<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 March 31, 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 March 31, 1997
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
BINGO & GAMING INTERNATIONAL, INC.
BALANCE SHEETS
(unaudited)
<CAPTION>
March 31, December 31,
1997 1996
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 95,447 $ 53,307
Accounts receivables 183,105 175,804
Inventory 41,196 54,327
Prepaid expenses - 0 - 420
Note receivable 26,605 40,813
Total current assets 346,353 324,671
Property and equipment, net 105,635 115,524
Deferreds and intangibles, Net 33,125 37,505
Other assets 64,310 63,549
Total Assets $549,423 $541,249
LIABILITIES AND STOCKHOLDERS' EQUITY
Payables $ 109,690 $ 110,866
Current maturities of long-term debt 104,607 122,363
Total current liabilities 214,297 233,229
Long-term debt 176,002 176,002
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 (242,480) (267,936)
Total stockholders' equity 159,124 132,018
Total Liabilities
and Stockholders' Equity $549,423 $541,249
</TABLE>
See notes to financial statements.
<TABLE>
BINGO & GAMING INTERNATIONAL
STATEMENTS OF OPERATIONS
(unaudited)
<CAPTION>
Three
Months Ended
March 31, March 31,
1997 1996
<S> <C> <C>
REVENUES:
Phone Card Sales $429,711 $ - 0 -
Management Fee Income - 0 - 18,000
Rental Income 125,444 125,850
Concession Income 12,765 19,959
Total Revenue 567,920 163,809
COST OF REVENUE
Cost of Goods Sold -
Phone Cards 122,305 - 0 -
Machine and Location Rental 113,885 - 0 -
Prizes Paid 99,109 - 0 -
Hall Rental 45,014 48,080
Total Cost of Revenue 380,313 48,080
Gross Margin 187,607 115,729
Operating Expenses 82,994 39,254
Salaries 57,848 58,475
General and Administrative
Expenses 11,828 18,170
Total Expenses 152,670 115,899
Operating Income (Loss) 34,937 (170)
Other Income - 0 - 168
Interest Expense 9,481 3,469
Net Income (Loss) before
Taxes 25,456 (3,471)
Taxes on Income - 0 - - 0 -
Net Income (Loss) $25,456 ($3,471)
Net Income * *
(* = less than $.01)
</TABLE>
See notes to financial statements.
<TABLE>
BINGO & GAMING INTERNATIONAL, INC.
STATEMENTS OF CASH FLOW
(unaudited)
<CAPTION>
Three Months Ended
March 31,
1997 1996
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ 25,456 $ (3,471)
Adjustments to net income (loss):
Depreciation and amortization 14,269 15,506
Changes to current assets and liabilities:
Receivables (7,301) 12,121
Prepaid expenses 420 2,940
Payables and accrued expenses (1,176) (29,274)
Inventory 13,131 - 0 -
Net cash provided by (used for) operating
activities 44,799 (2,178)
INVESTING ACTIVITIES
Increase in deferreds and other assets (761) (1,002)
Decrease in notes receivable 14,208 - 0 -
Net cash provided by (used for) investing
activities 13,447 (1,002)
FINANCING ACTIVITIES
Issuance of common stock 1,650 - 0 -
Payments on long-term debt (17,756) (32,057)
Net cash used for financing activities (16,106) (32,057)
CASH AND CASH EQUIVALENTS
Net increase (decrease) 42,140 (35,237)
Balances at beginning of period 53,307 74,062
Balances at end of period $ 95,447 $ 38,825
</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 March 31, 1997 and for the three months ended
March 31, 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 March 31, 1997 and 1996, the Company had, for tax reporting purposes, net
operating loss carryfowards of approximately $210,000 and $205,000,
respectively, available to offset future taxable income. The statutory federal
tax rate was 34% for the three months ended March 31, 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
three months ended March 31, 1997 and 8,050,000 during the three months ended
March 31, 1996).
Note. 4 RECLASSIFICATION
Certain amounts previously reported have been reclassified to conform to
current year presentation.
