10-K/A 1 bigr10kupa.htm BINGO.COM, INC. 10K/A 2002 UNITED STATES

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K/A

(Mark One)

|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT

OF 1934

For the fiscal year ended: December 31, 2002

|_| 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:000-26319

Bingo.com, Inc.

(Exact name of registrant as specified in its charter)

Florida		98-0206369
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

1166 Alberni Street, Suite 1405

Vancouver, BC, Canada, V6E 3Z3

(604) 694-0300

(Address of principal executive offices,

zip code, and phone number)

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to section 12(g) of the Act:

COMMON STOCK, PAR VALUE $0.001 PER SHARE

(Title of class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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. |X| Yes |_| No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [ ]

State the aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant computed by reference to the closing price of such stock on the National Association of Securities Dealers Over the Counter Bulletin Board market as of May 8, 2003 being $0.035 per share: $310,267. The number of shares of the Registrant's common stock outstanding on May 8, 2003 was 11,104,608. The Registrant's common stock is traded on the National Association of Securities Dealers Over-the-Counter Bulletin Board market under the symbol "BIGR".

DOCUMENTS INCORPORATED BY REFERENCE

None

INTRODUCTION

This Form 10-K/A amends the registrant's Form 10-K for the fiscal year ended December 31, 2002 by deleting the information contained in Items 8 of Part II of such form and substituting the following for such Items.

PART II........................................................................................................................................... 31

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.............................. 31

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

ON ACCOUNTING AND FINANCIAL DISCLOSURE........................................................ 60

PART IV....................................................................................................................................... 69

ITEMS 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND

REPORTS ON FORM 8-K...................................................................................................... 69

SIGNATURES......................................................................................................................... 70

CERTIFICATIONS................................................................................................................. 71

EXHIBIT LIST......................................................................................................................... 73

EXHIBIT 10.29 Amendment of Asset Purchase Agreement dated July 1, 2002............................. 74

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Supplementary Financial Information

Quarterly Results of Operations

The following tables present the Company's unaudited consolidated quarterly results of operations for each of our last eight quarters. This data has been derived from unaudited consolidated financial statements that have been prepared on the same basis as the annual audited consolidated financial statements and, in our opinion, include all normal recurring adjustments necessary for the fair presentation of such information. These unaudited quarterly results should be read in conjunction with our audited consolidated financial statements for the year ended December 31, 2002 included in Item 8 of this report.

				Three Months Ended
		March 31 2002		June 30 2002		September 30 2002		December 31, 2002
Revenue	$	236,955	$	179,449	$	142,443	$	158,345
Cost of revenue		157,027		100,107		30,693		63,380
Gross profit		79,928		79,342		111,750		94,965
Operating expenses and other income / expenses		278,405		483,876		258,060		314,352
Net loss from continuing Operations	$	(198,477)	$	(404,534)	$	(146,310)	$	(219.387)
Basic and diluted loss per share	$	(0.02)	$	(0.04)	$	(0.01)	$	(0.02)
Weighted average common shares		10,854,608		10,854,608		10,997,465		11,104,608

				Three Months Ended
		March 31 2001		June 30 2001		September 30 2001		December 31, 2001
Revenue	$	582,803	$	475,064	$	333,603	$	342,852
Cost of revenue		463,890		243,960		143,573		242,540
Gross profit		118,913		231,104		190,030		100,312
Operating expenses and other income / expenses		880,896		676,549		610,258		427,856
Net loss from continuing Operations	$	(761,983)	$	(445,445)	$	(420,228)	$	(327,544)
Basic and diluted loss per share	$	(0.08)	$	(0.04)	$	(0.04)	$	(0.03)
Weighted average common shares		10,104,608		10,104,608		10,756,190		10,804,357

The financial statements of the Company and related schedules described under "Item 15. Financial Statements and Financial Statement Schedules," are included following this page.

BINGO.COM, Inc.

Consolidated Financial Statements

Years ended December 31, 2002, 2001 and 2000

Independent Auditors' Report 33

Consolidated Financial Statements

Balance Sheets 36

Statements of Operations 37

Statements of Stockholders' Equity (Deficiency) 38

Statements of Cash Flows 39

Notes to Consolidated Financial Statements 40

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders

Bingo.com, Inc.

We have audited the accompanying consolidated balance sheet of Bingo.com, Inc. and Subsidiaries as of December 31, 2002, and the related consolidated statements of operations, stockholders equity (deficiency) and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The consolidated financial statements of Bingo.com, Inc. and Subsidiaries as of December 31, 2001 and 2000, were audited by other auditors whose reports dated March 15, 2002, except for Note 3, as to which the date is April 10, 2003, and May 3, 2001, respectively, expressed an unqualified opinion on those statements.

We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the 2002 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Bingo.com, Inc. and Subsidiaries as of December 31, 2002 and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1, the Company has continued to incur operating losses, has used, rather than provided, cash from operations and has an accumulated deficit of $9,174,243. These factors, and others, raise substantial doubt about the Company's ability to continue as a going concern. The ability of the Company to continue operations is subject to its ability to secure additional capital to meet its obligations and to fund operations. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/Dohan & Company, CPA's

Miami, Florida

April 10, 2003

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders

Bingo.com, Inc.

