U.S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
------------------
For the transition period from _________________ to __________________
COMMISSION FILE NO. 0-10519
--------
BGI, INCORPORATED
-----------------
OKLAHOMA 73-1092118
- ----------------------------------- -----------------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER I.D. NO.)
INCORPORATION OR ORGANIZATION)
13581 Pond Springs Rd. Suite 105
Austin, Texas 78729
--------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
ISSUER'S TELEPHONE NUMBER: (512) 335-0065
---------------
Indicate by check whether the Issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the Registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
(1) Yes X No (2) Yes X No
--- --- --- ---
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-QSB
or any amendment to this Form 10-QSB. [ ]
There were 8,862,742 shares of common stock, $.001 par value, outstanding as of
September 30, 1999.
TABLE OF CONTENTS
Page
Number
------
Part I:
Item 1. Financial Statements. . . . . . . . . . . . . . . . 1
- ------------------------------------------------------------
Item 2. Management's Discussion and Analysis. . . . . . . . 6
- ------------------------------------------------------------
Part II:
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . 9
- ------------------------------------------------------------
Item 2. Changes in Securities . . . . . . . . . . . . . . . 9
- ------------------------------------------------------------
Item 3. Defaults Upon Senior Securities . . . . . . . . . . 9
- ------------------------------------------------------------
Item 4. Submission of Matters to a Vote of Security Holders 9
- ------------------------------------------------------------
Item 5. Other Information . . . . . . . . . . . . . . . . . 9
- ------------------------------------------------------------
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . 9
- ------------------------------------------------------------
PART I
BGI, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
- -------------------------------------------------------
SEPTEMBER 30, 1999 DECEMBER 31, 1999
------------------- -------------------
1999 1998
------------------- -------------------
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . . $ 73,331 $ 133,184
Accounts receivable - trade, net. . . . . . . . . . . . 471,332 437,850
Inventories . . . . . . . . . . . . . . . . . . . . . . 137,842 87,169
Prepaid expenses. . . . . . . . . . . . . . . . . . . . 32,644 15,874
------------------- -------------------
Total current assets. . . . . . . . . . . . . . . . . . 715,149 674,077
------------------- -------------------
Property and equipment, at cost - net . . . . . . . . . 1,173,917 1,357,187
------------------- -------------------
Other assets:
Organizational costs and intangible assets - net. . . . 176,923 6,451
Deferred costs. . . . . . . . . . . . . . . . . . . . . 155,880 122,572
Deposits. . . . . . . . . . . . . . . . . . . . . . . . 37,557 32,707
------------------- -------------------
Total other assets. . . . . . . . . . . . . . . . . . . 370,360 161,730
------------------- -------------------
Total assets. . . . . . . . . . . . . . . . . . . . . . $ 2,259,426 $ 2,192,994
------------------- -------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
EQUITY
Current liabilities:
Accounts payable - trade and accrued expenses . . . . . $ 294,392 $ 294,918
Current maturities of long-term debt. . . . . . . . . . 116,837 142,962
Current maturities of lease obligations . . . . . . . . 474,729 452,892
------------------- -------------------
Total current liabilities . . . . . . . . . . . . . . . 885,958 890,772
Long-term debt, net of current maturities . . . . . . . 194,469 268,701
Long-term portion of lease obligations. . . . . . . . . 139,168 479,071
------------------- -------------------
Total liabilities . . . . . . . . . . . . . . . . . . . 1,219,595 1,638,544
------------------- -------------------
Stockholders' equity:
Common stock, $.001 par; 70,000,000 shares authorized;
8,551,819 and 8,558,418,6021,5
8,862,742 and 8,551,819 issued and outstanding . . . . 8,862 8,551
Additional paid-in capital. . . . . . . . . . . . . . . 938,990 643,757
Retained earnings (deficit) . . . . . . . . . . . . . . 91,979 (97,858)
------------------- -------------------
Total stockholders' equity. . . . . . . . . . . . . . . 1,039,831 554,450
