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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 2000
000-26319
Commission File Number
BINGO.COM, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 12-1233338
- ------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Suite C200, 4223 Glencoe Avenue, Marina Del Rey CA 90292
(Address and zip code of principal executive offices)
Registrant's telephone number: (310) 301-4171
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months, and (2) has been subject to such requirements for
the past 90 days.
YES [ ] NO [X]
Indicate the number of shares outstanding of each of the registrants classes of
common stock, as of the latest practicable date: 10,057,668 shares as of May 10,
2000.
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BINGO.COM, INC.
Quarterly Report on Form 10-Q
for the Quarter ended March 31, 2000
Table of Contents
<TABLE>
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Page
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PART I - FINANCIAL INFORMATION...............................................................i
Item 1. Financial Statements..............................................................1
Notes to the Consolidated Financial Statements.............................................4
For the Three Month Period Ended March 31, 2000............................................4
Note 1 - Basis of Presentation..............................................................4
Note 2 - Going Concern.......................................................................4
Note 3 - Related Party Transactions..........................................................4
Note 4 - Common Stock........................................................................4
Note 5 - Loss Per Share......................................................................5
Note 6 - Discontinued Operations.............................................................5
Note 7 - Contingencies.......................................................................5
Item 2. Managements Discussion and Analysis of Financial Condition and Results of
Operations.........................................................................5
Business.....................................................................................5
Background.................................................................................5
Business Strategy..........................................................................6
Employees..................................................................................6
Properties.................................................................................6
Forward Looking Statements...................................................................6
Results of Operations........................................................................7
First Quarter Ended March 31, 2000 Compared to March 31, 1999..............................7
Liquidity and Capital Resources..............................................................8
PART II - OTHER INFORMATION..................................................................8
Item 1. Legal Proceedings..................................................................8
Item 2. Changes in Securities..............................................................8
Item 3. Defaults Upon Senior Securities....................................................9
Item 4. Submission of Matters to a Vote of Security Holders................................9
Item 5. Other Information..................................................................9
Item 6. Exhibits and Reports on form 8-K...................................................9
SIGNATURES...................................................................................9
</TABLE>
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BINGO.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------
MARCH 31, MARCH 31,
2000 1999
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<S> <C> <C>
Revenues $ 4,280 $ --
Expenses
General and administrative 363,304 --
Marketing and advertising 100,887
Royalties - domain name 0
Software & website development 44,884 --
----------- -----------
Loss from continuing operations (504,794) --
Loss from discontinued operations 0
Other income (expense)
Depreciation (11,088) --
Net interest 21,360 --
----------- -----------
Net loss $ (494,522) $ --
=========== ===========
Basic and dilutive loss per share $ (0.05) $ --
Weighted average shares 9,987,168
===========
</TABLE>
The accompanying notes are an integral part of these financial statements
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BINGO.COM, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31,
2000 1999
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<S> <C> <C>
ASSETS
Current
Cash and cash equivalents $ 2,675,483 3,382,529
Accounts receivable ( allowance - nil ) 113,954 102,239
Prepaid expenses and security deposits 144,192 83,030
----------- -----------
2,933,629 3,567,798
----------- -----------
Equipment
Office and computer equipment 123,239 123,506
Software development & website equipment 149,750 157,889
Less: - accumulated depreciation (30,320) (59,727)
----------- -----------
242,669 221,668
----------- -----------
Domain name rights 1,200,905 1,200,905
----------- -----------
Total assets $ 4,377,203 4,990,371
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable & Accrued Liabilities $ 151,832 187,914
Loan payable 0 53,912
Provision for discontinued operations 19,445 60,000
Capital leases - current portion 16,370 14,323
----------- -----------
187,647 316,149
----------- -----------
Capital leases 3,581 9,494
----------- -----------
191,228 325,643
Stockholders' Equity
Common stock - $0.001 par value (1998 - $1.00 par value)
Authorized: 50,000,000 shares
Issued 10,057,668 shares 10,058 9,917
