SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
BINGO & GAMING INTERNATIONAL, INC.
(Name of Registrant as Specified in its Charter)
N/A
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction
applies: N/A
2) Aggregate number of securities to which transaction applies:
N/A
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined: N/A
4) Proposed maximum aggregate value of transaction: N/A
5) Total fee paid: $0.
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: $0.
2) Form, Schedule or Registration Statement No.: N/A
3) Filing Party: N/A
4) Date Filed: N/A
BINGO & GAMING INTERNATIONAL, INC.
13581 Pond Springs Road, Suite 105
Austin, Texas 78729
(512) 335-0065
__________________
PROXY STATEMENT
__________________
Purpose.
- --------
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Bingo & Gaming
International, Inc., an Oklahoma corporation (the "Company"), to be voted at
the annual meeting of stockholders of the Company (the "Meeting"). The
Meeting is to be held at the La Quinta Inn, MoPac North, 11901 N. MoPac,
Austin, Texas 78759, on Wednesday, September 29, 1999, at 10:00 a.m. Central
Daylight Time. The accompanying Notice of Annual Meeting of Stockholders,
Annual Report to Security Holders, this Proxy Statement and the enclosed proxy
are first being mailed to stockholders on or about September 9, 1999.
The names of each of the Company's current directors will be
submitted to the stockholders at the Meeting for the purpose of a vote to
retain each director to serve until his successor is elected at the next
annual meeting of stockholders or until his prior death, resignation or
termination and the qualification of his successor. The Company's Board of
Directors has unanimously resolved to adopt the following resolutions, which
will also be submitted to the Company's stockholders at the Meeting:
(a) To amend the Company's Articles of Incorporation to change its
name to "BGI, Inc."
(b) To amend the Company's Articles of Incorporation to authorize a
class of 10,000,000 shares of non-voting preferred stock, with such dividend
and conversion rights as the Board of Directors shall determine; and
(c) To adopt the Company's 1999 Stock Option Plan.
The cost of preparing, printing and mailing each of these documents
and of the solicitation of proxies by the Company will be borne by the
Company. Solicitation will be made by mail. The Company will request
brokers, custodians, nominees and other like parties to forward copies of
proxy materials to beneficial owners of the Company's $0.001 par value common
stock (the "Common Stock") and will reimburse such parties for their
reasonable and customary charges or expenses in this regard.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF THE
AFOREMENTIONED PROPOSALS.
Record Date and Outstanding Shares.
- -----------------------------------
The Board of Directors has fixed September 8, 1999, as the record
date for the determination of holders of Common Stock entitled to notice of
and to vote at the Meeting. At the close of business on that date there were
8,859,389 shares of Common Stock outstanding and entitled to vote. Holders of
Common Stock will be entitled to one vote per share held and are not entitled
to cumulative voting rights in the election of directors.
Proxies and Revocability of Proxies.
- ------------------------------------
The enclosed proxy is being solicited by the Board of Directors for
use at the Meeting and any adjournments thereof and will not be voted at any
other meeting. All proxies that are properly executed, received by the
Company prior to or at the Meeting, and not properly revoked will be voted at
the Meeting or any adjournment thereof in accordance with the instructions
given therein.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be revoked by
(i) filing with the President of the Company, at or before the taking of the
vote at the Meeting, a written notice of revocation bearing a later date than
the date of the proxy; (ii) duly executing a subsequent proxy relating to the
same shares and delivering it to the President of the Company before the
Meeting; or (iii) attending the Meeting and voting in person (although
attendance at the Meeting will not in and of itself constitute a revocation of
a proxy). Any written notice revoking a proxy should be sent to Bingo &
Gaming International, Inc., 13581 Pond Springs Road, Suite 105, Austin, Texas
78729, Attention: George Majewski, President, or hand delivered to the
President, at or before the taking of the vote at the Meeting.
Quorum and Voting.
- ------------------
The presence in person or by proxy of at least one-third (1/3) of
the total number of outstanding shares of Common Stock entitled to vote at the
Meeting is required to constitute a quorum for the transaction of business at
the Meeting. Abstentions and broker non-votes will be considered represented
at the Meeting for the purpose of determining a quorum.
The shares represented by each proxy will be voted in accordance
with the instructions given therein. Where no instructions are indicated, the
proxy will be voted in favor of all matters to be voted on as set forth in the
proxy and, at the discretion of the persons named in the proxy, on any other
business that may properly come before the Meeting.
Under applicable law and the Company's Bylaws, if a quorum is
present at the Meeting, the five nominees for election to the Board of
Directors who receive the plurality of votes cast for the election of
directors by the shares present in person or represented by proxy will be
elected directors. Each stockholder will be entitled to one vote for each
share of Common Stock held and will not be entitled to cumulate votes in the
election of directors. All other matters submitted to a vote of the
stockholders at the meeting will be approved if a majority of votes cast at
the Meeting in person or by proxy vote in favor thereof.
