding with any other person pursuant to which said he was elected as a
director or officer.
None of our directors or executive officers has any family relationship with any
other officer or director.
None of our officers or directors have been involved in the past five years in
any of the following: (1) bankruptcy proceedings; (2) subject to criminal
proceedings or convicted of a criminal act; (3) subject to any order, judgment
or decree entered by any court limiting in any way his or her involvement in any
type of business, securities or banking activities; or (4) subject to any order
for violation of federal or state securities laws or commodities laws.
45
<PAGE>
Item 6. Executive Compensation.
The following table contains information concerning the grant of stock options
to named executive officers and directors during the financial year ended
December 31, 1998. No compensation was paid to an executive officer during the
financial year ended December 31, 1998.
Our Directors do not receive any stated salary for their services as directors
or members of committees of the Board of Directors, but by resolution of the
Board, a fixed fee and expenses of attendance may be allowed for attendance at
each meeting. Directors may also serve our company in other capacities as an
officer, agent or otherwise, and may receive compensation for their services in
such other capacity.
Stock Options
We have reserved 1,145,000 shares of common stock for issuance pursuant to a
stock option plan, which we intend to authorize and adopt. We anticipate we will
issue shares to certain of our directors, executive officers and consultants
after our stock option plan is adopted. We intend to register our stock option
plan under the Securities Act after we adopt the plan and this registration
statement is declared effective.
We intend to issue stock options to the following officers, directors and
consultants after we approve and adopt a stock option plan:
<TABLE>
- -------------------------------- -------------------------- ----------------------------- -------------------------
Grantee Number of Options Vesting Schedule Exercise Price
- -------------------------------- -------------------------- ----------------------------- -------------------------
<S> <C> <C> <C>
Darren Little 500,000 3 Years, $4.75
President, CEO, Director pro rata annually
- -------------------------------- -------------------------- ----------------------------- -------------------------
Roger Flowerdew 200,000 2 Years, $4.75
CFO pro rata quarterly
- -------------------------------- -------------------------- ----------------------------- -------------------------
Chris Sargent 100,000 2 Years, $4.75
V.P. Investor Relations pro rata annually
- -------------------------------- -------------------------- ----------------------------- -------------------------
Robert MacKay 45,000 3 Months, $4.75
Consultant pro rata monthly
- -------------------------------- -------------------------- ----------------------------- -------------------------
Reserved for Issuance 500,000
- -------------------------------- -------------------------- ----------------------------- -------------------------
Total 1,145,000
- -------------------------------- -------------------------- ----------------------------- -------------------------
</TABLE>
46
<PAGE>
We did not granted any stock options to our executive officers and directors
during the fiscal year ended December 31, 1998.
Employment and Consulting Agreements
We currently have no employment, consulting or other service contracts or
arrangements between us or our subsidiaries and our directors and/or executive
officers.
Item 7. Certain Relationships and Related Transactions.
Except for relationships and transactions that we have disclosed in other
sections of this registration statement such as (a) the ownership of our
securities, (b) the compensation described herein and (c) advances to and by
certain officers to cover expenses, all of which were reimbursed or repaid
without interest, none of our directors, executive officers, holders of ten
percent of our outstanding shares of common stock, or any associate or affiliate
of such person, have, to our knowledge, had a material interest, direct or
indirect, during the three fiscal years ended December 31, 1996, 1997 and 1998
or in any proposed transaction which may materially affect us.
Item 8. Legal Proceedings.
To the best of our knowledge, we are not subject to any active or pending legal
proceedings or claims against us or any of our properties. However, from time to
time, we may become subject to claims and litigation generally associated with
any business venture.
Item 9. Market Price of and Dividends on Registrant's Common Equity and Related
Stockholder Matters.
On March 19, 1997, our common stock was approved for trading on the OTCBB under
the symbol PGLB. In January 1999, we changed our name from Progressive General
Lumber Corporation to Bingo.com, Inc., and our OTCBB symbol was changed to BIGG.
The following table sets forth, for the periods indicated, the range of the high
and low bid quotations (as reported by NASD). There were no trades of our
securities on the OTCBB prior to the first quarter 1999.
The bid quotations set forth below, reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not reflect actual transactions:
47
<PAGE>
OTCBB
1999 High Low Volume
---- ---- --- ------
1st Quarter 8.75 1.875 6,404,500
On June 3, 1999, the last reported sales price of our common stock, as reported
by the NASD was $3.93. As of May 15, 1999, there were 76 holders of record of
our common stock.
We have not declared or paid any cash dividends on our common stock since our
inception, and our Board of Directors currently intends to retain all earnings
for use in the business for the foreseeable future. Any future payment of
dividends will depend upon our results of operations, financial condition, cash
requirements and other factors deemed relevant by our Board of Directors.
Item 10. Recent Sales of Unregistered Securities.
Pursuant to a resolution dated June 30, 1988, we initially issued 5,000 shares
of common stock (the "Original Shares"). On July 17, 1998, we increased our
authorized share capital from 7,500 authorized shares of common stock to
50,000,000 shares of common stock. Pursuant to the resolution authorizing the
increase in authorize share capital, our board of directors of Bingo.com
declared a stock dividend (a forward split) that increased our number of
Original Shares on a 200-for-1 basis, resulting in 1,000,000 outstanding common
shares. The issuance of Original Shares was exempt from registration under the
provisions of Section 4(2) of the Securities Act of 1933, as amended. The
issuance of the shares did not involve a public offering.
We issued 3,000,000 shares of our common stock for $0.01 per share to raise
$30,000. This offering was made to four subscribers and was fully subscribed and
the shares were issued on January 12, 1999. The offering was not underwritten.
This sale was exempt from registration in reliance upon Rule 504 under
Regulation D promulgated under the Securities Act. The aggregate offering price
did not exceed $1,000,000, and the offering was otherwise in compliance with
Rules 501 and 502 promulgated under the Securities Act.
We issued 4,500,000 shares of our common stock for $0.01 per share to raise
$45,000. This offering was made to seven subscribers and was fully subscribed
and the shares were issued in January 1999. The offering was not underwritten.
This sale was exempt from registration in reliance upon Rule 504 under
Regulation D promulgated under the Securities Act. The aggregate offering price
did not exceed $1,000,000, and the offering was otherwise in compliance with
Rules 501 and 502 promulgated under the Securities Act.
Pursuant to an Asset Purchase Agreement dated January 18, 1999, we issued
500,000 shares of our common stock to Bingo.com, Inc. as consideration for the
acquisition of the domain name "Bingo.com." The shares were issued in reliance
on an exemption from registration pursuant to
48
<PAGE>
Section 4(2) of the Securities Act of 1933 and Regulation S promulgated under
the Securities Act. No placement agent was retained in connection with the
issuance and no fees or commissions were paid in connection with the
transaction. The shares issued to Bingo.com are subject to an Escrow Agreement
dated January 27, 1999, under which the shares held in escrow pending
confirmation of the transfer of the domain name, "Bingo.com".
Pursuant to a Subscription Agreement dated February 12, 1999, we issued units
consisting of one common share and one common share purchase warrant for $2.00
per unit to raise $1,000,000. Each share purchase warrant is exercisable to
acquire one additional common share at $1.00 per share until February 11, 2000.
This offering was made to one subscriber outside the United States. The offering
was not underwritten. The shares were issued on an exemption from registration
pursuant to Regulation S promulgated under the Securities Act. No placement
agent was retained in connection with the offering and no fees or commissions
were paid in connection with the transaction.
Pursuant to a Subscription Agreement dated April 23, 1999, we issued units
consisting of one common share and one common share purchase warrant for $12.00
per unit to raise $5,000,016. Each share purchase warrant is exercisable to
acquire one additional common share at $12.00 per share until April 22, 2000 and
at $15.00 per share until April 22, 2001. This offering was made to one
subscriber outside the United States. The offering was not underwritten. The
shares were issued in reliance on an exemption from registration pursuant to
Regulation S promulgated under the Securities Act. No placement was retained in
connection with the offering and no fees or commissions were paid in connection
with the transactions.
Item 11. Descriptions of Registrant's Securities to be Registered.
Pre-reorganization - Bingo.com (Florida)
Our authorized capital stock consists of 50,000,000 shares of common stock, par
value $0.001 per share. As of May 15, 1999, there were 9,916,668 issued and
outstanding shares of our common stock. On May 15, 1999, there were 76 holders
of record of common stock.
We have also agreed to issue 250,000 shares of our common stock to Stratford as
consideration for services related to the first phase of the development of the
Bingo.com (Canada) portal. We anticipate we will finalize a definitive agreement
with Stratford in June 1999 and issue the shares at closing.
Each of our stockholders is entitled to one vote for each share of common stock.
All elections for directors are decided by plurality vote; all other questions
are decided by majority vote except as may otherwise be provided by our Articles
of Incorporation or by the Florida General Corporation Law.
The holders of our common stock are not entitled to cumulative voting rights
with respect to the election of directors, and as a consequence, minority
stockholders will not be able to elect directors on the basis of their votes
alone. Our stockholders are entitled to receive ratably such dividends as may be
declared by our Board of Directors out of funds legally available therefor.
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<PAGE>
In the event of a liquidation, dissolution or winding up of the company, our
stockholders are entitled to share ratably in all assets remaining after payment
of liabilities. Our stockholders have no preemptive rights and no right to
convert their common stock into any other securities. There are no redemption or
sinking fund provisions applicable to the common stock. All outstanding shares
of our common stock are fully paid and non-assessable.
Post Reorganization Rights and Analysis
We anticipate it will be reorganized pursuant to a plan of reorganization. The
reorganization will be accomplished through the merger of us with and into a
wholly owned Wyoming subsidiary we will form to facilitate the reorganization.
We anticipate that each of our outstanding shares of common stock will, subject
to the exercise of statutory dissenters' rights, be automatically converted into
one outstanding share of the Wyoming Corporation's common stock, and that
immediately after the merger, the Wyoming Corporation will become Bingo.com,
Inc., an Antigua international business corporation.
Comparison of Your Rights as a Shareholder now and After the Reorganization
Florida law and our Articles of Incorporation and Bylaws govern your rights as a
stockholder of our stock. After the reorganization you will become a stockholder
of an Antigua International Business Corporation (unless you dissent) and the
Antigua International Business Corporation Act or the "IBCA", our Articles of
Continuance and our new Bylaws will govern your rights.
The principal attributes of your shares of our common stock and our shares after
the reorganization will be similar; however, there will be certain differences.
In addition, there are certain differences between our current Articles of
Incorporation and Bylaws, and our Articles of Continuance and Bylaws after
reorganization. The following discussion is a summary of all material
differences in your stockholder rights resulting from the reorganization, but
does not and covers all of the respects in which Antigua law may differ from
laws generally applicable to Florida corporations. You should review the
complete text of the relevant provisions of the Antigua IBCA, the Florida
Business Corporation Act or the "FBCA", our Articles of Incorporation and Bylaws
and our proposed Articles of Continuance and Bylaws.
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<PAGE>
Stockholder Approval of Business Combinations
Under the FBCA, there is no statutory restriction on a Florida corporation's
ability to acquire the business of another corporation. However, a merger or
consolidation, sale, lease, exchange or other disposition of all or
substantially all of the property of the corporation a "Disposition" not in the
usual and regular course of the corporation's business, or a dissolution of the
corporation, is required to be approved by the holders of a majority of the
shares entitled to vote thereon unless the Articles of Incorporation provides
otherwise. In addition, under the FBCA, class-voting rights exist with respect
to amendments to the Articles of Incorporation that adversely affect the terms
of the shares of a class. Such class voting rights do not exist as to other
extraordinary matters, unless the certificate of incorporation provides
otherwise; our Articles of Incorporation do not provide otherwise.
The IBCA requires the approval of the holders of at least two-thirds (2/3) of
the votes cast at a special meeting called for such purpose for Bingo.com
(Holding) to (i) merge, consolidate or amalgamate with another company or (ii)
reorganize or reconstruct itself pursuant to a plan sanctioned by the Antigua
courts.
Absence of Required Vote for Certain Mergers
Under the FBCA, no vote of the stockholders of a corporation surviving a merger
is required to approve a merger if (i) the agreement of merger does not amend
the Articles of Incorporation of such corporation, (ii) each share of stock of
such corporation outstanding immediately before the merger is to be an identical
outstanding or treasury share of the surviving corporation with identical
designations, preferences, limitations and relative rights.
There is no equivalent provision in the IBCA and therefore the stockholders of
the surviving company in such a situation would be entitled to vote on the
merger as described above.
Appraisal Rights
Under the FBCA, a stockholder of a corporation does not have appraisal rights in
connection with a merger or consolidation or, in the case of a disposition, if
(i) the shares of such corporation are listed on a national securities exchange
or held of record by more than 2,000 stockholders, as is presently not the case
with our company, or (ii) such corporation will be the surviving corporation of
the merger and no vote of the stockholders of the surviving corporation is
required to approve such merger; provided, however, that a stockholder is
entitled to appraisal rights in the case of a merger or consolidation if such
stockholder is required by the terms of an agreement of merger or consolidation
to accept in exchange for the shares of such stockholder anything other than (i)
shares of stock of the corporation surviving or resulting from such merger or
consolidation, (ii) shares of any other corporation that on the effective date
of the merger or consolidation will be either listed on a national securities
exchange or held of record by more
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<PAGE>
than 2,000 stockholders, (iii) cash in lieu of fractional shares of the
corporation described in the foregoing clauses (i) and (ii), or (iv) any
combination of the foregoing.
The IBCA does not provide for appraisal rights. However, in the case of a court
sanctioned reorganization of an Antigua company as described above, a dissenting
stockholder has the right to express to the court such stockholder's view that
the transaction sought to be approved would not provide the stockholders with
the fair value of their shares.
Stockholder Consent to Action Without Meeting
Under the FBCA, unless otherwise provided in the Articles of Incorporation, any
action that can be taken at a meeting of the stockholders may be taken without a
meeting if written consent thereto is signed by the holders of outstanding stock
having the minimum number of votes necessary to authorize or take such action at
a meeting of the stockholders.
There is no equivalent provision under the IBCA. However, Articles of
Continuance may provide that a resolution in writing signed by all of the
stockholders entitled to vote thereon at a meeting of stockholders is as valid
as if that resolution had been approved at a meeting of the stockholders.
Special Meetings of Stockholders Under the FBCA, a special meeting of
stockholders may be called only by the board of directors or by persons
authorized in our Articles of Incorporation or the Bylaws. Our Bylaws provide
for the call of a special meeting of stockholders by our President or Secretary,
or by resolution of our Board of Directors.
Under the IBCA, a special meeting will be able to be called by the Board of
Directors or by the holders of not less than five percent (5%) of the issued
shares of a corporation that carry the right to vote at the meeting sought to be
held.
Distributions and Dividends; Repurchases and Redemptions
Under the FBCA, a corporation may pay dividends out of surplus and, if there is
no surplus, out of net profits for the current and/or the preceding fiscal year,
unless the net assets of the corporation are less than the capital represented
by issued and outstanding stock having a preference on asset distributions.
Surplus is defined in the FBCA as the excess of the net assets over capital, as
the board may adjust such capital. A Florida corporation may purchase or redeem
shares of any class except when its capital is impaired or would be impaired by
such purchase or redemption. A corporation may, however, purchase or redeem out
of capital shares that are entitled upon any distribution of its assets to a
preference over another class or series of its stock if such shares are to be
retired and the capital reduced. Under the IBCA, the directors may pay to the
stockholders such dividends as appear to the directors to be justified by the
profits of the Corporation unless the corporation is unable or would, after the
payment, be unable to pay its liabilities as they become due, or the realizable
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<PAGE>
value of the corporation's assets would thereby be less than the aggregate of
its liabilities and stated capital of all classes.
Vacancies on Board of Directors
Under the FBCA, a vacancy and a newly created directorship may be filled by a
majority of the remaining directors, although less than a quorum, unless
otherwise provided in the Articles of Incorporation or Bylaws. Neither our
Articles of Incorporation nor our Bylaws provides otherwise so.
The IBCA and our proposed Bylaws after the reorganization will provide that a
vacancy and a newly created directorship may be filled by a majority of the
remaining directors, so long as a quorum of directors continues to exist at all
times.
Removal of Directors
Under the FBCA, except in the case of a corporation with a classified board, any
director or the entire board may be removed, with or without cause, by the
holders of a majority of the shares entitled to vote at an election of
directors.
The IBCA provides that directors may be removed by the affirmative vote of the
holders of at least a majority of the outstanding shares entitled to vote.
Inspection of Books and Records
Under the FBCA, any stockholder may inspect the corporation's books and records
for a proper purpose.
Shareholders of an Antigua corporation may inspect or obtain copies of the list
of shareholders, corporate records or financial statements.
Amendment of Articles of Incorporation
Under the FBCA, our Articles of Incorporation may be amended if (i) the board of
directors sets forth the proposed amendment in a resolution, declares the
advisability of the amendment and directs that it be submitted to a vote at the
meeting of stockholders and (ii) the holders of at least a majority of shares of
stock entitled to vote thereon approve the amendment, unless the Articles of
Incorporation requires the vote of a greater number of shares. If the holders of
the outstanding shares of a class are entitled to vote as a class upon a
proposed amendment, the holders of a majority of the outstanding shares of such
class must also vote in favor of the amendment.
Amendment of Bylaws
Under the FBCA, our Board of Directors may amend our Bylaws as our Articles of
Incorporation authorize such amendment. Our stockholders also have the power to
amend our Bylaws.
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Under the IBCA, our Bylaws after the reorganization may only be amended by a
special resolution.
Indemnification of Directors and Officers
The IBCA and the FBCA have different provisions and limitations regarding
indemnification by a corporation of its officers, directors, employees and
agents. If the reorganization is approved, the IBCA indemnification provisions
will not apply to any act or omission that occurs before the reorganization. The
following is a summary comparison of the IBCA and FBCA indemnification
provisions:
Under the FBCA, indemnification rights are expressly non-exclusive. A
corporation is permitted to provide indemnification or advancement of expenses,
by bylaw provisions, agreement or otherwise, against judgments, fines, expenses
and amounts paid in settlement actually and reasonably incurred by the person in
connection with such proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation. Our Articles of Incorporation and Bylaws make indemnification
mandatory on the part of our Officers and Directors to the fullest extent
permitted by law.
Antigua law does not limit the extent to which a corporation's Articles of
Incorporation and/or Bylaws may provide for the indemnification of officers and
directors, except to the extent that such provision may be held by the Antigua
courts to be contrary to public policy (for instance, for purporting to provide
indemnification against the consequences of committing a crime). In addition, an
officer or director may not be indemnified for his own dishonesty or willful
neglect or default.
Our Articles of Continuance are anticipated to contain provisions providing for
the indemnity of our officers, directors, employee and agents to the same extent
as permitted under our Articles of Incorporation.
Limited Liability of Directors
The FBCA permits the adoption of Articles of Incorporation provisions limiting
or eliminating the monetary liability of a director to a corporation or its
stockholders by reason of a director's breach of the fiduciary duty of care. The
FBCA does not permit any limitation of the liability of a director for (i)
breaching the duty of loyalty to the corporation or its stockholders, (ii)
failing to act in good faith, (iii) engaging in intentional misconduct or a
known violation of law, (iv) obtaining an improper personal benefit from the
corporation or (v) paying a dividend or approving a stock repurchase that was
illegal under the FBCA. Our Articles of Incorporation eliminates the monetary
liability of a director to the fullest extent permitted by the FBCA.
There is no equivalent provision under the IBCA.
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<PAGE>
Stockholders' Suits
The FBCA requires only that the stockholder bringing a derivative suit must have
been a stockholder at the time of the wrong complained of or that the stock
devolved to him by operation of law from a person who was such a stockholder. In
addition, the stockholder must remain a stockholder throughout the litigation.
Under of the IBCA a complainant may, for the purpose of prosecuting, defending
or discontinuing an action on behalf of a corporation, apply to an Antigua court
for leave to bring an action in the name and on behalf of the corporation or any
of its subsidiaries, or intervene in an action to which any such corporation or
any of its subsidiaries is a party. However, no derivative action may be brought
and no intervention may be made unless the court is satisfied (i) that the
complainant has given reasonable notice to the directors of the corporation or
its subsidiary of his intention to apply to the court if the directors of the
corporation or its subsidiary do not bring, diligently prosecute or defend or
discontinue the action, (ii) that the complainant is acting in good faith and
(iii) that it appears to be in the interest of the corporation or its subsidiary
that the action be brought, prosecuted, defended or discontinued.
Rights of Dissenting Stockholders
General
Our stockholders who follow the procedures specified in the FBCA will be
entitled to have their shares of common stock appraised and to receive payment
of the "fair value" of such shares, exclusive of any element of value arising
from the accomplishment or expectation of the reorganization, as determined by a
Florida court of competent jurisdiction. In order to take advantage of such
rights, the procedures set forth in the dissenter's rights provisions of the
FBCA must be strictly followed. Failure to comply with any of the procedures may
result in a termination or waiver of appraisal rights.
The following is a summary of FBCA ss.607.1320 the dissenter's rights provision.
Under FBCA ss.607.1320, a stockholder of Bingo.com (Florida) electing to
exercise appraisal rights must both:
(1) Deliver to us (or effectively our resolution Antigua Corporation
within 20 days after the date of approval of the reorganization, a
written demand for appraisal of his shares which reasonably informs us
of the identity of the stockholder of record and that such record
stockholder intends thereby to demand the appraisal of his shares; and
(2) Not approve or vote in favor of the proposal relating to the
reorganization.
The written demand for appraisal must be made by or for you in your registered
name.
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Within 120 days after the date of the reorganization, we or any stockholder who
has satisfied the foregoing conditions and is otherwise entitled to appraisal
rights under FBCA ss.607.1320, may file a petition in the Florida court of
competent jurisdiction demanding a determination of the fair value of the shares
of held by all stockholders entitled to appraisal rights. If no such petition is
filed, appraisal rights will be lost for all stockholders who had previously
demanded appraisal of their shares.
Within 120 days after the date of the reorganization, any dissenting stockholder
who has complied with the provisions of FBCA ss.607.1320 is entitled, upon
written request, to receive from us, a statement setting forth the aggregate
number of shares of not voted in favor of adoption of the reorganization with
respect to which demands the appraisal we received, and the number of holders
seeking appraisal. The statement must be mailed within 10 days after we receive
the written request or within 10 days after expiration of the time for delivery
of demands for appraisal under FBCA ss.607.1320, whichever is later.
If a petition for an appraisal is timely filed, after a hearing on such petition
the court will determine who is entitled to appraisal rights and will appraise
the value of the common stock owned by these stockholders, determining its "fair
value" exclusive of any element of value arising from the accomplishment or
expectation of the reorganization. The Court will direct us to pay the fair
value of such shares together with a fair rate of interest, if any. A
stockholder may also request the Court to order that all or a portion of the
expenses incurred in connection with an appraisal proceeding, including,
reasonable attorneys' fees and the fees and expenses of experts, be charged pro
rata against the value of all the shares entitled to appraisal.
Item 12. Indemnification of Directors and Officers.
Our Bylaws require us to indemnify to the fullest extent permitted by law each
person that is empowered by law to indemnify. Our Articles of Incorporation
require us to indemnify to the fullest extent permitted by Florida law, each
person that we have the power to indemnify.
Florida law permits a corporation, under specified circumstances, to indemnify
its directors, officers, employees or agents against expenses (including
attorney's fees), judgments, fines and amounts paid in settlements actually and
reasonably incurred by them in connection with any action, suit, or proceeding
brought by third parties by reason of the fact that they were or are directors,
officers, employees or agents of the corporation, if such directors, officers,
employees or agents acted in good faith and in a manner they reasonably believed
to be in or not opposed to the best interests of the corporation and, with
respect to any criminal action or proceeding, had no reason to believe their
conduct was unlawful. In a derivative action, i.e. one by or in the right of the
corporation, indemnification may be made only for expenses actually and
reasonably incurred by directors, officers, employees or agents in connection
with the defense or settlement of an action or suit, and only with respect to a
matter as to which they shall have acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, except that no indemnification shall be made if such person shall
have been adjudged liable to the corporation, unless and only to the extent that
the court in which the action or suit was brought shall determine upon
application that the defendant directors, officers,
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employees or agents are fairly and reasonably entitled to indemnity for such
expenses despite such adjudication of liability.
Our Articles of Incorporation and Bylaws also contain provisions stating that no
director shall be liable to us or any of our stockholders for monetary damages
for breach of fiduciary duty as a director, except with respect to (1) a breach
of the director's duty of loyalty to the corporation or its stockholders, (2)
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (3) liability under Florida law (for unlawful payment
of dividends, or unlawful stock purchases or redemptions) or (4) a transaction
from which the director derived an improper personal benefit. The intention of
the foregoing provisions is to eliminate the liability of our directors or our
stockholders to the fullest extent permitted Florida law.
There is no equivalent provision under the IBCA.
Item 13. Financial Statements and Supplementary Data.
Not Applicable.
Item 14. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
Not applicable.
Item 15. Financial Statements and Exhibits.
The following financial statements and related schedules are included in this
Item:
(a) Financial Statements
Auditors' Report
Progressive General Lumber Corp. Consolidated Balance Sheets as at
December 31, 1998 and 1997.
Progressive General Lumber Corp. Consolidated Statements of Income and
Deficit for the years ended December 31, 1998, 1997 and 1996.
Progressive General Lumber Corp. Consolidated Statements of Changes in
Financial Position for the years ended December 31, 1998, 1997 and
1996.
Notes to Consolidated Financial Statements.
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Bingo.com, Inc. (formerly Progressive General Lumber Corp.)
Consolidated Balance Sheets as at March 31, 1999 and 1998.
Bingo.com, Inc. (formerly Progressive General Lumber Corp.)
Consolidated Statements of Income and Deficit for the period ended
March 31, 1999 and 1998.
Bingo.com, Inc. (formerly Progressive General Lumber Corp.)
Consolidated Statements of Changes in Financial Position for the
periods ended March 31, 1999 and 1998.
(b) Exhibits
Exhibit Number Description
- -------------- ------------------------------------------------------------
3.1 Articles of Incorporation of Progressive Lumber Corp.
effective January 12, 1987.
3.2 Articles of Amendment to Progressive Lumber Corp. filed on
July 17, 1998.
3.3 Articles of Amendment to Progressive Lumber Corp. effective
January 22, 1999.