Additional paid - in capital 7,590,225 7,347,803
Shares allotted for issue 0 226,563
Accumulated deficit (3,409,964) (2,915,444)
Cumulative translation adjustment (4,343) (4,111)
----------- -----------
4,185,976 4,664,728
----------- -----------
$ 4,377,203 4,990,371
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
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BINGO.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS TWELVE MONTHS
ENDED ENDED
MARCH 31, 2000 DECEMBER 31, 1999
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<S> <C> <C>
Cash flows from operating activities:
Net loss $ (494,522) --
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation 11,088 --
Discontinued operations 0
Change in operating assets and liabilities:
Accounts receivable (11,715) --
Prepaid expenses & security deposits (61,162) --
Accounts payable (36,082) --
Loan payable (53,912) --
------------------ ------------------
Cash used by continuing operations (646,305) --
------------------
Discontinued operations -- --
Provision for discontinued operations (40,555) --
------------------ ------------------
Cash used by discontinued operations (40,555)
------------------ ------------------
Net cash used by operating activities (686,860)
------------------ ------------------
Cash flows from investing activities:
Equipment purchases (32,087) --
Domain name rights 0 --
------------------ ------------------
Net cash used in investing activities (32,087) --
------------------ ------------------
Cash flows from financing activities:
Capital leases 0 --
Capital lease repayments (3,866)
Proceeds from issuance of common stock 242,563
Shares allotted for issue (226,563)
Share issuance costs 0 --
------------------ ------------------
Net cash provided by financing activities 12,133 --
------------------ ------------------
Net decrease in cash and cash equivalents (706,814) --
Effect of exchange rates on cash and cash equivalents (232)
Cash and cash equivalents at beginning of period 3,382,529 --
------------------ ------------------
Cash and cash equivalents at end of period $ 2,675,483 --
================== ==================
Supplemental disclosure of cash flow information:
Cash paid during the period for interest $ 476 --
Non cash investing and financing activities:
Issuance of common stock for development of web site $ 242,563 --
</TABLE>
The accompanying notes are an integral part of these financial statements
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE-MONTH PERIOD ENDED MARCH 31, 2000
NOTE 1 - BASIS OF PRESENTATION
These unaudited financial statements have been prepared by management in
accordance with the instructions to Form 10-Q. Therefore, they do not include
all information and footnotes necessary for a complete presentation of financial
position, results of operations, cash flows, and stockholders equity in
conformity with generally accepted accounting principles. Except as disclosed
herein, there has been no material change in the information disclosed in the
notes to the financial statements included in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1999. In the opinion of
management, all adjustments considered necessary for a fair presentation of the
results of operations and financial position have been included and all such
adjustments are of a normal recurring nature. Operating results for the quarter
ended March 31, 2000 are not necessarily indicative of the results that can be
expected for the year ending December 31, 2000.
NOTE 2 - GOING CONCERN
These financial statements have been prepared on the basis that the Company will
continue as a going concern. The Company has incurred significant operating
losses since its incorporation and must raise additional equity financing to
finance its operations. However, there can be no assurance that funds required,
if any, would be available to the Company when required or on terms acceptable
to the Company. Failure to obtain acceptable equity financing could have a
material adverse effect on the Company's business, financial condition or
operations and these financial statements do not include any adjustment that
could result therefrom.
NOTE 3 - RELATED PARTY TRANSACTIONS
At March 31, 2000 the Company's President CEO and sole Director owed the Company
$43,413.22. The note has been fully paid with no balance owing. The loan was
unsecured, non-interest
bearing and was repayable in monthly installments of $5,833 Canadian Dollars
(approximately $4,022 US dollars).
NOTE 4 - COMMON STOCK
The authorized number of shares of the Company is 50,000,000 shares of common
stock with a par value of $0.001 per share. At March 31, 2000 there were
10,057,668 shares of common stock issued and outstanding.
During the first quarter ended March 31, 2000 the Company issued 125,000
restricted shares in a private placement to an unrelated party at a deemed price
of $1.8125 per share, for initial software and website development services
performed in 1999. The Company also issued 16,000 restricted shares in a private
placement to an unrelated company for investor relations services.
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At March 31, 2000 the Company had 416,668 warrants outstanding to purchase
shares of the Company, exercisable at a price of $12.00 per share before April
22, 2000 or $15.00 per share before April 22, 2001.
The Company did not grant any stock options during the quarter.
NOTE 5 - LOSS PER SHARE
Net loss per share is determined on the weighted average number of common shares
and common share equivalents outstanding. Outstanding stock options have not
been included in the computation of diluted loss per share as the inclusion of
these securities would be antidilutive. Consequently, no differences exist
between basic and diluted loss per share for the period. The weighted average
number of common shares for the first quarter ended March 31, 2000 was
10,057,668 shares.
