UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to ___________________
Commission File Number: 000-27339
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BINGO.COM, INC.
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(Exact name of registrant as specified in its charter)
FLORIDA 98-0206369
- --------------------------------- -----------------------------
(State or Other Jurisdiction (IRS Employer
of Incorporation) Identification No.)
3RD FLOOR, 1286 HOMER STREET, VANCOUVER,
BRITISH COLUMBIA, CANADA V6B 2Y5
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(Address of Principal Executive Offices)
(604) 647-6407
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(Registrant's Telephone Number, Including Area Code)
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
The number of outstanding shares of the Registrant's Common Stock, par value
$0.001 per share, was 10,854,608 on November 13, 2001.
BINGO.COM, INC.
QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 2000
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION.......................................................... 2
ITEM 1. Financial Statements.................................................. 2
CONSOLIDATED BALANCE SHEETS..................................................... 2
CONSOLIDATED STATEMENTS OF OPERATIONS........................................... 3
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY................................. 4
CONSOLIDATED STATEMENTS OF CASH FLOWS........................................... 5
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................. 11
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk............. 17
PART II - OTHER INFORMATION ............................................................ 18
ITEM 1. Legal Proceedings...................................................... 18
ITEM 2. Changes in Securities and Use of Proceeds.............................. 18
ITEM 3. Defaults Upon Senior Securities........................................ 18
ITEM 4. Submission of Matters to a Vote of Security Holders.................... 18
ITEM 5. Other Information...................................................... 19
ITEM 6. Exhibits and Reports on Form 8-K....................................... 23
SIGNATURES.............................................................................. 25
EXHIBIT INDEX........................................................................... 26
-1-
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BINGO.COM, INC.
CONSOLIDATED BALANCE SHEETS
(EXPRESSED IN U.S. DOLLARS)
September 30, 2001 December 31, 2000
------------------ -----------------
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 24,234 $ 174,463
Accounts receivable, net of allowance for doubtful
accounts of $65,204 (2000 - $36,949) 170,860 268,849
Note receivable from officer - 31,405
Prepaid expenses 90,268 51,128
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285,362 525,845
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Fixed assets 501,746 506,897
Other assets 23,365 37,286
Domain name rights, net 1,354,918 1,645,230
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$ 2,165,391 $ 2,715,258
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 867,453 $ 517,081
Contract payable - current portion 276,478 270,165
Loan payable 61,390 -
Capital leases - current portion 178,864 166,855
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1,384,185 954,101
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Contract payable, net of current portion - 276,476
Debenture payable (note 3) 900,000 -
Capital leases, net of current portion 30,367 100,660
Stockholders' equity (deficiency):
Common stock - $0.001 par value; authorized 50,000,000 shares;
issued and outstanding: 10,838,608 shares at September 30, 2001
and 10,104,608 shares at December 31, 2000 (note 4) 10,839 10,105
Additional paid-in-capital 7,699,166 7,629,900
Accumulated deficit (7,828,579) (6,250,335)
Accumulated other comprehensive loss (30,587) (5,649)
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(149,161) 1,384,021
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$ 2,165,391 $ 2,715,258
============= ==============
Commitments (note 5)
Subsequent events (note 6)
See accompanying notes to consolidated financial statements.
2
BINGO.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(EXPRESSED IN U.S. DOLLARS)
(UNAUDITED)
Three months Nine months
ended September 30, ended September 30,
------------------------------ ------------------------------
2001 2000 2001 2000
------------ ------------ ------------ ------------
Revenue $ 333,603 $ 544,416 $ 1,391,471 $ 606,284
Cost of revenue 143,573 274,726 851,423 303,326
------------ ------------ ------------ ------------
Gross profit 190,030 269,690 540,048 302,958
Operating Expenses:
Sales and marketing 56,960 290,231 221,272 594,616
General and administrative 325,746 834,178 1,302,949 1,861,329
Interest expense 41,238 22,785 99,900 23,482
Website development - 49,103 - 233,326
Depreciation and amortization 159,362 179,880 495,992 359,960
------------ ------------ ------------ ------------
583,306 1,376,177 2,120,113 3,072,713
------------ ------------ ------------ ------------
Loss from continuing operations (393,276) (1,106,487) (1,580,065) (2,769,755)
Other income (expense):
Interest income - - 1,504 22,932
Dividend income - 17,977 317 41,359
Loss on disposal of discontinued operations - - - (45,899)
------------ ------------ ------------ ------------
Net loss $ (393,276) $ (1,088,510) $ (1,578,244) $ (2,751,363)
============ ============ ============ ============
Net loss per share,
basic and diluted $ (0.04) $ (0.11) $ (0.15) $ (0.27)
------------ ------------ ------------ ------------
Weighted average common shares
outstanding, basic and diluted 10,756,190 10,069,842 10,311,135 10,054,308
============ ============ ============ ============
See accompanying notes to consolidated financial statements.
-3-
BINGO.COM, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(EXPRESSED IN U.S. DOLLARS)
Nine months ended September 30, 2001
(UNAUDITED)
Accumulated
other
comprehensive
loss
--------------
Foreign Total
Common Stock Additional Currency Stockholders'
------------------------ Paid in Translation Equity
Shares Amount Capital Adjustment Deficit (deficiency)
----------- --------- ----------- -------------- ------------- --------------
Balance, December 31, 2000 10,104,608 $ 10,105 $ 7,629,900 $ (5,649) $ (6,250,335) $ 1,384,021
Issuance of common stock 750,000 750 81,750 - - 82,500
Cancellation of common stock (16,000) (16) (12,484) - - (12,500)
Comprehensive loss:
Net loss - - - - (1,578,244) (1,578,244)
Foreign currency translation adjustment - - - (24,938) - (24,938)
---------- --------- ----------- --------- ------------ -----------
(1,603,182)
---------- --------- ----------- --------- ------------ -----------
Balance, September 30, 2001 10,838,608 $ 10,839 $ 7,699,166 $ (30,587) $ (7,828,579) $ (149,161)
========== ========= =========== ========= ============ ===========
See accompanying notes to consolidated financial statements.
