Back to GetFilings.com
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1999
Commission file number: 000-26319
BINGO.COM, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 98-0206369
- --------------------------------------- ------------------------------------
State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Suite C200 - 4223 Glencoe Ave.
Marina del Rey, CA 90292
-------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (310) 301-4171
Securities to be registered under Section 12(b) of the Act:
NONE NONE
- --------------------------------------- ------------------------------------
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
- --------------------------------------------------------------------------------
(Title of Class)
Not Applicable
- --------------------------------------------------------------------------------
(Title of Class)
Indicate by check mark whether the Resgistrant (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 [X] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates of the
Registrant, computed by reference to the closing price of such stock on the
National Association of Securities Dealers Over the Counter Bulletin Board
market as of March 14, 2000 was $1.75.
The number of share of Registrant's common stock outstanding on March 14, 2000
was 10,041,668. The Registrant's common stock is traded on the National
Association of Securities Dealers Over the Counter Bulletin Board market, symbol
BIGR.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Proxy Statement for the 2000 Annual Meeting of Stockholders are
incorporated by reference into Part III of this Form 10-K.
BINGO.COM, INC.
1999 Form 10-K Annual Report
Table of Contents
Page
Part I
Item 1. Business .............................................................1
Item 2. Properties ..........................................................21
Item 3. Legal Proceedings ...................................................21
Item 4. Submission of Matters to a Vote of Security Holders .................21
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters ...............................................22
Item 6. Selected Financial Data .............................................22
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations ...............................23
Item 7a. Quantitative and Qualitative Disclosures about
Market Risk .......................................................25
Item 8. Financial Statements and Supplementary Data .........................25
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure ...............................25
Part III
Item 10. Directors and Executive Officers ....................................27
Item 11. Executive Compensation ..............................................27
Item 12. Security Ownership of Certain Beneficial
Owners and Management .............................................27
Item 13. Certain Relationships and Related Transactions ......................27
Part IV
Item 14. Exhibits, Financial Statement Schedules, and
Reports on Form 8-K ...............................................27
Signatures
PART I
Item 1. Business.
Introduction
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. The company is
attempting to create a value based web site which will be backed up by an
extensive database of registered users and their buying preferences.
Corporate Structure and Background
We have three subsidiaries:
o Bingo.com (Canada) Enterprises Inc., a British Columbia corporation;
o Bingo.com (Antigua), Inc., an Antigua International Business Corporation;
and
o Bingo.com (Wyoming), Inc., a Wyoming corporation.
Our corporate structure is as follows:
-------------------------------
Bingo.com, Inc.
(a Florida corporation)
-------------------------------
- ------------------------------------- -------------------------------------- -----------------------------------
Bingo.com (Canada) Enterprises Inc.(1) Bingo.com (Antigua), Inc. (2) Bingo.com (Wyoming), Inc. (3)
(a British Columbia corporation) (an Antigua International Business (a Wyoming corporation)
Corporation)
- ------------------------------------- -------------------------------------- -----------------------------------
(1) Bingo.com (Canada) was incorporated on February 10, 1998 as 559262 B.C.
Ltd. and changed its name to Bingo.com (Canada) Enterprises Inc. on
February 11, 1999
(2) Bingo.com (Antigua) was incorporated on April 7, 1999 as Star
Communications Ltd. and changed its name to Bingo.com. (Antigua), Inc. on
April 21, 1999
(3) Bingo.com (Wyoming) was incorporated in the State of Wyoming on July 14,
1999.
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 a $1.00 par value per share. We were for the most
part inactive until January 1999.
On July 17, 1998, we filed Articles of Amendment and increased our authorized
share capital to 50,000,000 common shares with a $0.001 par value per share. We
also authorized a forward
1
stock split by way of a stock dividend to increase the number of then issued and
outstanding shares on a 200 shares for 1 share basis.
In January 1999, our management changed, and we began to implement our strategy
to become a leading online provider of Bingo based games and entertainment. 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 purchased the exclusive 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 then business plan.
We organized Bingo.com (Wyoming) on July 14, 1999, to restructure our corporate
organization because Florida law would not allow us to continue to a
jurisdiction outside the United States. We have subsequently redeveloped our
business strategy into a plan that does not include continuing operations in
Antigua, therefore we do not need to proceed with the reorganization into
Bingo.com (Wyoming).
The original business plan included Bingo.com (Canada) developing and operating
a web-site, but reconsideration of the priorities of the company and in the best
interest of shareholders, this plan is being discontinued. In March, 2000,
Bingo.com, Inc. relocated the principal executive offices to Los Angeles,
California to facilitate implementation of the business plan.
Bingo.com (Canada), Bingo.com (Antigua) and Bingo.com (Wyoming) remain as
subsidiaries and continue to support the implementation of the business plan.
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 cannot, however, assure you that we will continue to qualify
for quotation on the OTCBB. We have not been subject to any bankruptcy,
receivership or other similar proceeding.
Bingo.com Domain Name
We purchased the exclusive right to use the domain name "Bingo.com" from Bingo,
Inc. for (i) $200,000, (ii) 500,000 shares of our common stock (at a deemed
value of $2.00 per share) and (iii) an agreement to pay, on an ongoing basis,
royalties in the amount of 4% of our annual gross revenues with a total minimum
guarantee of $1,100,000. The value of the "Bingo.com" domain name was based on
factors such as the relationship of the name to our business, the ability for us
to create a brand for our web-site and portal based on the name, the ease of
internet browser searchability of the domain name and the ability of visitors to
our web-site to remember and associate the name with our web-site and portal. We
negotiated the terms of the domain name acquisition at arms' length, and we
believe the consideration we paid for the name was reasonable.
2
The Business of Bingo.com
Overview
Binco.com intends to become the leading online provider of Bingo based games and
entertainment. The Company intends to leverage the worldwide popularity of Bingo
with the exponential growth of the Internet to become the premier online Bingo
site.
The Business of Bingo.com, Inc.
Overview
Our primary objective will be to provide Internet users a web-site offering a
variety of bingo based games and entertainment. The beta site and `Play-4-Free'
games for North American audiences was released December 14, 1999.
We seek to attract as large an audience as possible to our site via an
aggressive advertising campaign designed to attract customers to use the
entertainment products and services, which the Company is developing.
Although games will be free to play, players will be required to register with
Bingo.com to receive prizes and to access certain premium features on the site.
All registration information will be stored in online databases and Bingo.com
will use that data to select which advertisements are displayed to each user.
This will allow advertisers to target their messages to their selected subset of
Bingo.com's audience.
We intend to build awareness of, and drive traffic to, Bingo.com through a
marketing program consisting of various elements. The Company will attempt to
sign license agreements with partners who will co-brand versions of Bingo.com
games on their sites. In addition, the Company will attempt to establish
promotional agreements with prominent web-sites and media content providers that
have reciprocal links to Bingo.com, or to display advertising.
We intend to build multiple revenue streams. We believe there is value in the
ability to direct the traffic of our membership base and their buying power, and
intend to pursue affinity arrangements with merchant partners. The Company may
generate revenues based on a variety of transactions. We are contemplating
price-per-click-through, percentage of sales transactions and other arrangements
as potential revenue generation models with potential retail affiliates.
In addition, we intend to sell advertising space on the web site. Advertisers
typically pay on the basis of the number of advertising impressions shown. The
number of impressions is a function of the number of users of a web-site, the
amount of time they stay on a site, and the frequency with which the advertising
displays are changed.
We believe the growing user base and length of time spent on our site
(stickiness) will provide advertisers with an attractive platform to reach their
target audience. Because we believe we can attract a large, diversified user
base and can segment it based upon information we collect, such
3
as geography, age, gender and income levels, we believe we will be able to
target advertisements to particular demographic profiles specified by our
advertisers.
Bingo.com, Inc. will be managed by its own management team and operating
principally from Los Angeles, California .
The entertainment aspect of Bingo.com will not include adult content.
The Industry
The Internet:
Initially envisioned as a common information space in which we communicate by
sharing information, the world wide web has developed into a gateway to
multimedia experiences and has created whole new forms of entertainment,
information delivery and business opportunities.
Conducting business on the Internet:
Electronic commerce is an area of growth and opportunity as more people
recognize and utilize the Internet as a vehicle through which to buy and sell
goods and services.
With 510 million-web users expected world wide by the end of 2003, 183 million
of them are predicted to generate over $1.3 trillion in purchases on the web,
according to International Data Corporation.
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, improved 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 in the Internet will increase as the number of successfully
completed transactions increases. 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. Web traffic can be
directed based on preferences indicated and historical transactions enacted.
Revenue generation models can be built and easily measured based on traffic
sources, volumes and purchase amounts.
We believe that Bingo.com, Inc.'s focus on entertainment content will attract
visitors with demographic consumer profiles that will appeal to advertisers. As
a result, we believe that Bingo.com , Inc. will be able to sell banner
advertising and enter into promotional joint ventures with a broad spectrum of
businesses.