3.4 Bylaws of Bingo.com, Inc.
10.1 Form of Stock Subscription Agreement dated December 1998.
10.2 Asset Purchase Agreement by and between Bingo, Inc. and
Progressive Lumber, Corp. dated January 18, 1999.
10.3 Escrow Agreement by and among Bingo.com, Inc., Bingo, Inc.
and Clark, Wilson dated January 27, 1999.
10.4 Registrant Name Change Agreement by and among Network
Solutions, Bingo, Inc. and Bingo.com, Inc. dated January
1999.
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Exhibit Number Description
- -------------- ------------------------------------------------------------
10.5* Lease Agreement by and between Harwood Corporation and
Bingo.com (Canada) Enterprises Inc. & 559262 B.C. Ltd.
commencing February 1, 1999.
10.6 Development Agreement by and between Stratford Internet
Technologies Inc. and Bingo.com, Inc. dated February 17,
1999.
10.7 Private Placement Subscription Agreement by and between
Bingo.com, Inc. and Dotcom Fund, S.A. dated February 11,
1999.
10.8 Share Purchase Warrant issued to Dotcom Fund, S.A. dated
February 12, 1999.
10.9* Application and Agreement for Merchant Services by and
between State Communications Ltd. and Global Payment
Services dated April 21, 1999.
10.10 Subscription Agreement by and between Bingo.com, Inc. and
Goldberg Equity Fund dated April 23, 1999.
10.11 Share Purchase Warrant issued to Goldberg Equity Fund dated
April 23, 1999.
10.12 Declaration of Trust made by Douglas Albert Lorne McLeod
dated May 1999.
21.1 List of Subsidiaries of Registrant
* To be filed by amendment
59
<PAGE>
PROGRESSIVE GENERAL LUMBER CORP.
(A Development Stage Company)
FINANCIAL STATEMENTS
(Expressed in United States Dollars)
DECEMBER 31, 1998
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Shareholders of
Progressive General Lumber Corp.
(A Development Stage Company)
We have audited the balance sheet of Progressive General Lumber Corp. as at
December 31, 1998 and the statements of operations, stockholders' deficiency and
cash flows for the year then ended and the cumulative amounts from incorporation
on January 12, 1987 to December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in the United States of America. Those standards require that we plan and
perform an audit to obtain reasonable assurance whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, these financial statements present fairly, in all material
respects, the financial position of the Company as at December 31, 1998 and the
results of its operations and stockholders' deficiency and its cash flows for
the year then ended and the cumulative amounts from incorporation on January 12,
1987 to December 31, 1998 in accordance with generally accepted accounting
principles in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 1 to the financial
statements, the Company has no established source of revenue. This raises
substantial doubt about its ability to continue as a going concern. Management's
plan in regard to these matters are also described in Note 1. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
The audited financial statements as at December 31, 1997 and 1996 and for the
years then ended were examined by another auditor who expressed an opinion
without reservation on those statements in his report dated August 3, 1998.
Vancouver, Canada Chartered Accountants
March 17, 1999
<PAGE>
PROGRESSIVE GENERAL LUMBER CORP.
(A Development Stage Company)
BALANCE SHEETS
(Expressed in United States Dollars)
AS AT DECEMBER 31
<TABLE>
============================================================================================================================
1998 1997
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash (Note 3) $ 157,600 $ -
============================================================================================================================
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current
Accounts payable (Note 3) $ 159,404 $ -
------------- ------------
Stockholders' deficiency
Capital stock
Authorized
50,000,000 common shares with a par value of $0.001 (December 31,
1997 - 7,500 common shares with
a par value of $1.00)
Issued
1,000,000 shares (December 31, 1997 - 5,000 shares) 1,000 5,000
Additional paid in capital 4,000 -
Deficit accumulated during the development stage (6,804) (5,000)
------------- -------------
(1,804) -
------------- ------------
$ 157,600 $ -
============================================================================================================================
</TABLE>
Subsequent events (Note 4)
The accompanying notes are an integral part of
these financial statements.
<PAGE>
PROGRESSIVE GENERAL LUMBER CORP.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Expressed in United States Dollars)
<TABLE>
============================================================================================================================
Cumulative
Amounts from
Incorporation
on January 12,
1987 to Years Ended December 31
December 31,
1998 1998 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
INTEREST INCOME $ 100 $ 100 $ - $ -
EXPENSES
General, selling and administrative 6,904 1,904 - -
--------------- -------------- -------------- -------------
Net loss for the period $ (6,804) $ (1,804) $ - $ -
============================================================================================================================
Net loss per share (Note 2) $ - $ - $ - $ -
============================================================================================================================
Weighted average number of common
shares outstanding 1,000,000 1,000,000 5,000 5,000
============================================================================================================================
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
PROGRESSIVE GENERAL LUMBER CORP.
(A Development Stage Company) STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIENCY
(Expressed in United States Dollars)
<TABLE>
============================================================================================================================
Deficit
Accumulated
Capital Stock Additional During the
------------------------------- Paid-in Development
Shares Amount Capital Stage Total
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1995 5,000 $ 5,000 $ - $ (5,000) $ -
Loss for the year - - - - -
-------------- -------------- -------------- -------------- ------------
Balance, December 31, 1996 5,000 5,000 - (5,000) -
Loss for the year - - - - -
-------------- -------------- -------------- -------------- ------------
Balance December 31, 1997 5,000 5,000 - (5,000) -
July 17, 1998 changed par value
from $1.00 to $0.001 - (4,995) 4,995 - -
July 17, 1998 forward stock split 200:1 995,000 995 (995) - -
Loss for the year - - - (1,804) (1,804)
-------------- -------------- -------------- -------------- -------------
Balance, December 31, 1998 1,000,000 $ 1,000 $ 4,000 $ (6,804) $ (1,804)
============================================================================================================================
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
PROGRESSIVE GENERAL LUMBER CORP.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Expressed in United States Dollars)
<TABLE>
============================================================================================================================
Cumulative
Amounts from
Incorporation
on January 12,
1987 to Years Ended December 31
December 31,
1998 1998 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss for the period $ (6,804) $ (1,804) $ - $ -
Adjustment to reconcile net loss to net cash
provided by operating activities - - - -
Change in non-cash working capital items
Increase in accounts payable 164,404 159,404 - -
--------------- -------------- ------------- ------------
Net cash provided by operating activities 157,600 157,600 - -
--------------- -------------- ------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES - - - -
--------------- -------------- ------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES - - - -
--------------- -------------- ------------- ------------
Change in cash position for the period - - - -
Cash, beginning of period - - - -
--------------- -------------- ------------- ------------
Cash, end of period $ 157,600 $ 157,600 $ - $ -
============================================================================================================================
</TABLE>
The accompanying notes are an integral part of
these financial statements.
<PAGE>
PROGRESSIVE GENERAL LUMBER CORP.
(A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS (Expressed in
United States Dollars)
DECEMBER 31, 1998
================================================================================
1. HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized January 12, 1987, under the laws of the State of
Florida as Progressive General Lumber Corp. The Company currently has no
operations and, in accordance with SFAS #7, is considered a development
stage company.
The Company's financial statements are prepared using the generally
accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and liquidation of liabilities in
the normal course of business. However, the Company has no current source
of revenue. Without realization of additional capital, it would be unlikely
for the Company to continue as a going concern. It is management's plan to
seek additional capital through private placements.
On July 17, 1998, the State of Florida approved the Company's restated
Articles of Incorporation, which increased its capitalization from 7,500
common shares to 50,000,000 common shares. The par value was changed from
$1.00 to $0.001.
On July 17, 1998, the Company forward split its common stock 200:1, thus
increasing the number of outstanding common stock shares from 5,000 shares
to 1,000,000 shares.
2. SIGNIFICANT ACCOUNTING POLICIES
Foreign currency translation
Transaction amounts denominated in foreign currencies are translated into
local functional currency at exchange rates prevailing at transactions
dates. Carrying values of monetary assets and liabilities are adjusted at
each balance sheet date to reflect the exchange rate at that date. Gains
and losses from restatement of foreign currency monetary assets and
liabilities are included in income.
Stock-based compensation
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," encourages, but does not require, companies to
record compensation cost for stock-based employee compensation plans at
fair value. The Company has chosen to account for stock-based compensation
using Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees." Accordingly compensation cost for stock options is
measured as the excess, if any, of the quoted market price of the Company's
stock at the date of the grant over the amount an employee is required to
pay for the stock.
Taxes on income
The Company accounts for income taxes under an asset and liability approach
that requires the recognition of deferred tax assets and liabilities for
expected future tax consequences of events that have been recognised in the
Company's financial statements or tax returns. In estimating future tax
consequences, the Company generally considers all expected future events
other than enactment's of changes in the tax laws or rates.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities,
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amount of revenues and expenses
during the year. Actual results could differ from these estimates.
<PAGE>
PROGRESSIVE GENERAL LUMBER CORP.
(A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS (Expressed in
United States Dollars)
DECEMBER 31, 1998
================================================================================
2. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
Loss per share
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("FAS
128"). Under FAS 128, basic and diluted earnings per share are to be
presented. Basic earnings per share is computed by dividing income
available to common shareholders by the weighted average number of common
shares outstanding in the period. Diluted earnings per share takes into
consideration common shares outstanding (computed under basic earnings per
share) and potentially dilutive common shares. FAS 128 is effective for
interim and annual financial statements ending after December 15, 1997.
New accounting standards
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income," is effective for years beginning after December 15,
1997. The primary objective of this statement is to report and disclose a
measure ("Comprehensive Income") of all changes in equity of a company that
result from transactions and other economic events of the period other than
transactions with owners. The Company does not anticipate that the
statement will have a significant impact on its future financial
statements.
Statement of Financial Accounting Standards No. 131, "Disclosure About
Segments of an Enterprise and Related Information," is effective for years
beginning after December 15, 1997. This statement requires use of the
"management approach" model for segment reporting. The management approach
model is based on the way a company's management organizes segments within
the company for making operating decisions and assessing performance.
Reportable segments are based on products and services, geography, legal
structure, management structure, or any other manner in which management
dissaggregates a company. The Company does not anticipate that the adoption
of the statement will have a significant impact on its financial statements
other than potentially providing more financial statement disclosures.
Statement of Financial Standards No. 132, "Employees' Disclosures About
Pensions and Other Post-retirement Benefits," standardizes the disclosure
requirements for pensions and other post-retirement benefits. This
statement requires additional information on changes in benefit obligations
and fair values of plan assets. It revises prior standards and is effective
for years beginning after December 15, 1997. Because the Company does not
currently have any significant employee benefit plans nor intends to
initiate any in the near-term, there should be no impact on its financial
statements.
3. CASH
The amount of $157,500 represents amounts payable to third parties is
included in accounts payable, and was paid subsequent to year end.
4. SUBSEQUENT EVENTS
i) Intangible asset - domain name rights
On January 18, 1999, the Company finalized an agreement to purchase the
domain name www.bingo.com. The Company is in the process of arranging for
the domain name to be transferable to the Company at the Domain Name
Registry maintained by Network Solutions, Inc. The agreement allowed the
Company to change it's name to Bingo.com Inc.. The purchase was financed as
follows:
o $200,000 cash (paid), plus
o 500,000 common shares of the Company (issued), plus
o ongoing quarterly royalty payments equal to 4% of the Company's gross
revenues, with a total minimum guarantee of $1,100,000.
<PAGE>
PROGRESSIVE GENERAL LUMBER CORP.
(A Development Stage Company) NOTES TO THE FINANCIAL STATEMENTS (Expressed in
United States Dollars)
DECEMBER 31, 1998
================================================================================
4. SUBSEQUENT EVENTS (cont'd.....)
ii) Equity funding
The Company completed a financing under Regulation D, Rule 504, by
issuing 7,500,000 common shares for proceeds of $75,000 on January 7,
1999. In February, 1999, the Company completed Phase I of its
financing requirements with a $1,000,000 private placement of 500,000
units, each consisting of one common share and one common share
purchase warrant at a price of $2.00 per unit. The warrants are
exercisable at a price of $2.00, for a period of one year.
iii) Stock options and warrants
In February, 1999, the Company reserved a total of 1,145,000 options
and granted a total of 595,000 options, exercisable at $4.75 per
share, to certain employees and advisors of the Company.
iv) Name change
The Company underwent a change of control in January, 1999 and changed
its name to Bingo.com Inc. on January 22, 1999.
v) The Company has entered into a preliminary agreement to assist in the
design and implementation of the Company's Web site. The Company will
issue 250,000 shares as payment of fees incurred in providing the
consulting services referred to in the agreement.
5. SUPPLEMENTAL DISCLOSURES WITH RESPECT TO OPERATING, FINANCING AND INVESTING
ACTIVITIES
There were no non-cash transactions for the years ended December 31, 1998,
1997 or 1996. Prior to December 31, 1996, the Company issued 5,000 common
shares for services received.
<PAGE>
Bingo.com Inc.
(formerly Progressive General Lumber Corp.)
CONSOLIDATED FINANCIAL STATEMENTS
as at March 31, 1999
unaudited
<PAGE>
Bingo.com Inc
(formerly Progressive General Lumber Corp.)
CONSOLIDATED BALANCE SHEETS
as at
<TABLE>
March 31, December 31,
1999 1998
(unaudited) (audited)
----------- ---------
ASSETS
<S> <C> <C>
Current
Cash and cash equivalents ........................................... $ 375,206 $ 157,600
Accounts receivable (allowance - nil) ............................... 15,340 --
Prepaid expenses .................................................... 4,299 --
394,845 157,600
----------- -----------
Equipment
Office .............................................................. 48,579 --
Gaming .............................................................. 134,954
Less: - accumulated depreciation .................................... -- --
----------- -----------
183,533 --
Other
Security deposits ................................................... 18,192 --
Software development ................................................ 562,340 --
Domain Name rights (note 2 .......................................... 1,200,000
-----------
1,780,532 --
----------- -----------
Total assets ........................................................ $ 2,358,910 $ 157,600
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable .................................................... $ 48,891 $ 159,404
Accrued liabilities
Salaries, and other compensation ................................. 4,179 --
Other ...........................................................
----------- -----------
53,070 159,404
----------- -----------
Stockholders' Equity
Common stock - $0.001 par value
authorized 50,000,000 shares;
issued and outstanding 9,500,000 ................................. 9,500 1,000
Additional paid - in capital ........................................ 2,061,857 4,000
Shares allotted for issue ........................................... 500,000 --
Accumulated deficit ................................................. (265,517) (6,804)
----------- -----------
2,305,840 (1,804)
----------- -----------
$ 2,358,910 $ 157,600
=========== ===========
</TABLE>
<PAGE>
Bingo.com Inc
(formerly Progressive General Lumber Corp.)
CONSOLIDATED STATEMENTS OF OPERATIONS
for the periods ended
<TABLE>
March 31, December 31,
1999 1998
3 months (12 months)
(unaudited) (audited)
----------- ---------
<S> <C> <C>
Revenues .............................................................. $ -- $ --
Expenses
General and administrative . ..................................... 192,412 1,804
Marketing and advertising .. ..................................... 39,943
----------- ----------
Operating loss .................. ..................................... (232,355) (1,804)
Other expense
Foreign exchange adjustments ..................................... (21,105)
Interest ................... ..................................... (5,253) ---------
Net loss ........................ ..................................... $ (258,713) $ (1,804)
========= =========
Accumulated deficit
Beginning .................. ..................................... $ (6,804) $ (5,000)
Net loss ................... ..................................... (258,713) (1,804)
----------- --------
Ending ..................... ..................................... $ (265,517) $ (6,804)
============ =========
</TABLE>
<PAGE>
Bingo.com Inc.
(formerly Progressive General Lumber Corp.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
as at
<TABLE>
March 31, December 31,
1999 1998
unaudited (audited)
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net loss ..................................................... $ (258,713) $ (1,804)
Adjustments to reconcile not loss to net cash
used in operating activities
Change in operating assets and liabilities: ..................
Accounts receivable ........................................ (15,340)
Prepaid expenses ........................................... (4,299) -
Accounts payable ............................................. (110,513) 159,404
Accrued liabilities ........................................ 4,179 -
------------------ ---------------
Net cash used In operating activities ................. (384,686) 157,600
------------------ ---------------
Cash flows from investing activities:
Software development ......................................... (62,340) -
Domain name rights ........................................... (200,000) -
Purchase equipment ........................................... (183,533) -
Security deposits ............................................ (18,192) -
------------------ ---------------
Net cash used in investing activities ................. (464,065) -
------------------ ---------------
Cash flows from financing activities:
Proceeds from issuance of common stock ....................... 1,075,000 -
------------------ ---------------
Share issuance costs ......................................... (8,643) -
------------------ ---------------
Net cash provided by financing activities .................. 1,066,357 -
------------------ ---------------
Net change in cash and cash equivalents ........................... 217,606 157,600
Cash and cash equivalents at beginning of period .................. 157,600 -
----------------
Cash and cash equivalents at end of period ........................ $ 375,206 $ 157,600
================= ===============
Supplemental disclosure of cash flow information:
Cash paid during the period for interest .......................... $ - $ -
Non cash investing and financing activities:
Issuance of common stock for domain name rights .............. $ 1,000,000 $ -
Allotment of common stock for software development ........... $ 500,000 $ -
</TABLE>
<PAGE>
SIGNATURES
In accordance with Section 12 of the Securities and Exchange Act of 1934, the
registrant caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized.
BINGO.COM, INC.
Date: June 8, 1999
/s/ Darren Little
- -------------------------------------
Darren Little
President
<PAGE>
Exhibit Number Description
- -------------- ------------------------------------------------------------
3.1 Articles of Incorporation of Progressive Lumber Corp.
effective January 12, 1987.
3.2 Articles of Amendment to Progressive Lumber Corp. filed on
July 17, 1998.
3.3 Articles of Amendment to Progressive Lumber Corp. effective
January 22, 1999.
3.4 Bylaws of Bingo.com, Inc.
10.1 Form of Stock Subscription Agreement dated December 1998.
10.2 Asset Purchase Agreement by and between Bingo, Inc. and
Progressive Lumber, Corp. dated January 18, 1999.
10.3 Escrow Agreement by and among Bingo.com, Inc., Bingo, Inc.
and Clark, Wilson dated January 27, 1999.
10.4 Registrant Name Change Agreement by and among Network
Solutions, Bingo, Inc. and Bingo.com, Inc. dated January
1999.
10.5* Lease Agreement by and between Harwood Corporation and
Bingo.com (Canada) Enterprises Inc. & 559262 B.C. Ltd.
commencing February 1, 1999.
10.6 Development Agreement by and between Stratford Internet
Technologies Inc. and Bingo.com, Inc. dated February 17,
1999.
10.7 Private Placement Subscription Agreement by and between
Bingo.com, Inc. and Dotcom Fund, S.A. dated February 11,
1999.
10.8 Share Purchase Warrant issued to Dotcom Fund, S.A. dated
February 12, 1999.
10.9* Application and Agreement for Merchant Services by and
between State Communications Ltd. and Global Payment
Services dated April 21, 1999.
10.10 Subscription Agreement by and between Bingo.com, Inc. and
Goldberg Equity Fund dated April 23, 1999.
10.11 Share Purchase Warrant issued to Goldberg Equity Fund dated
April 23, 1999.
10.12 Declaration of Trust made by Douglas Albert Lorne McLeod
dated May 1999.
21.1 List of Subsidiaries of Registrant
* To be filed by amendment
<PAGE>
Exhibit 3.1
ARTICLES OF INCORPORATION
OF
PROGRESSIVE GENERAL LUMBER CORP.
-----------------------------------------
THE UNDERSIGNED SUBSCRIBER to these Articles of Incorporation hereby
associate themselves together to form a corporation under the Law of the State
of Florida.
ARTICLE ONE:
The name of the Corporation is: Progressive General Lumber Corp.
ARTICLE TWO:
The corporation shall exist perpetually commencing upon the date of
execution and acknowledgment of these Articles.
ARTICLE THREE:
The corporation is organized for the purpose of operating a lumber
business.
Further, the corporation may engage in any business or purpose lawful under
the laws of the State of Florida.
ARTICLE FOUR:
The corporation is authorized to issue 7,500 shares of one dollar ($1) par
value shares which shall be designated as common shares.
ARTICLE FIVE:
The street address of the initial registered office of the corporation is
160 A North Parsons Avenue, (P.O. Box 813), Brandon Florida 34299-0813.
The name of the corporation's registered agent at that address is Leslie
Roth.
<PAGE>
ARTICLE SIX:
This corporation shall have two directors initially. The number of
directors may be either increased or decreased from time to time by amendment to
the By-Laws but shall never be less than the number shown in this Article. The
names and addresses of the initial directors of this corporation are:
Name Address
- ---- -------
Leslie P. Roth 13348 Golf Crest Circle
Tampa, Florida 33624
<PAGE>
ARTICLE SEVEN:
The name and address of the person signing these articles as incorporator
is:
Name Address
- ---- -------
Leslie P. Roth 13348 Golf Crest Circle
Tampa, Florida 33624
ARTICLE EIGHT:
The power to adopt, alter, amend or repeal the By-Laws shall be vested in
the Board of Directors and the Shareholders.
ARTICLE NINE:
The corporation shall indemnify any officer or director or any former
officer or director, to the full extent permitted by law.
ARTICLE TEN:
This corporation reserves the right to amend or repeal any provisions
contained in these Articles of Incorporation, or amendments hereto, and any
right conferred upon the shareholders is subject to this reservation.
ARTICLE ELEVEN:
At each election for directors every shareholder entitled to vote shall
have the right to cumulate his votes by giving one candidate as many votes as
the number of directors to be elected at that time multiplied by the number of
his shares , or by distributing such votes on the same principal among any
number of such candidates.
ARTICLE TWELVE:
The members of the Board of Directors may participate in meetings of the
Board of Directors by means of conference telephone as provided by law.
<PAGE>
ARTICLE THIRTEEN:
The corporation and the parties hereto, shall take whatever action as shall
be necessary to cause the shares of the corporation to qualify as "Section 1244
Stock" as such term is used and defined in the Internal Revenue code of 1954, as
amended, and regulations issued thereunder.
IN WITNESS WHEREOF, the undersigned subscribe has executed these Articles
of Incorporation this twelvth day of January, 1987.
/s/ Leslie P. Roth
-----------------------------------------
SUBSCRIBER - LESLIE P. ROTH
STATE OF FLORIDA )
COUNTY OF HILLSBOROUGH )
BEFORE ME, a Notary Public authorized to take acknowledgments in the State
and County set forth above, personally appeared Leslie P. Roth, known by me to
be the person who executed the foregoing Articles of Incorporation, and he
acknowledged before me that he has executed those Articles of Incorporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal, in the State and County aforsaid this twelvth day of January, 1987.
------------------------------------------
NOTARY PUBLIC
My commission Expires: State of Florida at Large
<PAGE>
CERTIFICATE DESIGNATING PLACE OF BUSINESS
OR DOMICILE FOR THE SERVICE OF PROCESS
WITHIN FLORIDA, NAMING AGENT
UPON WHOM PROCESS MAY BE SERVED
----------------------------------------
IN COMPLIANCE WITH SECTION 48.091, FLORIDA STATUTES, THE FOLLOWING IS
SUBMITTED:
FIRST - THAT PROGRESSIVE GENERAL LUMBER CORP.
---------------------------------------------
(NAME OF CORPORATION)
DESIRING TO ORGANIZE OR QUALIFY UNDER THE LAWS OF THE STATE OF FLORIDA, WITH ITS
PRINCIPAL PLACE OF BUSINESS AT 160 A NORTH PARSONS AVENUE, CITY OF BRANDON,
COUNTY OF HILLSBOROUGH, STATE OF FLORIDA, HAS NAMED LISLIE P. ROTH (residen
Agent) LOCATED AT 160 A NORTH PARSONS AVENUE, BRANDON, FLORIDA 33511, AS ITS
AGENT TO ACCEPT SERVICE OF PROCESS WITHIN FLORIDA.
01/12/87 /s/ Leslie P. Roth
------- --------------------------------------
DATE LESLIE P. ROTH, PRESIDENT OF
PROGRESSIVE GENERAL LUMBER CORP.
HAVING BEEN NAMED TO ACCEPT SERVICE OF PROCESS FOR THE ABOVE STATED
CORPORATION, AT THE PLACE DESIGNATED IN THIS CERTIFICATE, I HEREBY AGREE TO ACT
IN THIS CAPACITY, AND I FURTHER AGREE TO COMPLY WITH THE PROVISIONS OF ALL
STATUES RELATIVE TO THE PROPER AND COMPLETE PERFORMANCE OF MY DUTIES.
01/12/87 /s/ Leslie P. Roth
------- --------------------------------------
DATE LESLIE P. ROTH, REGISTERED AGENT
Exhibit 3.2
ARTICLES OF AMENDMENT TO
PROGESSIVE GENERAL LUMBER CORP
THE UNDERSIGNED, being the sole director and president of Progressive
General Lumber Corp., does hereby amend its Articles of Incorporation a follows:
ARTICLE I
CORPORATE NAME
The name of the Corporation is Progressive General Lumber Corp.
ARTICLE II
PURPOSE
The Corporation shall be organized for any and all purposes authorized
under the laws of the state of Florida.
III
PERIOD OF EXISTENCE
The period during which the Corporation shall continue is perpetual.
ARTICLE IV
SHARES
The capital stock of this corporation shall consist of 50,000,000 shares of
common stock, $.001 par value.
ARTICLE V
PLACE OF BUSINESS
The address of the principal place of business of this corporation in the
State of Florida shall be 200 East Robinson Street, Suite 450, Orlando, FL
32801. The Board of Directors may at any time and from time to time move the
principal office of this corporation.
ARTICLE VI
DIRECTORS AND OFFICERS
The business of this corporation shall be managed by its Board of
Directors. The number of such directors shall be not less than one (1) and,
subject to such minimum may be increased or decreased from time to time in the
manner provided in the By-Laws.
1
<PAGE>
ARTICLE VII
DENIAL OF PREEMPTIVE RIGHTS
No shareholder shall have any right to acquire shares or other securities
of the Corporation except to the extent such right may be granted by an
amendment to these Articles of Incorporation or by a resolution of the board of
Directors.