-4-
BINGO.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(EXPRESSED IN U.S. DOLLARS)
Nine months ended September 30, 2001 and 2000
(UNAUDITED)
2001 2000
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Cash flows from operating activities:
Net loss $(1,578,244) $(2,751,363)
Adjustments to reconcile net loss to net cash
used in operating activities:
Provision for loss from discontinued operations - 45,899
Depreciation and amortization 495,992 359,960
Cancellation of shares (12,500) -
Stock based compensation costs 37,500 247,833
Change in operating assets and liabilities:
Accounts receivable 97,989 (151,011)
Note receivable 31,405 -
Prepaid expenses (39,140) (29,922)
Other assets 13,921 -
Accounts payable and accrued liabilities 350,372 178,751
----------- -----------
Cash used by continuing operations (602,705) (2,099,853)
Provision for loss on disposition of
discontinued operations - (45,899)
Cash used by discontinued operations - 45,899
----------- -----------
Cash used in operating activities (602,705) (2,099,853)
Cash flows from investing activities:
Acquisition of property and equipment (30,751) (100,308)
Acquisition of Skill-Bingo game (169,278) -
Payments on domain name contract payable (270,163) (130,965)
----------- -----------
Cash used in investing activities (470,192) (231,273)
Cash flows from financing activities:
Capital lease repayments (58,284) (120,699)
Loan payable 78,000 -
Proceeds from debenture debt 900,000 -
Repayment of loan payable - (53,912)
----------- -----------
Cash provided by (used in) financing activities 919,716 (174,611)
Net decrease in cash and cash equivalents (153,181) (2,505,737)
Effect of exchange rates on cash and cash equivalents 2,952 1,646
Cash and cash equivalents at beginning of period 174,463 3,382,529
----------- -----------
Cash and cash equivalents at end of period $ 24,234 $ 878,438
=========== ===========
Supplemental disclosure of cash flow information:
Cash interest paid $ 64,029 $ 23,482
=========== ===========
Non Cash Transactions:
Barter transactions $ 371,566 $ 174,996
Present value adjustment to domain name rights - 734,500
Issuance of common stock for services rendered 37,500 52,000
=========== ===========
See accompanying notes to consolidated financial statements.
-5-
BINGO.COM, INC.
Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)
Nine months ended September 30, 2001 and 2000
(Unaudited)
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1. BASIS OF PRESENTATION
The accompanying unaudited interim financial statements have been prepared in
conformity with generally accepted accounting principles applicable to interim
financial information and with the rules and regulations of the United States
Securities and Exchange Commission. Accordingly, certain information and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been condensed, or
omitted, pursuant to such rules and regulations. In the opinion of management,
the unaudited interim financial statements include all adjustments necessary
for the fair presentation of the results of the interim periods presented. These
financial statements should be read in conjunction with the Company's audited
consolidated financial statements and notes thereto for the year ended December
31, 2000, included in Bingo.com's Annual Report on Form 10-K, filed May 21, 2001
with the Securities and Exchange Commission. The results of operations for the
interim period are not necessarily indicative of the results of operations for
any other interim period or for a full fiscal year.
Certain comparative figures have been reclassified to conform to the
presentation adopted in the current period.
2. GOING CONCERN
These unaudited interim consolidated financial statements have been prepared on
the going concern basis, which presumes the realization of assets and the
settlement of liabilities and commitments in the normal course of operations.
The application of the going concern basis is dependent upon the Company
achieving profitable operations to generate sufficient cash flows to fund
continued operations, or, in the absence of adequate cash flows from operations,
obtaining additional financing.
The Company has reported losses in the last three fiscal years, and has an
accumulated deficit of $7,828,579 at September 30, 2001, and recurring negative
cash flows from operations. Management continues to review operations in order
to identify additional strategies designed to generate cash flow, improve the
Company's financial position, and enable the timely discharge of the Company's
obligations. If management is unable to identify sources of additional cash flow
in the short term, it may be required to reduce or limit operations.
-6-
BINGO.COM, INC.
Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)
Nine months ended September 30, 2001 and 2000
(Unaudited)
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3. DEBENTURE PAYABLE
On April 16, 2001, the Company received a loan from and issued a secured
convertible debenture to Redruth Ventures Inc., a British Virgin Islands
corporation for $750,000, and to Bingo, Inc., an Anguilla corporation for
$500,000 (collectively, "the Lenders").
Under the terms of the debentures interest shall accrue on the outstanding
principal amount of the debentures at a fixed rate of 12% per annum from the
issuance date through April 16, 2003, at which time the interest will become
payable. Thereafter, interest shall accrue and be payable on the first business
day of each succeeding quarter through and including April 16, 2006. All
principal, accrued but unpaid interest and any other amounts due are due and
payable at maturity on April 16, 2006.
The Company has the option to pay all accrued interest in cash, common stock of
the Company, or a combination of both cash and common stock. Any amounts
remaining unpaid on the debentures on the maturity date, whether principal,
interest or other amounts due, shall be paid in full in cash on such date. Any
common stock of the Company delivered to the Lenders in payment of the
debentures will be valued at $0.25 per share.
The Lenders received a total of 12,000,000 common stock purchase warrants at an
exercise price of $0.25 per share exercisable for a period of three years from
the date of the debenture agreements in exchange for the loans. The Lenders have
the right, but not the obligation, to elect to convert any or all of the
outstanding principal amount of the debentures into shares of the Company's
common stock at a conversion price of $0.125 per share until the third
anniversary date of the debentures. The debentures are secured by all assets of
the Company.
Drawdowns of principal under the debentures are scheduled as follows:
Date Drawdown
- -------------- -----------
April 16, 2001 $ 250,000
May 1, 2001 250,000
June 1, 2001 250,000
July 1, 2001 150,000
October 1, 2001 100,000
January 1, 2002 100,000
April 1, 2002 100,000
July 1, 2002 50,000
-7-
BINGO.COM, INC.
Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)
Nine months ended September 30, 2001 and 2000
(Unaudited)
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3. DEBENTURE PAYABLE (CONTINUED)
As at September 30, 2001, the Company had drawndown a total of $900,000 in
accordance with the terms of the debentures.