NOTE 6 - DISCONTINUED OPERATIONS
During the first quarter ended March 31, 2000, the Company utilized $40,555 of
the provision for discontinued operations associated with the wind-up of its
Antigua-based online gaming operations. The Company officially closed the
operation in the first quarter. Management believes the reserve is sufficient
for the remaining obligations.
NOTE 7 - CONTINGENCIES
The agreement in principle with Paramount Trading, Inc., an unrelated party, to
license the Company's gaming software was terminated by mutual consent of the
parties.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
BUSINESS
Background
Bingo.com, Inc. is in the business of developing and operating a Bingo based
website designed to provide a variety of free games and other forms of
entertainment, including chat, sweepstakes, BingoGrams, and more. We are
attempting to create a value-based web site, planned to include an extensive
database of registered users and their buying preferences.
In March, 2000, we relocated our principal executive offices to Los Angeles,
California to facilitate the implementation of our revised business plan, which
focuses on the on-line entertainment industry. The relocation provides us with
access to the industry talent pool, a larger prize sponsor base and audience for
future revenue generation, financing and partnering opportunities.
The Canada and Wyoming subsidiaries may continue to support the implementation
of certain segments of our business plan.
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Our common shares are currently quoted on the National Association of Securities
Dealers' Over-The-Counter Bulletin Board (also known as the "OTCBB") under the
symbol "BIGR." We have not been subject to any bankruptcy, receivership or other
similar proceeding.
Business Strategy
Our objective is to become the premier online destination for web-based bingo
entertainment and a leading entertainment destination on the internet. We
experienced average monthly growth rates for new registered users of
approximately 65% during the first quarter. We had 134,184 registered users as
at April 30, 2000. We have been attracting in excess of 15,000 unique visitors
per day, 8 million hits per day, and an average visitor session length of more
than 50 minutes. We intend to continue to build our registered user database
through online and offline marketing strategies, promotional opportunities and
strategic alliances.
Employees
As of March 31, 2000 we had seven full-time employees and three regular
consultants located in our principal executive offices at C200, 4223 Glencoe
Avenue, Marina Del Rey, California to facilitate implementation of the new
business plan. From time to time, we may retain consultants and consulting firms
to provide us with specialized expertise in development, marketing, software and
telecommunications technologies.
Properties
In 1999, our principal business offices were located 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.
In January of 2000 we entered into a short term lease of three months, expiring
April 30, 2000 and subsequent thereto are renting the space on a month to month
basis, at C200 - 4223 Glencoe Avenue, Marina del Rey, California. Base rent
payments are $6341 per month. Bingo.com expects to make this or a similar leased
space the principal offices of the company. Subsequent to the end of the
quarter, we subleased the Vancouver offices. We do not presently own or lease
any other property or real estate.
FORWARD LOOKING STATEMENTS
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 Quarterly Report.
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RESULTS OF OPERATIONS
FIRST QUARTER ENDED MARCH 31, 2000 COMPARED TO MARCH 31, 1999
The last twelve months were effectively our first full year of reportable
operations. Initially, our strategy was to develop an online gaming operation.
In August, 1999 our board of directors decided to prohibit gaming in
jurisdictions with laws prohibiting online gaming. From August to December,
1999, we revised our business plan and focused on the alternative of developing
our prize-based, play-for-free games emphasizing entertainment. In December of
1999 we launched a beta version of our first play-for-free game and our revamped
website. Subsequent to our year ended December 31, 1999, our board announced the
discontinuance of our Antigua-based gaming operation. We applied all of our
resources to our revised business plan.
Our Registration Statement on Form 10 was filed on August 31, 1999. We produced
our first quarterly financial statements for the second quarter ended June 30,
1999. As a result, we believe that a comparison of our results for the quarter
ended March 31, 2000 versus other periods in 1999 is not meaningful.
During the first quarter ended March 31, 2000 we generated revenues of $ 4,280
from interest and initial advertising. Of total expenses of $ 509,075 for
continuing operations for the first quarter, $363,304 was for general and
administrative expenses associated with the ramp-up and refinement of our
operations. General and administrative expenses consist primarily of payroll and
consultant costs for the Company's executive staff, accounting and
administrative personnel, premises costs, legal and professional fees, insurance
and other general corporate and office expenses. General and administrative
expenses also include certain of the costs associated with the relocation of our
executive offices to Marina Del Rey, California.