------------------- -------------------
Total liabilities and stockholders' equity. . . . . . . $ 2,259,426 $ 2,192,994
=================== ===================
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
1
BGI, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
----------- ----------- ----------- -----------
1999 1998 1999 1998
----------- ----------- ----------- -----------
Revenue:
Phone card sales. . . . . . . . . . . $ 909,282 $ 765,428 $3,263,039 $2,615,124
Hall rental and concession income . . 102,947 134,946 378,033 416,730
Machine sales . . . . . . . . . . . . 22,800 65,415 211,400 133,296
Other . . . . . . . . . . . . . . . . 15,940 16,297 106,036 17,530
----------- ----------- ----------- -----------
Total revenue . . . . . . . . . . . . 1,050,969 982,086 3,958,508 3,182,680
----------- ----------- ----------- -----------
Cost of revenue:
Phone cards and royalties . . . . . . 238,745 309,770 823,670 828,002
Machine and location rental . . . . . - 2,600 11,138 2,908
Prizes paid . . . . . . . . . . . . . 270,538 288,691 1,171,264 449,872
Hall rental and concession. . . . . . 50,687 23,624 175,665 187,990
Machine depreciation. . . . . . . . . 70,592 57,401 213,905 151,376
Machines sold . . . . . . . . . . . . 19,375 42,354 178,575 113,159
----------- ----------- ----------- -----------
Total cost of revenue . . . . . . . . 649,937 724,440 2,574,217 1,733,307
----------- ----------- ----------- -----------
Gross margin. . . . . . . . . . . . . 401,032 257,646 1,384,291 1,449,373
----------- ----------- ----------- -----------
Expenses:
Operating expenses. . . . . . . . . . 30,225 130,953 118,002 227,884
Salaries. . . . . . . . . . . . . . . 151,450 106,263 445,792 282,007
General and administrative expenses . 116,376 122,025 410,178 392,870
----------- ----------- ----------- -----------
Total expenses. . . . . . . . . . . . 298,051 359,241 973,972 902,761
----------- ----------- ----------- -----------
Operating income. . . . . . . . . . . 102,981 (101,595) 410,319 546,612
Other income and expense:
Interest expense. . . . . . . . . . . (60,217) (56,892) (228,901) (210,217)
Gain(loss) on sale of assets. . . . . 8,424 (2,135) 8,424 (2,135)
----------- ----------- ----------- -----------
Net income. . . . . . . . . . . . . . 51,188 (160,622) 189,842 334,260
Retained earnings:
Beginning (deficit). . . (97,858) (224,504) (97,858) (224,504)
----------- ----------- ----------- -----------
Ending (deficit) . . . . $ (46,670) $ (385,126) $ 91,984 $ 109,756
=========== =========== =========== ===========
Basic and diluted earnings per share. $ 0.01 $ (0.02) $ 0.02 $ 0.04
=========== =========== =========== ===========
Weighted average shares outstanding . 8,663,006 8,508,830 8,663,006 8,508,830
=========== =========== =========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
2
BGI, INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30,
1999 1998
---------- -----------
Operating activities:
Net income. . . . . . . . . . . . . . . . . . . . . . $ 189,842 $ 334,260
Adjustments to reconcile net income to net cash from
Depreciation and amortization . . . . . . . . . . 263,489 195,414
Deferred financing cost . . . . . . . . . . . . . 48,154 -
Stock issued for consulting fee . . . . . . . . . 9,378 -
Increase in other assets. . . . . . . . . . . . . (31,462) (17,946)
Increase in deposits. . . . . . . . . . . . . . . (4,850) -
(Gain) Loss on disposal of assets . . . . . . . . (8,424) -
Changes in current assets and liabilities:
Accounts receivable . . . . . . . . . . . . . 12,226 (176,569)
Inventories . . . . . . . . . . . . . . . . . (50,673) (40,559)
Prepaid expenses. . . . . . . . . . . . . . . (16,770) (15,131)
Accounts payable - trade and accrued expenses (530) (78,240)
Net cash provided from operating activities . . . . . 410,380 201,229
Investing activities:
Purchase of property and equipment. . . . . . . . . . (98,312) (190,248)
Proceeds from sale of equipment . . . . . . . . . . . 31,500 -
Cash used by investing activities. . . . . . . . . . (66,812) (190,248)
Financing activities:
Payments on long-term debt. . . . . . . . . . . . . . (431,358) (78,937)
Proceeds from long term debt. . . . . . . . . . . . . 12,937 -
Issuance of common stock. . . . . . . . . . . . . . . 15,000 76,170
Cash used by financing activities . . . . . . . . . (403,421) (2,767)
Net increase(decrease) in cash and cash equivalents . (59,853) 8,214