Item 2. Managment'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., 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; while during the three months ended March 31, 1997, the Company
operated only the three charity bing facilities for itself.
In April 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.
Furthermore, in April 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 March 31, 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 enhance phone card dispensers, by acquiring existing bingo
facilities (for cash or for notes or for its own stock or in 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 March 31, 1997
Compared with Three Months Ended March 31, 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 $567,920 and $163,809 for the three months ended March
31, 1997 and 1996, respectively. Phone card sales were $429,711 for the three
months ended March 31, 1997 due to the distribution of approximately 110 phone
card dispensers from June 1996 through March 1997. Management advisory fees
and related concession income decreased by $18,000 and $7,194, respectively.
Such decreases were due to the transfer of the management agreements to a
former officer and director, as previously mentioned.
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 $380,313 and $48,080 for the three months ended March 31, 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 was $122,305, $113,885 and $99,109, respectively,
for the period ended March 31, 1997 and was due to the distribution of such
dispensers beginning in June 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 was $45,014 and $48,080 for the
three months ended March 31, 1997 and 1996, respectively.
Other expenses include salaries and wages, indirect operating cost, and other
general and administrative expenses. Such expenses were $152,670 for the
three months ended March 31, 1997 and $115,899 for the three months ended
March 31, 1996. The 31.7% 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.
Principally for the reasons set forth in the three preceding paragraphs, the
Company had net income of $25,456 for the three months ended March 31, 1997
compared with a net loss of $3,471 for the three months ended March 31, 1996.
Financial Position:
During the three months ended March 31, 1997, the Company's equity increased
by $27,106, such increase being principally the result of the net income for
the three 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
$1,176 and made scheduled payments of long-term debt of $17,756.
Liquidity:
The Company's net cash position at March 31, 1997 increased by approximately
$42,000 from what it was at December 31, 1996, primarily from the Company's
increase in operations from the distribution of the phone card dispensers. The
Company has plans to further develop its business by continuing to expand the
distribution of the Lucky Shamrock Emergency 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.
Red River Bingo has been assessed civil penalties totaling $25,000 by the
State of Louisiana for alleged gaming law violations; however, no hearing date
is scheduled. A motion for forfeiture of confiscated material has been filed
in San Antonio with regard to the confiscation of three Lucky Shamrock
Emergency Phone Card Dispensers, and an employee of a bingo hall was charged
with a misdemeanor gambling offense relating to the dispensers. A hearing has
been scheduled to consider these issues; however, no action has been taken.
The Texas Attorney General's Office issued Letter Opinion No. 97-008, which
sets forth facts which must be determined before a Promotional Sweepstakes can
be determined to be an illegal lottery. These matters were thoroughly
discussed in the previously filing of SEC Form 10-KSB for the Year Ended
December 31, 1997, which was submitted on April 16, 1997, and is incorporated
by reference.
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
Annual Report on Form 10 - KSB for the year **
ended December 31, 1996, filed April 16, 1997
(b) Reports on Form 8-K
None
** This document and related exhibits have been previously filed
with the Securities and Exchange Commission and by this reference are
incorporated herein.
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 May 15,1997 By:/s/Reid Funderburk
-----------------------
Reid Funderburk
Chairman, C.E.O., Director
By:/s/George Majewski
-----------------------
George Majewski
President, Director, Treasurer
By:/s/Robert H. Hughes
-----------------------
Robert H. Hughes
Director
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 95447
<SECURITIES> 0
<RECEIVABLES> 183105
<ALLOWANCES> 0
<INVENTORY> 41196
<CURRENT-ASSETS> 346353
<PP&E> 119904
<DEPRECIATION> 14269
<TOTAL-ASSETS> 549423
<CURRENT-LIABILITIES> 214297
<BONDS> 0
0
0
<COMMON> 8418
<OTHER-SE> 150706
<TOTAL-LIABILITY-AND-EQUITY> 549423
<SALES> 429711
<TOTAL-REVENUES> 567920
<CGS> 122305
<TOTAL-COSTS> 380313
<OTHER-EXPENSES> 152670
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9481
<INCOME-PRETAX> 25456
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25456
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