We have audited the accompanying restated consolidated balance sheet of Bingo.com, Inc. and Subsidiaries as of December 31, 2001, and the related restated consolidated statements of operations, stockholders equity (deficiency) and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

In our opinion, the restated consolidated financial statements referred to above present fairly, in all material respects, the financial position of Bingo.com, Inc. and Subsidiaries as of December 31, 2001, and the results of their operations and their cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America.

As discussed in Note 3 to the financial statements, certain errors resulting in an overstatement of the debenture payable in the amount of $462,673, understatement of additional paid-in-capital in the amount of $539,036, and understatement of net loss by $76,363 as of December 31, 2001, were discovered by management of the Company subsequent to the issuance of our report on those financial statements dated March 15, 2002. Accordingly, the accompanying 2001 financial statements have been restated to correct the errors.

/s/ Davidson & Company

Chartered Accountants

Vancouver, Canada

March 15, 2002, except for Note 3, as to which the date is April 10, 2003

INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders

Bingo.com, Inc.

We have audited the consolidated balance sheet of Bingo.com, Inc. as of December 31, 2000, and the related consolidated statements of operations, stockholders' equity (deficiency) and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Bingo.com, Inc. as of December 31, 2000, and the consolidated results of its operations and its consolidated cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1, the Company has continued to incur operating losses, has used, rather than provided, cash from operations and has an accumulated deficit of $6,250,335. Continued losses are projected for at least the next 8 months. These factors, and others, raise substantial doubt about the Company's ability to continue as a going concern. The ability of the Company to continue operations is subject to its ability to secure additional capital to meet its obligations and to fund operations. Management's plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Grant Thornton LLP

Certified Public Accountants

Los Angeles, California

May 3, 2001

BINGO.COM, INC.

Consolidated Balance Sheets

December 31, 2002 and 2001 (Restated)

		2002		RESTATED 2001
Assets
Current assets:
Cash and cash equivalents	$	14,682	$	14,028
Accounts receivable, less allowance for doubtful accounts of $nil (2001 - $46,185)		5,294		351,330
Inventory		2,631		-
Prepaid expenses		14,093		9,178
Total Current Assets		36,700		374,536

Equipment (Note 4)		127,469		477,554

Other assets		29,675		27,559

Domain name rights (Note 5)		1,257,241		1,257,241

Deferred tax asset, less valuation allowance of $3,346,803 (2001 - $2,993,179) (Note 10)		-		-

Total Assets	$	1,451,085	$	2,136,890

Liabilities and Stockholders' Equity (Deficiency)
Current liabilities:
Accounts payable	$	597,531	$	785,817
Accounts payable - related party (Note 12)		151,075		84,843
Accrued liabilities		262,072		165,076
Unearned Revenue		12,500		-
Loan payable (Note 12)		197,134		45,385
Current portion of contract payable (Note 5)		-		184,772
Current portion of capital leases (Note 6)		115,536		163,221
Total Current Liabilities		1,335,848		1,429,114

Capital leases payable, net of current portion (Note 6)		-		25,974

Debenture payable (Note 7)		1,395,000		1,100,000
Warrants -Debenture discount		(372,736)		(462,673)
Net Debenture Payable		1,022,264		637,327

Total Liabilities		2,358,112		2,092,415

Commitments and contingencies (Note 6 and 9)

Stockholders' equity (deficiency) (Note 8):
Common stock, $0.001 par value, authorized 50,000,000 shares; issued and outstanding 11,104,608 shares (2001 - 10,854,608)		11,105		10,855
Additional paid in capital		8,231,531		8,208,862
Accumulated deficit		(9,174,243)		(8,205,535)
Accumulated other comprehensive loss: Foreign currency translation adjustment		24,580		30,293
Total (Deficiency) Stockholders' Equity		(907,027)		44,475

Total Liabilities and Stockholders ' Equity (Deficiency)	$	1,451,085	$	2,136,890

See accompanying notes to consolidated financial statements.

BINGO.COM, INC.

Consolidated Statements of Operations

Years ended December 31, 2002, 2001 (Restated) and 2000

		2002		RESTATED 2001		2000

Revenue	$	713,192	$	1,362,756	$	820,384
Barter revenue (note 2)		4,000		371,566		299,480

Cost of revenue		351,207		1,093,963		861,200

Gross profit		365,985		640,359		258,664

Operating expenses:
Depreciation and amortization		177,006		611,147		536,419
General and administrative		514,806		1,558,677		1,988,666
Loss on disposal of equipment		260,531		16,716		154
Selling and marketing		81,320		200,607		735,659
Software and website development (Note 2)		8,916		-		268,296
Total operating expenses		1,042,579		2,387,147		3,529,194

Loss from continuing operations		(676,594)		(1,746,788)		(3,270,530)

Other income (expense):
Interest expense		(292,149)		(210,233)		(47,563)
Interest income		35		1,821		29,101

Loss before discontinued operations and income taxes		(968,708)		(1,955,200)		(3,288,992)

Loss from discontinued operations, net of tax (Note 11)		-		-		(45,899)

Loss before income taxes		(968,708)		(1, 955,200)		(3,334,891)

Income tax expense		-		-		-

Net Loss	$	(968,708)	$	(1, 955,200)	$	(3,334,891)

Cumulative translation adjustment		(5,713)		35,942		(1,538)

Comprehensive Loss	$	(974,421)	$	(1, 919,258)	$	(3,336,429)

Net loss per common share, basic and diluted (Note 2)	$	(0.09)	$	(0.19)	$	(0.33)

Weighted average common shares outstanding, basic and diluted (Note 2)		10,953,238		10,447,200		10,065,054

See accompanying notes to consolidated financial statements.