Cash and cash equivalents at beginning of period. . . 133,184 53,934
Cash and cash equivalents at end of period. . . . . . $ 73,331 $ 62,148
Supplemental disclosures of cash flow information:
Interest paid . . . . . . . . . . . . . . . . . . . . $ 228,901 $ 210,217
Taxes paid. . . . . . . . . . . . . . . . . . . . . . $ 20,860 $ -
Supplemental disclosure of non-cash investing and
financing activities:
Stock issued to consultant. . . . . . . . . . . $ 50,291 $ -
Stock issued to acquire distributor . . . . . . $ 221,169 $ -
Proceeds from financing of equipment purchases. $ - $1,127,672
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
3
BGI, INCORPORATED AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1999
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ----------------------------------------------------------
NATURE OF BUSINESS AND BASIS OF PRESENTATION:
Bingo & Gaming International, Inc. (the "Company") was formed in 1981 and was
dormant from 1984 to November, 1994. In December, 1994, the Company acquired
Monitored Investment, Inc., and Affiliates (Monitored Investment, Inc., Red
River Bingo, Inc., Tupelo Industries, Inc., and Meridian Enterprises, Inc.,
hereinafter referred to collectively as "Monitored"). Monitored's principal
operations consist of developing, managing and operating charity bingo
entertainment centers. Monitored is a commercial lessor of bingo facilities to
charity lessees which utilize bingo events as a means of fund raising. The
stockholders of Monitored became the controlling stockholders of the
consolidated company in a "reverse acquisition", whereby each of the
corporations comprising Monitored became wholly-owned subsidiaries of the
Company. As a result, the merger was accounted for as an "equity restructuring"
of Company. On September 29, 1999, the shareholders of Bingo & Gaming
International, Inc. voted to change the name of the company to BGI, Incorporated
to more accurately reflect its business operations.
In May, 1996, the Company began distributing the Lucky Shamrock Emergency Phone
Card Dispenser, under an exclusive agreement with Diamond Game Enterprises.
This agreement was terminated by the mutual consent of the parties in October
1997.
In October 1997, PrePaid Plus, Inc. ("PPI"), a Texas corporation, was acquired
under the purchase method. PPI is a wholly owned subsidiary of the Company.
PPI was formed for the purpose of transacting the prepaid telephone card
dispenser operations. PPI began distributing and selling the Lucky Strike Phone
Card Dispenser, a video enhanced prepaid phone card dispenser, under an
exclusive distribution agreement for five years with two successive five year
options to renew with Cyberdyne Systems, Inc.
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.
INVENTORIES:
Inventories, which consist of phone cards, prepaid vending machines, and small
equipment are valued at the lower of cost or market using the first-in,
first-out method.
CASH EQUIVALENTS:
Cash equivalents consist primarily of funds invested in short-term
interest-bearing accounts. The Company considers all highly liquid investments
purchased with initial maturities of three months or less to be cash
equivalents.
ORGANIZATIONAL COSTS AND INTANGIBLE ASSETS:
Organizational costs and intangible assets include significant expenses of
bringing new locations into operation and the cost of a noncompete agreement.
Organizational costs are amortized over periods of not more than five years and
the cost of the noncompete agreement is being amortized over five years.
PROPERTY, EQUIPMENT AND DEPRECIATION AND AMORTIZATION:
Property and equipment are stated at cost, net of accumulated depreciation and
amortization. For financial statement purposes, depreciation and amortization
are computed using the straight-line method over the estimated useful lives of
the related assets. Amortization of leasehold improvements is computed using
the straight-line method over
4
BGI, INCORPORATED AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1999
NOTE 1 - CONTINUED
- ---------------------
the shorter of the term of the related lease or the useful life of the leasehold
improvements. Accelerated depreciation methods are used for tax purposes.
Maintenance and repairs are charged to expense as incurred. The cost of
betterments and renewals are capitalized. Gains or losses upon disposal of
assets are recognized in the period during which the transaction occurs.