Dissenters' Rights of Appraisal.
- --------------------------------
The Oklahoma General Corporation Act (the "Act") authorizes an
Oklahoma corporation to provide in its certificate of incorporation for
dissenter's rights of appraisal in the event of any amendment to the
corporation's certificate of incorporation. The Company's Articles of
Incorporation do not provide for any such rights. Accordingly, the Company's
stockholders will not have any rights of appraisal in connection with any of
the proposals set forth below.
PROPOSAL 1 -- ELECTION OF DIRECTORS
The Board of Directors of the Company will consist of five
directors, each of whom will be elected at the Meeting to serve until his
successor is elected at the next annual meeting of stockholders or until his
prior death, resignation or termination and the qualification of his
successor. Unless directed otherwise, proxies received from stockholders will
be voted FOR election of the following nominees: Reid Funderburk; George
Majewski; Robert H. Hughes; R. E. Wilkin; and Rick Redmond. All of these
nominees presently serve on the Board of Directors of the Company.
If any nominee is unable to stand for election, the shares
represented by all valid proxies will be voted for the election of such
substitute nominee as the Board of Directors may recommend. The Company is
not aware of any nominee that is or will be unable to stand for election.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL OF THE NOMINEES
NAMED ABOVE FOR DIRECTORS OF THE COMPANY.
The following table sets forth the names and the nature of all
positions and offices held by all directors and executive officers of the
Company for the year ended December 31, 1998, and to the date hereof, and the
period or periods during which each such director or executive officer has
served in his respective position.
Date of Date of
Positions Election or Termination
Name Held Designation or Resignation
---- ---- ----------- --------------
Reid Funderburk Chairman and CEO 12/94 *
Director 12/94 *
George Majewski President and COO 4/96 *
Director 12/94 *
Robert H. Hughes Director 12/94 *
R. E. Wilkin Director 12/94 *
Rick Redmond Director 9/97 *
Robert Chappell Secretary/ 9/97 *
Treasurer 9/97 4/99
Clay McCalla Vice President 9/97 *
Rhonda McClellan CFO/ 10/98 *
Treasurer 4/99 *
* These persons presently serve in the capacities indicated
opposite their respective names.
The term of office of the current directors shall continue until the
Meeting, at which time a new Board of Directors will be elected. The annual
meeting of the Board of Directors, at which officers for the coming year are
elected, immediately follows the annual meeting of stockholders.
Business Experience of Current Directors and Executive Officers.
- ----------------------------------------------------------------
Mr. Funderburk, age 46, began engaging in the bingo commercial
lessor business in 1987. Since then, he and/or companies with which he was
associated have owned and/or operated and/or managed thirteen bingo commercial
lessor operations. He has been a director and executive officer of the
Company's subsidiary Monitored Investment, Inc., and its affiliated companies
since their inception. He served as President of the Texas Bingo Commercial
Lessors Association from 1989 through 1993. Mr. Funderburk has prior
experience as the owner of a bank equipment and supply company and as a real
estate developer.
Mr. Majewski, age 56, has been associated with the Company and its
affiliated companies and/or predecessor companies since 1989. He holds a
B.B.A. from the University of Texas and has prior experience as an owner of
businesses in the entertainment, catering, concessions and vending industries.
Mr. Hughes, age 72, is a retired lawyer and a legislative consultant
in Austin, Texas. He spends much of his time representing various clients
in the charity bingo and amusement and vending industry.
Mr. Wilkin, age 67, is a retired CPA and a general business
consultant. He was a practicing CPA with Ernst & Whinney (now Ernst & Young),
an international accounting firm, from 1957 through 1984 and a partner in such
firm from 1969 through 1984. Since then, he has been involved with several
start-up companies, including AmeriCredit Corporation (NYSE). For the past
several years, Mr. Wilkin has been the Chief Financial Officer of US Cast
Products of Fort Worth, Texas.
Mr. Redmond, age 47, is the founding owner and major stockholder of
Lone Star Cafe, Inc., a restaurant chain based in Austin, Texas, with
operations in Texas and Colorado. He serves as Vice President of Real Estate
Acquisitions for that corporation. In addition, Mr. Redmond is General
Partner and majority stockholder of VIP Marina and Volente Beach Club located
on Lake Travis in Austin.
Mr. McCalla, age 41, graduated with a B.B.A. from Texas Tech
University in Lubbock, Texas, in 1980. He has been President of Logistics by
Clay, Inc., an event management corporation from 1988 to the present. Mr.