ARTICLE VIII
AMENDMENT OF BYLAWS
Anything in these Articles of Incorporation, the Bylaws, or the Florida
Corporation Act notwithstanding, bylaws shall not be adopted, modified, amended
or repealed by the shareholders of the Corporation except upon the affirmative
vote of a simple majority vote of the holders of all the issued and outstanding
shares of the corporation entitled to vote thereon.
ARTICLE IX
SHAREHOLDERS
9.1 Inspection of Books. The board of directors shall make reasonable rules
to determine at what times and places under what conditions the books of the
Corporation shall be open to inspection by shareholders or a duly appointed
representative of a shareholder.
9.2 Control Share Acquisition. The provisions relating to any control share
acquisition as contained in Florida Statutes now, or hereinafter amended, and
any successor provision shall not apply to the Corporation.
9.3 Quorum. The holders of shares entitled to one-third of the votes at a
meeting of shareholder's shall constitute a quorum.
9.4 Required. Acts of shareholders shall require the approval of holders of
50.01% of the outstanding votes of shareholders.
ARTICLE X
LIABILITY AND INDEMNIFICATION OF DIRECTORS AND OFFICERS
To the fullest extend permitted by law, no director or officer of the
Corporation shall be personally liable to the Corporation or its shareholders
for damages for breach of any duty owed to the Corporation or its shareholders.
In addition, the Corporation shall have the power, in its By-Laws or in any
resolution of its stockholders or directors, to undertake to indemnify the
officers and directors of this corporation against any contingency or peril as
may be determined to be in the best interests of this corporation, and in
conjunction therewith, to procure, at this corporation's expense, policies of
insurance.
2
<PAGE>
ARTICLE XI
CONTRACTS
No contract or other transaction between this corporation and any person,
firm or corporation shall be affected by the fact that any officer or director
of this corporation is such other party or is, or at some time in the future
becomes, an officer, director or partner of such other contracting party, or has
now or hereafter a direct or indirect interest in such contract.
I hereby certify that the following was adopted by a majority vote of the
shareholders and directors of the corporation on July 14, 1998 and that the
number of votes cast was sufficient for approval.
IN WITNESS WHEREOF, I have hereunto subscribed to and executed this
Amendment to Articles of Incorporation this on July 14, 1998.
/s/ Pamela J. Wilkinson
- -------------------------------------
Pamela J. Wilkinson, Sole Director
The foregoing instrument was acknowledged before me on July 14, 1998, by
Pamela J. Wilkinson, who is personally known to me.
/s/ Nicole Johnson
------------------------------------
Notary Public
My commission expires:
3
Exhibit 3.3
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
PROGESSIVE GENERAL LUMBER CORP.
- --------------------------------------------------------------------------------
(present name)
Pursuant to the provisions of section 607.1006, Florida Statutes, this Florida
profit corporation adopts the following articles of amendment to its articles of
incorporation
FIRST: Amendment(s) adopted: (indicate article numbers(s) being amended, added
or deleted)
ARTICLE I
CORPORATE NAME
"The name of the Corporation shall be Bingo.com, Inc."
SECOND: If an amendment provides for an exchange, reclassification or
cancellation of issued shares, provisions, for implementing the amendment is not
contained in the amendment itself, are as follows:
N/A
THIRD: The date of each amendment's adoption: January 12, 1999, effective
January 22, 1999
FOURTH: Adoption of Amendment(s) (CHECK ONE)
|_| The amendment(s) was/were approved by the shareholders. The number of
votes cast for the amendment(s) was/were sufficient for approval.
|_| The amendment(s) was/were approved by the shareholders through voting
groups.
The following statement must be separately provided for each voting group
entitled to vote separately on the amendment(s):
<PAGE>
"The number of votes cast for the amendment(s) was/were sufficient for
approval by -------------------------------------------------------------."
voting group
|X| The amendment(s) was/were adopted by the board of directors without
shareholder action and shareholder action was not required.
|_| The amendment(s) was/were adopted by the incorporators without
shareholder action and shareholder action was not required.
Signed this 12th day of January, 1999.
Signature /s/ Darren Little
Darren Little
-------------------------------------
Typed or printed name
President and Director
-------------------------------------
Title
<PAGE>
BYLAWS
OF
BINGO.COM, INC.
ARTICLE I.
OFFICES, CORPORATE SEAL
Section 1.01. Registered Office. The registered office of the corporation
in Florida shall be that set forth in the articles of incorporation or in the
most recent amendment of the articles of incorporation or resolution of the
directors filed with the secretary of state of Florida changing the registered
office.
Section 1.02. Other Offices. The corporation may have such other offices,
within or without the state of Florida, as the directors shall, from time to
time, determine.
Section 1.03. Corporate Seal. The corporation shall have no seal.
ARTICLE II.
MEETINGS OF SHAREHOLDERS
Section 2.01. Place and Time of Meetings. Except as provided otherwise by
the Florida Business Corporation Act, meetings of the shareholders may be held
at any place, within or without the state of Florida, as may from time to time
be designated by the directors and, in the absence of such designation, shall be
held at the principal corporate office of the corporation in the state of
Florida. The directors shall designate the time of day for each meeting and, in
the absence of such designation, every meeting of shareholders shall be held at
ten o'clock a.m.
Section 2.02. Regular Meetings.
(a) A regular meeting of the shareholders shall be held on such date as the
board of directors shall by resolution establish.
(b) At a regular meeting the shareholders, voting as provided in the
articles of incorporation and these bylaws shall designate the number of
directors to constitute the board of directors (subject to the authority of the
board of directors thereafter to increase or decrease the number of directors as
permitted by law), shall elect qualified successors for directors who serve for
an indefinite term or whose terms have expired or are due to expire within six
months after the date of the meeting, and shall transact such other business as
may properly come before them.
1
<PAGE>
2
Section 2.03. Special Meetings. Special meetings of the shareholders may be
held at any time and for any purpose and may be called by the chief executive
officer, the chief financial officer, two or more directors or by a shareholder
or shareholders holding 10% or more of the voting power of all shares entitled
to vote, except that a special meeting for the purpose of considering any action
to directly or indirectly facilitate or affect a business combination, including
any action to change or otherwise affect the composition of the board of
directors for that purpose, must be called by 25% or more of the voting power of
all shares entitled to vote. A shareholder or shareholders holding the requisite
percentage of the voting power of all shares entitled to vote may demand a
special meeting of the shareholders by written notice of demand given to the
chief executive officer or chief financial officer of the corporation and
containing the purposes of the meeting. Within 30 days after receipt of demand
by one of those officers, the board of directors shall cause a special meeting
of shareholders to be called and held on notice no later than 90 days after
receipt of the demand, at the expense of the corporation. Special meetings shall
be held on the date and at the time and place fixed by the chief executive
officer or the board of directors, except that a special meeting called by or at
demand of a shareholder or shareholders shall be held in the county where the
principal executive office is located. The business transacted at a special
meeting shall be limited to the purposes as stated in the notice of the meeting.
Section 2.04. Quorum, Adjourned Meetings. The holders of shares entitled to
one-third of the votes at a meeting of shareholders shall constitute a quorum
for the transaction of business at any regular or special meeting. In case a
quorum shall not be present at a meeting, the meeting may be adjourned from time
to time without notice other than announcement at the time of adjournment of the
date, time and place of the adjourned meeting. If a quorum is present, a meeting
may be adjourned from time to time without notice other than announcement at the
time of adjournment of the date, time and place of the adjourned meeting. At
adjourned meetings at which a quorum is present, any business may be transacted
that might have been transacted at the meeting as originally noticed. If a
quorum is present when a meeting is convened, the shareholders present may
continue to transact business until adjournment notwithstanding the withdrawal
of enough shareholders originally present to leave less than a quorum.
Section 2.05. Voting. At each meeting of the shareholders, every
shareholder having the right to vote shall be entitled to vote either in person
or by proxy. Each shareholder, unless the articles of incorporation or statutes
provide otherwise, shall have one vote for each share having voting power
registered in such shareholder's name on the books of the corporation. Jointly
owned shares may be voted by any joint owner unless the corporation receives
written notice from any one of them denying the authority of that person to vote
those shares. Upon the
<PAGE>
3
demand of any shareholder, the vote upon any question before the meeting shall
be by ballot. All questions shall be decided by a majority vote of the number of
shares entitled to vote and represented at the meeting at the time of the vote
except if otherwise required by statute, the articles of incorporation, or these
bylaws. For purposes of these bylaws, no shareholders owning shares of
non-voting common stock of the corporation shall be entitled to vote.
Section 2.06. Record Date. The board of directors may fix a date, not
exceeding 70 days preceding the date of any meeting of shareholders, as a record
date for the determination of the shareholders entitled to notice of, and to
vote at, such meeting, notwithstanding any transfer of shares on the books of
the corporation after any record date so fixed. If the board of directors fails
to fix a record date for determination of the shareholders entitled to notice
of, and to vote at, any meeting of shareholders, the record date shall be the
twentieth day preceding the date of such meeting.
Section 2.07. Notice of Meetings. There shall be mailed to each shareholder
shown by the books of the corporation to be a holder of record of voting shares,
at his or her address as shown by the books of the corporation, a notice setting
out the time and place of each regular meeting and each special meeting, except
(unless otherwise provided in Section 2.04 hereof) where the meeting is an
adjourned meeting and the date, time and place of the meeting were announced at
the time of adjournment, which notice shall be mailed at least 10 days but not
more than 60 days prior thereto (unless otherwise provided in Section 2.04
hereof). Every notice of any special meeting called pursuant to Section 2.03
hereof shall state the purpose or purposes for which the meeting has been
called, and the business transacted at all special meetings shall be confined to
the purposes stated in the notice. The written notice of any meeting at which a
plan of merger or exchange is to be considered shall so state such as a purpose
of the meeting. A copy or short description of the plan of merger or exchange
shall be included in or enclosed with such notice.
Section 2.08. Waiver of Notice. Notice of any regular or special meeting
may be waived by any shareholder either before or after such meeting, in
writing, signed by such shareholder or a representative entitled to vote the
shares of such shareholder. A shareholder, by his or her attendance at any
meeting of shareholders, shall be deemed to have waived notice of such meeting,
except where the shareholder objects at the beginning of the meeting to the
transaction of business because the meeting is not lawfully called or convened,
or objects before a vote on an item of business because the item may not
lawfully be considered at that meeting and does not participate in the
consideration of the item at that meeting.
<PAGE>
4
Section 2.09. Written Action. Any action that may be taken at a meeting of
the shareholders may be taken without a meeting if done in writing and signed by
all of the shareholders entitled to vote on that action.
ARTICLE III.
DIRECTORS
Section 3.01. General Powers. The business and affairs of the corporation
shall be managed by or under the authority of the board of directors, except as
otherwise permitted by statute.
Section 3.02. Number, Qualification and Term of Office. Until the
organizational meeting of the board of directors, the number of directors shall
be the number named in the articles of incorporation. Thereafter, the number of
directors shall be increased or decreased from time to time by resolution of the
board of directors or the shareholders. Directors need not be shareholders. Each
of the directors shall hold office until the regular meeting of shareholders
next held after such director's election and until such director's successor
shall have been elected and shall qualify, or until the earlier death,
resignation, removal, or disqualification of such director.
Section 3.03. Board Meetings. Meetings of the board of directors may be
held from time to time at such time and place within or without the state of
Florida as may be designated in the notice of such meeting.
Section 3.04. Calling Meetings; Notice. Meetings of the board of directors
may be called by the chairman of the board by giving at least 24 hours' notice,
or by any other director by giving at least five days' notice, of the date, time
and place thereof to each director by mail, telephone, facsimile, telegram or in
person. If the day or date, time and place of a meeting of the board of
directors has been announced at a previous meeting of the board, no notice is
required. Notice of an adjourned meeting of the board of directors need not be
given other than by announcement at the meeting at which adjournment is taken.
Section 3.05. Waiver of Notice. Notice of any meeting of the board of
directors may be waived by any director either before or after such meeting
orally or in a writing signed by such director. A director, by his or her
attendance at any meeting of the board of directors, shall be deemed to have
waived notice of such meeting, except where the director objects at the
beginning of the meeting to the transaction of business because the meeting is
not lawfully called or convened and does not participate thereafter in the
meeting.
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5
Section 3.06. Quorum. A majority of the directors holding office
immediately prior to a meeting of the board of directors shall constitute a
quorum for the transaction of business at such meeting.
Section 3.07. Absent Directors. A director may give advance written consent
or opposition to a proposal to be acted on at a meeting of the board of
directors. If such director is not present at the meeting, consent or opposition
to a proposal does not constitute presence for purposes of determining the
existence of a quorum, but consent or opposition shall be counted as a vote in
favor of or against the proposal and shall be entered in the minutes or other
record of action at the meeting, if the proposal acted on at the meeting is
substantially the same or has substantially the same effect as the proposal to
which the director has consented or objected.
Section 3.08. Conference Communications. Any or all directors may
participate in any meeting of the board of directors, or of any duly constituted
committee thereof, by any means of communication through which the directors may
simultaneously hear each other during such meeting. For the purposes of
establishing a quorum and taking any action at the meeting, the directors
participating pursuant to this Section 3.08 shall be deemed present in person at
the meeting; and the place of the meeting shall be the place of origination of
the conference telephone conversation or other comparable communication
technique.
Section 3.09. Vacancies; Newly Created Directorships. Vacancies on the
board of directors of this corporation occurring by reason of death,
resignation, removal or disqualification shall be filled for the unexpired term
by a majority of the remaining directors of the board although less than a
quorum; newly created directorships resulting from an increase in the authorized
number of directors by action of the board of directors as permitted by Section
3.02 may be filled by a majority vote of the remaining directors serving at the
time of such increase although less than a quorum; and each director elected
pursuant to this Section 3.09 shall be a director until such director's
successor is elected by the shareholders at their next regular or special
meeting.
Section 3.10. Removal. Any or all of the directors may be removed from
office at any time, with or without cause, by the affirmative vote of the
shareholders holding a majority of the shares entitled to vote at an election of
directors except, as otherwise provided by the Florida Business Corporation Act,
Section 607.0808, as amended, when the shareholders have the right to cumulate
their votes. A director named by the board of directors to fill a vacancy may be
removed from office at any time, with or without cause, by the affirmative vote
of the remaining directors if the shareholders have not elected directors in the
interim between the time
<PAGE>
6
of the appointment to fill such vacancy and the time of the removal. In the
event that the entire board or any one or more directors be so removed, new
directors may be elected at the same meeting.
Section 3.11. Committees. A resolution approved by the affirmative vote of
a majority of the board of directors may establish committees having the
authority of the board in the management of the business of the corporation to
the extent provided in the resolution. A committee shall consist of one or more
persons, who need not be directors, appointed by affirmative vote of a majority
of the directors present. Committees are subject to the direction and control
of, and vacancies in the membership thereof shall be filled by, the board of
directors, except as provided by the Florida Business Corporation Act, Section
607.0825.
A majority of the members of the committee present at a meeting is a quorum
for the transaction of business, unless a larger or smaller proportion or number
is provided in a resolution approved by the affirmative vote of a majority of
the directors present.
Section 3.12. Written Action. Any action that might be taken at a meeting
of the board of directors, or any duly constituted committee thereof, may be
taken without a meeting if done in writing and signed by all of the directors or
committee members, unless the articles provide otherwise and the action need not
be approved by the shareholders.
Section 3.13. Compensation. Directors who are not salaried officers of this
corporation shall receive such fixed sum per meeting attended or such fixed
annual sum as shall be determined from time to time by resolution of the board
of directors. The board of directors may by resolution provide that all
directors shall receive their expenses, if any, of attendance at meetings of the
board of directors or any committee thereof. Nothing herein contained shall be
construed to preclude any director from serving this corporation in any other
capacity and receiving proper compensation therefor.
ARTICLE IV.
OFFICERS
Section 4.01. Number. The officers of the corporation shall consist of a
chief executive officer or president, a secretary, and such other officers and
agents as may from time to time be appointed by the board of directors in its
sole discretion. Any number of offices may be held by the same person.
<PAGE>
7
Section 4.02. Appointment, Term of Office and Qualifications. The board of
directors shall appoint, by resolution approved by the affirmative vote of a
majority of the directors present, from within or without their number, the
chief executive officer or president, the secretary, and such other officers as
may be deemed advisable, each of whom shall have the powers, rights, duties,
responsibilities and terms in office provided for in these bylaws or a
resolution of the board of directors not inconsistent with these bylaws. The
president and all other officers who may be directors shall continue to hold
office until the election and qualification of their successors, notwithstanding
an earlier termination of their directorship.
Section 4.03. Removal and Vacancies. Any officer may be removed from his or
her office by the board of directors at any time, with or without cause. Such
removal, however, shall be without prejudice to the contract rights of the
person so removed. If there be a vacancy in an office of the corporation by
reason of death, resignation or otherwise, such vacancy shall be filled for the
unexpired term by the board of directors.
Section 4.04. Chairman of the Board. The chairman of the board, if one is
appointed, shall preside at all meetings of the shareholders and directors and
shall have such other duties as may be prescribed, from time to time, by the
board of directors.
Section 4.05. Chief Executive Officer or President. The chief executive
officer or president shall have general active management of the business of the
corporation. In the absence of the chairman of the board, the chief executive
officer or president shall preside at all meetings of the shareholders and
directors. He or she shall see that all orders and resolutions of the board of
directors are carried into effect. He or she shall execute and deliver, in the
name of the corporation, any deeds, mortgages, bonds, contracts or other
instruments pertaining to the business of the corporation unless the authority
to execute and deliver is required by law to be exercised by another person or
is expressly delegated by the articles or bylaws or by the board of directors to
some other officer or agent of the corporation. He or she shall have the power
to execute share certificates issued by the corporation. He or she shall have
such other duties as may from time to time be prescribed by the board of
directors.
Section 4.06. Secretary. The secretary shall be secretary of and attend all
meetings of the shareholders and board of directors and shall record all
proceedings of such meetings in the minute book of the corporation. He or she
shall give proper notice of meetings of shareholders and directors. He or she
shall maintain records of and, whenever necessary, certify all proceedings of
the board of directors and the shareholders and shall perform such other duties
as may from time to time be prescribed by the board of directors, the president
or the chief executive officer.
<PAGE>
8
Section 4.07. Vice President. Each vice president, if one or more is
appointed, shall have such powers and perform such duties as prescribed by the
board of directors, the chief executive officer or the president. In the event
of the absence or disability of the president, the vice president(s) shall
succeed to the president's power and duties in the order designated by the board
of directors.
Section 4.08. Treasurer. The treasurer, if one is appointed, shall be the
chief financial officer and shall keep accurate financial records for the
corporation. He or she shall deposit all moneys, drafts and checks in the name
of, and to the credit of, the corporation in such banks and depositories as the
board of directors shall, from time to time, designate. He or she shall have
power to endorse, for deposit, all notes, checks and drafts received by the
corporation. He or she shall disburse the funds of the corporation, as ordered
by the board of directors, making proper vouchers therefor. He or she shall
render to the president and the directors, whenever requested, an account of all
his or her transactions as treasurer and of the financial condition of the
corporation, and shall perform such other duties as may from time to time be
prescribed by the board of directors or by the president.
Section 4.09. Compensation. The officers of the corporation shall receive
such compensation for their services as may be determined from time to time by
resolution of the board of directors.
ARTICLE V.
SHARES AND THEIR TRANSFER
Section 5.01. Certificates for Shares. All shares of the corporation shall
be certificated shares. Every owner of shares of the corporation shall be
entitled to a certificate, to be in such form as shall be prescribed by the
board of directors, certifying the number of shares of the corporation owned by
such shareholder. The certificates for such shares shall be numbered in the
order in which they shall be issued and shall be signed in the name of the
corporation by the chief executive officer (or the president, if the chief
executive officer delegates such authority) and by the secretary or an assistant
secretary or by such officers as the board of directors may designate. If the
certificate is signed by a transfer agent or registrar, such signatures of the
corporate officers may be by facsimile if authorized by the board of directors.
Every certificate surrendered to the corporation for exchange or transfer shall
be canceled, and no new certificate or certificates shall be issued in exchange
for any existing certificate until such existing certificate shall have been so
canceled, except in cases provided for in Section 5.04.
<PAGE>
9
Section 5.02. Issuance of Shares. The board of directors is authorized to
cause to be issued shares of the corporation up to the full amount authorized by
the articles of incorporation in such amounts as may be determined by the board
of directors and as may be permitted by law. Shares may be issued for any
consideration, including, without limitation, in consideration of cash or other
property, tangible or intangible, received or to be received by the corporation
under a written agreement, of services rendered or to be rendered to the
corporation under a written agreement, or of an amount transferred from surplus
to stated capital upon a share dividend. At the time of approval of the issuance
of shares, the board of directors shall state by resolution its determination of
the fair value to the corporation in monetary terms of any consideration other
than cash for which shares are to be issued.
Section 5.03. Transfer of Shares. Transfer of shares on the books of the
corporation may be authorized only by the shareholder named in the certificate,
the shareholder's legal representative or the shareholder's duly authorized
attorney-in-fact, and upon surrender of the certificate or the certificates for
such shares. The corporation may treat as the absolute owner of shares of the
corporation the person or persons in whose name shares are registered on the
books of the corporation.
Section 5.04. Loss of Certificates. Any shareholder claiming a certificate
for shares to be lost, stolen or destroyed shall make an affidavit of that fact
in such form as the board of directors shall require and shall, if the board of
directors so requires, give the corporation a bond of indemnity in form, in an
amount and with one or more sureties satisfactory to the board of directors, to
indemnify the corporation against any claim that may be made against it on
account of the reissue of such certificate, whereupon a new certificate may be
issued in the same tenor and for the same number of shares as the one alleged to
have been lost, stolen or destroyed.
ARTICLE VI.
DISTRIBUTIONS, RECORD DATE
Section 6.01. Distributions. Subject to the provisions of the articles of
incorporation, of these bylaws and of law, the board of directors may authorize
and cause the corporation to make distributions whenever, and in such amounts or
forms as, in its opinion are deemed advisable.
Section 6.02. Record Date. Subject to any provisions of the articles of
incorporation, the board of directors may fix a date not exceeding 120 days
preceding the date fixed for the payment of any distribution as the record date
for the determination of the shareholders entitled to receive payment of the
distribution and, in such case, only shareholders
<PAGE>
10
of record on the date so fixed shall be entitled to receive payment of such
distribution notwithstanding any transfer of shares on the books of the
corporation after the record date.
ARTICLE VII.
BOOKS AND RECORDS, FISCAL YEAR
Section 7.01. Share Register. The board of directors of the corporation
shall cause to be kept at its principal executive office, or at another place or
places within the United States determined by the board:
(a) a share register not more than one year old, containing the names
and addresses of the shareholders and the number and classes of
shares held by each shareholder; and
(b) a record of the dates on which certificates or transaction
statements representing shares were issued.
Section 7.02. Other Books and Records. The board of directors shall cause
to be kept at its principal executive office or, if its principal executive
office is not in Florida, shall make available at its Florida registered office
within five days after receipt by an officer of the corporation of a written
demand for them made by a shareholder or other person authorized by the Florida
Business Corporation Act, Section 607.1602, originals or copies of:
(a) its articles or restated articles of incorporation and all
amendments currently in effect;
(b) its bylaws or restated bylaws and all amendments currently in
effect;
(c) resolutions adopted by the board of directors creating one or
more classes or series of shares and fixing the relative rights,
preferences, and limitations, if shares issued pursuant to the
resolutions are still outstanding;
(d) minutes of all shareholder meetings and records of all action
taken by the shareholders without a meeting within the last three
years;
<PAGE>
11
(e) written communication to all shareholders generally or to all
shareholders of a class or series within the last three years,
including the financial statements furnished for the last three
years required by the Florida Business Corporation Act, Section
607.1620;
(f) a list of the names and business street addresses of its current
directors and officers; and
(g) its most recent annual report delivered to the Department of
State pursuant to Florida Business Corporation Act, Section
607.1622.
Section 7.03. Fiscal Year. The fiscal year of the corporation shall be
determined by the board of directors.
ARTICLE VIII.
LOANS, GUARANTEES
Section 8.01. The corporation may lend money to, guarantee an obligation of
or otherwise financially assist any officer, director or employee of the
corporation or of a subsidiary if the transaction, or a class of transactions to
which the transaction belongs, is approved by the affirmative vote of a majority
of the directors present, and if the transaction:
(a) is in the usual and regular course of business of the
corporation;
(b) is with, or for the benefit of, a related corporation, an
organization in which the corporation has a financial interest,
an organization with which the corporation has a business
relationship, or an organization to which the corporation has the
power to make donations;
(c) is with, or for the benefit of, an officer or other employee of
the corporation or a subsidiary, including an officer or employee
who is a director of the corporation or a subsidiary, and may
reasonably be expected, in the judgment of the board, to benefit
the corporation; or
(d) has been approved by (1) the holders of two-thirds of the voting
power of the shares entitled to vote that are owned by persons
other than the
<PAGE>
12
interested person or persons, or (2) the unanimous affirmative
vote of the holders of all outstanding shares whether or not
entitled to vote.
Such loan, guarantee or other financial assistance may be with or without
interest and may be unsecured, or may be secured in the manner as a majority of
the directors present approve, including, without limitation, a pledge of or
other security interest in shares of the corporation. Nothing in this section
shall be deemed to deny, limit or restrict the powers of guaranty, surety or
warranty of the corporation at common law or under a statute of the state of
Florida.
ARTICLE IX.
INDEMNIFICATION OF CERTAIN PERSONS
Section 9.01. The corporation shall indemnify all officers and directors of
the corporation for such expenses and liabilities, in such manner, under such
circumstances and to such extent as permitted by the Florida Business
Corporation Act, Section 607.0850, as now enacted or hereafter amended. Unless
otherwise approved by the board of directors, the corporation shall not
indemnify any employee of the corporation who is not otherwise entitled to
indemnification pursuant to this Section 9.01.
ARTICLE X.
AMENDMENTS
Section 10.01. These bylaws may be amended or altered by a vote of the
majority of the whole board of directors at any meeting. Such authority of the
board of directors is subject to the power of the shareholders, exercisable in
the manner provided in the Florida Business Corporation Act, Section 607.1020
and in the articles of incorporation, to adopt, amend or repeal bylaws adopted,
amended or repealed by the board of directors. After the adoption of the initial
bylaws, the board of directors shall not make or alter any bylaws fixing a
quorum for meetings of shareholders, prescribing procedures for removing
directors or filling vacancies in the board of directors or fixing the number of
directors or their classifications, qualifications or terms of office, except
that the board of directors may adopt or amend any bylaw to increase their
number.