4. STOCKHOLDERS' EQUITY
During the quarter the Company issued 750,000 shares of common stock to the
former President of the Company under a revised employment agreement. The
shares are to be held in escrow for a period of one year. After one year, the
shares will be released at a rate of at least 125,000 shares per month, in
accordance with a formula included in the replacement agreement completed
subsequent to period end.
During the quarter, the Company granted options to purchase a total of 600,000
shares of the Company's common stock at an exercise price of $0.30 per share to
four members of the board of directors of the Company. The options vest 100% at
the grant date and expire on September 21, 2006. The options were granted under
the terms of the Company's 2001 Stock Option Plan. The market price for the
Company's common stock on the grant date was $0.27.
During the quarter, previously granted options to purchase a total of 75,000
shares of the Company's common stock at exercises prices ranging from $0.44 to
$1.45 were cancelled as a result of the termination of the holders' employment
or directorship with the Company.
During the quarter, the post-termination exercise period on options to purchase
a total of 1,100,000 shares of the Company's common stock held by the former
president of the Company was extended from one year to two years. These options,
which were granted under the Company's 1999 Non-Qualified Stock Option Plan and
have exercise prices ranging from $0.44 to $0.75, now expire on August 31, 2003.
No compensation cost was recognized in connection with this extension because
the market value of the Company's common stock was less that the exercise price
of the options at the effective date of the extension.
During the quarter ended June 30, 2001 the Company disclosed that it had
granted options to purchase 371,000 shares of the Company's common stock at an
exercise price of $0.20 per share under the Company's 2001 Stock Option Plan,
subject to shareholder approval. All of these grants lapsed during the quarter
because the grantees ceased to be employees of the Company.
During the quarter, 16,000 shares of common stock previously recorded as issued
and outstanding were cancelled.
-8-
BINGO.COM, INC.
Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)
Nine months ended September 30, 2001 and 2000
(Unaudited)
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5. COMMITMENTS
During the quarter ended September 30, 2001, the Company, directly or through
its subsidiaries, completed the following agreements:
(a) Asset purchase and assignment agreement with FYRC Inc. ("FYRC") for the
worldwide rights to the Skill-Bingo game. This agreement requires the
Company to pay a royalty of 4% of the gross revenue derived from the
Skill-Bingo game (as defined in the agreement) commencing September
18, 2001 until December 31, 2098.
(b) Agreement with CYOP Systems Inc. ("CYOP") granting the Company a
license for a software program known as CrediPlay. Under the terms of
the agreement the Company is granted an irrevocable, worldwide,
perpetual license to use the software for the support and operation of
Bingo's business, and CYOP will provide services for the operation of
Bingo's customer service and data center. The initial term of the
agreement is three years.
The license fee payable to CYOP under the terms of the agreement is 25%
of the revenue derived from the Skill-Bingo game (as defined in the
agreement) received by the Company, with a minimum monthly fee of
$60,000. The service fee payable to CYOP under the terms of the
agreement is 5% of the revenue derived by the Company from the
Skill-Bingo game (as defined in the agreement), with a minimum monthly
service fee of $18,000.
(c) Website hosting and management agreement with NextLevel.com Inc.
("NextLevel") for the provision of Website hosting services for the
Company's Website. Pursuant to the terms of the agreement, NextLevel
will provide full Website hosting services for the Company's Website
for a fee of $12,000 per month, for an initial term of one year.
Certain directors and/or officers of FYRC and CYOP are directors of the Company.
In evaluating the Skill-Bingo game and negotiating the asset purchase and
assignment agreement, and the CYOP agreement, the Company used criteria such as:
market opportunity, competitive advantage, potential revenues and anticipated
margins. The Company's board of directors determined that the consideration for
each of these transactions was reasonable.
-9-
BINGO.COM, INC.
Notes to Consolidated Financial Statements
(Expressed in U.S. dollars)
Nine months ended September 30, 2001 and 2000
(Unaudited)
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6. SUBSEQUENT EVENTS
Subsequent to quarter end the Company granted to five employees options to
purchase a total of 255,000 shares of the Company's common stock at an exercise
price of $0.30 per share. The options vest 10% at the grant date, 15% 12 months
following the grant date, and 2% per month thereafter. The options were granted
under the terms of the Company's 2001 Stock Option Plan, and expire on October
15, 2006. The market price for the Company's common stock on the grant date was
$0.19.
Subsequent to period end, the Company also granted options to purchase 75,000
shares of the Company's common stock at an exercise price of $0.30 per share to
a former employee of the Company as part of a separation agreement. The options
vest 100% at the grant date and expire on October 31, 2002. The options were
granted under the terms of the Company's 1999 Stock Option Plan. The market
price for the Company's common stock on the grant date was $0.19
-10-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward- looking statements that involve risks
and uncertainties, as described below. Bingo.com's actual results could differ
materially from those anticipated in these forward-looking statements. The
following discussion should be read in conjunction with the unaudited interim
consolidated financial statements and notes thereto included in Part I - Item 1
of this Quarterly Report, and the audited consolidated financial statements and
notes thereto and Management's Discussion and Analysis of Financial Conditions
and Results of Operations included in our Annual Report on Form 10-K for the
fiscal year ended December 31, 2000.
FORWARD LOOKING STATEMENTS
ALL STATEMENTS CONTAINED IN THIS QUARTERLY REPORT ON FORM 10-Q AND THE DOCUMENTS
INCORPORATED HEREIN BY REFERENCE, AS WELL AS STATEMENTS MADE IN PRESS RELEASES
AND ORAL STATEMENTS THAT MAY BE MADE BY US OR BY OFFICERS, DIRECTORS OR
EMPLOYEES ACTING ON OUR BEHALF, THAT ARE NOT STATEMENTS OF HISTORICAL FACT
CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING STATEMENTS
INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT COULD
CAUSE OUR ACTUAL RESULTS TO BE MATERIALLY DIFFERENT FROM HISTORICAL RESULTS OR
FROM ANY FUTURE RESULTS EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS.