McCalla planned and managed executive travel programs for corporate clients
such as RJR Nabisco and PepsiCo. Mr. McCalla was Chief of Staff for State of
Texas Comptroller Bob Bullock from 1981 through 1985.
Mr. Chappell, age 39, graduated with an Associate of Applied
Sciences (Financial Management) degree from Community College of the Air Force
in 1993. He served with the Air Force in the positions of Financial Manager
and Auditor. In December, 1996, he accepted a position as a senior accountant
with the City of Austin Neighborhood Housing Division. Mr. Chappell accepted
his current position with the Company in September, 1997.
Ms. McClellan, age 47, is a Certified Public Accountant and held the
position of Manager in a regional public accounting firm in Texas,
specializing in Securities and Exchange Commission practice, prior to joining
the Company as Chief Financial Officer in October, 1998. For the previous
four years, she held the position of Finance Manager and Controller for a
department within the City of Austin. She holds a B.B.A. from the University
of Texas.
No family relationship exists between any current director or
executive officer.
Compliance with Section 16(a) of the Exchange Act.
- --------------------------------------------------
Reid Funderburk, an officer and director, disposed of 50,000 shares
of the Company's common stock as gifts on October 27, 1997, as disclosed in a
Form 4 Statement of Changes in Beneficial Ownership of Securities dated
December 4, 1997.
Mr. Funderburk disposed of 12,000 shares as gifts on November 6,
1997, as disclosed in a Form 4 dated December 5, 1997.
Mr. Fundberburk disposed of 50,000 shares as gifts on January 30,
1998, as disclosed in a Form 4 dated March 17, 1998.
Mr. Funderburk disposed of 12,374 shares as a gift on July 29, 1999,
as disclosed in a Form 4 dated August 16, 19999.
Mr. Funderburk disposed of 50,000 shares on August 10, 1999, as
disclosed in a Form 4 dated August 16, 1999.
Rhonda McClellan, an officer, purchased 100 shares on July 12, 1999,
100 shares on July 21, 1999, and 500 shares on August 4, 1999, as disclosed in
a Form 4 Initial Statement of Beneficial Ownership of Securities dated August
24, 1999.
George Majewski, an officer and director, disposed of 70,000 shares
as gifts to various persons on January 6, 1998, as reported on a Form 4 dated
March 17, 1998.
Clay McCalla, an officer, received 15,000 shares as a gift on
October 27, 1997, which was reported on a Form 3 dated May 3, 1999.
Robert Chappell, an officer, received 7,500 shares as a gift on
October 27, 1997, which was reported on a Form 3 dated April 30, 1999.
Involvement in Certain Legal Proceedings.
- -----------------------------------------
During the past five years, no present or former director, person
nominated to become a director, executive officer, promoter or control person
of the Company:
(1) Was a general partner or executive officer of any business
by or against which any bankruptcy petition was filed,
whether at the time of such filing or two years prior
thereto;
(2) Was convicted in a criminal proceeding or named the
subject of a pending criminal proceeding (excluding
traffic violations and other minor offenses);
(3) Was the subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated, of any court
of competent jurisdiction, permanently or temporarily
enjoining, barring, suspending or otherwise limiting his
or her involvement in any type of business, securities or
banking activities; or
(4) Was found by a court of competent jurisdiction in a civil
action or by the Securities and Exchange Commission or the
Commodity Futures Trading Commission to have violated any
federal or state securities or commodities law, and the
judgment has not been subsequently reversed, suspended or
vacated.
No director, executive officer, affiliate, or any owner of record or
beneficially of more than 5% of any class of voting securities of the Company
is a party adverse to the Company or has a material interest adverse to the
Company.
Certain Relationships and Related Transactions.
- -----------------------------------------------
Transactions with Management and Others.
- ----------------------------------------
During the years ended December 31, 1998, and 1997, and through the
first six months of 1999, there were no material transactions, or series of
similar transactions, or any currently proposed transactions, or series of
similar transactions, to which the Company or any of its subsidiaries was or
is to be a party, in which the amount involved exceeded $60,000 and in which
any director, executive officer or any security holder who is known to the
Company to own of record or beneficially more than 5% of any class of the
Company's common stock, or any member of the immediate family of any of the
foregoing persons, had an interest. However, Reid Funderburk, who is an
executive officer, director and 29% stockholder of the Company, and Henry A.
Anawaty, III, who owns more than 5% of the common stock of the Company, each
own 50% of the stock of Sharm, Inc., a corporation with which the Company
transacts more than $60,000 worth of business in a series of similar
transactions. Sharm, Inc., operates a bingo hall in which the Company has
placed 10 pre-paid phone card dispensers. The sale of pre-paid phone cards
through this outlet is handled the same as through the Company's other
outlets. Mr. Anawaty is not an employee or director of the Company.