<PAGE>
12
ARTICLE XI.
SECURITIES OF OTHER CORPORATIONS
Section 11.01. Voting Securities Held by the Corporation. Unless otherwise
ordered by the board of directors, the president and chief executive officer
shall have full power and authority on behalf of the corporation (a) to attend
any meeting of security holders of other corporations in which the corporation
may hold securities and to vote such securities on behalf of this corporation;
(b) to execute any proxy for such meeting on behalf of the corporation; or (c)
to execute a written action in lieu of a meeting of such other corporation on
behalf of this corporation. At such meeting, the president shall possess and may
exercise any and all rights and powers incident to the ownership of such
securities that the corporation possesses. The board of directors may from time
to time grant such power and authority to one or more other persons and may
remove such power and authority from the president or any other person or
persons.
Section 11.02. Purchase and Sale of Securities. Unless otherwise ordered by
the board of directors, the president and chief executive officer shall have
full power and authority on behalf of the corporation to purchase, sell,
transfer or encumber any and all securities of any other corporation owned by
the corporation, and may execute and deliver such documents as may be necessary
to effectuate such purchase, sale, transfer or encumbrance. The board of
directors may from time to time confer like powers upon any other person or
persons.
Exhibit 10.1
FORM OF
STOCK SUBSCRIPTION AGREEMENT
1. SUBSCRIPTION: The undersigned, --------------------, (the "Subscriber")hereby
subscribes for the purchase of -------- shares of Common Stock of Progressive
General Lumber Corp., a Florida
a. No certificate(s) for shares(s) shall be issued to the undersigned
until the entire stock subscription price is paid; and
b. The certificate(s) representing the share(s) delivered pursuant to
this subscription agreement may bear a restrictive legend.
2. RESPRESENTATIONS AND WARRANTIES: The undersigned Subscriber hereby represents
and warrants to the Company that:
a. The undersigned Subscriber understands that the Company's STOCK HAS
NOT BEEN APPROVED OR DISAPPROVED BY THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSIOIN, ANY STATE SECURITEIS AGENCY, OR ANY FOREIGN
SECURITIES AGENCY;
b. The under Subscriber is not an underwriter and would be acquiring the
Company's stock solely for investment for his or her own account and
not with a view to, or for, resale in connection with any distribution
within the meaning of any federal securities act, state securities act
or any other applicable federal or state laws;
c. The undersigned Subscriber understands the speculative nature and
risks of investments associated with the Company, and confirms that
the stock would be suitable and consistent with his or her investment
program; that his or her financial position enables him or her to bear
the risks of this investment; and, that there is no public market for
the stock subscribed for herein;
d. The stock subscribed for herein may not be transferred, encumbered,
sold, hypothecated, or otherwise disposed of, it such disposed of, if
such disposition will violate nay federal, provincial and/or state
securities acts. Disposition shall include, but is not limited to acts
of selling, assigning, transferring, pledging, encumbering,
hypothecating, giving, and any form of conveying, whether voluntary or
not;
<PAGE>
e. To the extent that any federal, provincial and/or state securities
laws shall require, the Subscriber hereby agrees that any stock
acquired pursuant to this Agreement shall be without preference as to
assets;
f. The Company is under no obligation to register or seek an exemption
under any federal securities act, provincial or state securities act,
or any foreign securities act for any stock of the Company or to cause
or permit such stock to be transferred in the absence of any such
registration or exemption.
g. The Subscriber has had the opportunity to ask questions of the Company
and has received additional information from the Company to the extent
that the Company possessed such information, necessary to evaluate the
merits and risks of any investment in the Company. Further, the
Subscriber has been given: (1) all material books, records and
financial statements of the Company; (2) all material contracts and
documents relating to the proposed transaction; and (3) an opportunity
to question the appropriate executive officers of the Company;
h. The Subscriber has satisfied the suitability standards imposed by his
or her applicable state laws and has a preexisting personal business
relationship with the Company.
i. The Subscriber has adequate means of providing for his or her current
needs and personal contingencies and has no need to sell the shares in
the foreseeble future (that is at the time of the investment,
Subscriber can afford to hold the investment for an indefinite period
of time);
j. The Subscriber acknowledges that the Company is non-reporting issuer
in Canada and, therefore, any Canadian Subscriber is subject to an
indefinite hold period during which the Subscriber is restricted from
transferring, selling or disposing the stock; and
k. The Subscriber has sufficient knowledge and experience in financial
matters to evaluate the merits and risks of this investment and
further, the Subscriber is capable of reading and interpreting
financial statements.
3. LIMITED POWER OF ATTORNEY: The undersigned Subscriber hereby constitutes and
appoints and grants to a Director of the Company, a limited power attorney for
the limited purpose of causing proper reporting and disclosure in connection
<PAGE>
with this subscription, and in the connection, to sign for him or her and act in
his or her name, place and stead, in any and all capacities to execute any and
all documents to be filed with the US Securities and Exchange Commission and any
governmental agency, federal, state or otherwise in connection with any
securities filings, including, but not limited to: amendments, exhibits,
agreements, concerning shareholders granting sad limited attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully and to
all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that each said limited attorney-in-fact and agent
or his or her substitutes, may lawfully do or cause to be done by virtue
thereof.
4. STATUS OF PURCHASER:
[] I am not a member of, or an associate or affiliate of a member of the
National Association of Securities Dealers.
[] I am a member of, or an associate or affiliate of a member of the
National Association of Securities Dealers. Attached is a copy of an
agreement signed by the principal of the firm with which I am
affiliated agreeing to my participation in this investment.
5. MISCELLANEOUS: This Subscription Agreement shall be binding upon the parties
hereto, their heirs, executors, successors, and legal representatives. The law
of the State of Florida shall govern the rights of the parties to this
Agreement. This Agreement is not assignable without the prior written consent of
the Company, any attempt to assign the rights, duties, or obligations which
arise under this Agreement without the Company's prior express written consent
shall be void.
The undersigned Subscriber hereby declares and affirms that he or she has read
the within and foregoing Subscription Agreement, is familiar with the contents
thereof and agrees to abide by their terms and conditions therein set forth, and
knows the statements therein to be true and correct.
I hereby consent to the use of my name in any prospectus or registration
statement which may be filed in connection with any public offering of the
Company's securities.
SIGNATURE PAGE FOLLOWS IMMEDIATELY
<PAGE>
IN WITNESS WHEREOF, the parties have executed and dated this SUBSCRIPTION
AGREEGMENT as follows:
Dated this ------ day of ---------------, 199--.
SUBSCRIBER
---------------------------------------------
Signature
---------------------------------------------
Address
---------------------------------------------
City, Country and Zip Code
---------------------------------------------
Area Code and Telephone Number
ACCEPTED BY:
PROGRESSIVE GENERAL LUMBER CORP.
By: ------------------------------------
President
Exhibit 10.2
ASSET PURCHASE AGREEMENT
THIS AGREEMENT dated the 18th day of January, 1999
BETWEEN:
BINGO, INC.,
a corporation incorporated pursuant to
the laws of Anguilla and having an address of:
P.O. Box 1127, The Hansa Bank Building,
Landsome Road, The Valley,
Anguilla, B.W.I.
(herein called the "Vendor")
OF THE FIRST PART
AND:
PROGRESSIVE GENERAL LUMMER, CORP.,
a corporation incorporated pursuant to the laws of
the state of Florida and having an address of:
Suite 1500, P.O. Box 1078, 885 West Georgia Street,
Vancouver, British Columbia, Canada, V6C 3E8
(herein called the "Purchaser")
OF THE SECOND PART
WITNESSES THAT WHEREAS:
A. The Vendor is the registered holder of the second-level domain
name"bingo.com" and is desirous of selling, assigning, transferring and
relinquishing to the Purchaser all of its right, title and interest in and to
that domain name and the registration thereof, on those terms and conditions
hereinafter set forth;
B. The Purchaser is desirous of purchasing from the Vendor and of having
assigned, transferred and relinquished to it all of the right, title and
interest of the Vendor in and to the second-level domain name "bingo.com" and
the registration thereof, on those terms and conditions hereinafter set forth;
NOW THEREFORE in consideration of the premises and the respective covenants,
agreements representations and warranties of the parties herein contained and
for other good and valuable
PAGE 1
<PAGE>
consideration (the receipt and sufficiency of which is hereby acknowledged) the
parties hereto covenant and agree as follows:
1 DEFINITIONS AND INTERPRETATION
1.1 For the purposes of this Agreement, unless the context otherwise requires,
the following terms will have the respective meanings set out below and
grammatical variations of such terms will have corresponding meanings:
(a) "Agreement" means this Asset Purchase Agreement;
(b) "Business Quarter" means the period of three consecutive months
commencing on July 1, 1999 and on each three-month anniversary
thereof, as the case may be;
(c) "Closing" means 5:00 p.m. (Pacific Standard Time) on January 27, 1999
or such other date and time as mutually agreed to by the Vendor and
the Purchaser;
(d) "Domain Name" means the second-level domain name "bingo.com" under the
InterNIC internet domain name registration service provided and
coordinated by Network Solutions, Inc. and includes all and any
goodwill and intellectual property rights, including any trademarks or
tradenames, that may be associated with the Domain Name;
(e) "Escrow Agent" means Clark, Wilson, Barristers and Solicitors, Suite
800, 885 West Georgia Street, Vancouver, British Columbia;
(f) "Gross Revenue" means, in respect of any specified period, the gross
revenue of the Purchaser for that period, without setoff of any kind,
as determined in accordance with United States generally accepted
accounting principles and, where the period specified is a Business
Quarter, reportable as such on the financial statements of the
Purchaser for that Business Quarter (or, where that Business Quarter
is the fourth Business Quarter of a fiscal year of the Purchaser, the
financial statements of the Purchaser for that fiscal year, being, by
implication, the difference between the gross revenue of the Purchaser
reportable therein for that fiscal year and the aggregate gross
revenue of the Purchaser previously reported for the first three
Business Quarters of that fiscal year) required to be filed with the
United States Securities and Exchange Commission;
(g) "including" means including without limitation or prejudice to the
generality of any description, definition, term or phrase preceding
that word, and the word "include" and its derivatives will be
construed accordingly;
(h) "Purchase Price" means:
(i) the greater of:
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(A) the sum of $1,100,000; and
(B) 4% of the Gross Revenue derived by the Purchaser during the
period commencing on Closing and ending on December 31, 2098
; and
(ii) five hundred thousand (500,000) common shares without par value
in the capital stock of the Purchaser (the "Purchase Shares");
payable to the Vendor for the Domain Name as provided in section 3
herein.
1.2 Unless otherwise indicated, all dollar amounts in this Agreement are
expressed in United States funds.
1.3 The division of this Agreement into sections and subsections and the
insertion of headings are for convenience of reference only and will not affect
the interpretation of this Agreement. Unless otherwise indicated, any reference
in this Agreement to a section or subsection refers to the specified section or
subsection of this Agreement
1.4 In this Agreement, words importing the singular number only will include
the plural and vice versa, words importing gender will include all genders and
words importing persons will include individuals, corporations, partnerships,
associations, trusts, unincorporated organizations, governmental bodies and
other legal or business entities of any kind whatsoever.
2 PURCHASE AND SALE
2.1 Subject to the terms and conditions of this Agreement, effective as at
Closing, the Vendor will sell, assign, transfer and relinquish to the Purchaser
and the Purchaser will purchase from the Vendor the Domain Name, free and clear
of all encumbrances, save and except the rights therein herein retained by the
Vendor as security for payment of the balance of the Purchase Price.
3 PAYMENT OF THE PURCHASE PRICE
3.1 The Purchaser will pay the Purchase Price to the Vendor as follows:
(a) upon execution of this Agreement, payment of a non-refundable deposit
in the sum of twenty five thousand dollars ($25,000) (the "Deposit")
by trust cheque payable to the Vendor,
(b) on Closing, payment of the sum of one hundred and seventy-five
thousand dollars ($175,000.00) by wire transfer to the account of the
Vendor in accordance with the following instructions:
To: Barclays Bank Plc
75 Wall Street
New York
NY, USA.
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ABA Number: 026002574
For Credit To: Barclays Bank Plc
Anguilla
British West Indies
Account Number: 28019840265
For Further Credit
to the account of: Bingo, Inc.
Account Number: 134 -7256
Advising: Donald Curtis
Tel. (264) 497-3800
(c) at those times specified in Schedule A attached hereto, payment of the
balance of the cash portion of the Purchase Price in those amounts
specified in that schedule by wire transfers to the account of the
Vendor in accordance with the instructions specified in section 3.1
(b); and
(d) on Closing, issuance to the Vendor, as fully paid and non-assessable,
five hundred thousand (500,000) common shares without par value in the
capital stock of the Purchaser pursuant to Rule 144 of the United
States Securities Act of 1933 (the "1933 Act").
3.2 The Purchaser will on or before August 15, 1999, report to the Vendor in
writing the Gross Revenue of the Purchaser for the period commencing on Closing
and ending on June 30, 1999 and will on or before the forty-fifth (45th) day
after the end of each Business Quarter of the Purchaser, report to the Vendor in
writing the Gross Revenue of the Purchaser for that Business Quarter.
4 DEFAULT
4.1 In the event that the Purchaser fails to make a payment in respect of the
Purchase Price as provided in this Agreement, the Vendor will notify the
Purchaser in writing of such default (a "Default Notice") and upon receipt of
any particular Default Notice, the Purchaser shall have sixty (60) days within
which to make the payment specified therein as being outstanding (the "Default
Period" in respect of such Default Notice).
4.2 If, after the expiration of the Default Period in respect of any particular
Default Notice, the Purchaser has not made the outstanding payment specified
therein, the Purchaser will cause the Domain Name and all of the rights, title
and interest of the Purchaser therein and thereto to be transferred, assigned
and relinquished to the Vendor and will cause the Domain Name to be registered
in name of the Vendor. To facilitate such transfer and registration in the event
of such default, the Purchaser shall deliver to the Escrow Agent, pursuant to an
Escrow Agreement to be entered into on Closing between the parties hereto and
the Escrow Agent (the "Escrow Agreement"), not more than thirty (30) days after
completion of registration of the Domain Name in the name of the Purchaser and,
thereafter, if the form of document required by the administrator
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of the InterNIC internet domain name registration service to effect such
transfer and registration is changed from time to time, forthwith after demand
by the Vendor for a replacement therefor, a completed registrant name change
agreement specifying the Vendor as the new registrant for the Domain Name, duly
executed by an authorized officer of the Purchaser before a notary public (in
whatever form, the "Registrant Name Change Agreement"). The Escrow Agent shall
hold each and every Registrant Name Change Agreement unused so long as the
Purchaser is not in default of payment of the Purchase Price as herein provided.
If, after the expiration of the Default Period in respect of any particular
Default Notice, the Purchaser has not made the outstanding payment specified in
that Default Notice, the Escrow Agent is authorized and instructed to deliver,
subject to the terms of the Escrow Agreement, the Registrant Name Change
Agreement to the Vendor which may deliver same to the then administrator of the
InterNIC internet domain name registration service in furtherance of
registration of the Domain Name in the name of the Vendor.
4.3 Notwithstanding that the registrant name change agreement to be entered
into between the Vendor and the Purchaser with respect to the Domain Name in
order to give effect to this Agreement will specify that the Vendor desires to
and does relinquish unto the Purchaser all of its interests in the registration
of the Domain Name, the provisions of this section shall take precedence over
the provisions of that registrant name change agreement and the Vendor shall be
and continue to be entitled to, in the manner provided in this section, have the
Domain Name and the rights, title and interests of the Purchaser therein and
thereto transferred, assigned and relinquished to the Vendor in the
circumstances specified in this section.
5 REPRESENTATIONS AND WARRANTIES OF THE VENDOR
5.1 The Vendor represents and warrants to the Purchaser, with the intent that
the Purchaser will rely thereon in entering into this Agreement and in
concluding the transactions contemplated hereby, that:
(a) the Vendor is a corporation duly incorporated, validly existing, and
in good standing under the laws of Anguilla and has the power,
authority, and capacity to enter into this Agreement and to carry out
its terms;
(b) the execution and delivery of this Agreement and the completion of the
transaction contemplated hereby have been duly and validly authorized
by all necessary corporate action on the part of the Vendor, and this
Agreement constitutes a valid and binding obligation of the Vendor
enforceable against the Vendor in accordance with its terms;
(c) the Vendor is the legal and beneficial owner of the Domain Name, free
and clear of all encumbrances whatsoever, and is not a party to or
bound by any contract or any other obligation whatsoever that limits
or impairs its ability to sell, transfer, assign or convey, or that
otherwise affects, the Domain Name;
(d) the Vendor has the right to convey the right, title, benefit and
interest in the Domain Name to the Purchaser in the manner provided
herein;
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(e) the Vendor is the registered owner of the Domain Name and all fees or
other costs associated with maintaining the registration of the Domain
Name have been paid as of January 1, 1999 and the registration of the
Domain Name is in good standing with Network Solutions, Inc.;
(f) no person other than the Purchaser has been granted any interest in or
right to use all or any portion of the Domain Name;
(g) the Vendor's use and sale of the Domain Name does not infringe upon,
or induce or contribute to the infringement of, the intellectual
property rights, domestic or foreign, of any other person;
(h) the Vendor is not aware of any claim of infringement (or the inducing
of or contribution to the infringement) of any intellectual property
rights of any other person arising from the use of the Domain Name,
nor has the Vendor received any notice that the use of the Domain Name
infringes upon or breaches any intellectual property rights of any
other person;
(i) the Vendor understands and agrees that the Purchaser will be changing
its corporate name to "Bingo.com" or some other similar name;
(j) the Vendor understands and acknowledges that the Purchase Shares will
carry a legend indicating that the Purchase Shares may not be traded
except in compliance with the 1933 Act and the United States
Securities Exchange Act of 1934 (the "1934 Act"); and
(k) the Vendor acknowledges that issuance of the Purchaser's common stock
has not been approved or disapproved by the United States Securities
and Exchange Commission, any state securities agency, or any foreign
securities agency and that the Purchaser is not registered under the
1934 Act.
6 COVENANTS OF THE VENDOR
6.1 The Vendor hereby covenants to the Purchaser (which covenants shall survive
closing) that it shall complete, sign and return to the Purchaser as soon as
possible on request by the Purchaser any subscription agreements, documents,
questionnaires, notices and undertakings as may be required by regulatory
authorities, stock exchanges and applicable law or as directed by the
Purchaser's solicitors.
7 REPRESENTATIONS OF THE PURCHASER
7.1 The Purchaser represents and warrants to the Vendor as follows, with the
intent that the Vendor will rely thereon in entering into this Agreement and in
concluding the purchase and sale contemplated hereby, that:
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(a) the Purchaser is a corporation duly incorporated, validly existing,
and in good standing under the laws of State of Florida and has the
power, authority, and capacity to enter into this Agreement and to
carry out its terms;
(b) the execution and delivery of this Agreement and the completion of the
transactions contemplated hereby has been duly and validly authorized
by all necessary corporate action on the part of the Purchaser, and
this Agreement constitutes a valid and binding obligation of the
Purchaser in accordance with its terms; and
(c) until the Purchase Price has been paid in full by the Purchaser, the
Purchaser will not assign, transfer, relinquish, dispose of or
encumber in any manner any of the rights, title, benefits or interests
in and/or to the Domain Name without the written consent of the
Vendor.
8. CONVENANTS OF THE PURCHASER
8.1 The Purchaser hereby covenants with the Vendor (which covenants shall
survive closing) that:
(a) until the Purchase Price has been paid in full by the Purchaser, the
Purchaser will use its commercially reasonable best efforts to
preserve and protect the Domain Name and its rights to utilize the
Domain Name, including the timely payment of all such sustaining and
other fees as may from time to time be or become payable to the
InterNIC internet domain name registration service and/or the
administrator thereof, and, in the event that the Purchaser elects not
to or fails or neglects to make any such payment or duly defend and
preserve and protect such rights against any adverse claim or claims,
the Vendor shall be entitled to make such payment or take all such
actions, in its own name or in the name of the Purchaser, as the
Vendor may deem necessary or prudent to defend against such claim or
claims and to preserve and protect such rights, and to charge to the
Purchaser any amounts so paid and the costs of any and all such
actions taken;
(b) until the Purchase Price has been paid in full by the Purchaser, the
Purchaser will not assign, transfer, relinquish, dispose of or
encumber in any manner any of the rights, title, benefits or interests
in and/or to the Domain name without the written consent of the
Vendor, and
(c) provided that any applicable hold period has expired or the Purchase
Shares are registered to be freely tradeable pursuant to a stock
registration statement accepted by the Security and Exchange
Commission, the Purchaser will , forthwith after being requested in
writing by the Vendor to so do, exchange the legended certificates
representing those of the Purchase Shares for unlegended certificates
of mequal denomination.
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9. NON-MERGER
9.1 The representations, warranties, covenants, and agreements of the Vendor
contained herein and those contained in the documents and instruments delivered
pursuant hereto or in connection herewith will survive the Closing, and the
waiver of any condition contained herein will remain in full force and effect
9.2 The representations, warranties, covenants, and agreements of the Purchaser
contained herein and those contained in the documents and instruments delivered
pursuant hereto or in connection herewith will survive the Closing and the
waiver of any condition contained herein will remain in full force and effect.
10 TRANSACTIQNS OF THE VENDOR AT THE CLOSING
10.1 At the Closing, the Vendor will execute and deliver or cause to be executed
and delivered:
(a) all such documents and instruments as may be necessary to transfer the
Domain Name, to the Purchaser and effectively vest good and marketable
title to the Domain Name in the Purchaser free and clear of any
encumbrances (except as provided herein) including without limitation,
the InterNIC (Network Solutions Inc.) registrant name change
agreement, a sample of which is attached as Schedule B (the "Domain
Name Transfer Documents"); and
(b) all such other documents and instruments as the Purchaser's solicitors
may reasonably require.
10.2 The Purchaser agrees to immediately file with InterNIC the Domain Name
Transfer Documents. If InterNIC for any reason does not effect transfer of the
Domain Name, the Vendor will co-operate fully with the Purchaser to ensure
transfer of the Domain Name, or will take such other steps as required to ensure
the Purchaser's exclusive rights to the Domain Name.
11 TRANSACTIONS OF THE PURCHASER AT THE CLOSING
11.1 At the Closing the Purchaser will deliver or cause to be delivered to the
Vendor:
(a) confirmation in writing from the Vendor's or the Vendor's solicitors'
bank that that portion of the purchase price specified in section 3(b)
hereof has been wire transferred to the account of the Vendor in
accordance with the instructions specified in that section; and
(b) confirmation in writing that ten (10) share certificates, each
representing 50,000 common shares without par value in the capital
stock of the Purchaser, legended in accordance with the requirements
of Rule 144 under the 1993 Act and registered in the name of the
Vendor at its address first set out above, have been delivered to the
Escrow Agent.
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11.2 The Escrow Agent is hereby irrevocably instructed to hold the Purchase
Shares in escrow until:
(a) confirmation (the "Confirmation") is received from InterNIC that the
Domain Name has been transferred to the Purchaser in which case the
Escrow Agent shall deliver the certificates representing the Purchase
Shares to the Vendor; or
(b) if the Confirmation is not received within thirty (30) days after
Closing, the Escrow Agent shall deliver the certificates representing
the Purchase Shares to the Purchaser.
12 TAXES
12.1 The Purchaser will be liable for and will pay all applicable sales taxes
properly payable in connection with the sale of the Domain Name by the Vendor to
the Purchaser.
13 SUCCESSQRS AND ASSIGNS
13.1 This Agreement will enure to the benefit of and be binding upon the parties
hereto and their respective successors and permitted assigns.
14 ENTIRE AGREEMENT
14.1 This Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether written or oral. There are
no conditions, covenants, agreements, representations, wan-antics or other
provisions, express or implied, collateral, statutory or otherwise, relating to
the subject matter hereof except as hereof provided.
15 TME OF ESSENCE
15.1 Time will be of the essence of this Agreement.
16 APPLICABLE LAW
16.1 This Agreement will be construed, interpreted and enforced in accordance
with, and the respective rights and obligations of the parties will be governed
by, the laws of the state of Washington and the federal laws of the United
States applicable therein without reference to its choice of law rules, and each
party hereby submits to the jurisdiction of the state of Washington and all
courts competent to hear appeals therefrom.
17 AMENDMENT AND WAIVER
17.1 No amendment or waiver of any provision of this Agreement will be binding
on either party unless consented to in writing by such party. No waiver of any
provision of this
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Agreement will constitute a waiver of any other provision, nor will any waiver
constitute a continuing waiver unless otherwise provided.
18 SEVERABILITY
18.1 If any provision or any part thereof is held by a court of competent
jurisdiction, after appeals therefrom have been exhausted, to be unenforceable,
invalid or illegal, then it will be severable or deemed to be limited in respect
of such territory and time to the extent necessary to render such provision
enforceable, valid or legal, and the remaining provisions will remain valid and
binding.
19 COUNTERPARTS
19.1 This Agreement may be executed in several counterparts, each of which will
be deemed to he an original and all of which will together constitute one and
the same instrument.
20 ELECTRONIC MEANS
20.1 Delivery of an executed copy of this Agreement by electronic facsimile
transmission, telecopy, telex, or other means of electronic communication
producing a printed copy will be deemed to be execution and delivery of this
Agreement on the date of such communication by the party so delivering such
copy.
21 NOTICES
21.1 Any notice or other documents required or permitted to be given under this
Agreement will be in writing and may be given by personal service, telecopier or
by prepaid registered mail, posted in Canada or by certified mail, posted in the
United States, and addressed to the proper party at the address stated below:
(c) if to the Vendor:
Bingo, Inc.
P.O. Box 1127
The Hansa Bank Building
Landsome Road
The Valley
Anguilla, B.W.I.
Telecopier No.: (264) 497-3801
Attention: Ben Cutler
(d) If to the Purchaser:
Progressive General Lumber, Corp.
