<PAGE>
U.S. Securities and Exchange Commission
Washington, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________________ to ____________________
Commission File No. 0-10519
Bingo & Gaming International, Inc.
(Name of Small Business Issuer in its Charter)
OKLAHOMA 73-1092118
(State or Other Jurisdiction of (IRS Employer ID No.)
incorporation or organization)
11006 Metric Blvd.
Austin, Texas 78758
(Address of Principal Executive Offices)
(512) 490-0065
(Issuer's Telephone Number, including Area Code)
8310 Capital of Texas Hwy. North Suite 310
Austin, Texas 78759
(Former Address of Principal Executive Office)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
There were 8,349,200 shares of common stock, $.001 par value, outstanding as
of September 30, 1996
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
BINGO & GAMING INTERNATIONAL, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
(unaudited)
----------- ----
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 113,287 $ 74,062
Accounts receivable 82,958 43,606
Deferred offering costs 31,280 25,510
Prepaid expenses 2,500 2,940
Inventory 23,796 - 0 -
------ -----
Total current assets 253,821 146,118
Property and equipment, net 114,751 167,737
Deferreds and intangibles, net 41,884 56,187
Note receivable 60,863 83,000
Other assets 34,071 18,766
------ ------
Total Assets $505,390 $471,808
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 113,087 $ 120,136
Accrued expenses 105 45
Current maturities of long-term debt 168,623 117,054
------- -------
Total current liabilities 281,815 237,235
Long-term debt 115,801 82,801
Common stock, $.001 par value:
Authorized - 70,000,000 shares
Issued and outstanding -
8,349,200 shares 8,349 8,349
Additional paid-in capital 363,204 363,204
Accumulated deficit (263,779) (219,781)
--------- ---------
Total stockholders' equity 107,774 151,772
------- -------
Total Liabilities
and Stockholders' Equity $505,390 $471,808
-------- ---------
</TABLE>
See notes to financial statements.
BINGO & GAMING INTERNATIONAL
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three Three Nine Nine
Months Ended Months Ended Months Ended Months Ended
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
REVENUES
Phone Card Sales $ 150,748 $ - 0 - $ 185,247 $ - 0 -
Management Fee Income - 0 - 18,000 18,000 54,000
Rental Income 125,844 136,900 377,944 340,275
Concession Income 15,880 31,142 51,887 79,702
------ ------ ------ ------
Total Revenue 292,472 186,042 633,078 473,977
COST OF REVENUES
Cost of Goods Sold -
Phone Cards 30,909 - 0 - 49,374 - 0 -
Machine and Location
Rentals 24,896 - 0 - 31,146 - 0 -
Prizes Paid 62,552 - 0 - 62,552 - 0 -
Hall Rentals 43,080 66,650 134,241 157,785
------ ------ ------- -------
Total Cost of Revenue 161,437 66,650 277,313 157,785
Gross Margin 131,035 119,392 355,765 316,192
Indirect
Operating Expenses 48,389 47,392 153,385 166,408
Salaries 46,221 71,979 146,266 193,975
General and Admin-
istrative Expenses 27,383 38,370 86,785 80,393
------ ------ ------ ------
Total Expenses 121,993 157,741 386,436 440,776
Operating Income (Loss) 9,042 (38,349) (30,671) (124,584)
Other Income - 0 - - 0 - 250 1,142
Interest Expense 6,468 4,219 13,577 12,287
----- ----- ------ ------
Net Income (Loss)
before Taxes 2,574 (42,568) (43,998) (135,729)
Taxes on Income - 0 - - 0 - - 0 - - 0 -
----- ----- ----- ------
Net Income (Loss) $ 2,574 $(42,568) $(43,998) $(135,729)
----- -------- -------- ---------
Net Income (Loss)
per share * * * *
----- -------- -------- ---------
(* = less than $.01)
</TABLE>
See notes to financial statements.
BINGO & GAMING INTERNATIONAL, INC.
STATEMENTS OF CASH FLOW
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30, September 30,
1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (43,998) $ (86,088)
Adjustments to net loss:
Depreciation and amortization 45,119 28,819
Loss on sale of equipment 3,825 -0-
Bad debt expense 25,200 -0-
Changes to current assets and liabilities:
Receivables (64,552) 18,287
Inventory (23,796) - 0 -
Prepaid expenses 440 ( 9,670)
Payables and accrued expenses ( 6,989) 3,675
-------- -----
Net cash used for operating activities (64,751) (44,977)
INVESTING ACTIVITIES
(Increase) decrease in property and equipment 18,145 (78,014)
(Increase) decrease in deferreds and other assets (20,875) 10,127
Decrease in notes receivable 22,137 - 0 -
------ -----
Net cash provided by (used for) investing activities 19,407 (67,887)
FINANCING ACTIVITIES
Proceeds from long-term debt 157,400 149,000
Payments on long-term debt (72,831) 13,748
-------- ------
Net cash provided by financing activities 84,569 135,252
------ -------
CASH AND CASH EQUIVALENTS
Net increase 39,225 22,388
Balances at beginning of period 74,062 23,087
------ ------
Balances at end of period $113,287 $ 45,475
-------- --------
</TABLE>
See notes to financial statements.