Certain Business Relationships.
- -------------------------------
Except as indicated under the heading "Transactions with Management
and Others," during the years ended December 31, 1998, and 1997, and through
the first six months of 1999, there were no material transactions, or series
of similar transactions, or any currently proposed transactions, or series of
similar transactions, to which the Company or any of its subsidiaries was or
is to be a party, in which the amount involved exceeded $60,000 and in which
any director, executive officer or any security holder who is known to the
Company to own of record or beneficially more than 5% of any class of its
common stock, or any member of the immediate family of any of the foregoing
persons, had an interest.
Indebtedness of Management.
- ---------------------------
Except as indicated under the heading "Transactions with Management
and Others," during the years ended December 31, 1998, and 1997, and through
the first six months of 1999, there were no material transactions, or series
of similar transactions, or any currently proposed transactions, or series of
similar transactions, to which the Company or any of its subsidiaries was or
is to be a party, in which the amount involved exceeded $60,000 and in which
any director, executive officer or any security holder who is known to the
Company to own of record or beneficially more than 5% of any class of its
common stock, or any member of the immediate family of any of the foregoing
persons, had an interest.
Parents.
- --------
The Company has no parents.
Committees.
- -----------
The Board of Directors of the Company maintains a Nominations
Committee, which is composed of R. E. Wilkin, Reid Funderburk and Robert H.
Hughes. The Nominations Committee held one meeting during the year ended
December 31, 1998, and the first six months of 1999.
In connection with the adoption of the Company's 1999 Stock Option
Plan, the Board of Directors created an Option Plan Committee. As of the date
hereof, the Option Plan Committee has not met.
A total of three meetings of the Board of Directors were held during
the Company's last full fiscal year. No incumbent director attended fewer
than 75% of such meetings or 75% of the meetings of the Nominations Committee.
Since the date of the last annual meeting of security holders, no
director has resigned or declined to stand for re-election to the Board of
Directors because of any disagreement with the Company on any matter relating
to the Company's operations, policies or practices.
Voting Securities and Principal Holders Thereof.
- ------------------------------------------------
As of September 8, 1999, the record date for the determination of
holders of Common Stock entitled to notice of and to vote at the Meeting, a
total of 8,859,389 shares of Common Stock were outstanding; such shares are
entitled to a total of 8,859,389 votes on the matters to be voted on at the
Meeting.
The following table sets forth the share holdings of the Company's
directors and executive officers and those persons who owned more than 5% of
the Company's common stock as of August 16, 1999.
Number and Percentage
Name and Address of Shares Beneficially Owned
- ---------------- ----------------------------
Reid Funderburk 2,528,000 28.5%
13581 Pond Springs Road, Suite 105
Austin, Texas 78729
Henry A. Anawaty, III 622,722 7.0%
5910 Courtyard Drive, Suite 150
Austin, Texas 78731
Robert H. Hughes 467,461 5.3%
1506 West 13th, #12
Austin, Texas 78704
George Majewski 459,461 5.2%
13581 Pond Springs Road, Suite 105
Austin, Texas 78729
R. E. Wilkin 257,600 2.9%
4304 Kirkland Drive
Fort Worth, Texas 76109
Rick Redmond 100,000 1.1%
13492 Research Boulevard
Austin, Texas 78750
Clay McCalla 15,000 0.2%
11602 Hare Trail
Austin, Texas 78726
Robert Chappell 7,500 0.1%
P. O. Box 624
Martindale, Texas 78655
Rhonda McClellan 700 0.0%
13581 Pond Springs Road, Suite 105
Austin, Texas 78729
________ ______
TOTALS 4,458,983 50.3%
Changes in Control.
- -------------------
None during the year ended December 31, 1998.
Executive Compensation.
- -----------------------
The following table shows the cash compensation paid by the Company,
as well as other compensation, for the Company's Chief Executive Officer,
President and directors for the calendar years 1996, 1997, and 1998.
