<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 June 30, 1997
[ ] 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)
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 8,417,600 shares of common stock, $.001 par value, outstanding as
of June 30, 1997
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
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BINGO & GAMING INTERNATIONAL, INC.
BALANCE SHEETS
(unaudited)
<CAPTION>
June 30, December 31,
1997 1996
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 62,272 $ 53,307
Accounts receivables 227,422 175,804
Inventory 54,141 54,327
Prepaid expenses 29,922 420
Note receivable 15,787 40,813
Total current assets 389,544 324,671
Property and equipment, net 122,410 115,524
Deferreds and intangibles, Net 29,027 37,505
Other assets 61,010 63,549
Total Assets $ 601,991 $ 541,249
LIABILITIES AND STOCKHOLDERS' EQUITY
Payables $ 128,171 $ 110,866
Current maturities of long-term debt 88,788 122,363
Total current liabilities 216,959 233,229
Long-term debt 197,803 176,002
Common stock, $.001 par value:
Authorized - 70,000,000 shares
Issued and outstanding-8,417,600 shares 8,418 8,415
Additional paid-in capital 393,186 391,539
Accumulated deficit (214,375) (267,936)
Total stockholders' equity 187,229 132,018
Total Liabilities
and Stockholders' Equity $ 601,991 $ 541,249
</TABLE>
See notes to financial statements.
<TABLE>
BINGO & GAMING INTERNATIONAL
STATEMENTS OF OPERATIONS
(unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30, June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
REVENUES:
Phone Card Sales $357,597 $ 34,499 $ 787,308 $ 34,499
Management Fee Income 0 0 0 18,000
Rental Income 125,844 126,250 251,288 252,100
Concession Income 14,804 16,048 27,570 36,007
Total Revenue 498,245 176,797 1,066,166 340,606
COST OF REVENUE
Cost of Goods Sold -
Phone Cards 132,373 18,465 254,678 18,465
Machine and Location Rental 89,171 6,250 203,056 6,250
Prizes Paid 32,180 974 131,289 974
Hall Rental 47,565 43,081 92,579 91,161
Total Cost of Revenue 301,289 68,770 681,602 116,850
Gross Margin 196,956 108,027 384,564 223,756
Operating Expenses 89,892 64,767 172,886 104,021
Salaries 61,736 41,570 119,584 100,045
General and Administrative
Expenses 9,806 41,232 21,634 59,402
Total Expenses 161,434 147,569 314,104 263,468
Operating Income (Loss) 35,522 (39,542) 70,460 (39,712)
Other Income 1,198 72 1,198 240
Interest Expense 8,616 3,630 18,097 7,099
Net Income (Loss) before
Taxes 28,104 (43,100) 53,561 (46,571)
Taxes on Income 0 0 0 0
Net Income (Loss) $ 28,104 $ (43,100) $ 53,561 $ (46,571)
Net Income (Loss) per share * * * *
(* = less than $.01)
</TABLE>
See notes to financial statements.
<TABLE>
BINGO & GAMING INTERNATIONAL, INC.
STATEMENTS OF CASH FLOW
(unaudited)
<CAPTION>
Six Months Ended
June 30, June 30,
1997 1996
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 53,561 $ (46,571)
Adjustments to net income (loss):
Depreciation and amortization 29,229 32,255
Loss on sale of equipment 3,825
Bad debt expense 25,200
Changes to current assets and liabilities:
Receivables (51,618) (16,851)
Prepaid expenses (29,502) 2,940
Payables and accrued expenses 17,200 (35,036)
Inventory 186 (19,035)
Net cash provided by (used for) operating
activities 19,056 (53,273)
INVESTING ACTIVITIES
(Increase) decrease in property and equipment (27,637) 28,195
(Increase) decrease in deferreds and other
assets 2,539 (10,243)
Decrease in notes receivable 25,026 18,387
Net cash provided by (used for) investing
activities (72) 36,339
FINANCING ACTIVITIES
Issuance of common stock 1,650 - 0 -
Proceeds from long-term debt 36,061 45,000
Payments on long-term debt (47,730) (50,869)
Net cash used for financing activities (10,019) (5,869)
CASH AND CASH EQUIVALENTS
Net increase (decrease) 8,965 (22,803)
Balances at beginning of period 53,307 74,062
Balances at end of period $ 62,272 $ 51,259
</TABLE>
See notes to financial statements.