BINGO.COM, INC.

Consolidated Statements of Stockholders' Equity (Deficiency)

Years ended December 31, 2002, 2001(Restated) and 2000

	Common stock					Accumulated Other Comprehensive income (loss)
	Shares	Amount	Additional paid-in capital	Shares allotted for issue	Accumulated (Deficit)	Foreign currency translation adjustment	Total Stockholders' equity (deficiency)
Balance, December 31, 1999	9,916,668	$ 9,917	$ 7,347,803	$ 226,563	$ (2,915,444)	$ (4,111)	$ 4,664,728

Issuance of common stock, for services	189,000	189	290,874	(226,563)	-	-	64,500

Repurchase of common stock	(1,060)	(1)	(8,777)	-	-	-	(8,778)

Comprehensive loss:
Net loss	-	-	-	-	(3,334,891)	-	(3,334,891)
Cumulative translation adjustment	-	-	-	-	-	(1,538)	(1,538)
Balance, December 31, 2000	10,104,608	10,105	7,629,900	-	(6,250,335)	(5,649)	1,384,021

Stock based compensation	750,000	750	39,926	-	-	-	40,676

Issuance of Warrant "A"	-	-	539,036	-	-	-	539,036

Comprehensive loss:
Net loss (Restated, Note 3)	-	-	-	-	(1,955,200)	-	(1, 955,200)
Cumulative translation adjustment	-	-	-	-	-	35,942	35,942
Balance, December 31, 2001 (Restated)	10,854,608	10,855	8,208,862	-	(8,205,535)	30,293	44,475

Stock based compensation	250,000	250	10,000	-	-	-	10,250

Mark to market of variable stock options	-	-	(21,000)	-	-	-	(21,000)

Issuance of Warrants "B"	-	-	20,423	-	-	-	20,423

Issuance of officer stock option	-	-	13,246	-	-	-	13,246

Comprehensive loss:
Net loss	-	-	-	-	(968,708)	-	(968,708)
Cumulative translation adjustment	-	-	-	-	-	(5,713)	(5,713)
Balance, December 31, 2002	11,104,608	$ 11,105	$ 8,231,531	$ -	$ (9,174,243)	$ 24,580	$ (907,027)

See accompanying notes to consolidated financial statements.

BINGO.COM, INC.

Consolidated Statements of Cash Flows

Years ended December 31, 2002, 2001 (Restated) and 2000

		2002		RESTATED 2001		2000
Cash flows from operating activities:
Net loss	$	(968,708)	$	(1,955,200)	$	(3,334,891)
Items not involving cash:
Stock based compensation		2,496		85,000		64,500
Depreciation and amortization		177,006		611,147		536,419
Domain name purchase payments		12,023		-		-
Loss on disposal of discontinued operations		-		-		45,899
Amortization of Warrants - Debenture discount		110,360		76,363		-
Loss on disposal of equipment		260,531		16,716		154
Changes in operating assets and liabilities:
Accounts receivable		346,037		(82,481)		(200,946)
Prepaid expenses		(4,915)		41,950		(5,384)
Note receivable		-		31,405		2,931
Inventory		(2,631)		-		-
Other assets		(2,116)		9,727		-
Accounts payable and accrued liabilities		(25,835)		518,656		236,268
Unearned Revenue		12,500		-		-
Net cash used in operating activities		(83,252)		(646,717)		(2,655,050)

Cash flows from investing activities:
Acquisition of Equipment		(84,263)		(23,088)		(119,629)
Acquisition of Skill- Bingo game		-		(188,348)		-
Acquisition of Bingo.com (UK) plc. (Note 14)		(61,440)		-		-
Cash acquired from subsidiary undertakings		59,026		-		-
Payments on domain name contract payable		(196,795)		(361,869)		(187,859)
Net cash used in investing activities		(283,472)		(573,305)		(307,488)

Cash flows from financing activities:
Issue of debenture payable		295,000		1,100,000		-
Capital lease repayments		(73,659)		(78,320)		(181,300)
Proceeds from loans and notes payable		151,750		168,385		-
Repayment of loans and notes payable		-		(123,000)		(53,912)
Repurchase of common stock		-		-		(8,778)
Net cash provided by (used in) financing activities		373,091		1,067,065		(243,990)

Effect of exchange rate changes on cash and cash equivalents		(5,713)		(7,478)		(1,538)
Net increase (decrease) in cash and cash equivalents		654		(160,435)		(3,208,066)

Cash and cash equivalents, beginning of year		14,028		174,463		3,382,529
Cash and cash equivalents, end of year	$	14,682	$	14,028	$	174,463

Supplementary information:
Interest paid	$	28,916	$	71,291	$	47,563
Income taxes paid	$	-	$	-	$	-
Non-cash transactions:
Barter transactions	$	4,000	$	371,566	$	299,480
Acquisition of domain name	$	-	$	-	$	734,500
Non-cash financing activities:
Value assigned on issuance of stock options	$	(2,000)	$	(40,000)	$	64,500
Equipment acquired through capital lease	$	-	$	-	$	424,998
Issuance of common stock for services	$	10,250	$	125,000	$	226,563

See accompanying notes to consolidated financial statements.

BINGO.COM, INC.