TAXES ON INCOME:
The Company accounts for income taxes under the asset and liability approach
that requires the recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been recognized in the
Company's financial statements or tax returns. In estimating future tax
consequences, the Company generally considers all expected future events other
than possible enactments of changes in the tax laws or rates. The Company
provides a valuation allowance against its deferred tax assets to the extent
that management estimates that it is not "more likely than not" that such
deferred tax assets will be realized.
REVENUE RECOGNITION:
Phone card and machine sales as well as rental income are recognized when
earned. An allowance for doubtful accounts is provided based on periodic review
of the accounts.
ACCOUNTING ESTIMATES:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATIONS.
-------------------------------------------------------------------
PLAN OF OPERATION
- -------------------
In October 1997, the Company executed an exclusive distribution agreement with
Cyberdyne Systems, Inc. to distribute the Lucky Strike Prepaid Phone Card
Dispenser (Lucky Strike machines or the machine). This agreement provides for
the Company to have the exclusive distribution rights for North America for five
years with two five year options. As of November 12, 1999, the Company has
distributors or company owned dispensers located in Texas, Oklahoma, Arizona,
Illinois, Idaho, Connecticut, Pennsylvania, North Dakota, California, and
Kansas.
The Company's principal objective is to sell an increasing number of phone cards
through Lucky Strike machines. This objective is accomplished by increasing the
number of machines placed in locations that will sell the greatest volume of the
sweepstakes enhanced phone cards. Generally, the company owned machines produce
greater sales volumes in company operated routes where machines are more
geographically concentrated. However, company owned machines are also placed in
locations where it is more advantageous for the machine to be operated by a
distributor.
The sales production of locations varies. Whether the machines are company
owned and operated, company owned and distributor operated, or distributor owned
and operated, the Company continuously evaluates the sales production of the
machines. If production in a particular location is not adequate, the machine
is relocated.
During the latter part of 1998, one of the larger distributors was not producing
adequate sales or handling its financial obligations satisfactorily. On August
1, 1999, the Company executed an agreement to directly purchase the operations
of the distributor for $221,169 in shares of its common stock and commenced to
operate the machines in that territory directly.
In August 1999, the Company executed an agreement with Multimedia Games, Inc.
(MGAM) to develop and host a website to sell phone cards employing a virtual
machine. It is expected that the site will sell, through the virtual machine,
the same sweepstakes enhanced phone cards that are available to a customer
purchasing from the actual Lucky Strike machines. The site is expected to be
fully operational in early 2000.
The Company's primary focus for the next quarter is twofold. First, 100% of the
company owned machines will be placed in production. Second, the program of
upgrading machine locations implemented in January 1999 will continue and is a
contributing factor to the increase in net phone card sales for the nine months
ended September 30, 1999. However, the rate of growth will depend on the
availability of either borrowing or leasing opportunities for the Company as
well as the number of dispensers that can be sold to retail operators.
RESULTS OF OPERATIONS
- -----------------------
THREE MONTHS ENDED SEPTEMBER 30, 1999
COMPARED WITH THE THREE MONTHS ENDED SEPTEMBER 30, 1998
Total revenues increased by 7% for the three months ended September 30, 1999 as
compared to the same three month period for 1998. This was the result of a 19%
increase in phone card sales which was partially offset by decreases in
dispenser sales and bingo hall rental income. The decrease in machine sales
was considered to have been a normal fluctuation. The decrease in bingo hall
rental income was the result of continuing regulatory pressure to reduce rents
by the Mississippi Gaming Commission.
6
The total cost of revenues represent expenses directly related to the
operations of the phone card dispensers and bingo facilities. Such costs as a
function of total sales has decreased by 12% which included a decrease in
sweepstakes prizes paid due to a change in the mix of route operated company
owned machines. Additionally, long distance costs decreased by 9% during this
period resulting from unit cost savings and changes in usage patterns.
Operating expenses represent expenses indirectly related to the operations of
the phone card dispensers and the bingo halls. Such costs decreased by 76.9%
principally due to improved credit and collection efforts in the Oklahoma
territory and the resulting improved bad debt experience. Salaries increased by
42.5%. This was principally the result of hiring a chief financial officer in
October 1998, an increase in the number of support staff positions, and
increases in other salaries. Other general and administrative expenses
decreased by 4.6% during three month period ended September 30, 1999 as compared
to the similar period in 1998. This reduction is primarily due to cost savings
in accounting fees.