4
Advertising through the Internet:
The Internet is changing the advertising community. It is causing a change in
the way companies reach their desired customer base. On-line advertising is
creating a faster, more focused, and dynamic method of reaching 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. The Internet is becoming an accepted
medium for advertising and e-commerce. In order to better understand the
demographics of the site visitor, companies are asking customers to first
provide information about themselves, allowing marketers to determine customer
needs based on actual preferences. Web-sites are an effective medium 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.
We believe that an increasing percentage of businesses' advertising budgets will
be allocated to funding their Web strategy. We believe advertisers are and will
increasingly be advertising on web-sites with a volume of users matching the
demographic profile of the advertiser's target consumer.
The key is the ability of marketers to measure the Web audience on a competitive
basis with other media such as broadcasting, cable or print. We believe that
measurement criteria focusing on users' interests, page views and duration is
roughly comparable to conventional advertising measurement criteria such as
frequency and reach.
We anticipate that an integral component of the Bingo.com site will be our
ability to analyze on a statistical basis our user base profiles. We collect
certain demographic information (age, income, household size, occupational
class, etc.), which will allow advertisers to target their marketing efforts to
certain user profiles. The web- site also tracks a number of monthly, daily and
hourly statistical criteria, including user type (.net - network, .gov -
government, .com - commercial, .edu - educational, etc.), duration on line, page
views, geographic location (.ca - Canada, .fr - France, .uk - United Kingdom,
etc.) and download file size. We intend to use this information to justify the
advertising rate structure used by Bingo.com, Inc. and to market our web-site to
advertisers. We believe that advertisers evaluate portals and web-sites in
advertising buying decisions based on statistical criteria such as number of
visitors, length of visits, page views and files downloaded. Bingo.com, Inc
believe that the anticipatedgrowth in registered user base and reported
stickiness of the site will make the web-site very attractive to potential
advertisers.
The Niche
Bingo.com is positioning itself to become a leading entertainment site through
the incorporation of Bingo technology, to create a fun and exciting daily user
experience centered around Bingo and Bingo-based games. We believe the size of
the worldwide community familiar with Bingo, the domain name Bingo.com, and the
attractive nature of the Company's product offering provides an opportunity to
build a large loyal base of daily visitors.
5
Bingo is reported to be the most socially acceptable form of gaming in the
world, with a 79% acceptability rate from the general public. Research indicates
that, in North America, on a per visit basis, Bingo is more popular than all
Hollywood movies, rock concerts, professional sports and casinos combined. A
Federal Study suggests that nearly 70% of Bingo players are between the ages of
18 and 44, and the Baby Boomers are playing Bingo more than ever. This is the
generation that is considered to have the most disposable income and the highest
ability to access the Internet. We believe that Bingo is well suited for online
entertainment content, and that online games are a compelling entertainment
medium for a mass user audience. There is appeal in providing users with an
opportunity to win prizes while allowing them to access entertaining content
according to their own schedule from their own location. Bingo.com intends to
lead the way using the popularity of Bingo games, the accessibility of the
Internet and the rate of growth for entertainment based game sites.
Bingo.com believes its future success will be dependent on a number of factors.
These include focus on online Bingo games and online entertainment, and the
development of a personalized community atmosphere, which will enable the site
to enjoy lengthy visits. We believe the nature of the Company's content and user
base will allow Bingo.com to establish a large detailed database of registered
users, which is a distinguishing factor to attracting online advertisers. The
Company intends to promote the Bingo.com brand name by establishing a large
syndication network and by building alliances with prominent companies, both
online and off.
Business Strategy
Bingo.com's objective is to become the premier online destination for web based
Bingo entertainment and a leading entertainment destination on the internet. The
company is pursuing this objective through the following strategies:
Continue to enhance content:
Bingo.com officially launched the beta web-site on December 14th, 1999.
Registered users are provided with a variety of free games and other forms of
entertainment such as chat, sweepstakes, BingoGrams, BingoFortune and more. The
free Bingo games can be played for points, which are redeemable for original
gift certificates at a wide variety of national merchants. The first games on
the site include the International Bingo, "Astrology Bingo", "Groovy Bingo", and
"Hollywood Bingo". Bingo.com is able to create low-cost content through creative
face-changes of the standard bingo games. These `faces' can reflect themes,
corporate interests or other targeted messages. The games are being developed to
maximize the value of the detailed data gathered from users. In addition,
Bingo.com has entered into agreements with other parties to provide a
combination of entertainment and community information at a reasonable cost, and
expects to build relationships and enter into agreements with other content
providers in the future.
Build multiple revenue streams:
Bingo.com intends to build multiple revenue streams.
6
Leveraging off the value of the ability to direct the growing membership base
and their buying power to merchant partners, Bingo.com intends to pursue
affinity program strategies.
Bingo.com also intends to engage in discussion to assess potential revenue
generating oportunities through affiliations and potential associations with
national merchant websites.
Revenue calculations may be based on click-throughs, percentage of sales
transactions, or other methods.
In addition, on December 1, 1999 a web advertising sales agreement was entered
into with Flycast Communications Corporation for the sale of advertising
impressions. The valuable detailed database of our registered users and
preferences enables us to target advertising to particular demographics.
Expand registered user database:
Entertainment and game sites have become increasingly popular and are showing
strong growth rates. Two months after the launch of the web-site and the
Play-4-Free games, web-site traffic reports indicate that an average of 1000 new
users a day are registering with Bingo.com. There has been 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.
Bingo.com intends to market aggressively and build the registered user database
through online and offline marketing strategies, promotional opportunities and
strategic alliances.
Leverage licensed users and alliances:
Bingo.com believes that the variety of games and entertainment available on the
website will encourage many visitors to come, stay, play and revisit often. Game
winners at Bingo.com win BingoBucks, which are redeemable for prizes and gift
certificates through associations with other web-sites and merchants. In the
process of providing a one-stop entertainment arena for Bingo lovers, we are
creating a value based web-site which will be backed by an extensive database of
registered users and their buying preferences. We believe the value of this
demographic data should enable Bingo.com to generate higher than average CPM and
CPC rates. We believe we can to leverage that detailed information to build
relationships and alliances with other web-sites and merchants, meanwhile also
offering Bingo Bucks winners a wide variety of options for spending their
winnings.
Extend and enhance the value of the brand name:
We believe that establishing a readily recognizable brand name is critical to
attracting a larger user base and deriving additional advertising revenues. We
believe that Bingo.com has inherent value as a brand name and we intend to
aggressively expand our user base by promoting that name. We intend to pursue
online and offline marketing strategies, promotional opportunities, and
strategic alliances to make Bingo.com the leading entertainment destination on
the Internet.
7
Bingo.com, Inc. Marketing Strategy
Our goal is for Bingo.com to become the most recognized Bingo and entertainment
destination site on the internet. We intend to build an Internet community
consisting of a dedicated and loyal user base that we believe will support our
ability to generate advertising revenues and e-commerce sales for Bingo.com,
Inc. The company plans to expand beyond traditional on-line and off-line media
methods, targeting advertising towards specific demographic audiences as
determined by the detailed database of registered users, as well as the Bingo
community of today.
We intend to use multiple advertising media in order to build our brand,
increase traffic, and raise our profile among potential advertisers and
strategic partners.
We have entered into promotional partnerships to place Bingo.com advertising on
sites including Gamesville.com, Val-Pak.com and COX Interactive Media, as well
as on the Prodigy Internet service, giving Bingo.com a strategic position on
some strategic real estate on the Internet. Advertising will initially be
focussed on promoting Bingo.com within the North American market through high
profile ads with a variety of companies. This strategy is intended to further
develop the growing database of registered users.
Bingo.com, Inc Business Development Costs
As of December 31, 1999, Bingo.com, Inc. had expended approximately $358,000 on
software and website development activities.
The original business plan included Bingo.com (Canada) developing and operating
the website however, Bingo.com, Inc. itself intends to incur any further
development costs and maintain operations of the web-site.
Bingo.com, Inc. Employees
As of December 31, 1999, Bingo.com, Inc had three people working full-time. In
addition, Shane Murphy, our President, devotes approximately 80% of his time to
Bingo.com, Inc. As of December 31, 1999, Bingo.com (Canada) had seven people
working full-time. Since Bingo.com, Inc. is now operating the website and. has
relocated the principal executive offices to Los Angeles, California to
facilitate implementation of the new business plan, as at February 28, 2000
there were only three people working full-time. From time to time, Bingo.com,
Inc. may retain consultants and consulting firms to provide Bingo.com, Inc. with
special expertise in developing marketing, software and telecommunications
technologies.
Bingo.com, Inc. Competition
Bingo.com, Inc. will face competition primarily from other companies that target
the entertainment segment of the market. Gamesville.com and Uproar.com are also
intending to be online entertainment destinations, offering game shows and other
interactive experiences to users.
8
The convergence of multimedia communications (voice, data, video, Internet) 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. Bingo.com intends to differentiate itself by focusing
primarily on Bingo related content. Early statistics indicate that the length of
time visitors spend on the web-site exceeds that of some other competitors.