READERS SHOULD CONSIDER STATEMENTS THAT INCLUDE THE TERMS "BELIEVE," "BELIEF,"
"EXPECT," "PLAN," "ANTICIPATE," "INTEND" OR THE LIKE TO BE UNCERTAIN AND
FORWARD-LOOKING. IN ADDITION, ALL STATEMENTS, TRENDS, ANALYSES AND OTHER
INFORMATION CONTAINED IN THIS REPORT RELATIVE TO TRENDS IN NET SALES, GROSS
MARGIN, ANTICIPATED EXPENSE LEVELS AND LIQUIDITY AND CAPITAL RESOURCES,
CONSTITUTE FORWARD-LOOKING STATEMENTS. POTENTIAL RISKS AND UNCERTAINTIES
INCLUDE, AMONG OTHERS, THOSE SET FORTH IN THIS ITEM 2. PARTICULAR ATTENTION
SHOULD BE PAID TO THE CAUTIONARY STATEMENTS INVOLVING THE COMPA NY'S LIMITED
OPERATING HISTORY, THE UNPREDICTABILITY OF ITS FUTURE REVENUES, THE COMPANY'S
NEED FOR AND THE AVAILABILITY OF CAPITAL RESOURCES, THE EVOLVING NATURE OF ITS
BUSINESS MODEL, AND THE RISKS ASSOCIATED WITH SYSTEMS DEVELOPMENT, MANAGEMENT OF
GROWTH AND BUSINESS EXPANSION. EXCEPT AS REQUIRED BY LAW, THE COMPANY UNDERTAKES
NO OBLIGATION TO UPDATE ANY FORWARD-LOOKING STATEMENT, WHETHER AS A RESULT OF
NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. ALL CAUTIONARY STATEMENTS MADE
HEREIN SHOULD BE READ AS BEING APPLICABLE TO ALL FORWARD-LOOKING STATEMENTS
WHEREVER THEY APPEAR. IN THIS CONNECTION, READERS SHOULD CONSIDER THE RISKS MORE
FULLY DESCRIBED IN THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 2000 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC")
AND SHOULD NOT PLACE UNDUE RELIANCE ON ANY FORWARD-LOOKING STATEMENTS.
-11-
OVERVIEW
Since 1999, Bingo.com, Inc. ("Bingo" or the "Company") has been focused on the
development of prize-based, play for free Internet games, with an emphasis on
entertainment. The Company began to experience revenue growth from these games
in fiscal 2000. During the second and third quarter of 2001, the Company began
to channel its efforts into the development of a skill-based Internet bingo ga
me, know as Skill-Bingo(TM). Skill-Bingo will generate revenue from a network
maintenance fee that will be charged to all players. The new Skill-Bingo game
began operating and generating revenue on October 26, 2001.
The Company has incurred significant losses since inception, and as of September
30, 2001 had an accumulated deficit of $7,829,000. Bingo will continue to incur
losses until its Skill- Bingo game achieves sufficient market penetration and
revenue grows. There can be no assurances that either will occur. Bingo.com has
made a significant investment in the development of the Company's website,
purchase of domain name, branding, marketing, and maintaining operations.
As of the date of this report, the Company has utilized substantially all of its
available funding. The Company's continuation as a going concern will depend on
its ability to generate sufficient cash flow from operations to cover operating
costs, or to raise additional capital. No assurance can be given that the
Company will be able to generate adequate cash flow to fund ongoing operating
costs or to raise additional funds. In the absence of sufficient cash flow, the
Company may be required to limit operations.
SOURCES OF REVENUE AND REVENUE RECOGNITION
Prior to September 1, 2001, Bingo generated the majority of its revenue from the
sale of advertising on its website. Advertising revenue is recognized as the
advertising campaign or impressions and clicks are made on the website. Accounts
receivable are recorded net of advertising commissions.
Effective September 1, 2001, the Company has contracted an arms length party,
NextLevel, to manage the sales of advertising on the Bingo.com Website (see Part
II, Item 5 - Other Information). Under the terms of the agreement, NextLevel
pays Bingo 50% of all advertising revenue generated from the Company's Website,
subject to a minimum monthly fee of $112,000.
In fiscal 2000, the Company adopted EITF No. 99-17 "Accounting for Advertising
Barter Transactions". EITF 99-17 provides that the Company recognize revenue and
advertising expenses from barter transactions at the fair value only when it has
a historical practice of receiving or paying cash for similar transactions.
Bingo barters portions of the unsold advertising impressions generated by its
website in exchange for advertising in media properties owned by third parties.
The Company records revenues and costs for such barter transactions at the
market value of the advertising exchanged, with no net income or loss
recognized. Barter revenue totaled $372,000 for the nine months ended September
31, 2001 and $175,000 for the nine months ended September 31, 2000.
-12-
The Company enters into co-branding contracts with its corporate customers. The
contracts provide the customer with the ability to allow its visitors the
opportunity to play Bingo for free on the customer's website. A monthly fee is
charged in accordance with the contract and is recognized in revenue on a
monthly basis. Setup fees associated with co-branding contracts are recorded as
revenue when the setup process has been completed.
RESULTS OF OPERATIONS
REVENUE
Revenue declined to $334,000 for the quarter ended September 30, 2001, a
decrease of 39% over revenue of $544,000 for the same period in the prior year.
Revenue for the nine months ended September 30, 2001 increased to $1,391,000, an
improvement of 130% over revenue of $606,000 for the same period in 2000. The
reduction in revenue for the third quarter of 2001 can be explained generally by
the downturn in the North Ame rican economy and the erosion of the market for
Internet advertising. More specifically, the Company had fewer people focused on
selling advertising during the quarter ended September 30, 2001, largely because
of the changes taking place in the business of the Company.