As the result of the above, the Company's net income increased by $211,810 to a
net income of $51,188 for the three months ended September 30, 1999 from a net
loss of $160,622 for the three months ended September 30, 1998. Due to a
federal income tax net operating loss carryforward, no provision for federal
income tax was required.
NINE MONTHS ENDED SEPTEMBER 30, 1999
COMPARED WITH THE NINE MONTHS ENDED SEPTEMBER 30, 1998
The Company experienced an increase of 24.4% in total revenues during the nine
months ended September 30, 1999 over the nine month period ended September 30,
1998. This increase is primarily due to a 24.8% increase in phone card sales.
Increased machine sales were offset by a decrease in bingo hall rental income.
The increase in machine sales is the result of opening additional territories to
distributors. The decrease in bingo hall income was the result of continuing
regulatory pressure, by the Mississippi Gaming Commission, to reduce the rent
paid by the charity operators.
The cost of revenues represent expenses directly attributable to the operations
of the phone card dispensers and bingo facilities. These costs increased by
48.5%, and the resulting gross margin decreased to 35.0% of sales for the nine
months ended September 30, 1999 from 45.5% for the nine months ended September
30, 1998. This significant increase in the total cost of revenue and decrease
in gross margin was principally the result of having operated with the
sweepstakes payout rates set at a higher experimental level for the first six
months ended June 30, 1999. They were reset to more profitable levels during
the three months ended September 30, 1999.
Operating expenses include expenses indirectly related to the operations of the
machines and the bingo halls. These costs decreased by 48.29%, principally as a
result of an improved bad debt experience as improved credit and collection
procedures with respect to distributors were initiated during 1999. Salaries
increased by 58.1% as the result of hiring a chief financial officer in October
1998 as well as increases in the number of support staff positions and some
increase in other salaries. Other general and administrative expense increased
by 4.4% for the nine month period ended September 30, 1999 as the result of
additional expenses required to support the increased level of revenue producing
activities.
As a result of all of the above, the Company's net income decreased by $144,418,
to a net income of $189,842 for the nine months ended September 30, 1999 from a
net income of $334,260 for the comparable period ended September 30, 1998. This
decrease is primarily a function of deploying 55% of the company owned machines
in Oklahoma during the first six months of 1998. The majority of the Oklahoma
placements were in native American charitable gaming facilities that began to
place large quantities of other devices offering cash prizes in the early part
of the third quarter of 1998. The unusual competitive environment in these
facilities had a negative impact on the sales volume of the phone cards as
reflected in the loss for the three month period ended September 1998.
7
LIQUIDITY
- ---------
The Company's cash inflows from operating activities increased by 103.9%, to
$410,380 for the nine months ended September 30, 1999 from $201,229 for the nine
months ended September 30,1998. Cash outflows for the nine months ended
September 30, 1999 were $470,233, with $423,237 of that amount reducing debt and
capital lease obligations as the Company's stockholders' equity increased to 45%
of total assets at September 30, 1999 from 25.3% of total assets at December 31,
1998.
The Company has a need for additional working capital to meet contractual
obligations. Management believes that revenues from the existing machines owned
by the Company will be sufficient to produce the necessary working capital to
meet its working capital requirements. However, there is no assurance that such
revenues will materialize.
8
PART II-OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
-------------------
In 1998, the Mississippi Gaming Commission rendered a decision to reject an
appraisal on the fair market value of rents charged at the Tupelo bingo
facility. A permanent injunction was obtained in Hinds County Chancery Court
(98-CA-01198-SCT) requiring the Gaming Commission to renew the Company's license
to operate as a lessor. The Commission was ordered to accept the two appraisals
already submitted and received a contempt of court citation. The Commission
issued a license renewal for the Iuka location and appealed the injunction on
the license renewal for the Tupelo location. The Court of Appeals of the State
of Mississippi ruled in favor of the Mississippi Gaming Commission, but prior to
this, the Mississippi Supreme Court had ruled in favor of Tupelo Industries.