Bingo.com, Inc. Trademarks and Intellectual Property Protection
We anticipate Bingo.com, Inc. will apply for trademark registration and
protection for its logo and various phrases in Canada and the United States.
However, Bingo.com, Inc. has not submitted any applications for trademark
registration. In the event that Bingo.com, Inc. 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, Inc. intends to rely on trade secret laws and
non-disclosure and confidentiality agreements with its employees and
consultants, who have access to its proprietary technology, to protect its
technologies.
Bingo.com (Antigua)
Overview
In the original business plan, Bingo.com (Antigua)'s primary objective was to
develop an on-line bingo game and Internet gaming business. The International
Bingo Wagering game was launched on July 28, 1999. The game accepted a wager
only from permitted jurisdictions and was the first revenue generating product
in the marketplace. Bingo.com is currently finalizing negotiations to licensing
the game technology to a third party, and is in negotiations to sell it
entirely. Our current business plan does not include operating an on-line
wagering gamesite.
Bingo.com (Antigua) - Licensing
On April 16, 1999, Bingo.com (Antigua) was granted a license to operate an
offshore virtual casino wagering business, effective April 30, 1999. 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. Bingo.com (Antigua) paid a license fee of $100,000 to the Barbuda Free
Trade and Processing Zone on April 16, 1999 and began to offer a live version of
the Bingo.com bingo game on July 28, 1999. This license will be allowed to
expire.
On-line Bingo Gaming Software
Bingo.com (Antigua) developed proprietary software that allowed patrons to play
a variety of bingo games over the Internet in two modes: wagering and
non-wagering. Bingo.com (Antigua) began beta testing the proprietary wagering
version of its software and its server in April 1999 and continued beta testing
through July 1999. The server systems and software performed well in test mode.
During the duration of the beta test period, players provided Bingo.com
(Antigua) with valuable comments and feedback, which were considered by
Bingo.com (Antigua) and incorporated into the improvement of its software and
on-line bingo game.
9
Bingo.com (Antigua) Operations
Although the initial business plan established the viability of operating an
on-line bingo game, accepting wagers from certain jurisdiction, changes in the
marketplace indicated that it was not in the best interest of the shareholders
or Bingo.com, Inc. to continue to pursue this strategy.
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 transacted over the Internet. There
are significant differences of opinion and law between countries such as the
United States, Canada, Australia, Liechtenstein and Antigua.
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.
Bingo.com, Inc. does not want to expose it's shareholders to the risks of
operating in the on-line gaming industry, nor limit opportunities for strategic
partnerships or financial alliances. We believe that discontinuing Antigua
operations will better serve the interests of the shareholders and the parent
company, Bingo.com, Inc.
Bingo.com (Antigua) Business Development and Windup Costs
As of December 31, 1999, we have recorded a loss of approximately $554,000
related to discontinuing our Antigua based gaming operation.
Bingo.com (Antigua) Employees
As of December 31, 1999, Bingo.com (Antigua) had two full-time employees,
however, subsequent to year end the Antiguan operations were discontinued.
10
DEVELOPMENT OF THE BUSINESS OF BINGO.COM INC., BINGO.COM (CANADA), BINGO.COM
(ANTIGUA)
Since January 1999, we have taken the following steps to implement our business
plans:
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) web-site;
o Began developing a cross-functional plan designed to avoid duplicating
marketing and advertising expenditures and to compliment and coordinate the
corporate objectives of the Bingo.com (Canada) web-site and the Bingo.com
(Antigua) on-line bingo game;
o Retained Stratford Internet Technologies Inc. to develop the Bingo.com
(Canada) web-site;
o Completed phase one of the development and launch of the Bingo.com
web-site;
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 Developed the new Bingo.com web-site;
o Launched the new Bingo.com web-site with Play-4-Free bingo games;
o Entered into agreements and affiliate relationships to promote Bingo.com,
generate traffic to the site, and increase the registered user database;
o Initiated the process to relocate the principal executive offices to Los
Angeles, California;
o Implemented internal financial controls;
RISK FACTORS
Our business is subject to a number of risks due to the nature and the
present state of development of our business. An investment in our securities is
speculative in nature and involves a high degree of risk. You should read
carefully and consider the following risk factors.
11
General
We have a Limited Operating History and a History of Losses, Which Makes Our
Ability to Continue as a Going Concern Questionable
As noted in the qualified audit report dated December 31, 1999, 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. Through December 31, 1999, we incurred cumulative net losses
of $ 2.9 million. Our business prospects should evaluate us in light of the
delays, expenses, problems and uncertainties frequently encountered by companies
developing markets for new products and technologies. We do not believe that
revenues generated will be sufficient to support our operations in fiscal 2000
due to a number of factors including, among others:
o the cost of promoting and marketing our web-site and the Bingo.com bingo
game;
o the anticipated low demand for our banner advertising until we can
establish our brand name and verify traffic on our web-site;
o the start-up cost associated with developing our software and technologies,
installing equipment and establishing our facilities;
o the anticipated nominal gaming revenues from the sale of advertising space
until we can establish our brand name and verify traffic to our web-site;
o the costs associated with hiring experienced management and staffing our
operations.
Consequently, in the foreseeable future, we believe that such expenses will
increase our net losses, and we may never be profitable.
You should evaluate our business in light of the factors affecting and
challenges frequently encountered by early stage companies engaged in Internet
commerce. Such factors and challenges include:
o our ability to generate revenues will depend on selling advertising on a
web-site focused on Bingo entertainment, a newly developed business concept
currently with only limited market acceptance;
o as our business grows and the expectations of our customers increases, we
must develop and upgrade our infrastructure, including internal controls,
transaction processing capacity, data storage and retrieval systems and
web-site to remain competitive;
o we compete with a number of competitors with greater resources and
experience than us;
12
o as the markets for our on-line bingo games develop, our success will depend
on our ability to successfully manage and change operations to meet the
demands of our customers;
o our businesses are dependent upon the Internet for commerce and growth;
o general economic conditions could change and adversely affect our business;
o we intend to rely upon strategic relationships to build market awareness
and to bring visitors to our portal and players to the on-line bingo game;
o our businesses are subject to regulatory risks, which may increase the cost
of operating our businesses or prohibit us from conducting our business;
and
o we depend upon and need to hire key, qualified personnel and management to
fully develop our businesses.
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 and being developed. We cannot assure you that
Bingo.com, Inc. will attract users, advertisers, consumers or network
affiliates, or generate significant revenues or operating margins in the future.
We cannot guarantee we will ever achieve commercial success.
As of December 31, 1999, we had approximately $3.4 million in cash and cash
equivalents. We believe that we will have sufficient funds to conduct our
operations into the first quarter of 2001, without considering any revenues
generated from the operations of our subsidiaries. We cannot assure you that we
will be able to obtain adequate financing to support our operations.
If Our Key Personnel Leave Bingo.com, Our Ability to Succeed will be Adversely
Affected
The future success of Bingo.com, Inc. will depend on certain key management,
marketing, sales and technical personnel. We rely upon consultants and advisors
who are not employees. The loss of key 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. We 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 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.
13
We May be Required to Sell Additional Common Stock or Parties May Exercise
Options and Warrants that May Cause Dilution of the Value of the Outstanding
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 December 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
1,895,000 shares of common stock for issuance upon exercise of options under an
incentive stock option plan. We have agreed to grant options to acquire a total
of 1,025,000 of our common shares to certain of our officers, directors and
consultants once we have approved and adopted our incentive stock option plan,
and we granted Shane Murphy, our President, options to acquire 600,000 shares of
our common stock. 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.
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, Which May Increase Our Cost of
Operations
Our success and our ability 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 our 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.
We and our vendors may experience periodic systems interruptions and
infrastructure failures, which we believe will cause customer dissatisfaction
and may adversely affect our results of operations. Limitations of technology
infrastructure may prevent us from maximizing our business opportunities.
We cannot assure you that that our and our vendors' data repositories, financial
systems and other technology resources will be secure from security breaches or
sabotage, especially as technology changes and becomes more sophisticated. In
addition, we expect that many of our and our vendors' software systems may be
custom-developed and that we and our 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, we and our vendors may
experience difficulty in improving and maintaining these systems. Furthermore,
we expect that we and our 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
14
relationships with other third parties to maintain and enhance their technology
infrastructures. 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 On-line Commerce May Deter Future Use of Our
Website, Which May Adversely Affect Our Ability to Generate Revenues
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
on-line services generally, and on-line commerce in particular. 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 transaction
data. Anyone who is able to circumvent our subsidiaries' or vendors' security
measures could misappropriate proprietary information, cause interruptions in
their operations or damage our brand and reputation. We 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.
We Face the Risks of System Failures, Which Would Disrupt Our Operations
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.
Our systems and operations 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 our services 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. Any claims could result in
costly litigation and be time consuming to defend, divert management's attention
and resources, cause
15
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 or will not in the future infringe the intellectual property
rights of third parties. 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 currently have no
patents or trademarks issued to date on our technology.
We May Not be Able to Protect Our Internet Domain Name, Which Is Important to
Our Branding Strategy
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.