Notes to Consolidated Financial Statements

Years ended December 31, 2002, 2001 (Restated) and 2000

1. Introduction:

Nature of business

Bingo.com, Inc. (the "Company") was incorporated on January 12, 1987, under the laws of the State of Florida as Progressive General Lumber Corp. On January 22, 1999, the Company changed its name to Bingo.com, Inc. The Company is in the business of providing games and entertainment based on the game of bingo through its Internet portal, www.bingo.com.

Continuing operations

These consolidated financial statements have been prepared on the going concern basis, which presumes the realization of assets and the settlement of liabilities 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 and incurred negative cash flow from operations in the last three years, and has an accumulated deficit of $9,174,243 at December 31, 2002. As of the date of these financial statements, the Company has utilized substantially all of its available funding.

In view of the matters described in the preceding paragraph, recoverability of a major portion of the recorded asset amounts and settlement of the liability amounts shown in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to meet its financing requirements on a continuing basis and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue in existence.

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 further reduce or limit operations.

2. Summary of significant accounting policies:

(a) Basis of presentation:

These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The financial statements include the accounts of the Company's wholly-owned subsidiaries, Bingo.com (Canada) Enterprises Inc., Bingo.com (Antigua) Inc., Bingo.com (Wyoming) Inc., Bingo Acquisition Corp and the 99% owned subsidiary, of Bingo.com (UK) plc. All material intercompany balances and transactions have been eliminated in the consolidated financial statements.

BINGO.COM, INC.

Notes to Consolidated Financial Statements

Years ended December 31, 2002, 2001 (Restated) and 2000

2. Summary of significant accounting policies (Continued):

(b) Use of estimates:

The preparation of consolidated financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and recognized revenues and expenses for the reporting periods. Significant areas requiring the use of estimates include the valuation of long-lived assets, the collectibility of accounts receivable and the valuation of future deferred tax assets. Actual results may differ significantly from these estimates.

(c) Revenue recognition:

(i) Advertising revenue:

During the year ended December 31, 2001, revenue related to advertising sold by the Company's sales force has been recognized as the advertising campaign or impressions and clicks are made on the website, when the service is delivered.

Effective September 1, 2001, the Company contracted with an Internet marketing company to sell advertising on its website directly to corporate customers or through advertising agencies. The Company received a minimum monthly fee of $112,000 in connection with this contract and the minimum fee was recognized as revenue on a monthly basis.

This agreement was cancelled effective January 31, 2002. Between the end of January 2002 and May 21, 2002, the Company and Internet marketing company operated under the terms of a verbal arrangement. This verbal arrangement was terminated effective May 21, 2002. Under the terms of the verbal arrangement, the Internet marketing company provided website management, marketing and Internet advertising services for the Company in exchange for a commission equal to 50% of the revenue generated by the Company's www.bingo.com web portal. Advertising revenues have been recognized as the advertising campaign or impressions and clicks that were made on the website.

Since May 21, 2002 the Company has managed its own sales of advertising, website hosting and ad serving. Advertising revenues have been recognized as the advertising campaign or impressions and clicks are made on the website and when collection of the amounts are reasonably assured.

(ii) Barter revenue:

In 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.COM, INC.

Notes to Consolidated Financial Statements

Years ended December 31, 2002, 2001 (Restated) and 2000

2. Summary of significant accounting policies (Continued):

(c) Revenue recognition: (Continued)

The Company bartered portions of the unsold advertising impressions generated by its website for advertising in media properties owned by third parties. The Company recorded revenues and costs for such barter transactions, with no net income or loss recognized. Barter revenue was $4,000 for the year ended December 31, 2002 (2001 - $371,566, 2000 - $299,480).

(d) Foreign currency:

The consolidated financial statements are presented in United States dollars, the functional currency of the Company. The Company accounts for foreign currency transactions and translation of foreign currency financial statements under Statement of Financial Accounting Standards ("SFAS") No. 52, "Foreign Currency Translation" ("SFAS 52"). Transaction amounts denominated in foreign currencies are translated at exchange rates prevailing at the transaction dates. Carrying values of monetary assets and liabilities are adjusted at each balance sheet date to reflect the exchange rate at that date. Nonmonetary assets and liabilities are translated at the exchange rate on the original transaction date. Gains and losses from restatement of foreign currency monetary and non-monetary assets and liabilities are included in income. Revenues and expenses are translated at the rates of exchange prevailing on the dates such items are recognized in earnings.

The functional currency of the Company's wholly-owned Canadian and United Kingdom subsidiaries is the Canadian dollar and British Pound Sterling respectively. These financial statements are translated into US dollars using the exchange rate at the balance sheet date for assets and liabilities. Exchange gains and losses arising on this translation are excluded from the determination of income and are reported as the foreign currency translation adjustment in stockholders' equity and included in other comprehensive loss.

(e) Cash and cash equivalents:

The Company considers all short-term investments with a term to maturity at the date of purchase of three months or less to be cash equivalents.

(f) Inventory

Inventory is stated at the lower of cost or market value. It consists of products, such as t-shirts, to sell from our online store.

BINGO.COM, INC.