SUMMARY COMPENSATION TABLE
Long Term Compensation
Annual Compensation Awards Payouts
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Secur-
ities All
Name and Year or Other Rest- Under- LTIP Other
Principal Period Salary Bonus Annual rictedlying Pay- Comp-
Position Ended ($) ($) Compen-Stock Options outs ensat'n
-----------------------------------------------------------------------
[S] [C] [C] [C] [C] [C] [C] [C] [C]
Reid Funderburk 1996 $66,241 -0- -0- -0- -0- -0- -0-
Chairman, CEO, 1997 $64,759 1241 -0- -0- -0- -0- -0-
Director 1998 $76,149 -0- -0- -0- -0- -0- $ 3,000
George Majewski 1996 $61,000 -0- -0- -0- -0- -0- -0-
President, COO, 1997 $58,759 1241 -0- -0- -0- -0- -0-
Director 1998 $70,000 1741 -0- -0- -0- -0- $ 3,000
Clay McCalla 1996 $ -0- -0- -0- -0- -0- -0- -0-
Vice President 1997 $ -0- -0- -0- -0- -0- -0- $15,745
1998 $51,652 350 -0- -0- -0- -0- $ 439
Robert Chappell 1996 $ -0- -0- -0- -0- -0- -0- -0-
Secretary 1997 $ 8,636 250 -0- -0- -0- -0- -0-
1998 $33,423 487 -0- -0- -0- -0- -0-
Rhonda McClellan 1996 $ -0- -0- -0- -0- -0- -0- -0-
CFO/Treasurer 1997 $ -0- -0- -0- -0- -0- -0- -0-
1998 $11,250 271 -0- -0- -0- -0- -0-
Henry A. Anawaty 1996 $16,250 -0- -0- -0- -0- -0- -0-
Former President 1997 $ -0- -0- -0- -0- -0- -0- -0-
and Director 1998 $ -0- -0- -0- -0- -0- -0- -0-
Bonuses and Deferred Compensation.
- ----------------------------------
None other than as may be set forth in the above table.
Compensation Pursuant to Plans.
- -------------------------------
None other than as may be set forth in the above table. The Company
adopted an Employment Agreement with Messrs. Funderburk and Majewski,
providing for the payment of salary, plus incentive stock options and year-end
cash bonuses. As of the date of this Annual Report, no stock options or
year-end bonuses have been awarded and only the salary amounts reflected in
the Summary Compensation Table above have been paid. The Employment
Agreements will expire on January 12, 2000.
On October 1, 1998, the Company entered into an Employment Agreement
wtih its Chief Financial Officer, Rhonda McClellan, which terminates on
October 30, 2000. This Employment Agreement provides for salary, stock
options, payment of professional CPA and CPE fees and other employee benefits
provided to all employees.
Pension Table.
- --------------
None; not applicable.
Other Compensation.
- -------------------
None other than as may be set forth in the above table.
Compensation of Directors.
- --------------------------
The Company paid to its non-officer directors fees of $500 per month
for six months in the 1998 calendar year. In addition, the Company paid each
of such directors $500 to attend the 1998 annual meeting of the Board of
Directors.
Termination of Employment and Change of Control Arrangement.
- ------------------------------------------------------------
Except as indicated below, during 1998, there were no compensatory
plans or arrangements, including payments to be received from the Company,
with respect to any person named in the Summary Compensation Table set out
above which would in any way result in payments to any such person because of
his or her resignation, retirement or other termination of such person's
employment with the Company or its subsidiaries, or any change in control of
the Company, or a change in the person's responsibilities following a change
in control of the Company.
In 1995, Messrs. Funderburk and Majewski entered into Employment
Agreements with the Company. These Employment Agreements provide, among other
things, for payment of all compensation due under such Agreements for a period
of one year from the date of termination of employment due to physical or
mental disability that results in the nonperformance of the employee's duties
for a period of six months in any 12 month period, or due to death, 30 days'
notice of breach of the Employment Agreements (which is not cured), or
termination by the Company for specified causes.
Independent Public Accountants.
- -------------------------------
Brown, Graham and Company, P.C., Certified Public Accountants, of
Georgetown, Texas, audited the Company's financial statements for the calendar
years ended December 31, 1998, and 1997. No principal accountant has been
selected or is being recommended for election, approval or ratification at the
Meeting, as the Company's Board of Directors voted to retain Brown, Graham and
Company in January, 1998, and the Company's Articles of Incorporation and
Bylaws do not require the stockholders to approve or ratify such retention.
BDO Seidman, LLP, Certified Public Accountants, of Austin, Texas,
audited the financial statements of the Company for the calendar years ended
December 31, 1996 and 1995 (which accompanied its Form 10-KSB Annual Report
for the calendar year ended December 31, 1996, filed with the Securities and
Exchange Commission on April 17, 1997), December 31, 1995 and 1994 (which
accompanied the Company's Form 10-KSB Annual Report for the calendar year
ended December 31, 1995, filed on or about April 12, 1996), and December 31,
1994 and 1993 (which accompanied its Form 10-KSB for the calendar year ended
December 31, 1994, filed on or about April 14, 1995).
Effective January 5, 1998, the Board of Directors engaged Brown,
Graham and Company to audit the financial statements of the Company for the
calendar years ended December 31, 1997 and 1996. These financial statements
accompanied the Company's Form 10-KSB Annual Report for the calendar years
ended December 31, 1998, and December 31, 1997, which were filed with the
Securities and Exchange Commission on April 15, 1999, and April 15, 1998,
respectively.