BINGO & GAMING INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
Note 1. BASIS OF PRESENTATION
The Company's consolidated financial statements include the accounts of the
Company and its wholly-owned subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
Such financial statements as of September 30, 1996 and for the three months
ended September 30, 1996 and 1995 and for the nine months ended September 30,
1996 and 1995 are unaudited, but, in management's opinion, include all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair presentation of the results from such interim periods. The results from
interim periods are not necessarily indicative of results from full years.
Such interim period financial statements, including the notes thereto, are
condensed and do not include all disclosures required by generally accepted
accounting principles. They should, therefore, be read in conjunction with
the Company's consolidated financial statements which were included in the
Company's Form 10-KSB for the year ended December 31, 1995.
Note 2. INCOME TAXES
The statutory federal tax rate was 34% for the nine months ended September 30,
1996 and 1995. The effective tax rate was zero due to the Company incurring a
net tax operating loss for the nine month ended September 30, 1996 and 1995.
At September 30, 1996 and 1995, the Company had, for tax reporting purposes,
net operating loss carryforwards of approximately $250,000 and $80,000,
respectively, available to offset future taxable income.
Note 3. EARNINGS PER SHARE
Net income (loss) per share is based upon the weighted average number of
shares outstanding during the periods (8,349,200 shares outstanding during the
nine months ended September 30, 1996 and 8,223,000 during the nine months
ended September 30, 1995).
Note 4. RECLASSIFICATIONS
Certain amounts previously reported have been reclassified to conform to
current year presentation.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Introduction:
The Company discontinued operations in 1984. From then until December 15,
1994, it had no operations of significance. On December 15, 1994, the
Company acquired Monitored Investments, Inc., Red River Bingo, Inc., Tupelo
Industries, Inc., and Meridian Enterprises, Inc. (collectively, Monitored or
the Monitored companies) in common stock for common stock exchanges, whereby
the stockholders of Monitored became the controlling stockholders of the
Company. Such acquisitions were treated as an equity restructuring of the
Company, which is similar to pooling-of-interests treatment. The operations
of Monitored were, therefore, retroactively included in the operations of the
Company.
Accordingly, during the three months ended March 31, 1995, the Company
operated three charity bingo facilities for itself (Shreveport, Louisiana,
Tupelo, Mississippi, and Meridian, Mississippi) and managed two other such
facilities (McAllen, Texas and Columbus, Mississippi) for two other
corporations which shared some common stockholders with the Company. During
the three months ended June 30, 1995, the Company opened two additional
charity bingo centers: one in Kosciusko, Mississippi and one in Iuka,
Mississippi. During the three months ended September 30, 1995, the Company
closed its Kosciusko location because of less than expected attendance.
Subsequently, in October 1995, the Company also closed its Shreveport,
Louisiana location due to competitive pressures. Similarly, during the three
months ended March 31, 1996, the Company operated three charity bingo
facilities for itself (Iuka, Mississippi, Tupelo, Mississippi, and Meridian,
Mississippi) and managed two other such facilities (McAllen, Texas and
Columbus, Mississippi) for two other corporations which share some common
stockholders with the Company. During the three months ended June 30, 1996, an
officer/director of the Company divested himself of over 1,000,000 shares of
stock thereby reducing his holdings in the Company to less than 10% and
relinquished his management and director's position in the Company. In return
for services rendered and release of the director's employment contract, the
Company issued stock options and transferred the two management agreements
(McAllen, Texas and Columbus, Mississippi) to the director. Furthermore, in
April 1996, the Company executed an exclusive Distribution Agreement for the
State of Texas for a video enhanced dispenser to market one minute emergency
phone cards. The Company began placing the dispensers in June, 1996, and by
September 30, 1996, approximately 50 had been placed and were in operation.
The Company intends to further develop and substantially expand its business,
principally by continuing its operation and expansion of the distribution of
the video enhance phone card dispensers, and to a lesser extent by acquiring
existing bingo facilities (for cash or for notes or for its own stock or in
combinations thereof) or by establishing new bingo facilities. Its ability to
do so will be limited by its available liquidity and other capital resources
as to which no assurances can be given.
Results of Operations:
Three Months Ended September 30, 1996
Compared with Three Months Ended September 30, 1995
Revenues include rental income from the charitable organizations which lease
the Company's bingo facilities, management fees from managing similar
facilities for others, related concession and vending income, and during 1996
phone card sales related to the video enhanced dispensers. Such revenues were
$292,472 for the three months ended September 30, 1996 and $186,042 for the
three months ended September 30, 1995. The 57.2% increase was principally due
to the distribution of 50 phone card dispensers from June 1996 through
September 1996 which resulted in approximately $151,000 of additional revenue.
Such increase was partially offset by a decrease in management fee income and
concession income related to the transfer of the management agreements to the
former director and a reduction in rental income as a result of the
Shreveport, Louisiana facility being closed in October 1995 as more fully
described in the above "Introduction".