COST OF REVENUE
Bingo recorded cost of revenue of $144,000 during the quarter ended September
30, 2001, a drop of $131,000 or 48% compared to costs of $275,000 for the same
period in the prior year. The gross margin improved to 57% in 2001 from 50% in
the third quarter of the prior year. For the year to date, cost of revenue
increased to $851,000, a change of $548,000 or 181% compared to costs of
$303,000 for the same period in the prior year. The gross margin on sales
decreased to 39% during the nine months ended September 30, 2001, compared to
50% during the same period in the prior year. Cost of revenue consists primarily
of commissions paid on the sale of advertising and the market value of
advertising exchanged in barter transactions (see above). The changes from the
prior year can be explained by the erosion in the North American advertising
market that occurred in 2001. It was more difficult to secure advertising
revenues, and prices had to be dropped to account for the weaker market. In
addition, the Company incurred license and service fees in connection with the
licensing of the CrediPlay software that will be used to operate the Company's
Skill- Bingo Website (see Part II, Item 5 - Other Information), starting in
September 2001.
SALES AND MARKETING EXPENSES
Sales and marketing expenses dropped to $57,000 for the quarter ended September
30, 2001, a decrease of $164,000 over 2000 quarter three expenses of $290,000.
2001 year to date expenses decreased by $374,000 to $221,000, from expenses of
$595,000 for the nine months ended September 30, 2000. Sales and marketing
expenses include principally costs for marketing, co-brand advertising and
keyword buys for our game site. The balance of marketing and
-13-
advertising expenses consists of payroll, consultant, and travel costs. All of
these amounts decreased in 2001 as a result of changes to the business,
particularly as a result of fewer employees being focused on selling. NextLevel
performed sales activities for the Company starting in late August, but did not
charge the Company for the service until September (see Part II, Item 5 - Other
Information).
GENERAL AND ADMINISTRATIVE EXPENSES
General and administrative expenses consist primarily of payroll costs for the
Company's executive staff, accounting and administrative personnel, premises
costs for the Company's office, legal and professional fees, insurance and other
general corporate and office expenses. General and administrative expenses
decreased to $326,000 for the third quarter of 2001, a reduction of 61% over
costs of $834,000 for the same period last year. General and administrative
expenses for the 2001 year to date period decreased by $558,000 to $1,303,000, a
drop of 30% from the prior year's expenses of $1,861,000. General and
administrative expenses declined from the prior year as a result of changes to
the business, including moving the Company's offices from California to
Vancouver, and lower executive payroll. Company management also made greater
efforts to control operating costs in order to reduce administrative and other
expenses.
WEBSITE DEVELOPMENT EXPENSES
Website development expenses are the costs associated with developing content
for and the maintenance of the Company's Website and planning costs associated
with the new Skill- Bingo game. There were no costs incurred during fiscal 2001,
while expenses totaled $49,000 in the third quarter of 2000 and $233,000 for the
nine months ended September 30, 2000. The Company completed a software
development agreement during the quarter ended September 30, 2001 in connection
with the Skill- Bingo game (see Part II, Item 5 - Other Information). Under the
terms of the agreement, the Company paid CDN$300,000 to a third party for the
development by of the Skill- Bingo game in accordance with the Company's
requirements. The full amount of these costs has been capitalized to Website
development costs.
The Company adopted EITF 00-2 "Accounting for Web Site Development Costs" and
development costs incurred subsequent to June 30, 2000 associated with the
Company's Web Site were recorded in accordance with EITF 00-2.
DEPRECIATION AND AMORTIZATION
Depreciation and amortization includes depreciation on the Company's fixed
assets, as well as amortization of the Bingo.com domain name. The Company
capitalized the cost of the purchase of the domain name and is amortizing the
cost over five years from the date of commencement of operations. Fixed assets
are depreciated using the declining balance method over the useful lives of the
assets, ranging from three to five years. Depreciation and amortization
decreased to $159,000 during the quarter ended September 30, 2001, from $180,000
during the same quarter
-14-
in the prior year. For the year to date, depreciation and amoritzation increased
to $496,000 compared to $360,000 in the prior year. The changes in depreciation
and amoritzation can be explained by the fact that the domain name rights were
amortized for a longer period of time in fiscal 2001.
OTHER INCOME AND EXPENSES
Interest expense consists of accrued interest on the convertible debentures and
other debt instruments, such as leases. Interest expense increased to $41,000
for the three months ended September 30, 2001 compared to $23,000 for the same
period in the prior year. Interest expense for the 2001 year to date increased
to $100,000, an increase of $77,000 over the prior year's expense of $23,000.
The increase is attributable to interest on the debenture drawdowns in 2001. The
Company began drawing down the convertible debentures in April 2001, and
interest began accruing at that time. There were no such debentures in the prior
year.
LIQUIDITY AND CAPITAL RESOURCES
The Company does not currently have an adequate source of reliable, long-term
revenue to fund operations. As a result, Bingo is reliant on outside sources of
capital funding. There can be no assurances that the Company will in the future
achieve a consistent and reliable revenue stream adequate to support continued
operations. In addition, there are no assurances that the Company will be able
to secure adequate sources of new capital funding, whether it be in the form of
share capital, debt, or other financing sources.
Bingo had cash and cash equivalents of $24,000 and a working capital deficit of
$1,099,000 at September 30, 2001. This compares to cash and cash equivalents of
$174,000 and a working capital deficit of $428,000 at December 31, 2000. The
Company continued to incur costs but did not secure adequate new revenue to
cover the costs, and this contributed to an erosion of working capital during
the quarter ended September 30, 2001.
During the nine months ended September 30, 2001, Bingo used cash of $603,000 in
operating activities compared to using $2,100,000 in the same period in the
prior year. The reduction in cash used for operations in 2001 demonstrates the
effect of the Company's efforts to reduce operating costs in 2001.
During the quarter ended September 30, 2001, Bingo received proceeds of $150,000
from the secured convertible debentures issued by the Company in April, for
total proceeds of $900,000 for the 2001 year to date. The funds were used to
fund working capital requirements. The debentures bear interest at a rate of 12%
per year and are due in April 2006. The Company has an additional $350,000
available under its $1.25 million debenture facility.
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RISK RELATED TO THE COMPANY'S BUSINESS
NEED FOR ADDITIONAL CAPITAL
The Company has recorded substantial operating losses and, as of September 30,
2001, has an accumulated deficit of approximately $7,829,000. The Company does
not currently have adequate cash flow or existing revenue to provide operating
capital until December 31, 2001. However, subsequent to period end, the Company
launched its new Skill- Bingo game, which it expects will provide additional
funding to finance operations. There can be no assurances that adequate revenue
will be achieved.