There were no disagreements between the Company and BDO Seidman,
LLP, whether resolved or not resolved, on any matter of accounting principles
or practices, financial statement disclosure or auditing scope or procedure,
which, if not resolved, would have caused it to make reference to the subject
matter of the disagreement in connection with its respective reports.
The reports of BDO Seidman, LLP, do not contain any adverse opinion
or disclaimer of opinion, and are not qualified or modified as to uncertainty,
audit scope or accounting principles.
During the Company's two most recent fiscal years, and since
then, neither BDO Seidman, LLP, nor Brown, Graham and Company has advised
the Company that any of the following exist or are applicable:
(1) That the internal controls necessary for the Company to
develop reliable financial statements do not exist, that
information has come to their attention 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;
(2) That the Company needs to expand significantly the scope of
its audit, or that information has come to their attention
that if further investigated may materially impact the
fairness or reliability of a previously issued audit report
or the underlying financial statements or any other
financial presentation, or cause them to be unwilling to
rely on management's representations or be associated with
the Company's financial statements for the foregoing reasons
or any other reason; or
(3) That they have advised the Company that information has come
to their attention that they have concluded materially
impacts the fairness or reliability of either a previously
issued audit report or the underlying financial statements
for the foregoing reasons or any other reason.
During the Company's two most recent fiscal years and since
then, the Company has not consulted Brown, Graham and Company regarding the
application of accounting principles to a specified transaction, either
completed or proposed; or the type of audit opinion that might be rendered on
the Company's financial statements or any other financial presentation
whatsoever.
On January 12, 1998, the Company filed with the Securities and
Exchange Commission a Current Report on Form 8-K disclosing this change in
independent accountants.
A representative of Brown, Graham and Company is expected to be
present at the Meeting and to have the opportunity to make a statement if he
desires. The representative is expected to be available to respond to
appropriate questions at the Meeting.
PROPOSAL 2 - AMENDMENT OF THE COMPANY'S ARTICLES OF INCORPORATION TO CHANGE
ITS NAME TO "BGI, INC."
When the Company began its operations in December, 1994, it was
engaged in the business of managing charity bingo locations and owning and
operating other such locations as a licensed commercial lessor. In May, 1996,
the Company began renting and distributing prepaid phone card dispensing
machines that used the novel marketing concept of allowing customers to enter
a free promotional sweepstakes for cash prizes ranging from $1 to $1,000. In
1997, the Company changed its business focus to ownership of the dispensing
machines for its own distribution and for resale to others and minimized its
efforts to expand the Company's bingo operations.
Currently, the Company owns 325 dispensers that are located
throughout the states of Texas, Oklahoma, Arizona, California, Connecticut,
Pennsylvania, Idaho and Illinois. Most of the machines are located in
charitable bingo halls and Indian bingo facilities, but some are located in
bars and bowling alleys. In the calendar year ended December 31, 1998,
approximately 85% of the Company's revenues were derived from sales of phone
cards and dispensers, with only about 13% coming from bingo hall rentals and
concessions.
The Company's Board of Directors has decided to more accurately
reflect the Company's business operations by de-emphasizing the bingo aspect
of these operations. In this regard, the Board of Directors has determined to
change the Company's name from "Bingo & Gaming International, Inc." to "BGI,
Inc." The Board of Directors believes that the new name will be more
reflective of the Company's business focus, while retaining a connection to
the name that it has used for over 4-1/2 years.
PROPOSAL 3 - AMEND THE COMPANY'S ARTICLES OF INCORPORATION TO AUTHORIZE A
CLASS OF 10,000,000 SHARES OF NON-VOTING PREFERRED STOCK
The Company's Board of Directors has voted to authorize the creation
of a class of 10,000,000 shares of non-voting preferred stock, and has
recommended such action to a vote of stockholders at the Meeting.
The Company is presently arranging with a securities underwriter,
Brookstreet Securities, for an offering of up to $2.5 million in Company
securities. The purpose of this financing is to pay of the Company's existing
short- and long-term debt and to provide additional working capital. The
parties propose to conduct an offering of non-voting preferred shares of the
Company, but the Articles of Incorporation must first be amended to allow the
issuance of preferred stock. If the stockholders vote to authorize the class
of preferred stock, the Board of Directors may commence the contemplated
offering without further authorization of the stockholders.