Tupelo Industries has filed a motion for a rehearing on the Court of Appeals
ruling. In addition, the Commission declined to renew a third facility license
for the Meridian location, but the facility has continued to operate pending the
results of a hearing whose date has yet to be determined. Finally, the
Commission has denied a renewal application for the charitable lessee of the
Iuka facility. One year passed without a hearing and a new renewal application
was required. The charitable organization was granted a 90 day license.
Legislation (HB977) passed in the most recent session of the Mississippi
Legislature eliminated the licensing requirement for commercial lessors;
thereby, making the dispute over the licensing of the Meridian facility a moot
point.
ITEM 2. CHANGES IN SECURITIES.
------------------------
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
-----------------------------------
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
-----------------------------------------------------------
On September 29, 1999, the annual meeting was held and the following matters
were submitted to a vote and approved by the shareholders of the Company:
The following directors were reelected Rick Redmond, Reid Funderburk, George
Majewski, R. E. Wilkins, and Robert Hughes.
Votes were cast as follows:
Rick Redmond
4,673,440 For 4,673,440 Against 98 Abstentions 0 Broker non-votes
- --------- --------- --- ---
Reid Funderburk
4,673,940 For 5,000 Against 98 Abstentions 0 Broker non-votes
- --------- --------- --- ---
George Majewski
4,673,940 For 5,500 Against 98 Abstentions 0 Broker non-votes
- --------- --------- --- ---
R.E. Wilkins
4,673,426 For 5,500 Against 112 Abstentions 0 Broker non-votes
- --------- --------- --- ---
Robert Hughes
4,673,440 For 5,500 Against 98 Abstentions 0 Broker non-votes
- --------- --------- --- ---
Change of corporate name to BGI, Incorporated with the votes cast as follows:
4,673,514 For 5,524 Against 0 Abstentions 0 Broker non-votes
- --------- --------- --- ---
Approval of employee incentive stock option plan with the votes cast as follows:
4,606,042For 72,828 Against 168 Abstentions 0 Broker non-votes
- --------- --------- --- ---
Authorization of 10,000,000 shares of preferred stock
4,608,042 For 70,628 Against 368 Abstentions 0 Broker non-votes
- --------- --------- --- ---
ITEM 5. OTHER INFORMATION.
-------------------
The Company is currently evaluating its computer systems to determine whether
modifications and expenditures will be necessary to make its systems and those
of its vendors compliant with year 2000 requirements. These requirements have
arisen due to the widespread use of computer programs that rely on two-digit
date codes to perform computations or decision-making functions. Many of these
programs may fail as a result of their inability to properly interpret date
codes beginning January 1, 2000. For example, such programs may interpret "00"
as the year 1900 rather than 2000. In addition, some equipment, being controlled
by microprocessor chips, may not deal appropriately with the year "00". The
Company believes it will timely meet its year 2000 compliance requirements and
does not anticipate that the cost of compliance will have a material adverse
effect on its business, financial condition, or results of operations. However,
there can be no assurance that all necessary modifications will be identified
and corrected or that unforseen difficulties or costs will not arise. In
addition, there can be no assurance that the systems of other companies on which
the Company's systems rely will be modified on a timely basis, or that the
failure by another company to properly modify its systems will not negatively
impact the Company's systems or operations.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
--------------------------------------
None
9
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.
BGI, INC.
Date: 11/08/99 By /s/ Reid Funderburk
---------- -----------------------------
Reid Funderburk, CEO
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
Reid Funderburk, Chairman, C.E.O. & Director
Date: 11/08/99
------------------------------------------
By /s/ Reid Funderburk
------------------------------------------
George Majewski, Director, President
Date: 11/08/99
------------------------------------------
By /s/ George Majewski
------------------------------------------
Rhonda McClellan, Chief Financial Officer
Date: 11/08/99
------------------------------------------
By /s/ Rhonda McClellan
------------------------------------------
R. E. Wilkin, Director
Date: 11/08/99
------------------------------------------
By /s/ R. E. Wilkin
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Robert H. Hughes, Director
Date: 11/08/99
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By /s/ Robert H. Hughes
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Rick Redmond, Director
Date: 11/08/99
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By /s/ Rick Redmond
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10