If We Are Unable to Meet the Changing Needs of Our Industry, Our Ability to
Compete Will be Adversely Affected
To remain competitive, we must be capable of enhancing and improving the
functionality and features of their on-line 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;
16
o develop and enhance our planned products and services;
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, Which May Affect the Value of Your Shares
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,
Which May Adversely Affect the Ability to Sell Your Shares
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 your 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.
17
Risks Associated with the Bingo.com, Inc. Web-Site
The Results of Operations for the Bingo.com, Inc. Web-site Will Vary Depending
on a Number of Factors, Which May Adversely Affect Our Business
We anticipate the operating results of Bingo.com, Inc.'s web-site will vary
widely depending on a number of factors, some that are beyond the control of
Bingo.com, Inc. These factors are likely to include:
o demand for our on-line 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, Inc. service, which have
not been determined by Bingo.com, Inc.;
o our costs of attracting consumers to the Bingo.com, Inc. 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 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, Inc. 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;
o our ability to upgrade and develop our information technology systems and
infrastructure;
o costs related to acquisitions of technologies or businesses; and
18
o general economic conditions, as well as those specific to the Internet and
related industries.
Because Bingo.com, Inc. has limited operating history, it is difficult to
accurately forecast the revenues that will be generated.
We plan to significantly increase our operating expenses to expand our marketing
and sales operations related to Bingo.com, Inc., establish customer support
capabilities and fund the development of the Bingo.com, Inc. web-site. We have
based our current and future expense levels on the operating plans and estimates
of future revenue for Bingo.com,Inc. We anticipate that the expenses related to
Bingo.com, Inc. may increase. The revenue and operating results for Bingo.com,
Inc. are difficult to forecast. 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.
If Bingo.Com, Inc.'s Web-Site is Unable to Achieve a Critical Mass of Registered
Users, Advertisers and Consumers, Bingo.Com, Inc. May Be Unable to Sell
Advertising or to Generate Revenues
The success of our web-site may be dependent upon achieving significant market
acceptance of our site by registered users, advertisers and consumers. Our
web-site has achieved very limited market acceptance to date. Internet
advertising in general is at an early stage of development and 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. Our competitors and potential competitors may offer more
cost-effective advertising solutions, which could damage our business. In
addition, our portal 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.
If We Are Unable to Develop On-line Marketing Partner and Relationships with a
Network of Affiliates, Our Web-Site May Never Achieve Market Acceptance or
Generate Any Significant Advertising Revenues
We anticipate that our web-site may depend on traffic from a limited number of
third-party web-sites. We anticipate Bingo.com, Inc. will obtain traffic from
these sources pursuant to short-term agreements. Bingo.com (Canada) currently
has 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 our ability to further develop and maintain relationships
with network affiliates. These network affiliates provide their users with the
Bingo.com links on their sites or direct their traffic to the Bingo.com
web-site. We believe these relationships are important in order to facilitate
broad market acceptance of our service and enhance Bingo.com, Inc.'s sales. Our
future ability to attract consumers to our Bingo site 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 business may never be successfully launched.
19
Our Business May be Subject to Government Regulation and Legal Uncertainties
that May Increase the Costs of Operating Our Web-Site or Limit Our Ability to
Sell Advertising
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, Inc. 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, Inc. 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 Millennium Copyright
Act, which is intended to reduce the liability of on-line 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 restrict the distribution of certain materials deemed harmful to
children and impose additional restrictions on the ability of on-line 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, Inc. 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
20
no assurance that this legislation will not impose significant additional costs
on our business or subject the company 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, Inc. 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, Inc. for violations of their laws. Bingo.com, Inc. 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.
Item 2. Properties
At December 31, 1999 Bingo.com was leasing one 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.
Subsequent to December 31, 1999, Bingo.com entered into a short term lease of
three months, expiring April 30, 2000, 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.
Actions are being taken to sub-lease the space in Vancouver.
Other than described above, neither we nor any of our subsidiaries presently own
or lease any other property or real estate.
Item 3. 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 us and Pan Pacific. Pan Pacific demanded payment, on or before
August 5, 1999, in the amount of $34,820, the alleged balance owed by us to Pan
Pacific, and informed us that they would commence legal action seeking the
damages with interest and costs. We believe the claim is without merit and
intend to vigorously defend the claim. As of March 2, 2000, we are not aware
that any legal action has been commenced against us.
To the best of our knowledge, we are not subject to any other active or pending
legal proceedings or claims against us, or any of our properties. However, from
time to time, we may become subject to claims and litigation generally
associated with any business venture.
Item 4. Submission of Matters to a Vote of Security Holders
None
21
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
On March 19, 1997, our common stock was approved for trading on the OTCBB under
the symbol PGLB. In January 1999, we changed our name from Progressive General
Lumber Corporation to Bingo.com, Inc., and our OTCBB symbol was changed to BIGG.
On July 26, 1999, we changed our trading symbol from BIGG to BIGR. There were no
trades of our securities on the OTCBB prior to the first quarter 1999.
The bid quotations set forth below, reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not reflect actual transactions:
OTCBB
-----------------------------------------------------------------------------
1999 High ($) Low ($) Volume
-----------------------------------------------------------------------------
1st Quarter 8.75 1.875 6,404,500
-----------------------------------------------------------------------------
2nd Quarter 13.125 3.75 12,198,800
-----------------------------------------------------------------------------
On March 14, 2000, the last reported sales price of our common stock, as
reported by the NASD OTC:BB was $1.75 .
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 6. 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 document.
Year Ended
December 31,
1999 1998 1997 1996 1995
------------- ----------- ----------- ---------- -----------
$ $ $ $ $
Revenues 100 nil nil nil
General & Administrative 1,588,863 1,904 nil nil nil
Expenses
Marketing & Advertising 490,234 nil nil nil nil
Software Development & 408,241 nil nil nil nil
Royalties
Foreign exchange gain nil nil nil nil
Interest income 126,001 nil nil nil nil
Net (Loss) from Continuing (2,361,337) (1,804) nil nil nil
Operations
Net (Loss) from (494,107) nil nil nil nil
Discontinued Operations
Net Loss per Share (0.31) nil nil nil nil
22
Year Ended
December 31,
1999 1998 1997 1996 1995
----------- ---------- ----------- ---------- -----------
$ $ $ $ $
Working Capital (Deficiency) 3,251,649 (1,804) nil nil nil
Total Assets 4,990,371 157,600 nil nil nil
Total Liabilities 325,643 159,404 nil nil nil
Shareholders' Equity 4,664,728 (1,804) nil nil nil
Long-term Obligations 9,494 Nil nil nil nil
Cash Dividends Nil Nil nil nil nil
Item 7. 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.
RESULTS OF OPERATIONS
Year Ended December 31, 1999 Compared to the Year Ended December 31, 1998
The year ended December 31, 1999 was effectively our first year of operations.
Initially, our strategy was to develop an online gaming operation with an
initial focus on bingo. Due to adverse changes in North American gaming laws, in
August, 1999 our board, in the best interests of protecting our shareholders,
decided to prohibit gaming in jurisdictions with laws that prohibit online
gaming. From August, 1999 to December 31, we revised our business plan and
focused on the alternative of developing our prize based, play for free games
with an emphasis on 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 and we applied all of it's resources to our
revised business plan. In 1998, we had no active business operations, material
transactions or operating results. As a result, we believe that a comparison of
our results for the year ended December 31, 1999 versus 1998 is not meaningful.
Total assets increased to $4,990,371 as of December 31, 1999 compared to
$157,600 at the beginning of the fiscal year. The primary source of this
increase was $7,066,374 raised through the issuance of common stock for general
corporate purposes, and $226,563 of common shares allocated for issue to pay for
software and website development . We invested $281,395 in office and computer
equipment including software development equipment. $37,865 of capital equipment
was purchased through long term capital leases over terms of 24 to 60 months. We
also acquired the Bingo.com domain name during 1999 for $200,000 in cash and
500,000 shares of our common stock, which was valued at $2.00 per share. Our
cash position increased by
23
$3,386,640 and our working capital position increased to $3,251,649 from a
deficit of $1,804, primarily due to previously noted financing activities
undertaken during 1999.
$1,254,944 of $2,487,338 of total expenses for continuing operations for the
year ended December 31, 1999 was for general and administrative expenses
associated with the start 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 for preparation and review of our
registration statement, insurance and other general corporate and office
expenses. The balance of general and administrative expenses was $286,346 for
stock based compensation costs for our executive and corporate staff, $40,669
for amortization of capital assets.
Marketing and advertising expenses were $490,234 for the year ended December 31,
1999. We spent $292,392 on initial awareness advertising and for 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 the twelve months ended December 31,
1999, was $2,361,337, including the domain name royalty payment of $50,000 and
$358,241 of software developments costs and website improvements. We expect
similar or greater losses into the foreseeable future as we build our
operations.
Our loss for the twelve months ended December 31, 1999 from our discontinued
gaming operation based in Antigua was $494,107. These costs include management
and customer service payroll and consultants costs, premises costs, website
advertising expenses and our gaming software development costs. Also included in
the loss is a provision for future costs associated with winding up the
operation in 2000 of $60,000.