Notes to Consolidated Financial Statements

Years ended December 31, 2002, 2001 (Restated) and 2000

2. Significant accounting policies (Continued):

(g) Equipment:

Equipment is recorded at cost less accumulated depreciation and amortization. Depreciation and amortization are provided for annually over the following periods :

Equipment and computers 3 years

Website and software development 3 years

Furniture and fixtures 5 years

The Company has adopted Statement of Position 98-1 "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use" ("SOP 98-1"). Under SOP 98-1, computer software costs incurred in the preliminary development stage are expensed as incurred. Computer software costs incurred during the application development stage are capitalized and amortized over the software's estimated useful life. The Company did not capitalize any software development costs during the year ended December 31, 2002 (2001 - $188,348).

The Company has adopted EITF 00-2 "Accounting for Web Site Development Costs". EITF 00-2 provides guidance on how an entity should account for costs involved in such areas as planning, developing software to operate the website, graphics, content, and operating expenses. EITF 00-2 is effective for website development costs incurred for fiscal quarters beginning after June 30, 2000. The Company adopted EITF 00-2 in 2000, and all website development costs for periods subsequent to June 30, 2000, have been expensed as operating costs. No website development costs were capitalized for the periods ending December 31, 2002 or 2001.

(h) Advertising:

The Company expenses the cost of advertising in the period in which the advertising space or airtime is used. Advertising costs charged to selling and marketing expenses in 2002 totaled $2,000 (2001 - $6,258, 2000 - $44,558).

(i) Stock-based compensation:

The Company accounts for its stock-based compensation arrangements with employees in accordance with APB Opinion No. 25, "Accounting for Stock Issued to Employees" and related interpretations. This practice is allowed under the provisions of SFAS No. 123. As such, compensation expense under fixed term option plans is recorded at the date of grant only to the extent that the market value of the underlying stock at the date of grant exceeds the exercise price. In accordance with SFAS 123, since the Company has continued to apply the principles of APB 25 to employee stock compensation, pro forma loss and pro forma loss per share information has been presented as if the options had been valued at their fair values. The Company recognizes compensation expense for stock options, common stock and other equity instruments issued to non-employees for services received based upon the fair value of the services or equity instruments issued, whichever is more

BINGO.COM, INC.

Notes to Consolidated Financial Statements

Years ended December 31, 2002, 2001 (Restated) and 2000

2. Significant accounting policies (Continued):

(i) Stock-based compensation: (Continued)

reliably determined. Stock compensation expense is recognized as the stock option is earned, which is generally over the vesting period of the underlying option.

In March 2000, the FASB issued FASB Interpretation No. 44, "Accounting for Certain Transactions Involving Stock Compensation." The Company adopted FIN 44, effective July 1, 2000, with respect to certain provisions applicable to new awards, options repricings, and changes in grantee status. FIN 44 addresses practice issues related to the application of APB 25. The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of SFAS 123 and EITF No. 96-18, "Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services". The measurement date used is the earlier of either the performance commitment date or the date at which the equity instrument holder's performance is complete.

Had compensation cost for the Company's stock option plans been determined based on the fair value at the grant date for awards under those plans, consistent with the measurement provisions of SFAS 123, the Company's net loss and basic loss per share would have been adjusted as follows:

		2002		RESTATED 2001		2000
Loss for the period - as reported	$	(968,708)	$	(1,955,200)	$	(3,334,891)
Loss for the period - pro forma		(966,148)		(2,115,073)		(3,922,847)
Basic loss per share - as reported		(0.09)		(0.19)		(0.33)
Basic loss per share - pro forma		(0.09)		(0.20)		(0.39)
Weighted average fair value of options granted during year		0.00		0.18		0.45

The fair value of each option grant has been estimated on the date of the grant using the Black-Scholes option-pricing model with the following assumptions:

	2002	2001	2000
Expected dividend yield	-	-	-
Expected stock price volatility	163 - 188%	184 - 188%	117%
Risk-free interest rate	1.7 - 1.8%	2.5 - 3.7%	5.0%
Expected life of options	5 years	5 years	5 years

BINGO.COM, INC.

Notes to Consolidated Financial Statements

Years ended December 31, 2002, 2001 (Restated) and 2000

2. Significant accounting policies (Continued):

(j) Impairment of long-lived assets and long-lived assets to be disposed of:

The Company accounts for long-lived assets in accordance with the provisions of SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets" and SFAS No. 142 "Accounting for Goodwill and Other Intangible Assets". At December 31, 2002, the only long-lived assets reported on the Company's consolidated balance sheet are equipment and domain name rights. These provisions require that long-lived assets and certain identifiable recorded intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount and the fair value less costs to sell.

(k) Comprehensive income:

Comprehensive income consists of net loss and foreign currency translation adjustments that are separately presented in the consolidated statements of stockholders' equity (deficiency).

(l) Income taxes:

The Company follows the asset and liability method of accounting for income taxes. Under this method, current income taxes are recognized for the estimated income taxes payable for the current period. Deferred income taxes are provided based on the estimated future tax effects of temporary differences between financial statement carrying amounts of assets and liabilities and their respective tax bases, as well as the benefit of losses available to be carried forward to future years for tax purposes.

Deferred tax assets and liabilities are measured using the enacted tax rates that are expected to apply to taxable income in the years in which those temporary differences are expected to be recovered and settled. The effect on future tax assets and liabilities of a change in tax rates is recognized in operations in the period that includes the enactment date. A valuation allowance is recorded for future tax assets when it is not more likely than not that such future tax assets will be realized.