HISTORY OF LARGE OPERATING LOSSES
Since inception, the Company has not had adequate revenue to support operations,
and has recognized substantially half of its revenues from barter transactions.
The Company has significantly reduced ongoing operating expenses and, subsequent
to period end, launched the Skill-Bingo game. However, there can be no assurance
that the Company will achieve positive cash flow and operating profitability.
SUCCESS DEPENDS ON KEY PERSONNEL; NO "KEY MAN" LIFE INSURANCE
Future performance depends on the continued service of key personnel, and the
ability to attract, train, and retain additional technical, marketing, customer
support, and management personnel. The loss of one or more key employees could
negatively impact the Company, and there is no "key man" life insurance in force
at this time. Competition for qualified personnel is intense, and there can be
no assurance that the Company will retain key employees, or attract and retain
other needed personnel.
RISKS RELATED TO THE INTERNET AND E-COMMERCE
VOLATILITY IN STOCK PRICE
The stock market and especially the stock prices of Internet related companies
have been very volatile. This volatility may not be related to the operating
performance of the companies. The broad market volatility and industry
volatility may reduce the price of the Company's stock without regard to the
Company's operating performance. The market price of the Company's stock could
significantly decrease at any time as a result of this volatility. The
uncertainty that results from such volatility can itself depress the market
price of the Company's stock.
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DEPENDENCE UPON, AND RISKS RELATED TO, THE INTERNET
While management believes that acceptance and use of the Internet will continue
to increase at rapid rates and that additional hits to the site will be made,
there can be no assurances that such increase will continue to develop, or that
use of the Internet as a means of communication and entertainment will continue
or increase. If growth in the use of the Internet does not continue, there may
not be an increase in the number of hits to the Company's website at the rates
or for the purposes management has assumed. This could, in turn, adversely
impact the Company and the results of its business operations. Further, even if
acceptance and use of the Internet does increase rapidly, but the technology
underlying the Internet and other necessary technology and related
infrastructure does not effectively support that growth, the Company's future
would be negatively impacted.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As of September 30, 2001, Bingo had not entered into or acquired financial
instruments that have material market risk. The Company has no financial
instruments for trading purposes, or derivative or other financial instruments
with off balance sheet risk. The majority of financial assets and liabilities
are due within the next twelve months and are classified as current assets or
liabilities in the consolidated balance sheet included in this report. The
exception is the convertible debentures. The market value of the convertible
debentures is not materially different from the book value because the
debentures bear interest at market rates at the date of issuance. The fair value
of all other financial instruments at September 30, 2001 is not materially
different from their carrying value.
To September 30, 2001, substantially all revenues and the majority of cash costs
have been realized or incurred in United States dollars. To date, the Company
has not entered into foreign currency contracts to hedge against foreign
currency risks between the Canadian dollar or other foreign currencies and our
reporting currency, the United States dollar.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Other than described below, the Company is not currently a party to any legal
proceeding, and was not a party to any legal proceeding during the fiscal period
ended September 30, 2001. Management of the Company is currently not aware of
any other legal proceedings proposed to be initiated against the Company.
However, from time to time, the Company may become subject to claims and
litigation generally associated with any business venture.
On July 6, 2001, Roger W. Ach, II, filed a complaint in the Court of Common
Pleas, Hamilton County, Ohio against the Company in connection with a promissory
note issued by the Company. Mr. Ach alleges that on or about May 16, 2001 the
Company borrowed the sum of $45,000 and executed and delivered to him a
promissory note and that the Company owes him the amount of the Note together
with interest from March 16, 2001 at the rate of prime plus 1%. Mr. Ach demands
judgment against the Company in the sum of $45,000, plus interest and costs.
On October 5, 2001, the Company filed an Answer, Counterclaim and third party
complaint in defense of the proceedings commenced, among other things, denying
the allegation that any moneys are due to Mr. Ach and counterclaiming against
him and bringing a third party complaint against the Lottery Channel, Inc. for
payment of outstanding invoices of $39,168 plus interest, costs and attorney
fees.
The Company believes that Mr. Ach's complaint is without merit and intends to
vigorously defend these proceedings and believes it is not likely to produce an
outcome which would have a material adverse effect on the Company's consolidated
financial position or results of operations.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
See Notes to Consolidated Financial Statements included elsewhere in this report
for a discussion of changes in securities and use of proceeds.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to the shareholders during the period.
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ITEM 5. OTHER INFORMATION
The Company executed the following agreements during the quarter ended September
30, 2001:
ASSET PURCHASE & ASSIGNMENT AGREEMENT
Effective September 19, 2001, the Company entered into an asset purchase and
assignment agreement (the "Asset Agreement") with FYRC Inc., a British Virgin
Islands incorporated company ("FYRC"), to purchase from FYRC the worldwide
rights to all inventions related to a method for Skill-Bingo (the "Skill-Bingo
Inventions"). A copy of the Asset Agreement is attached to this report as
Exhibit 10.4.
Under the terms of the Asset Agreement, the Company acquired the worldwide right
and title to the Skill-Bingo Inventions and the development of any and all
existing or future substitute, divisional, continuation or continuation-in-part
patent applications deriving directly or indirectly either in whole or in part
from the Skill-Bingo Inventions and any Additional Patent Applications, and
otherwise utilize the Skill-Bingo Inventions anywhere in the world, for
consideration of 4% of the Gross Revenue derived by the Company commencing on
the date of the Agreement and ending on December 31, 2098, with a minimum
payment after five years of $200,000.
The Company made an initial payment of $5,000 on the execution of the Asset
Agreement. Regular payments are due to commence on February 15, 2002, based on
4% of the Gross Revenue derived by the Company commencing on the date of the
Asset Agreement and ending on December 31, 2001 (the "First Business Quarter"),
and on the sixtieth (60th) day of each of the following Business Quarters
following the First Business Quarter, 4% of the Gross Revenue of the Company for
the immediately preceding Business Quarter.