We had a net loss of $2,908,640 or $.31 per share for the year ended December
31, 1999, including net interest income earned on our surplus cash balances of
$125,901. 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.
Year Ended December 31, 1998 Compared to December 31, 1997
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.
LIQUIDITY AND CAPITAL RESOURCES
We raised an aggregate of $6,066,374 in capital, net of share issuance costs,
through private placements during 1999 to finance our operations. We also
allocated $226,563 in share capital for software development for our website, to
be issued to an arms length developer. We financed a portion of our capital
equipment purchases with $37,865 of capital lease financing and repaid $14,048
under contractual terms. We have not yet generated any net revenue from our
business operations.
As at December 31, 1999, we had cash and cash equivalents of $3,382,529 versus
$157,600 at the beginning of the year. Our working capital position was
$3,251,649. We used $1,972,765
24
for continuing operating activities, $475,049 for discontinued operations during
the twelve months ended December 31, 1999 and $482,300 for investing activities.
Our investing activities includes $281,395 for the purchase of office, computer
and software development equipment, $200,905 for our domain name purchase.
We currently project that available cash balances will be sufficient to fund our
operations for the next 6 - 8 months, provided that we do not identify and
complete any acquisitions. We are currently seeking additional equity financing
to implement planned investments in advertising, software development and
personnel, to open an 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.
YEAR 2000 COMPLIANCE
Prior to January 1, 2000, we devoted resources in an effort to ensure that our
proprietary software, the third-party software on which we rely, and the
underlying systems and protocols did not contain error associated with Year 2000
date functions. Since January 1, 2000 we have not experienced any disruption as
a result of Year 2000 problems.
Item 7A. Quantitative and Qualitative Disclosures about Market Risk
We currently have instruments sensitive to market risk relating to exposure in
changing interest rates and market prices. We do not enter into financial
instruments for trading or speculative purposes and do not currently utilize
derivative financial instruments. Our operations are conducted primarily in the
United States and as such are not subject to material foreign currency exchange
rate risk.
The fair value of our investment portfolio or related income would not be
significantly impacted by either a 100 basis point increase or decrease in
interest rates due mainly to the short term nature of the majority of our
investment portfolio.
Item 8. Financial Statements and Supplementary Data
Reference is made to the financial statements listed under the heading
"Financial Statements" of Item 14 herein, which financial statements are
incorporated herein by reference in response to this Item 8.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
On August 31, 1998, Barry L. Friedman, P.C. resigned as our independent
auditors. Our financial statements for the years ended December 31, 1997 and
1996 contain no adverse opinion or disclaimer of opinion and have not been
qualified or modified as to uncertainty, audit scope, or accounting opinion.
Barry L. Friedman, P.C. has not been associated with any of our financial
statements subsequent to August 31, 1998. The change in independent chartered
accountants was effective for fiscal 1998, was approved by our board of
directors and was not due to any disagreement between us and Barry L. Friedman,
P.C.
25
During the period two financial years prior to and preceding the change in
independent auditors, there were no disagreements with Barry L. Friedman, P.C.
on any matter of accounting principles or practices, financial statement
disclosures or auditing scope or procedure, which disagreements if not resolved
to the satisfaction of Barry L. Friedman, P.C. would have caused them to make
reference thereto in their report on our financial statements for the period. We
have authorized Barry L. Friedman, P.C. to respond fully to any subject matter
of any potential disagreement with respect to our financial statements.
We have not been advised by Barry L. Friedman, P.C. or our current auditors,
Davidson and Company, Chartered Accountants, of any of the following: (A) lack
of internal controls necessary to for us to develop reliable financial
statements; (B) any information that has come to the attention of our auditors
that has led them to no longer be able to rely on management's representations
or that has made them unwilling to be associated with the financial statements
prepared by management; (C) any need to expand significantly the scope of our
auditors' audit or information that has come to our auditors' attention during
the period two financial years prior to and preceding the change in our
independent auditors that if further investigated, would (i) materially impact
the fairness or reliability of the previously issued audit report or the
financial statements issued or covering such period or (ii) cause our auditors
to become unwilling to rely on management's representations or that has made
them unwilling to be associated with our financial statements, or due to the
resignation of Barry L. Friedman, P.C. or any other reason, our auditor did not
so expand the scope of the audit or conduct such further investigation; and (D)
any information that has come to the attention of our auditors that has led them
to conclude that such information materially impacts the fairness or reliability
of the audit reports or the financial statements issued covering the period two
financial years prior to and preceding the change in our independent auditors
(including information that, unless resolved, to the satisfaction of such
auditor, would prevent it from rendering an unqualified audit report on those
financial statements) and due to the resignation of Barry L. Friedman, P.C. or
any other reason, any issue has not been resolved to such auditor's satisfaction
prior to Barry L. Friedman, P.C.'s resignation.
We engaged Davidson and Company, Chartered Accountants, as our independent
auditors on February 1, 1999. We engaged Davidson and Company to audit our
financial statement for the year ended December 31, 1998 and 1999. There were no
disagreements with Barry L. Friedman, P.C. on any matter of accounting
principles or practices, financial statement disclosures or auditing scope or
procedure, which disagreements if not resolved to the satisfaction of Barry L.
Friedman, P.C. would have caused them to make reference thereto in their report
on our financial statements for the period.
26
Item 10. Directors and Executive Officers of the Registrant
The information set forth under the captions "Election of Directors" and
"Section 16(a) Beneficial Ownership Reporting Compliance" in the Company's
definitive Proxy Statement for its 2000 Annual Meeting of Shareholders to be
filed with the Securities and Exchange Commission on or before April 29, 2000
(the Proxy Statement is incorporated herein by reference).
Item 11. Executive Compensation.
The information set forth under the captions "Executive Compensation and Other
Information" and "Compensation of Directors" in the Proxy Statement is
incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information set forth under the captions "Securities Ownership of Certain
Beneficial Owners" and "Securities Ownership of Management" in the Proxy
Statement is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
The information set forth under the caption "Certain Relationships and Related
Transactions between Management and the Company" in the Proxy Statement is
incorporated herein by reference.
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
The following financial statements and related schedules are included in this
Item:
(a) (1) Financial Statements
Audited Financial Statements
Auditor's Report
Bingo.com, Inc. (formerly Progressive General Lumber Corp.) Consolidated
Balance Sheets as at December 31,1999.
Bingo.com, Inc. (formerly Progressive General Lumber Corp.) Consolidated
Statements of Income and Deficit for the periods ended December 31, 1999
and 1998.
Bingo.com, Inc. (formerly Progressive General Lumber Corp.) Consolidated
Statements of Changes in Financial Position for the periods ended December
31, 1999 and 1998.
Notes to Consolidated Financial Statements.
(2) Financial Statement Schedules
Financial statement schedules have been omitted because they are
inapplicable or the required information is shown in the Consolidated
Financial Statements or Notes thereto.
27
(3) 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.
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.
28
Exhibit
Number Description
- ------ -----------
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.
10.13** Employment Agreement by and between Bingo.com, Inc. and Shane
Murphy dated June 17, 1999, effective July 1, 1999.
10.14** Agent Agreement by and between Bingo.com, Inc. and Access World,
Inc. dated April 6, 1999,
21.1** List of Subsidiaries of Registrant
27.1 Financial Data Schedule
- -------------------------
* Previously filed with the Registrant's registration statement on Form 10 on
June 9, 1999.
** Previously filed with the Registrant's amended registration statement on
Form 10 on August 31, 1999.
29
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:
Bingo.com, Inc.
March 30, 2000 /s/ Shane Murphy
- ----------------- ----------------------------------------------
(Date) Shane Murphy, Chief Executive Officer and
Sole Director
BINGO.COM, INC.
(formerly Progressive General Lumber Corp.)
(A Development Stage Company)
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
A Partnership of
Incorporated Professionals
DAVIDSON & COMPANY=========Chartered Accountants================================
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Bingo.com, Inc.
(formerly Progressive General Lumber Corp. )
(A Development Stage Company)
We have audited the balance sheets of Bingo.com, Inc. (formerly Progressive
General Lumber Corp.) as at December 31, 1999 and 1998 and the statements of
operations, stockholders' equity and cash flows for the years then ended and the
cumulative amounts from incorporation on January 12, 1987 to December 31, 1999.
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 audits.
We conducted our audits 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 audits 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, 1999 and 1998
and the results of its operations and stockholders' equity and its cash flows
for the years then ended and the cumulative amounts from incorporation on
January 12, 1987 to December 31, 1999 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 2 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 2. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
/s/ Davidson & Company
Vancouver, Canada Chartered Accountants
February 25, 2000
A Member of Accounting Group International
==========================================
Suite 1270, Stock Exchange Tower, 609 Granville Street, P.O. Box 10372,
Pacific Centre, Vancouver, B.C., Canada V7Y 1G6
Telephone (604) 687-0947 Fax (604) 687-6172
F-1
BINGO.COM, INC.