The preferred stock will have no voting rights in the election of
directors or any other matter that may be submitted to a vote of the Company's
stockholders. The preferred stock will have dividend rights, with the amount
of such dividends to be determined by the Board of Directors. It is
anticipated that the dividend will be approximately 11% to 12% of the offering
price of each share of preferred stock, payable quarterly. The holders of
preferred stock will have priority over the holders of the Company's common
stock in the payment of dividends. In addition, the holders of the preferred
stock will have the right to convert such stock into shares of common stock at
a conversion price and in a ratio to be determined by the Company and
Brookstreet Securities. It is expected that each share of preferred stock
will be sold with a warrant to purchase two additional shares of common stock
at a price to be determined by the Board of Directors. The shares of
preferred stock will not have any preemptive right to acquire additional
securities of the Company.
PROPOSAL 4 - TO ADOPT THE COMPANY'S 1999 STOCK OPTION PLAN
The Company's Board of Directors has adopted the 1999 Stock Option
Plan (the "Plan"), which reserves 1,000,000 shares of common stock for
issuance to certain "key employees," who are defined as "those employees of
the Company and its Subsidiaries whose performance and responsibilities are
determined by the [Company's Option Plan] Committee to have a direct effect on
the performance of the Company and its Subsidiaries." The identification of
which Company employees will qualify as "key employees" will be left to the
decision of the Company's Option Plan Committee (the "Committee"), which will
be comprised of Robert H. Hughes, R. E. Wilkin and Rick Redmond, the three
non-employee members of the Board of Directors. Management estimates that
approximately 14 employees will be eligible to participate in the Plan. The
number of options granted to any employee will also be left to the discretion
of the Committee.
The Plan provides for the granting of Incentive Options and
Nonqualified Options. Incentive Options must comply with Section 422 of the
Internal Revenue Code, and all options shall be evidenced by stock option
agreements between the Company and each key employee who is granted an option.
Incentive Options must be exercisable for not less than 100% of the fair
market value of the Company's common stock on the date that such options are
granted. In the case of Incentive Options granted to any key employee owning
more than 10% of the voting power of all classes of the Company's common
stock, the exercise price must be at least 110% of such fair market value, and
the Incentive Option must not be exercisable for than five years from the date
it is granted. No employee will be able to exercise Incentive Options for
shares valued at more than $100,000 in any calendar year.
The Plan gives the Committee the discretion to set the exercise
period of all options; however, no Incentive Option may terminate later than
10 years from the date the option is granted. The Committee may also set such
additional terms, conditions and limitations on the exercise of the options a
it determines. The Committee may provide for termination of an option in the
event of termination of employment or for any other reason.
Options shall be exercised by tendering full payment, in cash or
check. In addition, if a participant's option agreement so provides, he or she
may tender shares of common stock at the fair market value of such shares at
the time of exercise. As of Plan participants will also be required to tender
payment of such amounts as will be necessary to satisfy federal, state, or
local income or other taxes incurred through the exercise of an option. The
number of options that a participant is eligible to exercise shall be adjusted
as appropriate to reflect stock dividends, splits and share combinations of
the Company. In the event of a merger, consolidation, share exchange,
reorganization or sale of all or substantially all of the Company's assets,
the Company may make such arrangements as it deems advisable, provided that,
if no other arrangement is made for the substitution of outstanding options
under the Plan, the Plan will terminate and all outstanding options will
become immediately exercisable during the 15 days immediately preceding the
effective date of such transaction.
As of the date hereof, the Committee has not granted or allocated
any options under the Plan.
Interest of Certain Persons in Matters to be Acted Upon.
- --------------------------------------------------------
Except as indicated below, no director, executive officer, nominee
to become such, or any associate of any of the foregoing persons, has any
substantial interest, direct or indirect, by security holdings or otherwise,
in the matters to be submitted to a vote of stockholders at the Meeting, which
is not shared by all other stockholders, pro rata, and in accordance with
their respective interests in the Company.
As adopted by the Board of Directors, the Plan provides for the
Committee to identify which Company employees will be eligible for the
granting of Plan options. The Plan gives the Committee the discretion, from
time to time, to select "key employees" of the Company and its subsidiaries to
whom options are to be granted. For purposes of the Plan, "key employees" are
defined as "those employees of the Company and its Subsidiaries whose
performance and responsibilities are determined by the Committee to have a
direct and significant effect on the performance of the Company and its
Subsidiaries."
As of the date hereof, the Committee has not allocated any options
under the Plan. However, because of their significant day-to-day involvement
in Company affairs, each of the Company's executive officers (i.e., Reid
Funderburk; George Majewski; Robert Chappell; Clay McCalla and Rhonda
McClellan) is likely to be deemed a "key employee" under the Plan, and is
therefore likely to be granted options thereunder. Each of these persons has
a substantial direct interest in the adoption of the Plan. In order to
minimize the effects of any conflict that this interest may create, each
Committee member who is also an executive officer of the Company will abstain
from voting on the allocation of any Plan options to himself.