SOFTWARE LICENSE, TECHNICAL SUPPORT, AND OPERATION OF CUSTOMER SERVICE & DATA
CENTRE AGREEMENT
Effective September 1, 2001, the Company's wholly owned subsidiary Bingo.Com
(Canada) Enterprises Inc. ("Bingo Canada") entered into an agreement (the
"Software Agreement") with CYOP Systems Inc., a Barbados incorporated company
("CYOP"), with respect to the grant of a licence for a software program known as
"CrediPlay" (the "Software"), developed by CYOP. Crediplay is an online
financial network offering Pay-for-Play tournaments, and Pay-per-Use integrated
games, products, and services for licensed users, and which includes an
integrated credit card and financial payment processing application that permits
licensed users to access and utilize the services of credit card organizations
and collect, record, and distribute financial payments in the course of the
licensed users' business activities. A copy of the Software Agreement is
attached to this report as Exhibit 10.7.
Pursuant to the Software Agreement, CYOP has granted to Bingo Canada, an
irrevocable, worldwide, perpetual license to use the Software for the support
and operation of Bingo Canada's business, and CYOP will provide services for
the operation of Bingo Canada's customer service and data center. The initial
term of the agreement is three years. The license
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fee payable to CYOP under the terms of the agreement is 25% of the Network
Maintenance Fees derived from the Skill- Bingo game (as defined in the
agreement) by Bingo Canada, with a minimum monthly fee to CYOP of $60,000. The
service fee payable to CYOP under the terms of the agreement is 5% of Network
Maintenance Fees received by Bingo Canada from the Skill-Bingo game, with a
minimum monthly fee to CYOP of $18,000, including all hosting duties.
SOFTWARE DEVELOPMENT AGREEMENT FOR SKILL-BINGO
Effective May 1, 2001, Bingo Canada entered into an agreement (the "Development
Agreement") with Moshpit Entertainment Inc., a British Columbia incorporated,
wholly owned subsidiary of CYOP ("Moshpit"), with respect to the development of
the Skill- Bingo game acquired by the Company from FYRC in connection with the
Skill- Bingo Inventions. A copy of the Development Agreement is attached to this
report as Exhibit 10.8.
Pursuant to the Development Agreement, Bingo Canada retained Moshpit to develop
the Skill-Bingo game in the form of a computer program that incorporates design
concepts and specifications as determined by Bingo Canada and set out in the
Development Agreement, and that operates efficiently over the Internet, for an
aggregate consideration of CDN$300,000.
-20-
AGREEMENT FOR SITE MANAGEMENT, MARKETING AND INTERNET ADVERTISING SERVICES
Effective September 1, 2001, the Company signed an agreement (the "Management
Agreement") with NextLevel Inc., a British Columbia incorporated company
("NextLevel") with regard to the provision by NextLevel of services, software
and computer equipment to host the Company's Website on NextLevel's Web server
for access by Internet users. A copy of the Management Agreement is attached to
this Report as Exhibit 10.6.
Pursuant to the Management Agreement, NextLevel has acquired the right to the
use of all of the advertisements and email lists which are available for
inclusion or display in the Company's Website, and the right to retain all
advertising fees paid by third parties for advertising on the Company's Website
in consideration for which NextLevel will pay to the Company, monthly, in
arrears, a non-refundable fee, equal to 50% of all advertising fees collected by
NextLevel in the preceeding month, with a minimum monthly fee payable by
NextLevel to the Company of $112,000 per month.
WEBSITE HOSTING & MANAGEMENT AGREEMENT
Effective September 1, 2001, the Company entered into an agreement (the "Hosting
Agreement") with NextLevel.com Inc., a Nevada incorporated company
("NextLevel.com"), a wholly owned subsidiary of NextLevel, with regard to the
provision of Website hosting services for the Company's Website. A copy of the
Hosting Agreement is attached to this Report as Exhibit 10.5.
Pursuant to the Hosting Agreement, NextLevel has been engaged to provide full
Website hosting services for the Company's Website, including the provision of a
minimum of 100 gigabytes disk space, 15 MBS of sustained bandwidth related to
the Website and site management to include systems administration on a 24/7
basis, daily site back-up with remote location back up and ongoing security
monitoring, for consideration of a fee of $12,000 per month. The Hosting
Agreement provides that the Company may increase the sustained bandwidth for an
additional fee. In evaluating the Skill-Bingo Inventions and negotiating the
Asset Agreement, the Management Agreement, and the Hosting Agreement, the
Company used criteria such as: market opportunity, competitive advantage,
potential revenues and anticipated margins. The Company's board of directors
determined that the consideration for each of these transactions was reasonable.
In evaluating and negotiating the Software Agreement and the Development
Agreement, Bingo Canada used criteria such as: market opportunity, competitive
advantage, potential revenues and anticipated margins. The Directors of Bingo
Canada determined that the consideration for each of the transaction was
reasonable.
Mr. White and Mr. Petersen, directors of the Company, are beneficial
shareholders of FYRC, and disclosed their interest to the Company in advance of
the approval of the Asset Agreement, and abstained from approving the Asset
Agreement.
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Mr. White, a director of the Company is a director, officer and beneficial
shareholder of CYOP. CYOP is also the parent company of Moshpit. Mr. White
disclosed his interest to the Company in advance of the approval of the Software
Agreement and the Development Agreement, and abstained from approving either
agreement
A company in which Mr. White, a director of the Company is a director, officer
and beneficial shareholder of, has an agreement with respect to the acquisition
of NextLevel and all of its subsidiaries. Mr. White, disclosed his interest to
the Company in advance of the approval of the Management Agreement, and
abstained from approving the Management Agreement.
AMENDED TERMINATION AGREEMENT
As previously disclosed in the Company's Current Report on Form 8-K, filed with
the SEC on August 20, 2001, the Company entered into a termination agreement
with Shane Murphy (the "Murphy Agreement"), the former President and a director
of the Company. Effective November 9, 2001, the Company and Mr. Murphy agreed
(the "Second Agreement") to replace the Murphy Agreement with the following
agreement:
1. The Cdn$120,000 cash payment stipulated in the Murphy Agreement is
cancelled;
2. In accordance with the Murphy Agreement previously disclosed, the
Company will pay Mr. Murphy Cdn$130,000 by issuing to Mr. Murphy,
250,000 validly issued and outstanding fully paid and non-assessable
Common shares of the Company (the "Shares"), issued as "restricted
securities" and subject to the conditions of the resale exemption
provided by U.S. Securities and Exchange Commission Rule 144;
3. The 750,000 shares of commons stock of Bingo previously issued to Mr.
Murphy pursuant to the Murphy Agreement will be delivered into escrow
(the "Escrow") and not released to Mr. Murphy until the relevant
regulatory hold periods have expired, and will then be released to Mr.