(m) Net loss per share:

Basic loss per share is computed using the weighted average number of common shares outstanding during the periods. Diluted loss per share is computed using the weighted average number of common shares and potentially dilutive common stock equivalents, including stock options and warrants and convertible debt, outstanding during the period. As the Company has a net loss in each of the periods presented, basic and diluted net loss

BINGO.COM, INC.

Notes to Consolidated Financial Statements

Years ended December 31, 2002, 2001 (Restated) and 2000

2. Significant accounting policies (Continued):

(m) Net loss per share: (Continued)

per share is the same, as any exercise of the share purchase options or conversion of the convertible debenture outstanding would be anti-dilutive.

(n) Domain name:

The Company has capitalized the cost of the purchase of the domain name Bingo.com and was amortizing the cost over five years from the date of commencement of operations. In 2002, the Company suspended the amortization of the domain name cost in accordance with SFAS No. 142 "Accounting for Goodwill and Other Intangible Assets", where companies are no longer required to amortize indefinite assets but instead test the indefinite intangible asset for impairment at least annually. The capitalized amount is based on the net present value of the minimum payments permitted under the terms of the purchase agreement. The domain name was tested for impairment by comparing the future cash flows of the domain name with its carrying value. The Company determined that no impairment existed.

(o) Business Combinations:

In June, 2001, the Financial Accounting Standards Board approved the issuance of SFAS No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS No. 141 states that all business combinations should be accounted for using the purchase method of accounting. SFAS No. 141 is effective for business combinations completed after June 30, 2001.

(p) New Accounting Pronouncements

In July 2002, the Financial Accounting Standards Board (FASB) issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities " (SFAS 146), which addresses financial accounting and reporting associated with certain exit or disposal activities. Under SFAS 146, costs associated with certain exit or disposal activities shall be recognized and measured at their fair value in the period in which the liability is incurred rather than at the date of a commitment to an exit or disposal plan. The Company is required to adopt SFAS 146 for all exit and disposal activities initiated after December 31, 2002. The adoption of this interpretation is not anticipated to have a material effect on our financial position or results of operations.

In November 2002, the FASB issued Interpretation No. 45, " Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtness of Others" (FIN 45). Fin 45 provides guidance on the disclosure to be made by a guarantor in its interim and annual financial statements about its obligations under certain guarantees that it has issued and also clarifies that a guarantor is required to recognize, at the inception of a guarantee, a liability for the fair value of the obligation undertaken in issuing the guarantee. The disclosure requirements of FIN 45 are effective for financial statements of

BINGO.COM, INC.

Notes to Consolidated Financial Statements

Years ended December 31, 2002, 2001 (Restated) and 2000

2. Significant accounting policies (Continued):

(p) New Accounting Pronouncements (Continued)

interim or annual periods ending after December 15, 2002, and its recognition requirements are applicable for guarantees. The adoption of this interpretation is not anticipated to have a material effect on our financial position or results of operations.

In December 2002, the FASB issued SFAS No. 148 "Accounting for Stock-Based Compensation". This statement amends SFAS 123, "Accounting for Stock-Based Compensation". SFAS 148 provides alternative methods of transition for companies that voluntarily change to the fair value-based method of accounting for stock-based employee compensation. In addition, this statement amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based compensation and the effect of the method used on reported results. The disclosure requirements of this statement are effective for financial statements of interim or annual periods ending after December 15, 2002.

In January 2003, the FASB issued FASB Interpretation No. 146, "Consolidation of Variable Interest Entities" (FIN 46). Fin 46 requires a company to consolidate any variable interest entities for which that company has a controlling financial interest. Fin 46 also requires disclosures about variable interest entities that the company is not required to consolidate, but which it has a significant variable interest. The Company is required to adopt the consolidation requirements of FIN 46 for variable interest entities created after January 2003. The adoption of this interpretation is not anticipated to have a material effect on our financial position or results of operations.

(q) Financial Instruments

(i) Fair values:

The fair value of cash and cash equivalents, trade accounts receivable, accounts payable and accrued liabilities approximates their financial statement carrying amounts due to the short-term maturities of these instruments.

The financial statement carrying amount of the debentures payable at December 31, 2002, reflects the market value to the Company for the debt.

(ii) Foreign Currency risk:

The Company operates internationally, which gives rise to the risk that cash flows may be adversely impacted by exchange rate fluctuations. The Company has not entered into any forward exchange contracts or other derivative instrument to hedge against foreign exchange risk.

BINGO.COM, INC.

Notes to Consolidated Financial Statements

Years ended December 31, 2002, 2001 (Restated) and 2000

2. Significant accounting policies (Continued):

(r) Reclassification

Certain comparative figures have been reclassified to conform to the presentation adopted in the current year.

3. Prior Period Adjustment:

Debenture "A"

On April 16, 2001, the Company received a loan from, and issued a secured convertible Debenture "A" 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"). A current director and officer of the Company, is the potential beneficiary of various discretionary trusts that hold approximately 80% of the shares of Bingo, Inc.

The Lenders received a total of 12,000,000 common stock purchase warrants, with an exercise price of $0.25 per share. The common stock purchase warrants issued in connection with the Debenture "A" are exercisable for a period of three years from the date of the Debenture "A". The Company did not account for the value of the warrants upon issuance of the Debenture "A" in accordance with APB 14 "Accounting for Convertible Debt and Debt Issued with Stock Purchase Warrants". Using the Black-Scholes option pricing model, the warrants have an estimated value of $898,394, using the following assumptions: no annual dividend, volatility of 137%, risk-free interest rate of 5.17% and a term of three years. Due to the illiquidity of the Company's shares, a block discount of 40% ($359,357) was applied to this value providing a warrant debenture discount of $539,036.