(formerly Progressive General Lumber Corp.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
(Expressed in United States Dollars)
AS AT DECEMBER 31
================================================================================
1999 1998
- ----------------------------------------------------------------------------------------------------------------------------
ASSETS
Current
Cash and cash equivalents(Note 4) $ 3,382,529 $ 157,600
Accounts receivable (allowance - Nil) 102,239 -
Prepaid expenses and security deposits 83,030 -
--------------- --------------
3,567,798 157,600
Capital assets (Note 5) 221,668 -
Domain name rights (Note 6) 1,200,905 -
--------------- --------------
$ 4,990,371 $ 157,600
============================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
Accounts payable and accrued liabilities $ 187,914 $ 159,404
Loan payable (Note 7) 53,912 -
Provision for discontinued operations 60,000 -
Current portion of capital obligations 14,323 -
--------------- --------------
316,149 159,404
Capital lease obligations (Note 8) 9,494 -
--------------- --------------
325,643 159,404
--------------- --------------
Stockholders' equity
Capital stock
Authorized
50,000,000 common shares with a par value of $0.001
Issued
9,916,668 shares (December 31, 1998 - 1,000,000 shares) 9,917 1,000
Additional paid in capital 7,347,803 4,000
Shares allotted for issue (Note 17a) 226,563 -
Deficit accumulated during the development stage (2,915,444) (6,804)
Accumulative comprehensive other income (4,111) -
--------------- --------------
4,664,728 (1,804)
--------------- --------------
$ 4,990,371 $ 157,600
============================================================================================================================
Nature and continuance of operations (Note 1)
Subsequent events (Note 17)
Commitment (Note 18)
On behalf of the Board:
Director
- ---------------------------------
The accompanying notes are an integral part of these
consolidated financial statements.
F-2
BINGO.COM, INC.
(formerly Progressive General Lumber Corp.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in United States Dollars)
================================================================================
Cumulative
Amounts
from
Incorporation
on
January 12,
1987 to Year Ended Year Ended
December 31, December 31, December 31,
1999 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------
OPERATING EXPENSES
General and administrative $ 1,588,863 $ 1,581,959 $ -
Marketing and advertising 490,234 490,234 -
Royalties - domain name 50,000 50,000 -
Software and web site development 358,241 358,241 -
-------------- --------------- ---------------
(2,487,338) (2,480,434) (1,904)
OTHER ITEM
Interest income 126,001 125,901 100
-------------- --------------- ---------------
Loss from continuing operations (2,361,337) (2,354,533) (1,804)
-------------- --------------- ---------------
Loss from discontinued operations, net of income taxes (494,107) (494,107) -
Estimated loss on disposal of discontinued operations (60,000) (60,000) -
-------------- --------------- ---------------
Loss from discontinued operations (554,107) (554,107) -
-------------- --------------- ---------------
Loss for the year $ (2,915,444) $ (2,908,640) $ (1,804)
============================================================================================================================
Loss from continuing operations $ - $ (0.25) $ (0.01)
Loss from discontinued operations - (0.05) -
Loss on disposal of discontinued operations - (0.01) -
-------------- --------------- ---------------
Basic and diluted loss per share (Note 3) $ - $ (0.31) $ (0.01)
============================================================================================================================
Weighted average shares outstanding - 9,278,084 1,000,000
============================================================================================================================
The accompanying notes are an integral part of these
consolidated financial statements.
F-3
BINGO.COM, INC.
(formerly Progressive General Lumber Corp.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS
(Expressed in United States Dollars)
================================================================================
Cumulative
Amounts
from
Incorporation
on
January 12,
1987 to Year Ended Year Ended
December 31, December 31, December 31,
1999 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------
Net loss $ (2,910,444) $ (2,908,640) $ (1,804)
-------------- -------------- --------------
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments (4,111) (4,111) -
-------------- -------------- -------------
Other comprehensive income (loss) (4,111) (4,111) -
-------------- -------------- -------------
Comprehensive income $ (2,914,555) $ (2,912,751) $ (1,804)
============================================================================================================================
Loss from continuing operations $ - $ (0.25) $ (0.01)
Loss from discontinued operations - (0.05) -
Loss on disposal of discontinued operations - (0.01) -
-------------- -------------- -------------
Basic and diluted loss per share (Note 3) $ - $ (0.31) $ (0.01)
============================================================================================================================
Weighted average shares outstanding - 9,278,084 1,000,000
============================================================================================================================
The accompanying notes are an integral part of these
consolidated financial statements.
F-4
BINGO.COM, INC.
(formerly Progressive General Lumber Corp.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(Expressed in United States Dollars)
================================================================================
Deficit
Accumulated
Capital Stock Additional Cumulative Shares During the
------------- --------------- Paid-in Translation Allotted for Development
Shares Amount Capital Adjustment Issue Stage Total
- -----------------------------------------------------------------------------------------------------------------------------
Balance, December 31,
1995, 1996 and 1997 1,000,000 $ 1,000 $ 4,000 $ - $ - $ (5,000) $ -
Loss for the year - - - - - (1,804) (1,804)
------------ ------------ ----------- ----------- ----------- ------------ ------------
Balance, December 31,
1998 1,000,000 1,000 4,000 - - (6,804) (1,804)
January, 1999 Private
placement
(Note 10a) 7,500,000 7,500 67,500 - - - 75,000
January, 1999
Domain name
rights (Note 6) 500,000 500 999,500 - - - 1,000,000
February, 1999
Private placement
(Note 10b) 500,000 500 999,500 - - - 1,000,000
April, 1999 Private
placement
(Note 10c) 416,668 417 4,999,600 - - - 5,000,017
Share issuance costs - - (8,643) - - - (8,643)
Loss for the year - - - - - (2,908,640) (2,908,640)
Accumulative
comprehensive
other income - - - (4,111) - - (4,111)
------------ ------------ ----------- ----------- ----------- ------------ ------------
9,916,668 9,917 7,061,457 (4,111) - (2,915,444) 4,151,819
Stock based
compensation costs
(Note 12) - - 286,346 - - - 286,346
Shares allotted for
issue (Note 17a) - - - - 226,563 - 226,563
------------ ------------ ----------- ----------- ----------- ------------ ------------
Balance, December 31,
1999 9,916,668 $ 9,917 $ 7,347,803 $ (4,111) $ 226,563 $ (2,915,444) $ 4,664,728
=============================================================================================================================
The accompanying notes are an integral part of these
consolidated financial statements.
F-5
BINGO.COM, INC.
(formerly Progressive General Lumber Corp.)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Expressed in United States Dollars)
================================================================================
Cumulative
Amounts
from
Incorporation
on
January 12,
1987 to Year Ended Year Ended
December 31, December 31, December 31,
1999 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Continued operations
Loss for the year $ (2,361,337) $ (2,354,533) $ (1,804)
Adjustment to reconcile net loss
to net cash used in operating activities
Amortization 40,669 40,669 -
Stock based compensation costs 286,346 286,346
Change in non-cash working capital items
Increase in accounts receivable (102,239) (102,239) -
Increase in prepaid expenses and security deposits (83,030) (83,030) -
Increase in accounts payable and accrued liabilities 192,914 28,510 159,404
Increase in loan payable 53,912 53,912 -
--------------- --------------- --------------
Net cash used in continued operating activities (1,972,765) (2,130,365) 157,600
--------------- --------------- ---------------
Discontinued operations
Loss for the year (554,107) (554,107) -
Adjustment to reconcile net loss
to net cash used in operating activities
Amortization 19,058 19,058 -
Loss on disposal of discontinued operations 60,000 60,000 -
--------------- --------------- --------------
Net cash used in discontinued operating activities (475,049) (475,049) -
--------------- --------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Domain name rights (200,905) (200,905) -
Equipment (281,395) (281,395) -
--------------- --------------- --------------
Net cash used in investing activities (482,300) (482,300) -
--------------- --------------- --------------
- continued -
F-6
BINGO.COM, INC.
(formerly Progressive General Lumber Corp.)
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Expressed in United States Dollars)
================================================================================
Cumulative
Amounts
from
Incorporation
on
January 12,
1987 to Year Ended Year Ended
December 31, December 31, December 31,
1999 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------
Continued.....
CASH FLOWS FROM FINANCING ACTIVITIES
Capital lease obligations 23,817 23,817 -
Proceeds from issuance of common stock 6,075,017 6,075,017 -
Shares allotted for issue 226,563 226,563
Share issuance costs (8,643) (8,643) -
--------------- --------------- --------------
Net cash provided by financing activities 6,316,754 6,316,754 -
--------------- --------------- --------------
Net increase in cash and cash equivalents 3,386,640 3,229,040 157,600
Effect of exchange rates on cash and cash equivalents (4,111) (4,111) -
Cash and cash equivalents at the beginning of year - 157,600 -
--------------- --------------- --------------
Cash and cash equivalents at end of year $ 3,382,529 $ 3,382,529 $ 157,600
=============================================================================================================================
Supplemental disclosure with respect to cash flows (Note 13)
The accompanying notes are an integral part of these
consolidated financial statements.