BINGO & GAMING INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
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 June 30, 1997 and for the three months ended
June 30, 1997 and 1996 and for the six months ended June 30, 1997 and 1996 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, 1996.
Note 2. INCOME TAXES
At June 30, 1997 and 1996, the Company had, for tax reporting purposes, net
operating loss carryfowards of approximately $200,000 and $245,000,
respectively, available to offset future taxable income. The statutory federal
tax rate was 34% for the six months ended June 30, 1997 and 1996. The
effective tax rate was zero due to the Company's net operating loss
carryforwards as mentioned above.
Note 3. EARNINGS PER SHARE
Net Income (loss) per share is based upon the weighted average number of
shares outstanding during the periods (8,360,434 shares outstanding during the
six months ended June 30, 1997 and 8,349,200 during the six months ended June
30, 1996).
Note. 4 RECLASSIFICATION
Certain amounts previously reported have been reclassified to conform to
current year presentation.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Introduction:
During the three months ended March 31, 1996, the Company, through its wholly
owned subsidiaries Tupelo Industries, Inc., Meridian Enterprises, Inc.,
Monitored Investments, Inc., and Red River Bingo, Inc. 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 and director of the
Company indicated an intent to divest 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 to purchase 225,000 shares of its common stock
and transferred the two management agreements (McAllen, Texas and Columbus,
Mississippi) to him. During the three months ended June 30, 1997 the Company
operated only the three charity bingo facilities for itself.
Also during the three months ended June 30, 1996, the Company executed an
exclusive Distribution Agreement for the State of Texas for a video enhanced
dispenser to market pre-paid phone cards. An initial distribution of
twenty-five units began in June 1996 and increased to approximately 110 units
through June 30, 1997.
The Company intends to further develop and substantially expand its business,
principally by continuing its operation and expansion of the distribution of
the video enhanced phone card dispensers, by acquiring existing bingo
facilities (for cash or for notes or for its own stock or for combinations
thereof) and 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 June 30, 1997
Compared with Three Months Ended June 30, 1996
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 beginning in
1996, phone card sales related to the video enhanced dispensers. In total,
such revenue was $498,245 and $176,797 for the three months ended June 30,
1997 and 1996, respectively. Phone card sales from the distribution of
approximately 110 phone card dispensers were $357,597 for the three months
ended June 30, 1997 compared to the same three month period in 1996.
A decrease of 17% in phone card sales occurred from the first quarter to the
second quarter. This is due to the discontinuance of a location in the El
Paso region in March 1997. This location was set up as a retail outlet for
phone card dispensers, and sales for this location were reported at retail,
whereas, most other sales are wholesale transactions..
Cost of revenue represents expenses directly attributable to the operation of
the bingo facilities and operation of the phone card dispensers. In total,
such cost was $301,289 and $68,770 for the three months ended June 30, 1997
and 1996, respectively. Cost of revenue specifically related to the phone card
dispensers includes phone card and royalties cost, machine and location rental
and prizes paid. Such cost were $253,724 and $25,689 for the three months
ended June 30, 1997 and 1996, respectively. This increase was because the
initial distribution of the phone card dispensers did not begin until June of
1996, as previously mentioned. Cost of revenue specifically related to the
operations of the bingo facilities represents the rental cost of such
facilities and such cost were $47,565 and $43,081 for the three months ended
June 30, 1997 and 1996, respectively.