Marketing and advertising expenses were $100,887 for the first quarter ended
March 31, 2000. This amount includes funds expended for awareness advertising
and banner advertising for our gaming site. The balance of marketing and
advertising expenses consists of payroll and consultant's costs, travel and
office costs.
Our net loss from continuing operations for the first quarter ended March 31,
2000 was $504,794, including $44,884 of software developments costs and website
improvements. We expect similar or greater losses into the foreseeable future as
we build our operations.
We experienced a net loss of $494,522 or $0.05 per share for the first quarter
ended March 31, 2000, including net interest income earned on our surplus cash
balances of $21,360. We expect similar or greater losses into the foreseeable
future as we continue to develop our website and the technologies related to new
games. Revenue generation and operating income are dependent upon the
utilization of significant cash resources for advertising and promotion, new
games, and our future successes at attracting prize sponsors and advertising
customers.
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LIQUIDITY AND CAPITAL RESOURCES
As at March 31, 2000, we had cash and cash equivalents of $2,675,483 versus
$3,382,529 at the beginning of the year. Our working capital position was
$2,745,982. We used $646,305 for continuing operating activities, $40,555 for
our discontinued Antigua-based gaming operations. Our investing activities were
$32,087 for the purchase of office, computer and software development equipment
and $3,866 was utilized for capital lease repayments under financing activities.
We currently project that available cash balances will be sufficient to fund our
operations for the remainder of the fiscal year, provided that we do not
undertake significant advertising campaigns or identify and complete any
acquisitions. We are currently seeking additional equity financing to implement
planned investments in advertising, software development and personnel, to
expand our office in the U.S. and to preserve our working capital. We have not
made a final determination regarding the terms and conditions of an equity
placement, nor can we provide any assurance that such financing will be
available on acceptable terms, if at all. Our inability to raise additional
financing would have a material adverse effect on our business and on our
operations.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On July 28, 1999, we were advised by legal counsel for Pan Pacific
Communications, an advisor to Bingo.com Inc., that we allegedly breached an
agreement between the parties. Pan Pacific demanded payment, on or before August
5, 1999, in the amount of $34,820, the alleged balance owed by us to Pan
Pacific, and informed us that they would commence legal action seeking the
damages with interest and costs. We believe the claim is without merit and
intend to vigorously defend the claim. As of May 10, 2000, we are not aware that
any legal action has been commenced against us.
To the best of our knowledge, we are not subject to any other 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 2. CHANGES IN SECURITIES
On February 18, 2000, we issued 125,000 restricted shares of our common stock to
Stratford Internet Technologies Inc. in a private placement at a deemed price of
$1.8125 per share, or an aggregate value of $226,563. We issued the shares to
Stratford for initial software development related to our website. The services
were performed in 1999 and we recorded the allocation of the shares in our year
end financial statements for 1999.
On February 21, 2000 we entered into an agreement with Market Pathways Financial
Relations Incorporated to provide investor relations services, including
services for shareholder communications, institutional support systems, lead
generation and media relations. The agreement is for a one year term but may be
terminated on sixty days notice subsequent to the first ninety
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'
days. While the agreement is in effect, we will pay Market Pathways $6,000 per
month plus pre-approved expenses. Market Pathways will also be entitled to
64,000 shares of our common stock of which 16,000 shares were issued on the date
of the agreement, and the balance vesting equally on May 15, 2000, August 15,
2000 and November 15, 2000 so long as the agreement is in effect.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
27.1 Financial Data Schedule.
SIGNATURES
Pursuant to the requirements of section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized:
By: /s/ Shane Murphy
---------------------------------
Shane Murphy
President, Chief Executive Officer, Sole Director
and Principal Accounting Officer
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 2,675,483
<SECURITIES> 0
<RECEIVABLES> 113,954
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,933,629
<PP&E> 242,669
<DEPRECIATION> 30,320
<TOTAL-ASSETS> 4,377,203
<CURRENT-LIABILITIES> 187,647
<BONDS> 0
10,057,668
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 4,377,203
<SALES> 0
<TOTAL-REVENUES> 4,280
<CGS> 504,794
<TOTAL-COSTS> 504,794
<OTHER-EXPENSES> 11,088
<LOSS-PROVISION> (494,522)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (494,522)
<INCOME-TAX> 0
<INCOME-CONTINUING> (494,522)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (494,522)
<EPS-BASIC> (.05)
<EPS-DILUTED> (.05)
</TABLE>