F-7
BINGO.COM, INC.
(formerly Progressive General Lumber Corp.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
================================================================================
1. HISTORY AND ORGANIZATION OF THE COMPANY
The Company was organized on January 12, 1987, under the laws of the State
of Florida as Progressive General Lumber Corp. On January 22, 1999, the
Company changed its name to Bingo.com, Inc. The Company is a development
stage high tech company created to provide an online bingo gaming business
via the Internet. During 1999, the Company decided to diversify into the
non-gambling internet business by developing a new free bingo based
entertainment and lifestyle portal.
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.
In addition, the Company forward split its common stock 200:1, thus
increasing the number of outstanding common shares from 5,000 shares to
1,000,000 shares. All common share and per share data have been
retroactively adjusted to reflect the stock split.
2. GOING CONCERN
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 in
this regard to obtain additional working capital through equity financings.
3. SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
These consolidated financial statements include the accounts of the Company
and the accounts of its wholly owned subsidiaries, Bingo.com (Canada) Inc.,
Bingo.com (Antigua) Inc. and Bingo.com (Wyoming) Inc. All inter-company
balances and transactions have been eliminated upon consolidation.
Revenue recognition
The Company intends to generate revenue from the sale of advertising space
and time on the web-site, entering into arrangements with sponsors to post
links to their web-sites and running promotional campaigns for arranged
fees. Revenue will be recognized when the services have been performed and
the collection is reasonably assured.
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.
F-8
BINGO.COM, INC.
(formerly Progressive General Lumber Corp.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
================================================================================
3. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
Cash and cash equivalents
Cash and cash equivalents include highly liquid investments with original
maturities of three months or less.
Software development
The Company has adopted Statement of Position 98-1 ("SOP 98-1") "Accounting
for the Costs of Computer Software Developed or Obtained for Internal Use",
as its accounting policy for internally developed computer software costs.
Under SOP 98-1, computer software costs incurred in the preliminary
development stage are expensed as incurred. Computer software costs
incurred during the application development stage are capitalized and
amortized over the software's estimated useful life.
Domain name
The Company has capitalized the cost of the purchase of the domain name
Bingo.com and will amortize the cost over five years from the date of
commencement of operations.
Capital assets
Capital assets will be recorded at cost less accumulated amortization.
Amortization will be provided for annually using the declining balance
method at the following rates:
Office & computers 20%
Software development and web-site equipment 30%
Advertising costs
The Company recognizes advertising expenses in accordance with Statement of
Position 98-7, "Reporting on Advertising Costs'. As such, the Company
expenses the cost of communicating advertising in the period in which the
advertising space or airtime is used.
Gaming license
The company's gaming license represents an annual cost of securing and
maintaining a license to operate an online internet bingo in the Country of
Antigua. The annual costs of the license of $100,000 were expensed as part
of the loss from discontinued operations in 1999 as the Company is no
longer operating the online internet bingo game in Antigua.
Foreign currency translation
The Company accounts for foreign currency transactions and translation of
foreign currency financial statements under Statement of Financial
Accounting Standards No. 52, "Foreign Currency Translation" ("SFAS 52").
Transaction amounts denominated in foreign currencies are translated 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. Non monetary assets and liabilities
are translated at the exchange rate on the original transaction date. Gains
and losses from restatement of foreign currency monetary and non-monetary
assets and liabilities are included in income. Revenues and expenses are
translated at the rates of exchange prevailing on the dates such items are
recognized in earnings.
F-9
BINGO.COM, INC.
(formerly Progressive General Lumber Corp.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
================================================================================
3. SIGNIFICANT ACCOUNTING POLICIES (cont'd.....)
Foreign currency translation (cont'd.....)
Financial statements of the Company's Canadian subsidiary, Bingo.com
(Canada) Inc. are translated into US dollars using the exchange rate at the
balance sheet date for assets and liabilities. The functional currency of
Bingo.com (Canada) Inc. is the local currency, the Canadian dollar.
Translation adjustments, if necessary, are recorded as a separate component
of Stockholders' Equity.
Accounting for derivative instruments and hedging activities
In September 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133 ("SFAS 133"),
"Accounting for Derivative Instruments and Hedging Activities" which
establishes accounting and reporting standards for derivative instruments
and for hedging activities. SFAS 133 is effective for all fiscal quarters
of fiscal years beginning after June 15, 1999. In June 1999, the FASB
issued SFAS 137 to defer the effective date of SFAS 133 to fiscal quarters
of fiscal years beginning after June 15, 2000. The Company does not
anticipate that the adoption of the statement will have a significant
impact on its financial statements.
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.
Loss per share
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS
128"). Under SFAS 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.
Comprehensive income
The Company has adopted Statement of Financial Accounting Standards No. 130
("SFAS 130"), "Reporting Comprehensive Income". This statement establishes
rules for the reporting of comprehensive income and its components. The
adoption of SFAS 130 had no impact on total stockholders' equity as of
December 31, 1999.
F-10
BINGO.COM, INC.
(formerly Progressive General Lumber Corp.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
================================================================================
4. CASH AND CASH EQUIVALENTS
Cash and cash equivalents contain an amount of $22,352 representing a
pledge collateral for a corporate credit card.
5. CAPITAL ASSETS
===================================================================================================================
Net Book Value
Accumulated --------------- --------------
Cost Amortization 1999 1998
-------------------------------------------------------------------------------------------------------------------
Office and computer equipment $ 123,506 $ 24,309 $ 99,197 $ -
Software development and web-site equipment 157,889 35,418 122,471 -
-------- ------- -------- -------
$ 281,395 $ 59,727 $ 221,668 $ -
===================================================================================================================
Software development costs represent amounts incurred to develop the
Company's portal web-site.
6. DOMAIN NAME RIGHTS
An agreement to purchase the right to use the domain name Bingo.com was
acquired as follows:
- $200,000 cash (paid)
- 500,000 common shares (issued) at a deemed price of $2.00 per
share
In addition, the Company is required to make quarterly royalty payments
with a minimum guarantee of $1,100,000. Commencing July 1, 1999, a payment
of $50,000 is due 60 days after the end of each business quarter, for four
consecutive quarters. On July 1, 2000, four more consecutive payments of
$75,000 are due 60 days after the end of each business quarter. On July 1,
2001, four more consecutive payments of $100,000 are due 60 days after the
end of each business quarter. During the current year, royalties of $50,000
were paid.
======================================================= ===============
Domain name 1999 1998
------------------------------------------------------- ---------------
Bingo.com $ 1,200,000 $ -
Other 905 -
------------- ------------
$ 1,200,905 -
======================================================= ===============
7. LOAN PAYABLE
The loan payable of $50,000 to Lindlay Equity Fund bears interest at 12%
per annum with no specific terms of repayment. During the current year,
interest expense of $3,912 was accrued.
F-11
BINGO.COM, INC.
(formerly Progressive General Lumber Corp.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
================================================================================
8. CAPITAL LEASE OBLIGATIONS
Future minimum lease payments under capital leases are as follows:
============================================================================
1999 1998
------------------------------------------------------------- --------------
Total minimum lease payments $ 25,639 $ -
Less: amount representing interest (1,822) -
------------- ------------
Balance of obligation 23,817 -
Less: due within one year (14,323) -
------------- ------------
$ 9,494 $ -
============================================================================
9. COMPREHENSIVE INCOME
Total comprehensive loss for the year ended December 31, 1999 and 1998 were
$(2,912,751) and $(1,804), respectively. The only item included in other
comprehensive loss is foreign currency translation adjustments in the
amounts of $4,111 and $Nil, respectively for the years ended December 31,
1999 and 1998.
============================================================================
Foreign Accumulated
Currency Compre-
Translation hensive
Adjustment Loss
----------------------------------------------------------------------------
Beginning balance, December 31, 1998 $ - $ -
Current - year change (4,111) (4,111)
------------- -------------
Ending balance, December 31, 1999 $ (4,111) $ (4,111)
============================================================================
10. CAPITAL STOCK
a) The Company issued 7,500,000 shares under a private placement for
$0.01 per share for total proceeds of $75,000.
b) The Company issued 500,000 units through a private placement, each
unit consisting of one common share and one share purchase warrant for
$2.00 per unit for total proceeds of $1,000,000. Each share purchase
warrant entitles the holder to acquire one additional common share at
$2.00 per share until February 11, 2000.
c) The Company issued 416,668 units through a private placement, each
unit consisting of one share and one share purchase warrant for $12.00
per unit for total proceeds of $5,000,017. Each share purchase warrant
entitles the holder 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.
F-12
BINGO.COM, INC.
(formerly Progressive General Lumber Corp.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
================================================================================
11. OPTIONS AND WARRANTS
At December 31, 1999, employee and director incentive stock options were
outstanding enabling the optionees to acquire the following number of
common shares.