The Company has restated the comparative prior periods presented in the December 31, 2002 consolidated statements of operations to reflect additional interest expense for the full discounted value of the warrants in the amount of $539,036, which will be amortized to interest expense over the next five years.

The total effect of the restatement was to increase interest expense by $76,363, increase debenture discount by $462,673 and additional paid-in capital by $539,036 for the year ended December 31, 2001, increasing the net loss for the year from $1,878,837 to $1,955,200 and accumulated net deficit from $8,129,172 to $8,205,535. The interest expense and additional paid-in capital accounts in the comparative prior periods balance sheet, statement of operations, statement of changes in stockholders' equity and statement of cash flows have been restated for the effects of the adjustments.

BINGO.COM, INC.

Notes to Consolidated Financial Statements

Years ended December 31, 2002, 2001 (Restated) and 2000

3. Prior Period Adjustment: (Continued)

The effects on the Income statement for the year ending December 31, 2001 were as follows:

		As Reported		Adjustment			As Restated
Revenue	$	1,362,756	$	-	$	1,362,756
Barter revenue		371,566		-		371,566
Cost of revenue		1,093,963		-		1,093,963
Gross profit		640,359		-		640,359
Operating expenses:
Depreciation and amortization		611,147		-		611,147
General and administrative		1,558,677		-		1,558,677
Loss on disposal of equipment		16,716		-		16,716
Selling and marketing		200,607		-		200,607
Total operating expenses		2,387,147		-		2,387,147
Loss before interest and income taxes		(1,746,788)		-		(1,746,788)
Other income (expense):
Interest expense		(133,870)		(76,363)		(210,233)
Interest income		1,821		-		1,821
Loss before income taxes		(1,878,837)		(76,363)		(1,955,200)
Income tax expense		-		-		-
Loss for the year	$	(1,878,837)	$	(76,363)	$	(1,955,200)
Net loss per common share, Basic and diluted	$	(0.18)	$	(0.01)	$	(0.19)

The effects on the balance sheet as of December 31, 2001 were as follows:

			As Reported		Adjustment		As Restated
ASSETS
Total current assets	$		374,536	$		$	374,536
Fixed assets			477,554		-		477,554
Other assets			27,559		-		27,559
Domain name rights			1,257,241		-		1,257,241
Total Assets	$		2,136,890	$	-	$	2,136,890

LIABILITIES AND STOCKHOLDER'S EQUITY (DEFICIENCY)
Total current liabilities		$	1,429,114	$	-	$	1,429,114
Capital leases payable, net of current portion			25,974		-		25,974
Debenture payable			1,100,000		-		1,100,000
Warrants - Debenture discount			-		(462,673)		(462,673)
Total Liabilities			2,555,088		(462,673)		2,092,415

Stockholders' equity (deficiency)
Common stock $0.01 par value			10,855		-		10,855
Additional paid in capital			7,669,826		539,036		8,208,862
Accumulated deficit			(8,129,172)		(76,363)		(8,205,535)
Accumulated other comprehensive loss: Foreign currency translation adjustment			30,293		-		30,293
Total Stockholders' equity (deficiency)			(418,198)		462,673		44,475
Total Liabilities and Stockholders' equity (deficiency)		$	2,136,890	$	-	$	2,136,890

BINGO.COM, INC.

Notes to Consolidated Financial Statements

Years ended December 31, 2002, 2001 (Restated) and 2000

4. Equipment:

2002		Cost		Accumulated depreciation		Net book value

Equipment and computers	$	600,160	$	479,562	$	120,598
Website and software development		1,073		-		1,073
Furniture and fixtures		6,103		305		5,798
	$	607,336	$	479,867	$	127,469

2001		Cost		Accumulated depreciation		Net book value

Equipment and computers	$	736,508	$	452,552	$	283,956
Website and software development		194,421		15,696		178,725
Furniture and fixtures		32,372		17,499		14,873
	$	963,301	$	485,747	$	477,554

5. Domain name rights and contract payable:

The rights to use the domain name bingo.com were acquired in January of 1999 for a cash payment of $200,000 and the issuance of 500,000 shares of common stock of the Company at a deemed value of $2.00 per share. The agreement was signed with Bingo, Inc., an unrelated party at the date of signing of the agreement. Under the terms of the agreement, the Company is required to make quarterly domain name purchase payments to the vendor based on 4% of annual gross revenue (as defined in the agreement), with total minimum payments of $1,100,000 in the first three years, including the initial cash payment, required over the 99 year period ended December 31, 2098. These minimum payments commitments were completed on June 30, 2002.

During the year ended December 31, 2002, the agreement was amended so that the remaining domain name purchase payments to the vendor are made monthly, based on 4% of the preceding month's gross revenue.

Domain name rights have been capitalized on the balance sheet based on the present value of the future minimum royalty payments. In 2002, the Company suspended the amortization of the domain name in accordance with SFAS No. 142 "Accounting for Goodwill and Other Intangible Assets", where companies are no longer permitted to amortize indefinite assets.