The second quarter shows an increase in phone card cost of goods sold. This is
attributable to the change from a one-minute phone card to a two-minute phone
card which increased phone card cost by 8%.
The decrease in the second quarter of 1997 in machine and location rental, as
well as the decrease in prizes paid, can be attributed to the discontinuance
of the El Paso location. The location incurred both a machine rental expense
and a location rental expense. Discontinuing the El Paso location also reduced
prizes paid significantly. This is attributable to the fact that the El Paso
location was treated as a retail outlet for phone card sales, therefore making
it necessary to account for prizes paid out.
Other expenses include salaries and wages, indirect operating cost, and other
general and administrative expenses. Such expenses were $161,434 for the
three months ended June 30, 1997 and $147,569 for the three months ended June
30, 1996. The 9.4% increase was principally the result of the increase in
operations with regards to the distribution of the phone card dispensers. This
increase was partially offset by an overall decrease in overhead due to
management's concerted efforts to reduce such cost in the current year. This
effort to decrease overhead has been successful.
Principally for the reasons set forth in the three preceding paragraphs, the
Company had net income of $28,104 for the three months ended June 30, 1997
compared with a net loss of $43,100 for the three months ended June 30, 1996.
Six Months Ended June 30, 1997
Compared with Six Months Ended June 30, 1996
Revenues were $1,066,165 for the six months ended June 30, 1997 and $340,606
for the six months ended June 30, 1996. The 213% increase was principally the
result of the matters more fully described in the above "Three Months Compared
with Three Months" discussion.
Cost of revenues were $681,602 and $116,850 for the six months ended June 30,
1997 and 1996, respectively. This 483.3% 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 $314,104 and $263,468 for the six months ended June 30,
1997 and 1996, respectively. The 19.2% increase was principally the result of
the matters more fully described in the above "Three Months Compared with
Three Months" discussion.
The Company had net income of $53,560 for the six months ended June 30, 1997
compared with a net loss of $46,571 for the six months ended June 30, 1996.
The significant changes in revenue and related expenses are explained in the
above paragraphs under the three-months ended analysis.
Financial Position:
During the six months ended June 30, 1997, the Company's equity increased by
$55,211, such increase being principally the result of the net income for the
six months. In addition, in February of 1997, a former officer and director
of the Company exercised options to purchase 3,000 shares of common stock.
These options were originally issued in return for services rendered and
release of the employment contract as previously mentioned.
During this period, the Company reduced the amount of its accounts payable by
$17,305 and made scheduled payments of long-term debt of $47,730.
Liquidity:
The Company's net cash position at June 30, 1997 increased by approximately
$9,000 from what it was at December 31, 1996, primarily from the Company's
increase in distribution of the phone card dispensers. The Company has plans
to further develop its business by continuing to expand the distribution of
the phone card dispensers in Texas.
The Company will, however, need to obtain additional financing to achieve
substantial profitability and there is no assurance that the Company will be
able to obtain such additional financing.
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
(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 August 19,1997 By:/s/Reid Funderburk
----------------------------------
Reid Funderburk
Chairman, C.E.O., Director
By:/s/George Majewski
----------------------------------
George Majewski
President, Director, Treasurer
By:/s/Ray Wilkin
----------------------------------
Ray Wilkin
Director
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 62272
<SECURITIES> 0
<RECEIVABLES> 227422
<ALLOWANCES> 0
<INVENTORY> 54141
<CURRENT-ASSETS> 389544
<PP&E> 122410
<DEPRECIATION> 0
<TOTAL-ASSETS> 601991
<CURRENT-LIABILITIES> 216959
<BONDS> 0
0
0
<COMMON> 8418
<OTHER-SE> 178811
<TOTAL-LIABILITY-AND-EQUITY> 601991
<SALES> 357597
<TOTAL-REVENUES> 498245
<CGS> 132373
<TOTAL-COSTS> 301289
<OTHER-EXPENSES> 161434
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8616
<INCOME-PRETAX> 28104
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28104
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