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Suite 1500, P.O. Box 1078
885 West Georgia Street
Vancouver, British Columbia
Canada, V6C 3E8
Telecopier No.: (604) 688-9382
Attention: Darren Little
or to such other address as any party may specify by notice. Any notice sent by
telecopier will be
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deemed conclusively to have been effectively given and received at the time of
successful transmission. Any notice sent by registered mail as aforesaid will be
deemed conclusively to have been effectively given and received on the fifth
business day after posting; but if at the time of posting or between the time of
posting and the fifth business day thereafter there is a strike, lockout or
other labour disturbance affecting postal service, then such notice will not be
effectively given until actually received.
22 REFERENCES TO AGREEMENT
22.1 The terms "this Agreement", "hereof', "herein", "hereby", "hereto", and
similar terms refer to this Asset Purchase Agreement and not to any particular
clause, paragraph or other part of this Agreement. References to particular
clauses are to clauses of this Agreement unless another document is specified.
IN WITNESS WHEREOF the parties have executed and delivered this Agreement on the
day of January, 1999.
BINGO, INC.
Per: --------------------------------------
Authorized Signatory
PROGRESSIVE GENERAL LUMBER, CORP.
Per: --------------------------------------
Authorized Signatory
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SCHEDULE A
PAYMENT SCHEDULE FOR BALANCE OF PURCILASE PRICE
The balance of the Purchase Price shall be payable to the Vendor at the
following times in the following amounts:
1. on August 29, 1999 four percent (4%) of the Gross Revenue of the Purchaser
for the period commencing on Closing and ending on June 30, 1999; and
2. on the sixtieth (60th) day of each of the four Business Quarters next
following the first Business Quarter the lesser of:
(a) the greater of
(i) four percent (4% ) of the Gross Revenue of the Purchaser for the
Business Quarter immediately preceding the Business Quarter in
which such payment is required to be made; and
(ii) the sum of $50,000; and
(b) the sum of $1,100,000 less the aggregate of all cash payments
theretofore made by the Purchaser in respect of the cash portion of
the Purchase Price; and
3. on the sixtieth (60th) day of each of the four Business Quarters next
following those four Business Quarters specified in section 2 above, the
lesser of:
(a) the greater of
(i) four percent (4% ) of the Gross Revenue of the Purchaser for the
Business Quarter immediately preceding the Business Quarter in
which such payment is required to be made; and
(ii) the sum of $75,000; and
(b) the sum of $1,100,000 less the aggregate of all cash payments
theretofore made by the Purchaser in respect of the cash portion of
the Purchase Price; and
4. on the sixtieth (60th) day of each of the four Business Quarters next
following those four Business Quarters specified in section 3 above, the
lesser of
(a) the greater of
<PAGE>
(i) four percent (4% ) of the Gross Revenue of the Purchaser for the
Business Quarter immediately preceding the Business Quarter in
which such payment is required to be made; and
(ii) the sum of $100,000; and
(b) the sum of $1,100,000 less the aggregate of all cash payments
theretofore made by the Purchaser in respect of the cash portion of
the Purchase Price; and
5. on the sixtieth (60th) day of the Business Quarter in which the aggregate
of all cash payments made by the Purchaser pursuant to sections 1, 2, 3 and
4 above first equals or exceeds $1,100,000, in addition to the payment then
being made pursuant to section 1, 2, 3 or 4 above in respect of the
Business Quarter immediately preceding that Business Quarter, the
difference between four percent (4% ) of the Gross Revenue of the Purchaser
for the Business Quarter immediately preceding that Business Quarter and
the amount then required to be paid in respect of the Business Quarter
immediately preceding that Business Quarter pursuant to section 1, 2, 3 or
4 above; and
6. on the sixtieth (60th) day of each Business Quarter after the Business
Quarter in which the aggregate of all cash payments made by the Purchaser
pursuant to sections 1, 2, 3 and 4 above first equals or exceeds $1,100,000
and before and including the Business Quarter coming on January 1, 2098,
four percent (4% ) of the Gross Revenue of the Purchaser for the Business
Quarter immediately preceding the Business Quarter in which such payment is
required to be made.
Exhibit 10.3
ESCROW AGREEMENT
THIS AGREEMENT dated for reference the 27th day of January, 1999.
AMONG:
BINGO.COM, INC. (formerly known as Progressive General Lumber Corp.), a
company, incorporated pursuant to the laws of the State of Florida and
having an address of Suite 702 - 543 Granville Street, Vancouver, British
Columbia V6C 1X8
(hereinafter called the "Purchaser")
OF THE FIRST PART
AND:
BINGO, INC., a corporati6n incorporated pursuant to the laws of Anguilla
and having an address at P.O. Box 1127, The Hansa Bank Building, Landsome
Road, The Valley, Anguilla, B.W.1.
(hereinafter called the "Vendor")
OF THE SECOND PART
AND:
CLARK, WILSON, Barristers & Solicitors, of Suite 800 - 885 West Georgia
Street, Vancouver, British Columbia V6C 3H1
(hereinafter called the "Escrow Agent")
OF THE THIRD PART
WITNESSES THAT WHEREAS:
A. Pursuant to the Asset Purchase Agreement, the Purchaser agreed to purchase
the domain name "bingo.com" (the "Domain Name") from the Vendor;
B. The Asset Purchase Agreement provides that in the event the Purchaser
defaults in certain payments to the Vendor, the Purchaser will cause the Domain
Name to be transferred, assigned and relinquished back to the.Vendor;
<PAGE>
-2-
C. In order to facilitate such transfer in the event of such default by the
Purchaser, the Purchaser has agreed to deliver to the Escrow Agent the Transfer
Documents fully executed by the Purchaser and specifying the Vendor as the new
registrant for the Domain Name;
D. The Purchaser and Vendor have agreed that the Escrow Agent shall hold the
Purchase Shares until confirmation is received that the Domain Name has been
registered in the name of the Purchaser; and
E. The Vendor and the Purchaser desire to appoint the Escrow Agent, and the
Escrow Agent has agreed to act as escrow agent to hold the Transfer Documents
and the Purchaser Shares in accordance with the terms hereof;
THEREFORE, in consideration of the mutual covenants and agreements herein
contained and other good and valuable consideration (the receipt and sufficiency
of which are hereby acknowledged), the parties covenant and agree as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Wherever used in this Agreement, unless the context otherwise
requires, the following words and terms will have the meanings shown:
(a) "Agreement" means this Escrow Agreement;
(b) "Asset Purchase Agreement" means the asset purchase agreement, dated
for reference January 18, 1999, and made among the Vendor and the
Purchaser;
(c) "Notice of Dispute" means a written objection of the Purchaser to
delivery of the Transfer Documents to the Vendor pursuant to a Default
Notice, together with evidence of payment of the outstanding amounts
owing to the Vendor;
(d) "Purchase Shares" means 500,000 common shares without par value in the
capital stock of the Purchaser issuable to the Vendor pursuant to the
Asset Purchaser Agreement;
(e) "Statutory Declaration" means a statutory declaration or equivalent
signed by an officer of the Vendor and notarized, stating that the
amount owing by the Purchaser, pursuant to a Default Notice delivered
at least 60 days prior to the statutory declaration, remains unpaid;
(f) "Transfer Documents" means all of the registrant name change
agreements (or such form of document as is required from time to time
by the administrator of the InterNIC internet domain name registration
service to effect such transfer and registration) executed by the
Purchaser transferring the Domain Name from the Purchaser to the
Vendor.
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- 3 -
1.2 Any capitalized term not defined herein shall have the meaning
ascribed thereto in the Asset Purchase Agreement.
1.3 In this Agreement:
(a) the headings have been inserted for convenience of reference only and
in no way define, limit, or enlarge the scope or meaning of the
provisions of this Agreement;
(b) all references to any party, whether a party to this Agreement or not,
will be read with such changes in number and gender as the context or
reference requires; and
(c) when the context hereof makes it possible, the word "Person" includes
in its meaning any firm and any body corporate or politic.
2. DEPOSIT OF TRANSFER DOCUMENTS AND PURCHASE SHARES
2.1 The Purchaser will within thirty (30) days after completion of the
registration of the Domain Name in the name of the Purchaser deliver the
Transfer Documents to the Escrow Agent for deposit in escrow with the Escrow
Agent on the terms of this Agreement and the Asset Purchase Agreement.
2.2 The Purchaser will deliver, on Closing of the Asset Purchase
Agreement, the Purchase Shares to the Escrow Agent for deposit in escrow with
the Escrow Agent on the terms of this Agreement and the Asset Purchase
Agreement.
3. ESCROW PROVISIONS TRANSFER DOCUMENTS AND PURCHASE SHARES
3.1 The Purchaser hereby directs the Escrow Agent to retain the Transfer
Documents and the Purchase Shares, and not to do or cause anything to be done.to
release the same from escrow except in accordance with this Agreement. The
Escrow Agent accepts its responsibilities hereunder and agrees to perform them
in accordance with the terms hereof.
3.2 The Escrow Agent will hold the Purchase Shares in escrow and
undelivered until written confirmation (the "Confirmation") is received from
InterNIC that the Domain Name has been transferred to the Purchaser in which
case the Escrow Agent shall deliver the certificates representing the Purchase
Shares to the Vendor. If the Confirmation is not received within thirty (30)
days after Closing of the Asset Purchase Agreement, the Escrow Agent shall
deliver the certificates representing the Purchase Shares to the Purchaser.
3.3 The Escrow Agent will hold the Transfer Documents in escrow and
undelivered so long as the Purchaser is not in default of payment of the
Purchase Price as provided in the Asset Purchase Agreement and will deliver the
Transfer Documents to the Vendor if, after expiration of the Default Period in
respect of any particular Default Notice, the Purchaser has
<PAGE>
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not made the outstanding payment specified in that Default Notice and the Vendor
has delivered the Statutory Declaration to the Escrow Agent and the purchaser
has not delivered a Notice of Dispute to the Escrow Agent.
3.4 The Vendor agrees to deliver to the Escrow Agent a copy of any Default
Notice delivered to the Purchaser. Upon the expiration of the Default Period, if
the, outstanding payment specified in the Default Notice has not been paid, the
Vendor will deliver to the Escrow Agent the Statutory Declaration. If prior to
the receipt of the Statutory Declaration the Purchaser has delivered to the
Escrow Agent a Notice of Dispute, the Es crow Agent may:
(a) retain the Transfer Documents until the Purchaser and the Vendor
deliver joint instructions to the Escrow Agent; or
(b) interplead the Transfer Documents into court in an interpleader action
for the benefit of the Purchaser and the Vendor.
3.5 If the Escrow Agent delivers the Transfer Documents to the Vendor
pursuant to Clause 3.2, without restricting any other rights available to it,
the Vendor will be entitled to transfer the Domain Name into its name.
3.6 The Transfer Documents and the Purchase Shares will not be sold,
assigned, hypothecated, alienated, released from escrow, transferred within
escrow or otherwise in any manner dealt with except in accordance with this
Agreement or as may be required by reason of the bankruptcy of the Purchaser, in
which case the Escrow Agent will hold the Transfer Documents and the Purchase
Shares subject to this Agreement, for whatever person, firm or corporation shall
be legally entitled to be or become the registered owner thereof.
4. THE ESCROW AGENT
4.1 In exercising the rights, duties and obligations prescribed or
confirmed by this Agreement, the Escrow Agent will act honestly and in good
faith and will exercise that degree of care, diligence and skill that a
reasonably prudent person would exercise in comparable circumstances.
4.2 The Purchaser and the Vendor jointly and severally covenant and agree
from time to time and at all times hereafter well and truly to save, defend and
keep harmless and fully indemnify the Escrow Agent, its successors, and assigns,
from and against all loss, costs, charges, suits, demands, claims, damages and
expenses which the Escrow Agent, its successors or assigns may at any time or
times hereafter bear, sustain, suffer or be put unto for or by reason or on
account of its acting pursuant to this Agreement or anything in any manner
relating thereto or by reason of the Escrow Agent's compliance in good faith
with the terms hereof.
4.3 In case proceedings should hereafter be taken in any court respecting
the Transfer Documents or the Purchase Shares, the Escrow Agent will not be
obliged to defend any such action or submit its rights to the court until it has
been indemnified by other good and sufficient security in addition to the
indemnity given in Clause 4.2 against its costs of such proceedings.
<PAGE>
- 5 -
4.4 The Escrow Agent will have no responsibility in respect of loss of the
Transfer Documents or the Purchase Shares except the duty to exercise such care
in the safekeeping thereof as it would exercise if the Transfer Documents and
the Purchase Shares belonged to the Escrow Agent. The Escrow Agent may act on
the advice of counsel but will not be responsible for acting or failing to act
on the advice of counsel.
4.5 The Escrow Agent will not be bound in any way by any contract between
the parties hereto whether or not it has notice thereof or of its terms and
conditions and the only duty, liability and responsibility of the Escrow Agent
will be to hold the Transfer Documents and the Purchase Shares as herein
directed and to pay and deliver the same to such persons and other such
conditions as are herein set forth.. The Escrow Agent will not be required to
pass upon the sufficiency of any of the Transfer Documents or Purchase Shares or
to ascertain whether or not the person or persons who have executed, signed or
otherwise issued or authenticated the said documents have authority to, so
execute, sign or authorize, issue or authenticate the said documents or any of
them, or the same persons named therein or otherwise to pass upon any
requirement of such instruments that may be essential of their validity, but it
shall be sufficient for all purposes under this Agreement insofar as the Escrow
Agent is concerned that the said documents are deposited with it as herein
specified by the parties executing this Agreement with the Escrow Agent.
4.6 In no event will the Escrow Agent be deemed to have assumed any
liability or responsibility for the sufficiency, form and manner of making any
notice or demand provided for under this Agreement or of the identity of the
persons executing the same, but it shall be sufficient if any writing purporting
to be such a notice, demand or protest is served upon the Escrow Agent in any
manner sufficient to bring it to its attention.
4.7 In the event that the Transfer Documents or Purchase Shares are
attached, garnished or levied upon under any court order, or if the delivery of
such property is stayed or enjoined by any court order or if any court order,
judgment or decree is made or entered affecting such property or affecting any
act by the Escrow Agent, the Escrow Agent may, in its sole discretion, obey and
comply with all writs, orders, judgments or decrees so entered or issued,
whether with or without jurisdiction, notwithstanding any provision of this
Agreement to the contrary. If the Escrow Agent obeys and complies with any such
writs, order, judgment. or decrees it will not be liable to any of the parties
hereto or to any other person, firm or corporation by reason of such compliance,
notwithstanding that such writs, orders, judgments or decrees may be
subsequently reversed, modified, annulled, set aside or vacated.
4.8 Except as herein otherwise provided, the Escrow Agent is authorized
and directed to disregard in its sole discretion any and all notices and
warnings which may be given to it by any of the parties hereto or by any other
person, firm, association or corporation. It will, however, obey the order,
judgment or decree of any court of competent jurisdiction, and it is hereby
authorized to comply with and obey such orders, judgements or decrees and in
case of such compliance, it shall not be liable by reason thereof to any of the
parties hereto or to any other person, firm, association or corporation, even if
thereafter any such order, judgment or decree may be reversed, modified,
annulled, set aside or vacated.
<PAGE>
-6-
4.9 If the Escrow Agent receives any written instructions contrary to the
instructions contained in this Agreement, the Escrow Agent may continue to hold
the Transfer Documents or Purchase Shares until the lawful determination of the
issue between the parties hereto.
4.10 If protest is made, to any action contemplated by the Escrow Agent
under this Agreement, the Escrow Agent may continue to hold the Transfer
Documents or Purchase Shares until the right to the documents is legally
determined by a court of competent jurisdiction or otherwise.
4.11 If written notice of protest is made by either the Purchaser or the
Vendor to the Escrow Agent to any action contemplated by the Escrow Agent under
this Agreement, and such notice sets out reasons for such protest, the Escrow
Agent will be entitled to continue to hold the Transfer Documents or the
Purchase Shares until the right to the documents is legally determined by a
court of competent jurisdiction or otherwise.
4.12 The Escrow Agent may resign as Escrow Agent by giving not less then
ten (10) days' notice thereof to each of the Purchaser or the Vendor. The
Purchaser and the Vendor may terminate the Escrow Agent by giving to the Escrow
Agent a notice of termination executed by each of them not less than ten (10)
days' prior to the proposed date of termination. The resignation or termination
of the Escrow Agent will be effective and the Escrow Agent will cease to be
bound by this Agreement on the date that is ten (10) days after the date of
receipt of the termination notice given hereunder or on such other date as the
Escrow Agent, the Purchaser and the Vendor may agree upon. All indemnities
granted to the Escrow Agent will survive the termination of this Agreement or
the resignation or termination of the Escrow Agent.
4.13 Notwithstanding anything herein to the contrary, the Escrow Agent may
act upon any written instructions given by the Vendor and the Purchaser jointly.
4.14 Notwithstanding anything to the contrary contained herein, in the
event of any dispute arising between the Purchaser and the Vendor or between any
other persons or between any of them with respect to the Asset Purchase
Agreement, this Agreement or any matters arising thereto, or with respect to the
Shares, the Escrow Agent may in its sole discretion deliver and interplead the
Transfer Documents and the Purchase Shares into court and such delivery and
interpleading will be an effective discharge to the Escrow Agent.
4.15 The Escrow Agent is under no responsibility to take any action
whatsoever unless and until the fees and disbursements of the Escrow Agent due
or reasonably expected to accrue are paid in full.
5. COUNTERPARTS
5.1 This Agreement may be executed in several counterparts, each of which
will be deemed to be an original and all of which will together constitute one
and the same instrument.
<PAGE>
-7-
6. GENERAL
6.1 Except as herein otherwise Provided, no subsequent alteration,
amendment, change or addition to this Agreement will be binding upon the parties
hereto unless reduced to writing and signed by the parties.
6.2 This Agreement will enure to the benefit of and be binding upon the
parties and their respective heirs, executors, administrators, successors, and
assigns.
6.3 The parties will execute and deliver all such further documents, do or
cause to be done all such further acts and things, and give all such further
assurances as may be necessary to give full effect to the provisions and intent
of this Agreement.
6.4 This Agreement will be governed by and construed in accordance with
the law of British Columbia.
6.5 Any notice required or permitted to be given under this Agreement will
be in writing and may be given by delivering, sending by electronic facsimile
transmission or other means of electronic communication capable of producing a
printed copy, or sending by prepaid registered mail posted in Canada the United
States and Australia, the notice to the addresses set forth on the first page of
this agreement (or to such other address or facsimile number as any party may
specify by notice in writing to another party). Any notice delivered or sent by
electronic facsimile transmission or other means of electronic communication
capable of producing a printed copy on a business clay will be deemed
conclusively to have been effectively given on the day the notice was delivered,
or the transmission was sent successfully, as the case may be. Any notice sent
by prepaid registered mail will be deemed conclusively to have been effectively
given on the third business day after posting; but if at the time of posting or
between the time of posting and the third business day thereafter there is a
strike, lockout, or other labour disturbance affecting postal service, then the
notice will not be effectively given until actually delivered.
6.6 Time is of the essence of this Agreement.
6.7 Delivery of an executed copy of this Agreement by electronic facsimile
transmission or other means of electronic communication capable of producing a
printed copy will be deemed to be execution and delivery of this Agreement on
the date of such communication by the party so delivering such copy, subject to
delivery of an originally executed copy of this Agreement to the other party
hereto within two weeks of the date of delivery of the copy sent via the
electronic communication.
<PAGE>
-8-
6.8 It is understood and agreed by the parties to this Agreement that the
only duties and obligations of the Escrow Agent are those specifically stated
herein and no other.
IN WITNESS WHEREOF the parties have caused this Agreement to be executed under
seal and delivered this ----- day of January, 1999.
CLARK, WILSON
Per: --------------------------------
Partner
BING0.COM, INC.
Per: --------------------------------
Authorized Signatory
BINGO, INC.
Per: --------------------------------
Authorized Signatory
- --------------------------------------------------------------------------------
Send this Agreement via postal mail or courier to:
Network Solutions, Inc.
NETWORK SOLUTIONS 505 Huntmar Park Drive
Herndon, VA 20170
Attn: Registrant Change Group
(703) 742-4777
- --------------------------------------------------------------------------------
Registrant Name Change Agreement
Version 3.0 -Transfers
General Information;
*Once this form is complete, verify the information, read it, sign it and date
it
*An individual that has the apparent authority to legally bind the current
Registrant must sign this form in the presence of a Notary Public. The Notary
Public is required to notarize this form. For information about notarization,
please refer to the RNCA FAQ.
*An individual that has the apparent authority to legally bind the new
Registrant must also sign this form. Notarization is not required for the new
Registrant's signature.
*Make a copy of the Agreement for your records, then send it to Network
Solutions at the address shown above.
*Or, if this domain name is the subject of litigation or a trademark dispute,
send this Agreement to the attention of the Business Affairs Office at the
address shown above.
Domain Name One per Registrant Name Change Agreement
bingo.com
Transfer the As per the WHOIS record (URL http:
registration for the /www.networksolutions.com/cgi-bin/whois/whois)
domain name from Bingo, Inc.
Enter the Registrant's Street Address, City, State,
Current Registrant's Country and ZIP if applicable
Address: PO Box 1127, The Hansa Bank Building,
Landsome Road, The Valley, Anguilla, B.W.I.
Current Registrant's Please enter the Registrant's business type (e.g.,
type of Business Corporation, etc.
Corporation
Transfer the Enter the correct name of the new Registrant
registration for the Bingo.com, Inc.
domain name to;
Enter the correct address of the new Registrant
New Registrant's Address 702-543 Granville Street, Vancouver, B.C., V6C IX8,
Canada
Enter the NIC tracking number from the new Registrant's
NIC Tracking Number Domain Name Registration Agreement email submission
("New Registrant's Application")
NIC-990526.d86a
Terms and
Conditions The Current Registrant and the New Registrant enter into
this Registrant Name Change Agreement as of the date
executed by the final party hereto. WHEREAS the Registrant
and Network Solutions, Inc. ("Network Solutions") have
entered into a Domain Name Registration Agreement (the
"Agreement") for the registration of the second-level domain
name referenced in the block above headed Domain Name (the
"Domain Name"); WHEREAS the New Registrant desires to
register the Domain Name with Network Solutions and to that
end has transmitted by electronic mail to Network Solutions
a completed Domain Name Registration Agreement as
application ("New Registrant's Application') for
registration of the Domain Name; WHEREFORE, in consideration
of these premises, and for other good and valuable
consideration the sufficiency of which is hereby
acknowledged, the parties agree as follows: 1.Registrant's
Relinquishment of the Domain Name: The Registrant hereby
relinquishes its registration of the Domain Name and
discharges Network Solutions from all obligations under the
Agreement. The Registrant releases Network Solutions from
all claims, liabilities or demands arising from the
Agreement. The Registrant further acknowledges and agrees
that it is not entitled to a refund of any fees it may have
paid to Network Solutions. Nothing
<PAGE>
contained in this Registrant Name Change Agreement shall be
construed as an assignment of the Registrant's rights under
the Agreement. The Registrant hereby authorizes Network
Solutions to take all steps necessary to register the Domain
Name to the New Registrant, including without limitation,
disassociating the Domain Name from the host servers
designated by the Registrant without further notice.
2. New Registrant's Registration of the Domain Name: The New
Registrant acknowledges that it has reviewed and understands
the terms, conditions, representations and warranties of
Network Solutions' Domain Name Registration Agreement in
effect as of the date of the New Registrant's Application.
The New Registrant, by signing and sending this Registrant
Name Change Agreement to Network Solutions, agrees to be
bound by and to perform in accordance with the terms and
conditions of Network Solutions' current Domain Name
Registration Agreement, incorporated herein by reference,
which includes Network Solutions' current Domain Name
Dispute Policy. The New Registrant specifically agrees to
pay Network Solutions a new registration fee upon receipt of
Network Solutions' invoice. The New Registrant also
reaffirms the accuracy and completeness of all of the
information contained in the New Registrant's Application.
To the extent the terms and conditions of Network Solutions'
current Domain Name Registration Agreement conflict With the
terms and conditions of this Registrant Name Change
Agreement, the terms and conditions of this Registrant Name
Change Agreement shall prevail.
3. Effective Date of the New Registrant's Registration of
the Domain Name: The New Registrant's registration of the
Domain Name shall be effective upon Network Solutions'
transmission of an acknowledgement to the New Registrant
that the Domain Name has been Registered to the New
Registrant
Signature Block
Current Registrant must complete below:
Organization:
Bingo, Inc.
Signature:
Name:
Title:
Active e-mail address:
Phone Number
Date:
New Registrant must complete below:
Organization:
Bingo.com, Inc.
Signature:
Name:
Darren Little
Title:
President
Active e-mail address:
[email protected]
Phone number:
04-609-7849
Date:
<PAGE>
Notarization A Notary Public or its foreign equivalent must certify the
Current Registrant's signature
County of:
State of:
The foregoing instrument was signed before me by
on this date.
Notary's name (printed):
Notary's signature:
Date of Notarization:
My commission expires:
Exhibit 10.6
STRATFORD INTERNET TECHNOLOGIES INC.
AGREEMENT:
Made by the Client, in the Month of February on the day of 17 in the year of
1999 by Stratford Internet Technologies and between Bingo.Com (hereinafter
referred to as the "The Client" with its offices ADDRESS listed at the bottom of
this form) and Stratford Internet Technologies (hereinafter referred to as
"Stratford" with its Mailing address at 500-1168 Hamilton Street, Vancouver, BC
Canada V6B 2S2).
WHEREAS:
Stratford has been commissioned to create, maintain, upgrade and supply artwork,
computer files, and coding for The Client's existing, or soon to be existing,
website site at: www.bingo.corn.
Stratford has been contracted for the terms of 250,000 common shares of
Bingo.com (BIGG: OTC-BB) for the development of a portal community site which
includes a free e-mail and free website (user) system incorporated into the
Bingo.com domain.
Stratford will be responsible for development costs.
Bingo.com will be responsible for all costs of required software and hardware
related to website technologies and hosting issues (licenced 3rd party software
technologies and servers for e-commerce, hosting and e-mail).
WEBPAGE AND WEBSITE DEVELOPMENT:
The Client agrees and understands the limits of terms and conditions listed in
this contract. Below is a detailed outline of what is included with The Client's
new website. Any services or items created or supplied by Stratford for the
Client's website beyond the terms or limits listed in this contract, will be
billed to the Client at an hourly rate. Once the Client signs and sends in this
contract to Stratford Internet Technologies, there will be no changes or
modifications made to this contract. Stratford reserves the right to cancel or
terminate this contract in the event the Client breaches the terms listed
within.