======================================================================
Number Exercise
of Shares Price Expiry Date
----------------------------------------------------------------------
600,000 $4.75 July 1, 2004
215,000 3.00 December 1, 2004
210,000 1.45 December 1, 2004
======================================================================
At December 31, 1999, warrants were outstanding enabling the holders to
acquire the following number of common shares:
======================================================================
Number Exercise
of Shares Price Expiry Date
----------------------------------------------------------------------
500,000 $2.00 February 11, 2000
416,668 12.00 April 22, 2000
then at 15.00 April 22, 2001
======================================================================
12. STOCK BASED COMPENSATION PLAN
Compensation
The Company applies Accounting Principles Board Opinion No. 25 in
accounting for its stock option plan. There were compensation costs of
$286,346 incurred based on options granted in 1999. Had compensation cost
been recognized on the basis of fair value pursuant to Statement of
Financial Accounting Standards No. 123, net income and loss per share would
have been adjusted as follows:
=========================================================================
Year Ended Year Ended
1999 1998
-------------------------------------------------------------------------
Net loss
As reported $ (2,908,640) $ (1,804)
============== ===============
Pro forma $ (2,858,522) $ (1,804)
============== ===============
Basic and diluted loss per share
As reported $ (0.31) $ (0.01)
============== ===============
Pro forma $ (0.31) $ (0.01)
==========================================================================
F-13
BINGO.COM, INC.
(formerly Progressive General Lumber Corp.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
================================================================================
12. STOCK BASED COMPENSATION PLAN (cont'd.....)
In determining the fair value of these employee stock options, the
following assumptions were used:
===========================================================================
1999 1998
---------------------------------------------------------------------------
Risk free interest rate 5.00% -
Expected life 5 years -
Expected volatility 141.03% -
Expected dividends - -
===========================================================================
The following is a summary of the status of stock options outstanding at
December 31, 1999:
=====================================================================================================================
Outstanding Options Exercisable Options
------------------- -------------------
Weighted
Average Weighted Weighted
Remaining Average Average
Range of Contractual Exercise Exercise
Exercise Prices Number Life (Years) Price Number Price
---------------------------------------------------------------------------------------------------------------------
$ 4.75 600,000 4.50 4.75 37,500 4.75
3.00 215,000 3.92 3.00 20,000 3.00
1.45 210,000 3.92 1.45 26,667 1.45
=====================================================================================================================
Following is a summary of the stock based compensation plan during 1999:
====================================================================================================================
Weighted
Average
Number Exercise
of Shares Price
--------------------------------------------------------------------------------------------------------------------
Outstanding and exercisable at January 1, 1999 - $ -
Granted 1,025,000 3.72
Exercised - -
Forfeited - -
------------- -------------
Outstanding and exercisable at December 31, 1999 1,025,000 $ 3.72
============= =============
Weighted average fair value of options granted during 1999 $ 2.35
=====================================================-==============================================================
F-14
BINGO.COM, INC.
(formerly Progressive General Lumber Corp.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
================================================================================
13. SUPPLEMENTAL DISCLOSURES WITH RESPECT TO OPERATING, FINANCING AND INVESTING
ACTIVITIES
Cumulative
Amounts
from
Incorporation
on
January 12,
1987 to Year Ended Year Ended
December 31, December 31, December 31,
1999 1999 1998
---------------------------------------------------------------------------------------------------------------------
Cash paid during the year for interest $ - $ 12,630 $ -
Cash paid during the year for income taxes - - -
Non cash investing and financing activities:
Issuance of common stock for domain name rights 1,000,000 1,000,000 -
=====================================================================================================================
For the year ended December 31, 1999, the Company issued 500,000 common
shares at a deemed price of $2.00 for the purchase of a domain name (Note
6). There were not non-cash transactions for the year ended December 31,
1998.
14. DISCONTINUED OPERATIONS
Subsequent to year end, the Company announced that it has discontinued and
wound-up its Antigua based internet gaming operations. These financial
statements have been adjusted to include the effects of reclassification of
the discontinued operation. In addition, the Company recorded a provision
of $60,000 for on-going costs associated with the wind-up in the next
fiscal year.
The balance sheet includes the following amounts applicable to the Antigua
operations:
==============================================================================================
1999 1998
- ----------------------------------------------------------------------------------------------
Current assets $ 7,782 $ -
Capital assets, net of accumulated depreciation 67,494 -
Other assets 21,175 -
Current liabilities 51,550 -
Non-current liabilities 53,912 -
==============================================================================================
F-15
BINGO.COM, INC.
(formerly Progressive General Lumber Corp.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
================================================================================
15. RELATED PARTY TRANSACTIONS
During the year, the Company entered into the following transactions with
related parties:
a) The Company entered into an employment agreement with the Company's
President, Chief Executive Officer, Secretary and Treasurer and Sole
Director ("Sole Officer and Director"), effective July 1, 1999. The
initial term of the agreement is three years at a salary rate of
$250,000 (Canadian dollars) or approximately $172,000 (US dollars) per
year. The Company also granted options to acquire 600,000 shares of
the Company's common stock at a price of $4.75 per share (Note 11),
subject to vesting provisions. In the event of termination of
employment, provisions exist for certain compensation if the contract
is terminated prematurely.
The Company's Board of Directors agreed to re-price the share purchase
options granted to the Company's Sole Officer and Director to reflect an
exercise price of $1.31 per share and amend certain vesting terms. The
amendment and re-pricing is subject to shareholder ratification at the next
annual meeting of the shareholders.
b) The Company provided an interest-free loan to the Company's Sole
Officer and Director of $70,000 Canadian dollars ($48,212 US dollars),
repayable over 12 months. As at December 31, 1999, $49,583 Canadian
dollars ($34,336 US dollars) remained outstanding, in addition to
$5,286 Canadian dollars ($3,640 US dollars) of other unsecured
advances. The amounts are included in the Company's accounts
receivable.
16. INCOME TAXES
Subject to certain restrictions, the Company has certain operating losses
available to reduce taxable income of future years. Future tax benefits
which may arise as a result of these losses and resource deductions have
not been recognized in these financial statements.
The Company has not recorded potential future income tax benefits of
$991,000 in operating losses which expire as follows:
2012 $ 5,000
2019 1,804
2020 2,908,640
---------------
$ 2,915,444
A reconciliation of the U.S. statutory federal income tax rate to the
effective rate is as follows:
=====================================================================================================================
December 31, December 31,
1999 1998
- ---------------------------------------------------------------------------------------------------------------------
U.S. federal statutory graduated rate 15.00% 15.00%
State income tax rate, net of federal benefit 7.00% 7.00%
Net operating loss for which no tax benefit is currently available (22.00)% (22.00)%
------------- -------------
0.00% 0.00%
=====================================================================================================================
F-16
BINGO.COM, INC.
(formerly Progressive General Lumber Corp.)
(A Development Stage Company)
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1999
================================================================================
16. INCOME TAXES (cont'd.....)
At December 31, 1999, deferred taxes consisted of a net tax asset of
$991,000 due to operating loss carryforwards of $2,915,444, which was fully
allowed for in the valuation allowance of $991,000. The valuation allowance
offsets the net deferred asset for which there is no assurance of recovery.
The change in the valuation allowance for the years ended December 31, 1998
and 1999 were $1,700 and $989,300, respectively. Net operating loss
carryforwards will expire in 2020.
The valuation allowance will be evaluated at the end of each year,
considering positive and negative evidence about whether the asset will be
realized. At that time, the allowance will either be increased or reduced;
reduction could result in the complete elimination of the allowance if
positive evidence indicates that the value of the deferred tax asset is not
longer impaired and the allowance is no longer required.
17. SUBSEQUENT EVENTS
a) The Company issued 125,000 common share at a price of $1.8125 per
share to Stratford Technologies Inc. ("Stratford") in return for
Stratford's services to develop the Company's portal web-site.
b) In February, 2000, the Company announced that it would discontinue its
Antigua based gaming operations and was proceeding with a wind-up of
the operations.
c) The Company repaid the loan described in Note 7.
18. COMMITMENT
The Company has entered into an agreement in principle, to license its
gaming software to an unrelated part (the "Licensee"). The Licensee will
receive a perpetual, non-exclusive, non-transferable right to use the
Company's gaming software in jurisdictions where on-line gaming is
permitted by law. On closing, the Licensee will pay the Company $100,000
and on-going monthly royalties of 50% of Net Monthly Revenues. Net Monthly
Revenue is defined as gross gaming receipts net of winnings, less a maximum
of 5% for credit card processing fees and certain other operating expenses.
The Company anticipates completing the agreement in the first quarter of
2000.
F-17
EXHIBIT INDEX
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.
10.13** Employment Agreement by and between Bingo.com, Inc. and Shane
Murphy dated June 17, 1999, effective July 1, 1999.
Exhibit
Number Description
- ------ -----------
10.14** Agent Agreement by and between Bingo.com, Inc. and Access World,
Inc. dated April 6, 1999,
21.1** List of Subsidiaries of Registrant
27.1 Financial Data Schedule
- -------------------------
* Previously filed with the Registrant's registration statement on Form 10 on
June 9, 1999.
** Previously filed with the Registrant's amended registration statement on
Form 10 on August 31, 1999.