Murphy on the 1st day of each following month at the rate of the
greater of:
(i) 125,000 shares; or
(ii) that number of shares equal to 10% of the number of Bingo shares
sold (viz. excluding double counting) through the NASDAQ Over the
Counter Bulletin Board market during the preceding month;
4. All 1,100,000 stock options previously granted to Mr. Murphy to
purchase up to 1,100,000 Common shares of the Company (the "Options")
held by Mr. Murphy will vest immediately, and will expire on August 31,
2003. Any shares issued pursuant to the exercise of Options will be
held as part of the Escrow;
5. The Company and Mr. Murphy will execute mutual releases in favor of
each other.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
The following instruments are included as exhibits to this Report. Exhibits
incorporated by reference are so indicated.
EXHIBIT
NUMBER DESCRIPTION
- -------- -----------
4.1 $1,250,000.00 Convertible Debenture**
4.2 Common Stock Purchase Warrant (Redruth Ventures Inc. a British
Virgin Islands Corporation ("RRV") and Bingo, Inc.**
4.3 Common Stock Purchase Warrant (Redruth Ventures Inc. a British
Virgin Islands Corporation ("RRV") and Bingo, Inc.**
10.1 Employment Agreement dated April 16, 2001, between the Company and
Shane Murphy*
10.2 Termination Agreement dated August 17, 2001, between the Company and
Shane Murphy***
10.3 Consulting Agreement dated August 20, 2001, between the Company T.M.
Williams (Row), Ltd., and T.M. Williams***
10.4 Asset Purchase & Assignment Agreement dated September 18, 2001
between the Company and FYRC Inc.
10.5 Website Hosting & Management Agreement dated September 1, 2001
between the Company and NextLevel.com Inc.
10.6 Agreement for Site Management, Marketing and Internet Advertising
Services Dated September 1, 2001 between the Company and NextLevel
Inc.
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EXHIBIT
NUMBER DESCRIPTION
- -------- -----------
10.7 Software License, Technical Support, And Operation Of Customer
Service & Data Centre Agreement dated September 1, 2001 between
Bingo.Com (Canada) Enterprises Inc., and CYOP Systems Inc.
10.8 Software Development Agreement For Skill-Bingo dated May 1, 2001
between Bingo.Com (Canada) Enterprises Inc., and Moshpit
Entertainment Inc.
*Previously filed with the Company's quarterly report on Form 10-Q for the
period ended June 30, 2001, on August 20, 2001.
**Previously filed with the Company's quarterly report on Form 10-Q for the
period ended March 31, 2001, on June 25, 2001.
***Previously filed with the Company's current report on Form 8-K reporting
events as at August 20, 2001, filed on August 27, 2001.
REPORTS ON FORM 8-K.
During the quarter covered by this report, the Company filed the following
reports on Form 8-K.
Form 8-K filed on July 9, 2001, reporting on the events and outcome of the
business conducted at the Company's Annual General Meeting held June 27, 2001.
Form 8-K filed on August 14, 2001, reporting the change of independent
accountants from Grant Thornton, LLP to Davidson & Company, Chartered
Accountants.
Form 8-K filed on August 27, 2001, reporting the changes in the board of
directors and the executive officers of the Company.
Form 8-K/A filed on September 24, 2001, filing a copy of the letter of the
Former Auditor, Grant Thornton LLP, on the change of independent accountants
from Grant Thornton, LLP to Davidson & Company, Chartered Accountants.
-24-
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of
1934, the Registrant ha s duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
BINGO.COM, INC.
-------------------------------------
(Registrant)
Date: November 12, 2001 /S/ Tryon Williams
----------------- -------------------------------------
Tryon Williams, Chairman of the Board,
Chief Executive Officer, President and
Secretary
(Principal Executive and Accounting Officer)
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- -------- -----------
4.1 $1,250,000.00 Convertible Debenture**
4.2 Common Stock Purchase Warrant (Redruth Ventures Inc. a British
Virgin Islands corporation ("RRV") and Bingo, Inc.**
4.3 Common Stock Purchase Warrant (Redruth Ventures Inc. a British
Virgin Islands corporation ("RRV") and Bingo, Inc.**
10.1 Employment Agreement dated April 16, 2001, between the Company and
Shane Murphy*
10.2 Termination Agreement dated August 17, 2001, between the Company and
Shane Murphy***
10.3 Consulting Agreement dated August 20, 2001, between the Company T.M.
Williams (Row), Ltd., and T.M. Williams***
10.4 Asset Purchase & Assignment Agreement dated September 18, 2001
between the Company and FYRC Inc.
10.5 Website Hosting & Management Agreement dated September 1, 2001
between the Company and NextLevel.com Inc.
10.6 Agreement for Site Management, Marketing and Internet Advertising
Services dated September 1, 2001 between the Company and
NextLevel.com Inc.
10.7 Software License, Technical Support, And Operation Of Customer
Service & Data Centre Agreement dated September 1, 2001 between
Bingo.Com (Canada) Enterprises Inc., and CYOP Systems Inc.
10.8 Software Development Agreement For Skill-Bingo dated May 1, 2001
between Bingo.Com (Canada) Enterprises Inc., and Moshpit
Entertainment Inc.
*Previously filed with the Company's quarterly report on Form 10-Q for the
period ended June 30, 2001, on August 20, 2001.
**Previously filed with the Company's quarterly report on Form 10-Q for the
period ended March 31, 2001, on June 25, 2001.
***Previously filed with the Company's current report on Form 8-K reporting
events as at August 20, 2001, filed on August 27, 2001.
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