FEES:
These fees apply to the maintenance, upgrading, creation, designing and
programming of the website as well as approved adaptations, revisions, and
changes made to it by Stratford Internet Technologies. Billing for all services
that are above and beyond the terms listed in this contract that are billed at
an hourly rate, shall be submitted to the Client by Stratford Internet
Technologies, at the end of each month. Final payment of the balance shall be
made within 30 days of submission (or by the terms outlined in the final invoice
of the overall order) of invoice as hereinabove set forth. Stratford shall be
entitled to reasonable legal fees in the event the services of an attorney are
necessary for collection. Cheques, Money Orders, and Wire Transfers must be made
out to Stratford Internet Technologies. Bank account and routing information is
available upon request. The Client will pay all appropriate taxes that would
apply, Provincial and Federal included. Stratford reserves the right to change
prices of additional custom coding, and graphics development at any time. All
prices and maintenance set forth in this agreement shall not be subject to
change for one year.
1) Authorization:
The Client is engaging Stratford, as an independent contractor for the specific
project of developing and/or improving a World Wide Web site to be installed on
The Client's server. The Client hereby authorizes Stratford to access this
account, and authorizes the Internet Service Provider to provide Stratford with
"write permission" for
Stratford Internet Technologies Inc. o Suite 500 - 1168 Hamilton Street
Vancouver, BC V6B 2S2 o Phone: 604-683-0250 o Fax: 604-683-7570
www.stratfordinternet.com
<PAGE>
The Client's web page directory, cgi-bin directory, and any other directories or
programs which need to be accessed for this project. The Client also authorizes
Stratford to publicize their completed Web site to Web search engines, as well
as other Web directories and indexes,
2) Basic Maintenance:
The maintenance or upgrades will begin on the date that this agreement is
signed. Upgrades will be done on thirty (30) minute increments; All upgrades
that exceed the project outlines will be billed at $125.00 an hour in thirty
(30) minute increments. No other parties shall have the right to change or alter
The Client's Website other than Stratford Internet Technologies, or the owner(s)
of The Client. If The Client or an agent other than Stratford attempts updating
The Client's web pages, time to repair Web pages will be assessed at the hourly
rate, and is not included as part of the updating time.
3) Web page construction and Deposit:
Stratford shall design Client's Website with:
I) Free E-mail Service to Users and Members of Bingo.Com:
Ii) Free Web Page and Free (limited) server space on Bingo.com:
Iii) Custom Graphics and Interface Design:
Vi) Links:
V) Photos and other Graphics:
Vi) Setup and Installation: Installation of Web pages on the Client's ISP
host computer or server of their choice.
Vii) Email Responses: E-mail response link on each Web page to any e-mail
address that the Client designates.
Viii)Forms: Feedback or guestbook form (Basic CGI program included.
Includes up to 20 fields. Extra charges may be incurred if the
Client's Internet Service Provider does not use a Unix operating
system.
4) Consultant's warranties:
Stratford represents as follows:
i) That Stratford will create and use Artwork, Clipart, Programming and
website pages other than the Client's logo and except for artwork and
coding supplied by the Client;
ii) That Stratford has the full and unrestricted right to make this
agreement;
iii) That the artwork will not infringe upon any statutory copyright;
iv) That it contains no matter contrary to the law;
v) That Stratford has the right to use the likeness of all the persons
depicted in the artwork where Stratford has supplied the likeness;
vi) That Stratford will indemnify the Client and hold the Client harmless
from any and all claims arising therefrom, including legal fees;
Stratford Internet Technologies Inc. o Suite 500 - 1168 Hamilton Street
Vancouver, BC V6B 2S2 o Phone: 604-683-0250 o Fax: 604-683-7570
www.stratfordinternet.com
<PAGE>
5) The Client Warranties:
The Client represents as follows:
i) That all artwork, design, logos, likeness, or photos of persons as
supplied by the Client are with proper permission;
ii) That any artwork supplied by the Client does not infringe on any
statutory right;
iii) That the Client will indemnify and hold harmless Stratford from any
and all claims arising therefrom, including legal fees.
Related Development and Maintenance Issues and Standard Terms
i) Changes to, and Submitting Text:
Time required to make substantive changes to client-submitted text after the Web
pages have been constructed will be additional fees, billed at the hourly rate
and is not part of the maintenance terms. All text that is to be placed onto the
The Client's Web Pages must be submitted to Stratford on floppy disk, Zip Disk,
CD-Rom or, Emailed to Stratford, or made available to Stratford by means of the
internet or world wide web. All text that is in need of actual retyping by
Strafford will be billed at $75.00 an hour. Large text areas (1,200 words or
more) for web pages that need a considerable amount of formatting is billed at
an hourly rate of $100.00(hr) and is not part of any maintenance plan.
i) Changes to Graphics and Images:
All images and graphics that are to be placed on or changed on the Client's web
pages must be submitted to Stratford on floppy disk, Zip Disk, CD-Rom or,
Emailed to Stratford, or made available to Stratford by means of the internet or
world wide web. All images and graphics to be used on the Client's web pages
must be in either a *.jpg or *.gif format Any image or graphic that needs to be
reformatted or resized or altered in any way to fit on the Client's web pages,
will be billed at an hourly rate of $150.00. Stratford can and will add standard
clipart or icons from its collection at the Clients request. However, this does
not mean that Stratford will create a custom graphic or reformatt graphics
without additional changes. These changes and creations of graphics are not part
of the development and maintenance terms, and are billed at an hourly rate.
ii) Sounds or Music:
All sound and music to be used on the Client's website must be submitted to
Stratford Internet Technologies in the appropriate format to be used on the
Client's web pages. Any changes, reformatting or converting of a sound or music
file, by Stratford will be billed at an hourly rate of $150.00. (e.g. a *.wav
file needs to be changed to a *.au file.).
All Sound and music files must be submitted to Stratford by the Client on floppy
disk, Zip Disk, CD-Rom or, Emailed to Stratford, or made available to Stratford
by means of the Internet or World Wide Web.
iii) Plug-ins:
All plug-ins that the Client wishes to use for their webpages are included in
this development and maintenance contract, provided that the support files and
the plug-in are made available. (This would include giving Stratford the
manufacturer URL's to download the plug-ins or the Client suppling it to
Stratford. All additional manufacturer fees would be billed to the Client). Any
changes to the files or support files for the plug-ins must be submitted to
Stratford by the Client on floppy disk, Zip Disk, CD-Rom, Emailed to Stratford
Internet Technologies, or made available to Stratford by means of the internet
or world wide web. Any additional coding
Stratford Internet Technologies Inc. o Suite 500 - 1168 Hamilton Street
Vancouver, BC V6B 2S2 o Phone: 604-683-0250 o Fax: 604-683-7570
www.stratfordinternet.com
<PAGE>
or upgrading to the plug-ins that requires reformatting, new coding, or the
creation of files will be billed at an hourly rate of $150.00. If plug-ins are
to be upgraded due to a newer version issued by the manufacturer, and no
additional changes by Stratford are required, there will be no additional
charges for the upgrade.
NOTE: This does not include, reconfiguring servers, setting up mime type on the
server, or an extended installation that requires a reformatting of the user end
files or recoding of the web page.
Plug-in NOTE: Setting up and maintaining plug-ins, can be very easy or very
difficult, depending on the plug-in in question and servers being used. Most
plug-ins are easy to maintain and upgrade and Stratford would not charge for
most changes. However, Stratford reserves the right to charge an hourly rate for
updating and maintaining plug-ins on Client's web pages and Website, at
Stratford Internet Technologies's own discretion.
iv) Custom or Advance Coding:
Stratford will maintain any custom coding or custom scripts that the Client's
supplies for their webpages or Website. This would include, but is not limited
to Java Script, CG1 Scripts, or advance HTML coding (DHTML, CSS, or Style
Sheets.). If the Client supplies the scripts to Stratford, then it is assumed
that these scripts and codes are ready to be setup, installed and will run
properly on the Client's webpages or Website. If Stratford has to remove the
script to get the Client's webpages working, recode them, or requires
reformatting of the webpage, the Client will be billed an hourly rate of
$150.00. If Stratford has to recode any existing script or supply new scripts
for the Client's web page, the Client will be billed an hourly rate of $150.00.
If Stratford supplies the scripts, there will be a fee of $150.00 an hour for
developing and setting them up on the Clients Web pages. Once the scripts are up
and running on the Client's web pages, there will be no additional charges to
maintain them on the Client's web pages, provided that there are no additional
changes to be made to the scripts.
v) Advertising and Search Engines:
Upon payment of all fees herein, the Client shall have the nonexclusive right to
reproduce the completed artwork as interior illustrations, appear on
merchandise, in the form a jacket of any packaging or software, on any book or
manual thereof which may print or publish for the packaging and instruction of
the merchandise which it sells or distributes for the life of this contract.
Stratford does not take responsibility for the placement of the Client's
webpages or website by selected Internet search engines. Stratford shall have
the right to add the Client's Website or webpages to its link section on the
Stratford Website, and to show any or all parts of the Client's Website as an
example of Stratford Internet Technologies' work, whether by directing people to
the Client's webpages or Website, or by showing the Client's Website on remote
computers or in Stratford's portfolio. Stratford reserves the right to place an
icon and link on the clients web site intending to redirect all visitors back to
the Stratford Website, on all webpages and websites that it creates and
maintains for the Client.
The Client shall have the right to show its Website or webpages to the public on
the World Wide Web, or Internet.
The Client shall also have the right to print the Website and use its likeness
in any print, video, software or multimedia marketing, provided that the client
does not make any changes or modifications to Stratford work. The Client shall
notify Stratford of any mass distribution of the likeness of its Website or
webpages that Stratford has created or modified.
vi) Additions:
The Client will receive at no extra charge, changes to text or graphics on their
Website for the duration of this contract (within the limits stated in the
contract), with all terms and conditions applying from the date of signing of
this contract, provided that the Client provides the text or graphics to
Stratford. All other changes to graphics,
Stratford Internet Technologies Inc. o Suite 500 - 1168 Hamilton Street
Vancouver, BC V6B 2S2 o Phone: 604-683-0250 o Fax: 604-683-7570
www.stratfordinternet.com
<PAGE>
text, coding & styles on the Client Website will be billed at $150.00 an hour,
in thirty (30) minute increments. The addition of any custom created graphics,
and images by Stratford, will be billed at an hourly rate of $150.00.
vii) Uploading and Installation:
Stratford will upload and install the changes to all of the Client's web pages
and Website on the Client' s server (Server fees and costs are not included with
fix rates).
viii) Non-disclosure and Security:
Stratford takes the privacy and security of its customers and it self very
seriously. The Client shall maintain all information obtained by Stratford in
the strictest confidences. Stratford shall not disclose or reveal any
information obtained from the client to any individual or other entity for the
life of this contract or until it has been released to the public by the Client.
All passwords, high security issues, ways of operation, business practices and
corporate secrets of the Client, shared with Stratford, shall remain in the
highest confidence and will not be reveled or given out by Stratford. The Client
shall also hold all information obtained from Stratford in the highest
confidence.
All business secrets, passwords, and high security issues, obtained by the
Client about the way Stratford operates shall not be given out or revealed to
anyone. Violation of these security issues can result in the penalty of the law.
ix) Copyrights and Ownership:
Any image, graphics, sound, music, custom coding or scripts, text and any other
material supplied by the Client to Stratford, will remain the property of its
owner, be it Client or a 3rd party. Stratford assumes, that any items or
materials supplied by the Client, for it's web pages or Website, are legally and
lawfully obtained by the Client. The Client shall assume all the legal rights
and responsibilities of obtaining any materials that it supplies to Stratford
for it's webpages. The Client shall be held responsible for any unlawfully
obtain ad materials and related fees, it supplies to Stratford for it's
webpages. This would include, but is not limited to, legal fees, court fees,
lawyer fees, copyright violation fees, and all fees that would apply from a
copyright infringement lawsuit. Stratford shall not reuse or modify any image,
graphics, sound, music, custom coding or scripts, text and any other material
supplied by the Client, for any other webpage or Website that Stratford works
on, without approval from the client.
Any image, graphics, sound, music, custom coding or scripts, text and any other
material supplied by Stratford shall remain the property of Stratford Internet
Technologies. Stratford shall give the right to the Client, to have any of its
copyright material used for the Client's web pages or Website for the length of
this contract. If this contract expires and the Client does not retain Stratford
to remain as their Website maintenance company. Stratford has the right to
remove all and any, image, graphics, sound, music, custom coding or scripts,
text and any other material that was supplied by Stratford during the length of
this contract. Stratford shall assume all rights and legal copyrights of any
items supplied to the Client. Stratford reserves the right to use the same
images, likeness of, or modified versions of any image, graphics, sound, music,
custom coding or scripts, text and any other material supplied by Stratford for
any other webpage or Website that Stratford is working or will work on. All
Stratford logo's, designs, images, and trademarks are copyright Stratford
Internet Technologies.
x) ISP and Server Charges:
The Client understands and realizes that this contract does not provide ISP
(Internet Service Provider) services or a Web Hosting server. That the Client
must obtain their own Internet connection and secure it's own web space on a Web
Server. That the charges for an ISP and Web Server are not included in the
prices listed here for web development. The Client will also provide Stratford
the location of the ISP or web Server that will be used for the maintenance of
it's Website or web pages. By providing, any passwords, codes, URLs,
directories, FTP addresses, user names or any other information that is directly
involved or needed for Stratford to perform it's obligations to the Client. The
Client or Stratford shall also inform the Client's ISP or web Host of the fact
that Stratford is
Stratford Internet Technologies Inc. o Suite 500 - 1168 Hamilton Street
Vancouver, BC V6B 2S2 o Phone: 604-683-0250 o Fax: 604-683-7570
www.stratfordinternet.com
<PAGE>
maintaining the Client's Website or web pages, and that the ISP shall allow
Stratford to work on and make changes on their servers or computers as needed.
xi) Understanding of Contract and Terms:
The Client understands and agrees with these terms that are listed. The Client,
by hiring Stratford and going into this agreement, acknowledges that he/she has
read this contract and will be bound to the terms of it. The Client acknowledges
that Stratford has the right to make this contract, and to terminate it if the
terms here as above are broken by the Client. Stratford will not give refunds or
exchanges for any terminated or canceled contracts. If the contract is
terminated for any reason, the Client shall be billed for work not yet paid for,
that was completed by Stratford.
xii) Headings:
Headings used in the agreement are for convenience only and shall not be used to
interpret or construe its provisions.
xiii) Notices:
All notices or other documents under this agreement shall be in writing and
delivered personally or fax received, or mailed by certified mail, postage
prepaid, addressed to Stratford and the Client at their last known addresses.
Any extras that are added on by the Client, will be billed by either an hourly
or page rate. All additions must be approved before, by the Client and submitted
to Stratford in writing and delivered personally or fax received, or mailed by
certified mail, postage prepaid, addressed to Stratford Internet Technologies.
xiv) Expenses:
Stratford reserves the right to charge the Client all and any additional fees or
expenses which might occur from the creation, maintenance or development of the
Client's website or web pages. In which Stratford incurs a cost or bill from an
outside agency, organization, company or any other entity. This would include,
but is not limited to: Travel Expenses, Long Distance Phone Calls, Obtaining
specific Programs or Plug-ins, Creating and producing all Printed materials
(such as; brochures, manuals, posters, etc....), Hiring outside contractors,
Obtaining Specific hardware or computer equipment, Obtaining specific licenses
or copyrights, Obtaining specific equipment, All reproduction cost of the
Client's website or webpages (such as; Reproducing on floppy disks, Zip disks,
CD-Roms, or any other portable computer medium.), Obtaining an ISP, Server or
Web Space for the Client. Stratford shall inform the Client before beginning any
development or obtaining any services, equipment or software, that would require
the need of an added Expense or Fee to the Client.
7) Stratford Billing and Payment Terms and Incentives
i) Payment and Billing Terms:
All orders and maintenance contracts must be accompanied by(a deposit of) at
least 50% of the overall cost of the order when submitted. All extra maintenance
and additions that are billed at an hourly rate shall be billed to the Client at
the end of each month. All invoices must be paid within thirty days (30) of
invoice date. All maintenance fees must be paid at least thirty days (30) before
termination of the maintenance contract.
All delinquent accounts will be assessed a $25 charge if payment is not received
within 30 days of the invoice date. If an account remains delinquent 31 days
after its invoice date, an additional 5% penalty will be added for each month of
the delinquency. Stratford reserves the right to remove or make unattainable any
webpage or Website or portion of the work, of a delinquent account until full
payment is received. (A setup and installation fee of $100.00 will apply for
restoring the Client's website and $25.00 per web page to be viewed on the Web
or Intenet or an in-house Intranet)
Stratford Internet Technologies Inc. o Suite 500 - 1168 Hamilton Street
Vancouver, BC V6B 2S2 o Phone: 604-683-0250 o Fax: 604-683-7570
www.stratfordinternet.com
Between: Stratford Internet Technologies Inc.
500-1168 Hamilton Street
Vancouver, B.C.
V613 2S2
And: Bingo.Com
702-543 Granville
Vancouver, B.C.
V6C I X8
Darren Little
President, Bingo.Com
Per: ------------------------------- witness --------------------------
Robert Craig
President, Stratford Internet Technologies, Inc.
Per: ------------------------------- witness --------------------------
Stratford Internet Technologies Inc. o Suite 500 - 1168 Hamilton Street
Vancouver, BC V6B 2S2 o Phone: 604-683-0250 o Fax: 604-683-7570
www.stratfordinternet.com
<PAGE>
Between: Stratford Internet Technologies Inc.
500-1168 Hamilton Street
Vancouver, B.C.
V613 2S2
And: Bingo.Com
702-543 Granville
Vancouver, B.C.
V6C I X8
Darren Little
President, Bingo.Com
Per: ------------------------------- witness --------------------------
Robert Craig
President, Stratford Internet Technologies, Inc.
Per: ------------------------------- witness --------------------------
Stratford Internet Technologies Inc. o Suite 500 - 1168 Hamilton Street
Vancouver, BC V6B 2S2 o Phone: 604-683-0250 o Fax: 604-683-7570
www.stratfordinternet.com
Exhibit 10.7
THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT RELATES TO AN OFFERING OF
SECURITIES IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS
DEFINED HEREIN) PURSUANT TO REGULATIONS UNDER THE UNITED STATES SECURITIES ACT
OF 1933, AS AMENDED (THE "1933 ACT").
NONE OF THE SECURITIES TO WHICH THIS PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT
(THE "AGREEMENT") RELATES HAVE BEEN REGISTERED UNDER THE 1933 ACT, AND, UNLESS
SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNMD STATES OR TO U.S. PERSONS
(AS DEFINED HEREIN) EXCEPT PURSUANT TO AN EXEMIMON FROM, OR IN A TRANSACTION NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT.
PRIVATE PLACEMENT SUBSCRIPTION AGREEMENT
(Foreign/Overseas Subscribers)
TO: BINGO.COM, INC., a Florida Corporation (the "Company")
Purchase of Securities
1. Subscription
1.1 The undersigned (the "Subscriber") hereby irrevocably subscribes for
and agrees to purchase 500,000 units (the "Units") at a price of US$2.00 per
Unit (such subscription and agreement to purchase being the "Subscription"), for
the total purchase price of US$1 Million (the "Subscription Proceeds"), which is
tendered herewith, on the basis of the representations and warranties and
subject to the terms and conditions set forth herein.
1.2 Each Unit will consist of one common share in the capital of the
Company (a "Share") and one non-transferrable share purchase warrant (a "Share
Purchase Warrant") subject to adjustment. One Share Purchase Warrant shall
entitle the holder thereof to purchase one common share in the capital of the
Company (a "Warrant Share"), as presently constituted, at a price of $2.00 per
Warrant Share for a period of the one (1) year commencing from the Closing (as
defined hereafter). The Shares, Share Purchase Warrants and the Warrant Shares
are referred to as the "Securities'.
1.3 The Company hereby irrevocably agrees to sell, on the basis of the
representations and warranties and subject to the terms and conditions set forth
herein, to the Subscriber the Units.
1.4 Subject to the terms hereof, the Subscription will be effective upon
its acceptance by the Company.
2. Payment
2.1 The Subscription Proceeds must accompany this Subscription and shall
be paid by certified cheque or bank draft drawn on a U.S. chartered bank made
payable to the Company. If the funds are wired to the Company or to its agent or
lawyers those agents or lawyers are authorized to immediately deliver the funds
to the Company
3. Documents Required from Subscriber
3.1 The Subscriber must complete, sign and return to the Company two (2)
executed copies of this Agreement.
<PAGE>
- 2 -
3.2 The Subscriber shall complete, sign and return to the Company as soon
as possible on request by the Company any documents, questionnaires, notices and
undertakings as may be required by regulatory authorities, stock exchanges and
applicable law.
4. Closing
4.1 Closing of the offering of the Units (the "Closing") shall occur on
February 12, 1999, or on such other date as may be determined by the Company
(the "Closing Date").
5. Acknowledgements of Subscriber
5.1 The Subscriber acknowledges and agrees that:
(a) the Securities have not been registered under the 1933 Act, or
under any state securities or "blue sky" laws of any state of the
United States, and, unless so registered, may not be offered or
sold in the United States or to U.S. Persons, as that term is
defined in Regulation S under the 1933 Act ("Regulation S"),
except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the 1933 Act;
(b) the decision to execute this Agreement and purchase the Units
agreed to be purchased hereunder has not been based upon any oral
or written representation as to fact or otherwise made by or on
behalf of the Company and such decision is based entirely upon a
review of any public information which has been filed by the
Company with the Securities and Exchange Commission in
compliance, or intended compliance, with applicable securities
legislation. If the Company has presented a business plan to the
Subscriber, the Subscriber acknowledges that the business plan
may not be achieved or be achievable;
(c) by execution hereof the Subscriber has waived the need for the
Company to communicate its acceptance of the purchase of the
Units pursuant to this Agreement;
(d) the Company is entitled to rely on the representations and
warranties and the statements and answers of the Subscriber
contained in this Agreement, and the Subscriber will hold
harmless the Company from any loss or damage it or they may
suffer as a result of the Subscriber's failure to correctly
complete this Agreement;
(e) it will indemnify and hold harmless the Company and, where
applicable, its respective directors, officers, employees,
agents, advisors and shareholders from and against any and all
loss, liability, claim, damage and expense whatsoever (including,
but not limited to, any and all fees, costs and expenses
whatsoever reasonably incurred in investigating, preparing or
defending against any claim, lawsuit, administrative proceeding
or investigation whether commenced or-threatened) arising out of
or based upon any representation or warranty of the Subscriber
contained herein or in any document furnished by the Subscriber
to the Company in connection herewith being untrue in any
material respect or any breach or failure by the Subscriber to
comply with any covenant or agreement made by the Subscriber to
theCompany in connection therewith;
(f) it has been advised to consult its own legal, tax and other
advisors with respect to the merits and risks of an investment in
the Units and with respect to applicable resale restrictions and
it is solely responsible (and the Company is not in any way
responsible) for compliance with applicable resale restrictions;
(g) the Securities are not listed on any stock exchange or automated
dealer quotation system and no representation has been made to
the Subscriber that any of the Securities will become listed on
any stock
<PAGE>
- 3 -
exchange or automated dealer quotation system; except that
currently certain market makers make market in shares of the
Company on the non-NASDAQ Over-the-Counter Bulletin Board;
(h) it is outside the United States when receiving and executing this
Subscription Agreement and is acquiring the Securities as
principal for its own account, for investment purposes only, and
not with a view to, or for, resale, distribution or
fractionalization thereof, in whole or in part, and no other
person has a direct or indirect beneficial interest in such
Securities;
(i) the Securities may not be offered or sold to a U.S. Person or for
the account or benefit of a U.S. Person (other than a
distributor) prior to the end of the Restricted Period (as
defined herein);
(j) the Company is under no obligation to register or qualify any of
the Securities on behalf of the Subscriber or to assist the
Subscriber in complying with any exemption from registration and
qualification under the 1933 Act and applicable state securities
laws, or any form of exemption therefrom;
(k) in the view of the Securities and Exchange Commission, the
statutory and regulatory basis for the exemption claimed for the
offer and sale of the Securities, although in technical
compliance with Regulation S, would nonetheless not be available
if the offering is part of a plan or scheme to evade the
registration provisions of the 1933 Act; and (1) this Agreement
is not enforceable by the Subscriber unless it has been accepted
by the Company.