Cost of revenues represent expenses directly attributable to the operation of
the bingo facilities and operation of the phone card dispensers. Such cost was
$161,437 and $66,650 for the three months ended September 30, 1996 and 1995,
respectively. The 142.2% increase was mostly attributed to the increase in
cost associated with the distribution of the phone card dispensers. Such
increase was partially offset by a decrease in rental cost associated to the
Company's bingo facilities as a result of the Shreveport, Louisiana facility
being closed as previously mentioned.
Other expenses include salaries and wages, indirect operating costs, and other
general and administrative expenses. Such expenses were $121,933 for the
three months ended September 30, 1996 and $157,741 for the three months ended
September 30, 1995. The 22.7% decrease was principally the result of a
reduction in salaries and wages related to the director relinquishing his
management position with the Company as more fully described in the above
"Introduction. This decrease was also partially the result of non-recurring
expenses in the three months ended September 30, 1995 related to the opening
of the two charity bingo centers as more fully described in the above
"Introduction" and certain uncapitalized expenses related to planned
equity offerings.
Principally for the reasons set forth in the three preceding paragraphs, the
Company had net income of $2,574 for the three months ended September 30,
1996 compared with a net loss of $42,568 for the three months ended September
30, 1995.
Nine Months Ended September 30, 1996
Compared with Nine Months Ended September 30, 1995
Revenues were $633,078 for the nine months ended September 30, 1996 and
$473,977 for the nine months ended September 30, 1995. The 33.6% increase was
principally the result of the matters more fully described in the above "Three
Months Compared with Three Months" discussion. Furthermore, this increase was
also the result of opening a new bingo facility in Iuka, Mississippi on June
1, 1995.
Cost of revenues were $277,313 for the nine months ended September 30, 1996
and $157,785 for the nine months ended September 30, 1995. The 75.8% increase
was principally the result of the increase in costs associated with the
distribution of the phone card dispensers as more fully described in the above
"Three Months Compared with Three Months" discussion.
Other expenses were $386,436 for the nine months ended September 30, 1996 and
$440,776 for the nine months ended September 30, 1995. The 12.3% decrease was
principally the result of the matters more fully described in the above "Three
Months Compared with Three Months" discussion.
The Company had a net loss of $43,998 for the nine months ended September 30,
1996 compared with a net loss of $135,729 for the nine months ended September
30, 1995.
Financial Position:
During the nine months ended September 30, 1996, the Company's equity
decreased by $43,998, such decrease being the result of the net loss for the
nine months.
During this period, the Company increased borrowings of $157,400 to fund the
initial distribution of the video enhanced phone card dispenser. However, the
Company reduced the amount of its accounts payable, paid off a $20,000 note
and made scheduled payments of other long term debt of an additional $52,831.
Furthermore, the Company renegotiated its $89,000 line of credit with a local
financial institution by making a $15,000 payment and placing the balance of
$74,000 on a ten year note at prime interest plus 2% with a balloon payment
due December 30, 2000.
A second note of $60,000, which had also been an interest only instrument, was
converted on January 10, 1996, to payments of $1,000 principal per month plus
interest at 10.5%.
Overall, the Company increased its long term debt by approximately $85,000.
Liquidity:
The Company's net cash position at September 30, 1996 increased approximately
$39,000 from what it was at December 31, 1995, primarily from the Company's
increased borrowings and increase in operations of the phone card dispensers.
The Company intends to further develop and substantially expand its business,
principally by further expanding the distribution of video enhanced phone card
dispensers, and to a lesser extent by acquiring existing bingo facilities (for
cash or notes or its own
stock or combination thereof) or by establishing new bingo facilities.
The Company will, however, need to obtain additional financing for development
and expansion, and there is no assurance that the Company will be able to
obtain it.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
No further developments
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K.
(a) EXHIBIT EXHIBIT NUMBER
Financial Data Schedule 27
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
BINGO & GAMING INTERNATIONAL, INC.
Dated as of November 15, 1996 By /s/ Reid Funderburk
--------------------
Reid Funderburk
Chairman, C.E.O., Director
By /s/ George Majewski
--------------------
George Majewski
President, Director
By /s/ Ray E. Wilkin
------------------
Ray E. Wilkin
Director
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000355590
<NAME> BINGO & GAMING INTERNATIONAL, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 113,287
<SECURITIES> 0
<RECEIVABLES> 82,958
<ALLOWANCES> 0
<INVENTORY> 23,796
<CURRENT-ASSETS> 253,821
<PP&E> 114,751
<DEPRECIATION> 0
<TOTAL-ASSETS> 505,390
<CURRENT-LIABILITIES> 281,815
<BONDS> 0
0
0
<COMMON> 8,349
<OTHER-SE> 99,425
<TOTAL-LIABILITY-AND-EQUITY> 505,390
<SALES> 150,748
<TOTAL-REVENUES> 292,472
<CGS> 30,909
<TOTAL-COSTS> 161,437
<OTHER-EXPENSES> 121,993
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,468
<INCOME-PRETAX> 2,574
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,574
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