Proposals of Security Holders.
- ------------------------------
Proposals of security holders that are intended to be presented at
the Company's next annual meeting of stockholders (to be held in 2000) must be
received by the Company for inclusion in its proxy statement and form of proxy
for that meeting not later than May 1, 2000.
OTHER MATTERS
The Board of Directors of the Company is not aware of any business
other than the aforementioned matters that will be presented for consideration
at the Meeting. If other matters properly come before the Meeting, it is the
intention of the persons named in the enclosed proxy to vote thereon in
accordance with their best judgment.
ANNUAL REPORT TO SECURITY HOLDERS
A copy of the Company's Annual Report to Security Holders for the
Calendar Year Ended December 31, 1998, accompanies this Proxy Statement. The
Annual Report is not to be treated as part of the proxy solicitation material
or as having been incorporated by reference therein.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. STOCKHOLDERS WHO
DO NOT EXPECT TO ATTEND THE MEETING IN PERSON ARE URGED TO EXECUTE AND RETURN
THE ENCLOSED PROXY IN THE REPLY ENVELOPE PROVIDED.
By Order of the Board of Directors,
September 8, 1999 Reid Funderburk
Austin, Texas Chairman of the Board and Chief
Executive Officer
APPENDIX "A"
PROXY
FOR THE ANNUAL MEETING OF STOCKHOLDERS OF
BINGO & GAMING INTERNATIONAL, INC.
TO BE HELD WEDNESDAY, SEPTEMBER 29, 1999
By completing and returning this proxy to Bingo & Gaming International,
Inc. (the "Company"), you will be designating George Majewski, the President
of the Company, to vote all of your shares of the Company's common stock as
indicated below.
Please complete this proxy by clearly marking the appropriate column(s),
filling out the stockholder information and dating below, and return to the
Company in the enclosed self-addressed, envelope.
Matters of business are as follows:
PROPOSAL 1 - ELECTION OF DIRECTORS. Shall the following persons be
elected to serve on the Company's Board of Directors until their successors
are elected at the next annual meeting of stockholders or until their prior
death, resignation or termination and the qualification of their successors?
YES NO ABSTAIN
(1) Reid Funderburk ____ ____ ____
(2) George Majewski ____ ____ ____
(3) Robert H. Hughes ____ ____ ____
(4) R.E. Wilkin ____ ____ ____
(5) Rick Redmond ____ ____ ____
PROPOSAL 2 - AMENDMENT OF ARTICLES OF INCORPORATION. Shall the Articles
of Incorporation of the Company be amended to change the Company's name from
"Bingo & Gaming International, Inc." to "BGI, Inc."?
YES NO ABSTAIN
____ ____ ____
PROPOSAL 3 - AMENDMENT OF ARTICLES OF INCORPORATION. Shall the Articles
of Incorporation of the Company be amended to authorize a class of 10,000,000
shares of non-voting preferred stock, with such dividend and conversion rights
as the Board of Directors shall determine?
YES NO ABSTAIN
____ ____ ____
PROPOSAL 4 - ADOPTION OF 1999 STOCK OPTION PLAN. Shall the Company adopt
a 1999 Stock Option Plan reserving up to 1,000,000 shares of common stock for
issuance to certain key employees?
YES NO ABSTAIN
____ ____ ____
The undersigned hereby acknowledges receipt of the Company's Proxy
Statement dated September 8, 1999, and expressly revokes any and all proxies
heretofore given or executed by the undersigned with respect to the shares of
stock represented in this Proxy. (Please sign exactly as your name appears on
your stock certificate(s). Joint owners should both sign. If signing in a
representative capacity, give full titles and attach proof of authority unless
already on file with the Company.)
Dated: ____________, 1999 _________________________________
Name of stockholder (Please print
legibly)
Number of shares: ____________ _________________________________
Signature
This proxy is being solicited by, and the above-referenced proposals are
being proposed by, the Board of Directors of the Company. The proposals to be
voted on are not related to or conditioned on the approval of any other
matter. You may revoke this proxy at any time prior to the vote thereon.
As of September 8, 1997, which is the record date for determining the
stockholders who are entitled to notice of and to vote at the Meeting, the
Board of Directors of the Company is not aware of any other matters to be
presented at the Meeting. If no direction is indicated on a proxy that is
executed and returned to the Company, it will be voted "FOR" the election of
the above-named persons as directors and "FOR" each of the other proposals set
forth above. Unless indicated below, by completing and returning this proxy,
the stockholder grants to Mr. Majewski the discretion to vote in accordance
with his best judgment on any other matters that may be presented at the
Meeting.
____ Withhold discretion to vote on any other matter presented at
the Meeting.