6. Representations, Warranties and Covenants of the Subscriber
6.1 The Subscriber hereby represents and warrants to and covenants with
the Company (which representations, warranties and covenants shall survive the
Closing) that:
(a) it is not a U.S. Person or a resident of Canada;
(b) it is not acquiring the Securities for the account or benefit of,
directly or indirectly, a U.S. Person;
(c) the Subscriber has the legal capacity and competence to enter
into and execute this Subscription and to take all actions
required pursuant hereto and, if the Subscriber is a corporation,
it is duly incorporated and validly subsisting under the laws of
its jurisdiction of incorporation and all necessary approvals by
its directors, shareholders and others have been obtained to
authorize execution and performance of this Subscription on
behalf of the Subscriber;
(d) the entering into of this Subscription and the transactions
contemplated hereby do not result in the violation of any of the
terms and provisions of any law applicable to, or the constating
documents of, the Subscriber or of any agreement, written or
oral, to which the Subscriber may be a party or by which the
Subscriber is or may be bound,
(e) the Subscriber has duly executed and delivered this Subscription
and it constitutes a valid and binding agreement of the
Subscriber enforceable against the Subscriber;
(f) it is not an underwriter of, or dealer in, the securities of the
Company, nor is the Subscriber participating, pursuant to a
contractual agreement or otherwise, in the distribution of the
Securities;
(g) it is purchasing the Units for its own account or for an account
with respect to which it exercises sole investment discretion,
and that it or such account is an accredited investor as that
term is defined in Rule 501 under the 1933 Act (an "Accredited
Investor") acquiring the Units for investment purposes and not
for distribution;
<PAGE>
- 4 -
(h) it understands and agrees that none of the Securities has been
registered under the 1933 Act, and they may not be sold except as
permitted in paragraph 6. 1 (i) below;
(i) it understands and agrees (i) that the Units are being offered
only in a transaction not involving any public offering within
the meaning of the 1933 Act, and (ii) that (A) if within one year
after the date of original issuance of the Shares, or, in the
case of common shares issued upon the exercise of a Share
Purchase Warrant, within one year after the date of such
exercise, or if within three months after it ceases to be an
affiliate (within the meaning of Rule 144 under the 1933 Act
("Rule 144")) of the Company, it decides to resell, pledge or
otherwise transfer any of the Securities on which the legend as
set forth below appears, such Securities may be resold, pledged
or transferred only (1) to the Company, (2) so long as the
Securities are eligible for resale pursuant to Rule 144A under
the 1933 Act ("Rule 144A"), to a person whom the seller
reasonably believes is a qualified institutional investor buyer
("QIB") as that term is defined in Rule 144A(a)(1) that purchases
for its own account or for the account of a QIB to whom notice is
given that the resale, pledge or transfer is being made in
reliance on Rule 144A (as indicated by the box checked by the
transferor on the certificate of transfer on the reverse of the
Securities), (3) in an offshore transaction in accordance with
Regulation S (as indicated by the box checked by the transferor
on the certificate of transfer on the reverse of the Securities),
(4) to an Institutional Accredited Investor (as indicated by the
box checked by the transferor on the certificate of transfer on
the reverse of the Securities) who has certified to the Company
that such transferee is an Institutional Accredited Investor and
is acquiring such security for investment purposes and not for
distribution, (5) pursuant to an exemption from registration
provided by Rule 144 (if applicable) under the 1933 Act, or (6)
pursuant to an effective registration statement under the 1933
Act, in each case in accordance with any applicable securities
laws of any state of the United States, (B) the purchaser will,
and each subsequent holder is required to, notify any purchaser
of the Securities from it of the resale restrictions referred to
in clause (A) above, if then applicable, and (C) with respect to
any transfer of the Securities by an Institutional Accredited
Investor, such holder will deliver to the Company such
certificates and other information as it may reasonably require
to confirm that the transfer by it complies with the restrictions
set forth in this paragraph 6. 1 (i);
(j) it understands and agrees that the notification requirement
referred to in paragraph 6. 1 (i) above will be satisfied by
virtue of the fact that the legend set out in Schedule A will be
placed on the Securities unless otherwise agreed by the Company;
(k) it understands and agrees that offers and sales of the Securities
prior to the expiration of a period of one year after the date of
original issuance of the Securities (the "Restricted Period")
shall only be made in compliance with the safe harbor provisions
set forth in Regulation S, pursuant to the registration
provisions of the 1933 Act or an exemption therefrom, and that
all offers and sales after the Restricted Period shall be made
only in compliance with the registration provisions of the 1933
Act or an exemption therefrom;
(l) it will not sell or otherwise transfer the Securities except as
permitted under the 1933 Act and applicable state securities laws
or an exemption therefrom;
(m) it (i) is able to fend for itself in the Subscription; (ii) has
such knowledge and experience in business matters as to be
capable of evaluating the merits and risks of its prospective
investment in the Units; and (iii) has the ability to bear the
economic risks of its prospective investment and can afford the
complete loss of such investment;
(n) it understands and agrees that the legend set forth in paragraph
6. 10) above shall not be removed from any Securities purchased
by it pursuant to this Subscription unless there is delivered to
the Company such satisfactory evidence, Which may include an
opinion of counsel licensed to practice law in one of the states
of the United States of America, as may be reasonably required by
the Company, that such Securities are not " restricted" within
the meaning of Rule 144;
<PAGE>
- 5 -
(o) if it is acquiring the Units as a fiduciary or agent for one or
more investor accounts, it has sole investment discretion with
respect to each such account and it has full power to make the
foregoing acknowledgments, representations and agreements on
behalf of such account;
(p) it understands and agrees that the Company and others will rely
upon the truth and accuracy of the acknowledgments,
representations and agreements contained in sections 5 and 6
hereof and agrees that if any of such acknowledgments,
representations and agreements are no longer accurate or have
been breached, it shall promptly notify the Company;
(q) the Subscriber is not aware of any advertisement of any of the
Securities;
(r) no person has made to the Subscriber any written or oral
representations:
(i) that any person will resell or repurchase any of the
Securities;
(ii) that any person will refund the purchase price of any of the
Securities;
(iii)as to the future price or value of any of the Securities;
or
(iv) that any of the Securities will be listed and posted for
trading on any stock exchange or automated dealer quotation
system or that application has been made to list and post
any of the Securities of the Company on any stock exchange
or automated dealer quotation system.
6.2 In this Subscription, the term "U.S. Person" shall have the meaning
ascribed thereto in Regulation S.
7. Acknowledgement and Waiver
7.1 The Subscriber has acknowledged that the decision to purchase the
Units was solely made on the basis of publicly available information. The
Subscriber hereby waives, to the fullest extent permitted by law, any rights of
withdrawal, rescission or compensation for damages to which the Subscriber might
be entitled in connection with the distribution of any of the Securities.
8. Legending of Subject Securities
8.1 The Subscriber hereby acknowledges that a legend may be placed on the
certificates representing any of the Securities to the effect that the
securities represented by such certificates are subject to a hold period and may
not be traded until the expiry of such hold period except as permitted by
applicable securities legislation.
9. Costs
9.1 The Subscriber acknowledges and agrees that all costs and expenses
incurred by the Subscriber (including any fees and disbursements of any special
counsel retained by the Subscriber) relating to the purchase of the Units shall
be borne by the Subscriber.
10. Governing Law
10.1 This Subscription Agreement is governed by the laws of the state of
Florida and the federal laws of the United States applicable herein. The
Subscriber, in its personal or corporate capacity and, if applicable, on behalf
of each beneficial purchaser for whom it is acting, irrevocably attorns to the
jurisdiction of the state of Florida.
<PAGE>
- 6 -
11. Survival
11.1 This Subscription, including without limitation the representations,
warranties and covenants contained herein, shall survive and continue in full
force and effect and be binding upon the parties hereto notwithstanding the
completion of the purchase of the Units by the Subscriber pursuant hereto.
12. Assignment
12.1 This Subscription is not transferable or assignable.
13. Execution
13.1 The Company shall be entitled to rely on delivery by facsimile machine
of an executed copy of this Subscription and acceptance by the Company of such
facsimile copy shall be equally effective to create a valid and binding
agreement between the Subscriber and the Company in accordance with the terms
hereof.
14. Severability
14.1 The invalidity or unenforceability of any particular provision of this
Subscription shall not affect or limit the validity or enforceability of the
remaining provisions of this Subscription.
15. Entire Agreement
15.1 Except as expressly provided in this Agreement and in the agreements,
instruments and other documents contemplated or provided for herein, this
Agreement contains the entire agreement between the parties with respect to the
sale of the Units and there are no other terms, conditions, representations or
warranties, whether expressed, implied, oral or written, by statute or common
law, by the Company or by anyone else.
16. Notices
16.1 All notices and other communications hereunder shall be in writing and
shall be deemed to have been duty given if mailed or transmitted by any standard
form of telecommunication. Notices to the Subscriber shall be directed to the
address on page 7 and notices to the Company shall be directed to it at Suite
702 - 543 Granville Street, Vancouver, B.C. V6C IX8, attention of Darren Little.
17. Counterparts
17.1 This Agreement may be executed in any number of counterparts, each of
which, when so executed and delivered, shall constitute an original and all of
which together shall constitute one instrument.
IN WITNESS WIIEREOF the Subscriber has duly executed this Subscription as of the
date first above mentioned.
DELIVERY INSTRUCTIONS
I. Delivery - please deliver the Share certificates to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
- 7 -
2. Registration - registration of the certificates which are to be delivered
at closing should be made as follows:
- --------------------------------------------------------------------------------
(name)
- --------------------------------------------------------------------------------
(address)
3. The undersigned hereby acknowledges that it will deliver to the Company all
such additional completed forms in respect of the Subscriber's purchase of the
Units as may be required for filing with the appropriate securities commissions
and regulatory authorities.
Dotcom Fund, S.A.
--------------------------------------------
(Name of Subscriber - Please type or print)
--------------------------------------------
(Signature and, if applicable, Office)
P.O. 571, Providenciales, Turks & Caicos Wands
--------------------------------------------
(Address of Subscriber)
--------------------------------------------
(City, State or Province, Postal Code
of Subscriber)
BWI
--------------------------------------------
(Country of Subscriber)
<PAGE>
- 8 -
A C C E P T A N C E
The above-mentioned Subscription in respect of the Units is hereby accepted by
BINGO.COM, INC.
DATED at --------------, the --- day of --------------------, 1999.
BINGO.COM, INC.
Per: ----------------------------
Authorized Signatory
<PAGE>
- 9 -
SCHEDULE A - LEGEND
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE " 1933 ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE ONE YEAR ANNIVERSARY
OF THE ISSUANCE HEREOF OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY
AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN
EITHER CASE, OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE 1933 ACT ("RULE 144A-), TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH
REGULATION S UNDER THE 1933 ACT (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (4)
TO AN INSTITUTION THAT IS AN 'ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) UNDER THE 1933 ACT (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY) THAT
IS ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND
A CERTIFICATE IN THE FORM ATTACHED TO THIS SECURITY IS DELIVERED BY THE
TRANSFEREE TO THE COMPANY, (5) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE 1933 ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE 1933 ACT, OR (6)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, IN EACH CASE
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. AN INSTITUTIONAL ACCREDITED INVESTOR HOLDING THIS SECURITY AGREES THAT
IT WILL FURNISH TO THE COMPANY SUCH CERTIFICATES AND OTHER INFORMATION AS IT MAY
REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES
WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED
INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2) AN INSTITUTION THAT
IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER
THE 1933 ACT AND THAT IT IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND
NOT FOR DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (o)(2)
OF) RULE 902 UNDER REGULATION S UNDER THE 1933 ACT."
Exhibit 10.8
500,000 Common Shares Void after
Par Value of U.S. $0.01 February 11, 2000.
SHARE PURCHASE WARRANT
BINGO.COM, INC.
(the "Company")
This is to certify that, for value received, DOTCOM FUND, S.A. (the "Warrant
Holder") of Box 571, Providenciales, Turks and Caicos Islands, B.W.I. has the
right to purchase from the Company, upon and subject to the terms and conditions
hereinafter referred to, 500,000 common shares having a par value of U.S.$0.01
per share (the "Shares") in the capital of the Company. The Shares may be
purchased at a price of U.S. $2.00 per Share at any time up to 5:00 p.m. local
time in Vancouver, B.C. on February 11, 2000. The right to purchase the Shares
may be exercised in whole or in part, by the Warrant Holder only, at the prices
set forth above (the "Exercise Price") within the times set forth above by:
(a) completing and executing the Subscription Form attached hereto for the
number of the Shares which the Warrant Holder wishes to purchase, in
the manner therein indicated;
(b) surrendering this Warrant Certificate, together with the completed
Subscription Form, to Interwest Transfer Company, Inc., 1981 E. 4800
South, Ste. 100, Salt Lake City, Utah 84117, (the "Transfer Agent");
and
(c) paying the appropriate Exercise Price, in United States funds, for the
number of the Shares of the Company subscribed for, either by
certified cheque or bank draft or money order payable to the Company
in Vancouver, British Columbia or such other address as the Company
may advise by written notice to the address of the Warrant Holder set
forth above.
Upon surrender and payment, the Company shall issue to the Warrant Holder or to
such other person or persons as the Warrant Holder may direct, the number of the
Shares subscribed for and will deliver to the Warrant Holder, at the address set
forth on the subscription form, a certificate or certificates evidencing the
number of the Shares subscribed for. If the Warrant Holder subscribes for a
number of Shares which is less than the number of Shares permitted by this
warrant, the Company shall forthwith cause to be delivered to the Warrant Holder
a further Warrant Certificate in respect of the balance of Shares referred to in
this Warrant Certificate not then being subscribed for.
In the event of any subdivision of the common shares of the Company (as such
common shares are constituted on the date hereof) into a greater number of
common shares while this warrant is outstanding, the number of Shares
represented by this warrant shall thereafter be deemed to be subdivided in like
manner and the Exercise Price adjusted accordingly, and any subscription by the
Warrant Holder for Shares hereunder shall be deemed to be a subscription for
common shares of the Company as subdivided.
In the event of any consolidation of the common shares of the Company (as such
common shares are constituted on the date hereof) into a lesser number of common
shares while this warrant is outstanding, the number of Shares represented by
this warrant shall thereafter be deemed to be consolidated in like manner and
the Exercise Price adjusted accordingly, and any subscription by the Warrant
Holder for
<PAGE>
Shares hereunder shall be deemed to be a subscription for common shares of the
Company as consolidated.
In the event of any capital reorganization or reclassification of the common
shares of the Company or the merger or amalgamation of the Company with another
corporation at any time while this warrant is outstanding, the Company shall
thereafter deliver at the time of purchase of the Shares hereunder the number of
common shares the Warrant Holder would have been entitled to receive in respect
of the number of the Shares so purchased had the right to purchase been
exercised before such capital reorganization or reclassification of the common
shares of the Company or the merger or amalgamation of the Company with another
corporation.
If at any time while this, or any replacement, warrant is outstanding:
(a) the Company proposes to pay any dividend of any kind upon its common shares
or make any distribution to the holders of its common shares;
(b) the Company proposes to offer for subscription pro rata to the holders of
its common shares any additional shares of stock of any class or other
rights;
(c) the Company proposes any capital reorganization or classification of its
common shares or the merger or amalgamation of the Company with another
corporation; or (d) there is a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
The Company shall give to the Warrant Holder at least seven days prior written
notice (the "Notice") of the date on which the books of the Company are to close
or a record is to be taken for such dividend, distribution or subscription
rights, or for determining rights to vote with respect to such reorganization,
reclassification, consolidation, merger, amalgamation, dissolution, liquidation
or winding-up. The Notice shall specify, in the case of any such dividend,
distribution or subscription rights, the date on which holders of common shares
of the Company will be entitled to exchange their common shares for securities
or other property deliverable upon any reorganization, reclassification,
consolidation, merger, amalgamation, sale, dissolution, liquidation or
winding-up, as the case may be. Each Notice shall be delivered by hand,
addressed to the Warrant Holder at the address of the Warrant Holder set forth
above or at such other address as the Warrant Holder may from time to time
specify to the Company in writing.
The holding of this Warrant Certificate or the Warrants represented hereby does
not constitute the Warrant Holder a member of the Company.
Nothing contained herein confers any right upon the Warrant Holder or any other
person to subscribe for or purchase any Shares of the Company at any time
subsequent to 5:00 p.m. local time in Vancouver, B.C. on February 11, 2000 and
from and after such time, this Warrant and all rights hereunder will be void.
The Warrants represented by this Warrant Certificate are non-transferable. Any
common shares issued pursuant to this Warrant will bear the following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S.
SECURITIES ACT"). THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR
OTHERWISE
-2-
<PAGE>
TRANSFERRED ONLY (a) TO THE CORPORATION, (b) OUTSIDE THE UNITED STATES IN
COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT IF
AVAILABLE, (c) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 OR RULE
144A THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS, OR (d) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION
UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE LAWS AND REGULATIONS
GOVERNING THE OFFER AND SALE OF SECURITIES, AND THE HOLDER HAS, PRIOR TO
SUCH SALE, FURNISHED TO THE CORPORATION AN OPINION OF COUNSEL, OF
RECOGNIZED STANDING, OR OTHER EVIDENCE OF EXEMPTION, REASONABLY
SATISFACTORY TO THE COMPANY. HEDGING TRANSACTIONS INVOLVING THE SECURITIES
REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S.
SECURITIES ACT."
Time will be of the essence hereof.
This Warrant Certificate is not valid for any purpose until it has been signed
by the Company.
IN WITNESS WHEREOF, the Company has caused its common seal to be hereto affixed
and this warrant certificate to be signed by one of its directors as of the 12th
day of February, 1999.
BINGO.COM, INC.
Per:
- ----------------------------------
Darren Little, Director
-3-
<PAGE>
SUBSCRIPTION FORM
To: Bingo.com, Inc. (the "Company")
And to: the directors thereof.
Pursuant to the Share Purchase Warrant made the 12th day of February, 1999, the
undersigned hereby subscribes for and agrees to take up -- common shares having
a par value of U.S.$0.01 (the "Shares") in the capital of the Company, at a
price of U.S. $2.00 per Share for the aggregate sum of $-- (the "Subscription
Funds"), and encloses herewith a certified cheque, bank draft or money order
payable to the Company in full payment of the Shares.
The undersigned hereby requests that:
(a) the Shares be allotted to the undersigned;
(b) the name and address of the undersigned as shown below be entered in the
registers of members and allotments of the Company;
(c) the Shares be issued to the undersigned as fully paid and non-assessable
common shares of the Company; and
(d) a share certificate representing the Shares be issued in the name of the
undersigned.
Dated this ---- day of ----------------, 19--.
DIRECTION AS TO REGISTRATION:
(Name and address exactly as you wish them to appear on your share certificate
and in the register of members.)
Full Name(1): ------------------------------------------------------------------
Full Address: ------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
Signature of Subscriber(1): ----------------------------------------------------
Signature of Subscriber(1) guaranteed by:
If the name above differs from
the name of the Subscriber, then
please complete the following
guarantee: -----------------------------------------
Authorized Signature Number
NOTE: The signature to this subscription form must correspond with the name as
recorded on the warrant certificate in every particular without alteration or
enlargement or any change whatever. The signature of the person executing this
power must be guaranteed in a manner satisfactory to the Company's transfer
agent.
Exhibit 10.10
SUBSCRIPTION AGREEMENT - ss. 74(2)(4)
THIS AGREEMENT MADE EFFECTIVE AS OF THE 23rd DAY OF April, 1999 (the "Effective
Date").
BETWEEN:
BINGO.COM, INC.,
702 - 543 Granville Street,
Vancouver, British Columbia,
Canada, V6C 1X8;
(the "Company")
AND:
THE PARTY NAMED AS PURCHASER BELOW
(the "Purchaser")
WHEREAS:
A. The Purchaser wishes to subscribe for common shares 416,668 units, where each
unit consists of one common share and one non-transferable share purchase
warrant, of the Company (the "Securities");
B. It is the intention of the parties to this Agreement that this subscription
will be made pursuant to appropriate exemptions (the "Exemptions") from the
registration and prospectus or equivalent requirements of all rules, policies,
notices, orders and legislation of any kind whatsoever (collectively the
"Securities Rules") of all jurisdictions applicable to this subscription;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
covenants and agreements herein contained, the receipt of which is hereby
acknowledged, the parties covenant and agree with each other (the "Agreement")
as follows:
1. Representations and Warranties of the Purchaser
1.1 The Purchaser represents and warrants to the Company, and acknowledges that
the Company is relying on these representations and warranties to, among other
things, ensure that it is complying with all of the applicable Securities Rules,
that:
(a) the Purchaser is purchasing a sufficient number of Securities such
that the aggregate acquisition cost to the Purchaser of such
Securities is not less than $97,000, if the Purchaser is a resident of
British Columbia, Alberta, Manitoba, New Brunswick, Prince Edward
Island, Newfoundland or an International Jurisdiction, or $150,000 if
the Purchaser is a resident of Saskatchewan, Ontario, Quebec or Nova
Scotia, and the Purchaser is:
<PAGE>
(i) purchasing such Securities as principal for its own account and
not for the benefit of any other person; or
(ii) deemed to be acting as principal by virtue of it being:
A. a trust company or insurer which is authorized to carry on
business in B.C. under the Financial Institutions Act
(British Columbia) and which is acting as agent or trustee
for accounts that are fully managed by it within the meaning
of ss. 74(1)(a) of the Securities Act (British Columbia (the
"Act") and NIN #97/11 issued by the B.C. Securities
Commission (the "Commission"); or
B. a portfolio manager within the meaning of ss. 1(1) of the
Act which is carrying on business in B.C. and which is
registered or exempt from registration under the Act and
which is acting as agent for accounts that are fully managed
by it within the meaning of ss. 74(1)(b) of the Act and NIN
#97/11; or
C. a trust company, insurer or portfolio manager within the
meaning of BOR #97/4 issued by the Commission which is
acting, in the case of a trust company or insurer, as agent
or trustee or, in the case of a portfolio manager, as agent,
for accounts that are fully managed by it within the meaning
of BOR #97/4and NIN #97/11;
and the Purchaser is also deemed to be acting as principal under
the analogous provisions of any other Securities Rules having
application;
(b) the Purchaser has not been formed, created, established or
incorporated for the purpose of permitting the purchase of the
Securities without a prospectus by groups of individuals whose
individual share of the aggregate acquisition cost for such Securities
is less than $97,000, if the beneficial purchaser is a resident of
British Columbia, Alberta, Manitoba, New Brunswick, Prince Edward
Island, Newfoundland or an International Jurisdiction, or $150,000 if
the beneficial purchaser is a resident of Saskatchewan, Ontario,
Quebec or Nova Scotia;
(c) if the Purchaser is resident of an "International Jurisdiction" (which
means a country other than Canada or the United States) then:
(i) the Purchaser is knowledgeable of, or has been independently
advised as to, the applicable Securities Rules of the
International Jurisdiction which would apply to this
subscription, if there are any;
(ii) the Purchaser is purchasing the Securities pursuant to Exemptions
under the Securities Rules of that International Jurisdiction or,
if such is not applicable, the Purchaser is permitted to purchase
the Securities under the applicable Securities Rules of the
International Jurisdiction without the need to rely on
Exemptions; and (iii)
-2-
<PAGE>
(iii) the applicable Securities Rules do not require the Company to
make any filings or seek any approvals of any kind whatsoever
from any regulatory authority of any kind whatsoever in the
International Jurisdiction; and
the Purchaser will, if requested by the Company, deliver to the
Company a certificate or opinion of local counsel from the
International Jurisdiction which will confirm the matters referred to
in subparagraphs (ii) and (iii) above to the satisfaction of the
Company, acting reasonably;
(d) [intentionally left blank]
(e) the Purchaser acknowledges that the Company is relying on the
Exemptions in order to complete the trade and distribution of the
Securities and the Purchaser is aware of the criteria of the
Exemptions to be met by the Purchaser, including those referred to in
the Form 20A attached hereto and, if applicable, the Purchaser meets
those criteria;
(f) the Purchaser acknowledges that because this subscription is being
made pursuant to the Exemptions:
(i) the Purchaser is restricted from using certain of the civil
remedies available under the applicable Securities Rules;
(ii) the Purchaser may not receive information that might otherwise be
required to be provided to the Purchaser under the applicable
Securities Rules if the Exemptions were not being used; and
(iii) the Company is relieved from certain obligations that would
otherwise apply under the applicable Securities Rules if the
Exemptions were not being used;
(g) the Securities are not being subscribed for by the Purchaser as a
result of any material information about the Company's affairs that
has not been publicly disclosed;
(h) the offer and sale of these Securities was not accompanied by an
advertisement and the Purchaser was not induced to purchase these
Securities as a result of any advertisement made by the Company;
(i) if the Purchaser is a corporation, the Purchaser is a valid and
subsisting corporation, has the necessary corporate capacity and
authority to execute and deliver this Agreement and to observe and
perform its covenants and obligations hereunder and has taken all
necessary corporate action in respect thereof, or, if the Purchaser is
a partnership, syndicate, trust or other form of unincorporated
organization, the Purchaser has the necessary legal capacity and
authority to execute and deliver this Agreement and to observe and
perform its covenants and obligations hereunder and has obtained all
necessary approvals in respect thereof, and, in either case, upon the
Company executing and delivering this Agreement, this Agreement will
constitute a legal, valid and binding contract of the Purchaser
enforceable against the Purchaser in accordance with its terms and
neither the agreement resulting from such acceptance nor the
completion of the transactions contemplated hereby conflicts with, or
will conflict with, or results, or will result, in a breach or
violation of any law applicable to the Purchaser, any constating
-3-
<PAGE>
documents of the Purchaser or any agreement to which the Purchaser is
a party or by which the Purchaser is bound;
(j) the Purchaser is not, and was not at any time that it purchased the
Securities or received an offer to purchase the Securities pursuant to
this subscription, a "U.S. Person" as defined in Regulation S under
the United States Securities Act of 1933, as amended (the "U.S.
Securities Act"), which definition includes, but is not limited to, an
individual resident in the United States, an estate or trust of which
any executor or administrator or trustee, respectively, is a U.S.
person, and any partnership or corporation organized or incorporated
under the laws of the United States;
(k) the Purchaser did not receive any term sheet, subscription form or
other offering materials in connection with this subscription in the
United States, and did not execute or deliver any such subscription
form or other materials in the United States;
(l) no offers of Securities were made by any person to the Purchaser while
the Purchaser was in the United States; and
(m) the Purchaser is not acquiring Securities, directly or indirectly, for
the account or benefit of a U.S. Person or a person in the United
States.
1.2 The Company represents and warrants to the Purchaser, and acknowledges that
the Purchaser is relying on these representations and warranties in entering
into this Agreement, that:
(a) the Company is a valid and subsisting corporation duly incorporated
and in good standing under the laws of Florida;
(b) the Company is not a reporting issuer in British Columbia and any
Securities issued to the Purchaser will be subject to an indefinite
hold period in British Columbia unless an exemption from the
registration and prospectus requirements of the Securities Act is
available. Such an exemption may not be available;
(c) the Company's subsidiaries (the "Subsidiaries"), if any, are valid and
subsisting corporations and in good standing under the laws of the
jurisdictions in which they were incorporated;
(d) the common shares of the Company are eligible for quotation on the
N.A.S.D. OTC Bulletin Board ("OTC");
(e) upon their issuance, the Shares will be validly issued and outstanding
fully paid and non-assessable common shares of the Company registered
as directed by the Purchaser, free and clear of all trade restrictions
(except as may be imposed by operation of the applicable Securities
Rules) and, except as may be created by the Purchaser, liens, charges
or encumbrances of any kind whatsoever;
(f) upon their issuance, the Warrants will be validly created, issued and
outstanding, registered as directed by the Purchaser, and, upon their
issuance, the shares issued on the exercise of the Warrants will be
validly issued and outstanding fully paid and non-assessable common
shares of the Company registered as directed by the Purchaser, and
both will be free and clear of all trade restrictions (except as may
be imposed by
-4-
<PAGE>
operation of the applicable Securities Rules) and, except as may be
created by the Purchaser, liens, charges or encumbrances of any kind
whatsoever;
(g) the Company and its Subsidiaries, if any, hold all licences and
permits that are required for carrying on their business in the manner
in which such business has been carried on and the Company and its
Subsidiaries, if any, have the corporate power and capacity to own the
assets owned by them and to carry on the business carried on by them
and they are duly qualified to carry on business in all jurisdictions
in which they carry on business;
(h) all prospectuses, exchange offering prospectuses, offering
memorandums, filing statements, information circulars, material change
reports, shareholder communications, press releases and other
disclosure documents of the Company including, but not limited to,
financial statements, contain no untrue statement of a material fact
as at the date thereof nor do they omit to state a material fact
which, at the date thereof, was required to have been stated or was
necessary to prevent a statement that was made from being false or
misleading in the circumstances in which it was made;
(i) to the best of its knowledge, and except as publicly disclosed, there
are no material actions, suits, judgments, investigations or
proceedings of any kind whatsoever outstanding, pending or threatened
against or affecting the Company or its Subsidiaries, if any, at law
or in equity or before or by any Federal, Provincial, State, Municipal
or other governmental department, commission, board, bureau or agency
of any kind whatsoever and, to the best of the Company's knowledge,
there is no basis therefor;
(j) the Company has good and sufficient right and authority to enter into
this Agreement and complete its transactions contemplated under this
Agreement on the terms and conditions set forth herein; and
(k) to the best of its knowledge, the execution and delivery of this
Agreement, the performance of its obligations under this Agreement and
the completion of its transactions contemplated under this Agreement
will not conflict with, or result in the breach of or the acceleration
of any indebtedness under, or constitute default under, the constating
documents of the Company or any indenture, mortgage, agreement, lease,
licence or other instrument of any kind whatsoever to which the
Company is a party or by which it is bound, or any judgment or order
of any kind whatsoever of any Court or administrative body of any kind
whatsoever by which it is bound.
2. Subscription
2.1 The Purchaser hereby subscribes the subscription funds (the "Subscription
Funds") referred to below for and agrees to take up the units (a "Unit" or the
"Units") referred to below, where each Unit consists of one common share with a
par value of U.S. $0.01 in the capital stock of the Company (a "Share" or the
"Shares") and one non-transferable share purchase warrant (a "Warrant" or the
"Warrants"), at a price of U.S. $12.00 per Unit. Each Warrant will entitle the
Purchaser to subscribe for one additional common share of the Company at a price
of U.S. $12.00 per share at any time up to 5:00 p.m. local time in Vancouver,
B.C. on the first anniversary of the Closing Date, and thereafter at a price of
U.S. $15.00 per share at any time up to 5:00 p.m. local time on the second
anniversary of the Closing Date.
-5-
<PAGE>
2.2 On or before the 26th day of April, 1999, the Purchaser shall deliver the
Subscription Funds for the Securities subscribed for in the form of solicitor's
trust cheque, certified cheque, bank draft, money order or wire transfer payable
to "Campney & Murphy In Trust" as the solicitors for an on behalf of the
Company. The Company will be entitled to use the Subscription Funds immediately
upon the issuance of the certificates representing Securities to the Purchaser.
The Purchaser hereby confirms that upon the Company advising Campney & Murphy
that is has delivered such certificates, or caused such certificates to be
delivered to, the Purchaser, Campney & Murphy is hereby authorized and directed
to release and deliver the Subscription Funds to the Company without prior
notice to, consent of or action by the Purchaser.
3. Covenants, Agreements and Acknowledgments
3.1 The Purchaser covenants and agrees with the Company to:
(a) concurrent with the execution of this Agreement, if the Purchaser is
an individual (which means a natural person, but does not include a
partnership, unincorporated association, unincorporated syndicate,
unincorporated organization or trust, or a natural person in his
capacity as a trustee, executor, administrator or personal or other
legal representative), fully complete and execute the Form 20A
scheduled to this Agreement; and
(b) hold and not sell, transfer or in any manner dispose of the Shares
comprising the Units or any shares acquired on the exercise of the
Warrants comprising the Units unless the sale, transfer or disposition
is made in accordance with all applicable Securities Rules.
3.2 The Purchaser acknowledges and agrees that the Shares comprising the Units
and any shares acquired on the exercise of the Warrants comprising the Units
will be subject to such trade restrictions as may be imposed by operation of the
applicable Securities Rules, and the share certificate or certificates
representing the Shares comprising the Units and any shares acquired on the
exercise of the Warrants comprising the Units will bear such legends as may be
required by the applicable Securities Rules. The Purchaser further acknowledges
and agrees that it is the Purchaser's obligation to comply with the trade
restrictions in all of the applicable jurisdictions and the Company offers no
advice as to those trade restrictions.
3.3 The Purchaser acknowledges that:
(a) the Securities have not been registered under the U.S. Securities Act
and are "restricted securities" within the meaning of Rule 144 under
the U.S. Securities Act and may only be resold in accordance with the
provisions of Regulation S under the U.S. Securities Act, pursuant to
registration under the U.S. Securities Act, or pursuant to an
available exemption from such registration. The Purchaser understands
that the Company has no obligation or present intention of filing a
registration statement under the U.S. Securities Act in respect of the
Securities;
(b) hedging transactions involving the Securities may not be conducted
unless in compliance with the U.S. Securities Act;
(c) there may be material tax consequences to the Purchaser of an
acquisition or disposition of Securities. The Company gives no opinion
and makes no representation with respect to the tax consequences to
the Purchaser under United States, state, local or foreign tax law of
the Purchaser's acquisition or disposition of such securities;
-6-
<PAGE>
(d) the certificates evidencing the Securities issued in this subscription
will bear a legend in substantially the following form:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "1933 ACT"), OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED ONLY (i)
TO THE COMPANY; (ii) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH
REGULATION S UNDER THE 1933 ACT; (iii) IN ACCORDANCE WITH RULE 144
UNDER THE 1933 ACT; OR (iv) IN A TRANSACTION THAT IS OTHERWISE EXEMPT
FROM REGISTRATION UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES
LAWS, PROVIDED, PRIOR TO ANY SUCH SALE, TRANSFER OR ASSIGNMENT, THE
COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL, IN FORM ACCEPTABLE
TO THE COMPANY, THAT NO VIOLATION OF SUCH REGISTRATION PROVISIONS
WOULD RESULT FROM ANY PROPOSED TRANSFER OR ASSIGNMENT."
(e) the Company is required to refuse to register any transfer of the
Securities not made in accordance with the provisions of Regulation S
under the U.S. Securities Act, pursuant to registration under the U.S.
Securities Act, or pursuant to an available exemption from such
registration; and
(f) any person who exercises a Warrant will be required to provide to the
Company either:
(i) written certification that it is not a U.S. Person and that such
Warrant is not being exercised within the United States or on
behalf of, or for the account or benefit of, a U.S. Person; or
(ii) a written opinion of counsel or other evidence satisfactory to
the Company to the effect that the Warrants and the common shares
issuable on the exercise of the Warrants have been registered
under the 1933 Act and applicable state securities laws or are
exempt from registration thereunder.
3.4 The Company covenants and agrees with the Purchaser to file the documents
necessary to be filed under the applicable Securities Rules, including Forms 20
(or the forms equivalent thereto), within the required time.
4. [Intentionally left blank]
5. Closing
5.1 The completion of the subscription contemplated under this Agreement shall
occur on or before May 21, 1999 (the "Closing Date"). The Company shall deliver
to the Purchaser, no later than the Closing Date, a share certificate or
certificates representing the Shares and a warrant certificate or certificates
representing the Warrants comprising the Units to the Purchaser as provided for
below by the Purchaser. Upon the Company advising Campney & Murphy that it has
delivered these documents, or caused them to be delivered, Campney & Murphy is
authorized and directed by the parties hereto to release and deliver the
Subscription Funds to the Company without prior notice to, consent of or action
by the Purchaser.
-7-
<PAGE>
6. General
6.1 For the purposes of this Agreement, time is of the essence.
6.2 The parties hereto shall execute and deliver all such further documents and
instruments and do all such acts and things as may, either before or after the
execution of this Agreement, be reasonably required to carry out the full intent
and meaning of this Agreement.
6.3 This Agreement shall be subject to, governed by and construed in accordance
with the laws of British Columbia.
6.4 This Agreement may not be assigned by either party hereto.
6.5 This Agreement may be signed by the parties in as many counterparts as may
be deemed necessary, each of which so signed shall be deemed to be an original,
and all such counterparts together shall constitute one and the same instrument.
IN WITNESS WHEREOF the parties have executed this written Agreement effective as
of the Effective Date.
BINGO.COM, INC.
Per: --------------------------------
Authorized Signatory
TO BE COMPLETED BY THE PURCHASER:
A. Name and Address (Note: Cannot be a U.S. Address) The name and address (to
establish the Purchaser's jurisdiction of residence for the purpose of
determining the applicable Securities Rules) of the purchaser (the "Purchaser")
is as follows:
Goldberg Equity Fund
c/o McLean McNally
---------------------------------------------
Name
2001 Leeward Highway
---------------------------------------------
Street Address
Providenciales, Turks & Caicos Islands
---------------------------------------------
British West Indies
---------------------------------------------
Country
-8-
<PAGE>
B. Registration Instructions (Note: Cannot be a U.S. Address) The name and
address of the person in whose name the Purchaser's Securities are to be
registered is as follows (if the name and address is the same as was inserted in
paragraph A above, then insert "N/A"):
---------------------------------------------
Name
---------------------------------------------
Street Address
---------------------------------------------
---------------------------------------------
City and Province
---------------------------------------------
Country
------------------
Postal Code
C. Delivery Instructions (Note: Cannot be a U.S. Address) The name and address
of the person to whom the certificates representing the Purchaser's Securities
referred to in paragraph A above are to be delivered is as follows (if the name
and address is the same as was inserted in paragraph A above, then insert
"N/A"):
---------------------------------------------
Name
---------------------------------------------
Street Address
---------------------------------------------
---------------------------------------------
City and Province
---------------------------------------------
Country
------------------
Postal Code
-9-
<PAGE>
D. Subscription Amount The minimum is Cdn. $97,000 if the Purchaser is a
resident (as per the address inserted in paragraph A above) of British Columbia,
Alberta, Manitoba. New Brunswick, Prince Edward Island, Newfoundland or an
International Jurisdiction, or Cdn. $150,000 if the Purchaser is a resident of
Saskatchewan, Ontario, Quebec or Nova Scotia.:
Subscription Funds: U.S. $5,000,016
Number of Securities: 416,668 Units.
Note: The number of Securities must equal the Subscription Funds
divided by price of U.S. $12.00 per Security.
TO BE COMPLETED AND SIGNED BY THE PURCHASER:
GOLDBERG EQUITY FUND
- ------------------------------------
Name of the "Purchaser" - use the name inserted
in paragraph A above.
Per:
---------------------------------
Signature of Purchaser
---------------------------------
Title (if applicable)
-10-
<PAGE>
[ONLY COMPLETE IF PURCHASER IS AN INDIVIDUAL
(see paragraph 3.1(a) of the Subscription Agreement)]
This is the form required under section 135 of the Rules and, if applicable, by
an order issued under section 76 of the Securities Act.
FORM 20A (IP)
Securities Act
Acknowledgement of Individual Purchaser
1. I have agreed to purchase from Bingo.com, Inc. (the "Issuer") [Issuer]
--------------------------------- Units (the "Securities") of the Issuer.
[number and description of securities]
2. I am purchasing the Securities as principal and, on closing of the
agreement of purchase and sale, I will be the beneficial owner of the
Securities.
3. I [circle one] have/have not received an offering memorandum describing the
Issuer and the Securities.
4. I acknowledge that:
(a) no securities commission or similar regulatory authority has reviewed
or passed on the merits of the Securities, AND
(b) there is no government or other insurance covering the Securities, AND
(c) I may lose all of my investment, AND
(d) there are restrictions on my ability to resell the Securities and it
is my responsibility to find out what those restrictions are and to
comply with them before selling the Securities, AND
(e) I will not receive a prospectus that the British Columbia Securities
Act (the "Act") would otherwise require be given to me because the
Issuer has advised me that it is relying on a prospectus exemption,
AND
(f) because I am not purchasing the Securities under a prospectus, I will
not have the civil remedies that would otherwise be available to me,
AND
(g) the Issuer has advised me that it is using an exemption from the
requirement to sell through a dealer registered under the Act, except
purchases referred to in paragraphs 5(a) and 5(g), and as a result I
do not have the benefit of any protection that might have been
available to me by having a dealer act on my behalf.
5. I also acknowledge that: [circle one]
(a) I am purchasing Securities that have an aggregate acquisition cost of
$97,000 or more, OR
<PAGE>
(b) my net worth, or my net worth jointly with my spouse at the date of
the agreement of purchase and sale of the security, is not less than
$400,000, OR
(c) my annual net income before tax is not less than $75,000, or my annual
net income before tax jointly with my spouse is not less than
$125,000, in each of the two most recent calendar years, and I
reasonably expect to have annual net income before tax of not less
than $75,000 or annual net income before tax jointly with my spouse of
not less than $125,000 in the current calendar year, OR
(d) I am registered under the Act, OR
(e) I am a spouse, parent, brother, sister or child of a senior officer or
director of the Issuer, or of an affiliate of the Issuer, OR
(f) I am a close personal friend of a senior officer or director of the
Issuer, or of an affiliate of the Issuer, OR
(g) I am purchasing securities under section 128(c) ($25,000 - registrant
required) of the Rules, and I have spoken to a person [Name of
registered person: -------------------------------- (the "Registered
Person")] who has advised me that the Registered Person is registered
to trade or advise in the Securities and that the purchase of the
Securities is a suitable investment for me.
6. If I am an individual referred to in paragraph 5(b), 5(c) or 5(d), I
acknowledge that, on the basis of information about the Securities
furnished by the Issuer, I am able to evaluate the risks and merits of the
Securities because: [circle one]
(a) of my financial, business or investment experience, OR
(b) I have received advice from a person [Name of adviser:
-------------------------------- (the "Adviser")] who has advised me
that the Adviser is:
(i) registered to advise, or exempted from the requirement to be
registered to advise, in respect of the Securities, and
(ii) not an insider of, or in a special relationship with, the Issuer.
The statements made in this report are true.
DATED -------------------------, 199---.
----------------------------------------
Signature of Purchaser
----------------------------------------
Name of Purchaser
----------------------------------------
----------------------------------------
Address of Purchaser
-2-
Exhibit 10.11
416,668 Common Shares Void after
Par Value of U.S. $0.01 April 22, 2001.
SHARE PURCHASE WARRANT
BINGO.COM, INC.
(the "Company")
This is to certify that, for value received, GOLDBERG EQUITY FUND (the "Warrant
Holder") of 2001 Leeward Hwy., Providenciales, Turks & Caicos Islands, has the
right to purchase from the Company, upon and subject to the terms and conditions
hereinafter referred to, 416,668 common shares having a par value of U.S. $0.01
per share (the "Shares") in the capital of the Company. The Shares may be
purchased at a price of U.S. $12.00 per Share at any time up to 5:00 p.m. local
time in Vancouver, B.C. on April 22, 2000 and at a price of U.S.$15.00 per Share
at any time up to 5:00 p.m. local time in Vancouver, B.C. on April 22, 2001. The
right to purchase the Shares may be exercised in whole or in part, by the
Warrant Holder only, at the prices set forth above (the "Exercise Price") within
the times set forth above by:
(a) completing and executing the Subscription Form attached hereto for the
number of the Shares which the Warrant Holder wishes to purchase, in
the manner therein indicated;
(b) surrendering this Warrant Certificate, together with the completed
Subscription Form, to Interwest Transfer Company, Inc., 1981 E. 4800
South, Ste. 100, Salt Lake City, Utah 84117, (the "Transfer Agent");
and
(c) paying the appropriate Exercise Price, in United States funds, for the
number of the Shares of the Company subscribed for, either by
certified cheque or bank draft or money order payable to the Company
in Vancouver, British Columbia or such other address as the Company
may advise by written notice to the address of the Warrant Holder set
forth above.
Upon surrender and payment, the Company shall issue to the Warrant Holder or to
such other person or persons as the Warrant Holder may direct, the number of the
Shares subscribed for and will deliver to the Warrant Holder, at the address set
forth on the subscription form, a certificate or certificates evidencing the
number of the Shares subscribed for. If the Warrant Holder subscribes for a
number of Shares which is less than the number of Shares permitted by this
warrant, the Company shall forthwith cause to be delivered to the Warrant Holder
a further Warrant Certificate in respect of the balance of Shares referred to in
this Warrant Certificate not then being subscribed for.
In the event of any subdivision of the common shares of the Company (as such
common shares are constituted on the date hereof) into a greater number of
common shares while this warrant is outstanding, the number of Shares
represented by this warrant shall thereafter be deemed to be subdivided in like
manner and the Exercise Price adjusted accordingly, and any subscription by the
Warrant Holder for Shares hereunder shall be deemed to be a subscription for
common shares of the Company as subdivided.
In the event of any consolidation of the common shares of the Company (as such
common shares are constituted on the date hereof) into a lesser number of common
shares while this warrant is outstanding, the number of Shares represented by
this warrant shall thereafter be deemed to be consolidated in like manner and
the Exercise Price adjusted accordingly, and any subscription by the Warrant
Holder for
<PAGE>
Shares hereunder shall be deemed to be a subscription for common shares of the
Company as consolidated.
In the event of any capital reorganization or reclassification of the common
shares of the Company or the merger or amalgamation of the Company with another
corporation at any time while this warrant is outstanding, the Company shall
thereafter deliver at the time of purchase of the Shares hereunder the number of
common shares the Warrant Holder would have been entitled to receive in respect
of the number of the Shares so purchased had the right to purchase been
exercised before such capital reorganization or reclassification of the common
shares of the Company or the merger or amalgamation of the Company with another
corporation.
If at any time while this, or any replacement, warrant is outstanding:
(a) the Company proposes to pay any dividend of any kind upon its common shares
or make any distribution to the holders of its common shares;
(b) the Company proposes to offer for subscription pro rata to the holders of
its common shares any additional shares of stock of any class or other
rights;
(c) the Company proposes any capital reorganization or classification of its
common shares or the merger or amalgamation of the Company with another
corporation; or
(d) there is a voluntary or involuntary dissolution, liquidation or winding-up
of the Company;
The Company shall give to the Warrant Holder at least seven days prior written
notice (the "Notice") of the date on which the books of the Company are to close
or a record is to be taken for such dividend, distribution or subscription
rights, or for determining rights to vote with respect to such reorganization,
reclassification, consolidation, merger, amalgamation, dissolution, liquidation
or winding-up. The Notice shall specify, in the case of any such dividend,
distribution or subscription rights, the date on which holders of common shares
of the Company will be entitled to exchange their common shares for securities
or other property deliverable upon any reorganization, reclassification,
consolidation, merger, amalgamation, sale, dissolution, liquidation or
winding-up, as the case may be. Each Notice shall be delivered by hand,
addressed to the Warrant Holder at the address of the Warrant Holder set forth
above or at such other address as the Warrant Holder may from time to time
specify to the Company in writing.
The holding of this Warrant Certificate or the Warrants represented hereby does
not constitute the Warrant Holder a member of the Company.
Nothing contained herein confers any right upon the Warrant Holder or any other
person to subscribe for or purchase any Shares of the Company at any time
subsequent to 5:00 p.m. local time in Vancouver, B.C. on April 22, 2001 and from
and after such time, this Warrant and all rights hereunder will be void.
The Warrants represented by this Warrant Certificate are non-transferable. Any
common shares issued pursuant to this Warrant will bear the following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933
ACT"), OR THE SECURITIES LAWS OF ANY STATE, AND MAY BE OFFERED FOR SALE,
SOLD OR OTHERWISE TRANSFERRED OR ASSIGNED ONLY (i) TO THE COMPANY; (ii)
OUTSIDE THE UNITED STATES IN ACCORDANCE WITH REGULATION S UNDER THE 1933
ACT; (iii) IN
-2-
<PAGE>
ACCORDANCE WITH RULE 144 UNDER THE 1933 ACT; OR (iv) IN A TRANSACTION THAT
IS OTHERWISE EXEMPT FROM REGISTRATION UNDER THE 1933 ACT AND APPLICABLE
STATE SECURITIES LAWS, PROVIDED, PRIOR TO ANY SUCH SALE, TRANSFER OR
ASSIGNMENT, THE COMPANY SHALL HAVE RECEIVED AN OPINION OF COUNSEL, IN FORM
ACCEPTABLE TO THE COMPANY, THAT NO VIOLATION OF SUCH REGISTRATION
PROVISIONS WOULD RESULT FROM ANY PROPOSED TRANSFER OR ASSIGNMENT."
Time will be of the essence hereof.
This Warrant Certificate is not valid for any purpose until it has been signed
by the Company.
IN WITNESS WHEREOF, the Company has caused its common seal to be hereto affixed
and this warrant certificate to be signed by one of its directors as of the 23rd
day of April, 1999.
BINGO.COM, INC.
Per:
- ----------------------------------
Darren Little, Director
-3-
<PAGE>
SUBSCRIPTION FORM
To: Bingo.com, Inc. (the "Company")
And to: the directors thereof.
Pursuant to the Share Purchase Warrant made the 23rd day of April, 1999, the
undersigned hereby subscribes for and agrees to take up o common shares having a
par value of U.S. $0.01 (the "Shares") in the capital of the Company, at a price
of U.S. $o per Share for the aggregate sum of $o (the "Subscription Funds"), and
encloses herewith a certified cheque, bank draft or money order payable to the
Company in full payment of the Shares.
The undersigned hereby requests that:
(a) the Shares be allotted to the undersigned;
(b) the name and address of the undersigned as shown below be entered in the
registers of members and allotments of the Company;
(c) the Shares be issued to the undersigned as fully paid and non-assessable
common shares of the Company; and
(d) a share certificate representing the Shares be issued in the name of the
undersigned.
Dated this ---- day of ----------------, 19--.
DIRECTION AS TO REGISTRATION:
(Name and address exactly as you wish them to appear on your share certificate
and in the register of members.)
Full Name(1): ------------------------------------------------------------------
Full Address: ------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
------------------------------------------------------------------
Signature of Subscriber(1): ----------------------------------------------------
Signature of Subscriber(1) guaranteed by:
If the name above differs from
the name of the Subscriber, then
please complete the following
guarantee: -----------------------------------------
Authorized Signature Number
NOTE: The signature to this subscription form must correspond with the name as
recorded on the warrant certificate in every particular without alteration or
enlargement or any change whatever. The signature of the person executing this
power must be guaranteed in a manner satisfactory to the Company's transfer
agent.
Exhibit 10.12
ANTIGUA AND BARBUDA
THIS DECLARATION OF TRUST is made on the ____ day of _____, 1999 by DOUGLAS
ALBERT LORNE MCLEOD of 688-6 Ishikawa, Kanagawa, Fujisawa City, Japan
(hereinafter called "The Trustee").
WHEREAS STAR COMMUNICATIONS, LTD. Now known as BINGO.COM (ANTIGUA), INC. was
registered as an Antigua Company on the 7th day of April 1999 pursuant to the
International Business Corporations Act, Cap. 222 of the Laws of Antigua and
Barbuda.
AND WHEREAS DOUGLAS ALBERT LORNE MCLEOD is the registered holder of 820 shares
of US $1.00 each par value common stock in the capital of STAR COMMUNICATIONS
LIMITED now known as BINGO.COM (ANTIGUA), INC. (hereinafter called "The
Company").
AND WHEREAS BINGO.COM, INC. incorporated under the laws of the State of Florida
and having a business office at Suite 700, 543 Granville Street, Vancouver,
British Columbia, Canada (hereinafter called "the donee") is the beneficial
owner of the shares aforesaid.
NOW THIS DEED WITNESSETH as follows:
1. The Trustee hereby declares himself as trustee of the said shares for the
donee absolutely and that he will henceforth hold the said shares upon
trust:
(i) To pay, apply, dispose of and deal with the said shares and all
dividends, bonuses and other monies to which they may at any time
hereafter become entitled in respect of the same or any of them and to
exercise all voting and other powers and rights attached or hereafter
to be attached to the same or any of them in such manner in all
respects as the donee shall from time to time direct; and
(ii) If and whenever requested by the donee so to do, to use their best
endeavours to procure the said shares to be transferred in the names
of the donee in the books of the Company and to execute and do all
instruments and things necessary for that purpose.
2. The power of appointing a new trustee or new trustees hereof is vested in
the donee.
3. Notwithstanding any of the Trust powers and provisions herein contained,
the donee shall have power at any time to release any power, right or
discretion vested in the Trustee under the Trusts hereof.
4. The Trustee shall be entitled to charge and be paid all usual professional
and other charges for business transacted, time spent and acts done by him
or any other partner of his in connection with the Trusts hereof, including
acts which he is not being in any profession or business could have done
personally.
<PAGE>
5. It is hereby declared that this Trust is created for the purpose of holding
shares that may be vested in the Trustee to be held upon the Trusts hereof.
6. This Trust is established under the Laws of Antigua and Barbuda and the
construction and effect of each and every provision hereof shall be subject
to the exclusive jurisdiction of and construed only according to the laws
of Antigua and Barbuda.
7. This deed shall be executed in duplicate as an original and one duplicate
copy each of which shall constitute one and the same instrument and the
original Deed shall be kept by the Trustee.
IN WITNESS WHEREOF the Trustee has set his Hand the day and year herein before
written.
SIGNED, SEALED AND DELIVERED by )
DOUGLAS ALBERT LORNE MCLEOD )
Before and in the presence of: ) --------------------------------
)
)
- -----------------------------------)
Exhibit 21.1
Bingo.com (Canada) was incorporated in the Province of British Columbia on
February 10, 1998 as 559262 B.C. Ltd., which by Certificate of Change of
Name dated February 11, 1999 changed its name to Bingo.com (Canada)
Enterprises Inc.
Bingo.com (Antigua) was incorporated under the laws of Antigua and Barbuda
on April 7, 1999 as Star Communications Ltd., which by Certificate of
Amendment dated April 21, 1999 changed its name to Bingo.com. (Antigua),
Inc.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Dec-31-1998
<CASH> 158
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 158
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 158
<CURRENT-LIABILITIES> 159
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 4
<TOTAL-LIABILITY-AND-EQUITY> 158
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 7
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