Capitalized domain name rights are $1,257,241 at December 31, 2002 (2001 - $1,257,241). As per SFAS 142 there is no accumulated amortization for the year ended December 31, 2002. (2001 - $677,259). Payments made relating to this contract totaled $196,795 during the year ended December 31, 2002 (2001 - $361,869), of which $185,000 related to the final payment made in accordance with the agreement for the minimum guaranteed domain name purchase payments of the domain name rights and the remaining $12,023 related to payments based on the continuing 4% of the proceeding months gross revenue as defined in the amended agreement.

BINGO.COM, INC.

Notes to Consolidated Financial Statements

Years ended December 31, 2002, 2001 (Restated) and 2000

5. Domain name rights and contract payable: (Continued)

The effects of the SFAS 142, where companies are no longer permitted to amortize indefinite assets, on the Company's net loss and basic loss per share were as follows:

		2002		RESTATED 2001		2000
Net Loss - as reported	$	(968,708)	$	(1, 955,200)	$	(3,334,891)
Add back: Intangible Asset Amortization				387,084		290,175
Adjusted Net Loss	$	(968,708)	$	(1,568,116)	$	(3,044,716)

Net loss per common share, basic and diluted - as reported	$	(0.09)	$	(0.19)	$	(0.33)
Adjusted net loss per common share, basic and diluted	$	(0.09)	$	(0.15)	$	(0.30)

Weighted average common shares outstanding, basic and diluted		10,953,238		10,447,200		10,065,054

The amortization of the Domain Name was commenced during 2000 when the Company's website www.bingo.com became fully operational.

6. Capital lease obligations:

Future minimum lease payments under capital leases for software and website equipment are as follows:

		2002		2001
Year ending December 31,
2002	$	-	$	170,765
2003		117,042		27,480
Future minimum lease payments		117,042		198,245
Less: amount representing interest		(1,506)		(9,050)
Balance of obligation		115,536		189,195
Less: due within one year		(115,536)		(163,221)
Long-term obligation under capital leases	$	-	$	25,974

The timing of the minimum lease payments detailed above is based on the provisions of the original lease agreements.

BINGO.COM, INC.

Notes to Consolidated Financial Statements

Years ended December 31, 2002, 2001 (Restated) and 2000

7. Debenture payable:

Debenture "A"

On April 16, 2001, the Company received a loan and issued a secured convertible Debenture "A" for $1,250,000. Bingo, Inc has subsequently acquired Debenture "A" in its entirety. Under the terms of the Debenture "A" interest shall accrue on the outstanding principal amount of Debenture "A" at the 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 are 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 Debenture "A" 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 Holders in payment of the Debenture "A" will be valued at $0.25 per share.

The Holders of the Debenture "A" have the right, but not the obligation, to elect to convert any or all of the outstanding principal amount of the Debenture "A" into shares of the Company's common stock at a conversion price of $0.125 per share until the third anniversary date of the Debenture "A". The common stock that would be issued upon conversion of the Debenture "A" will be subject to certain resale restrictions, as defined in Rule 144 of the Securities and Exchange Act of 1933 (the "Exchange Act"). The Debenture "A" is secured by all assets of the Company.

The Holders of the Debenture "A" received a total of 12,000,000 common stock purchase warrants with an exercise price of $0.25 per share. The common stock purchase warrants issued in connection with the Debenture "A" are exercisable for a period of three years from the date of the Debenture "A".

The discounted value of the warrants will be amortized to interest expense over the next five years. The total effect of the issuance of the warrants relating to Debenture "A" was to increase interest expense by $107,807 for the year ended December 31, 2002. (2001 - $76,363)

Effective as at the end of business on May 21, 2002, a debenture holder agreed to surrender for cancellation all of the 7,200,000 Warrants issued to them in connection with Debenture "A", in exchange for unused advertising inventory on the bingo.com website.

As of the date of this report, none of the Warrants have been exercised, and with the surrender for cancellation of all of the 7,200,000 warrants issued to a debenture holder, there remains 4,800,000 warrants outstanding under this Debenture "A".

BINGO.COM, INC.

Notes to Consolidated Financial Statements

Years ended December 31, 2002, 2001 (Restated) and 2000

7. Debenture payable: (Continued)

Debenture "B"

On July 2, 2002 the Company issued a convertible debenture for $145,000 of which $50,000 was received from Bingo, Inc.

Under the terms of Debenture "B", interest accrues on the outstanding principal amount of Debenture "B" at the rate of 12% per annum through July 2, 2004, 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 July 2, 2006. All principal, accrued but unpaid interest and any other amounts due, are due and payable at maturity on July 2, 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 Debenture "B" at 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 holders of Debenture "B" in payment of Debenture "B" will be valued at $0.25 per share.

The Holders of the Debenture "B" have the right, but not the obligation, to elect to convert all, or part, of the outstanding principal amount of Debenture "B" into shares of the Company's common stock at a conversion price of $0.15 per share until the third anniversary date of the Debenture "B". The common stock that would be issued upon conversion of Debenture "B" will be subject to certain resale restrictions, as defined in Rule 144 of the Securities and Exchange Act of 1933 ("The Exchange Act").

The holders of the Debenture "B" received a total of 580,000 common stock purchase warrants with an exercise price of $0.25 per share. The common stock purchase warrants issued in connection with the Debenture "B" are exercisable for a period of three years from the date of Debenture "B". Using the Black-Scholes model, the warrants have an estimated value of $34,038, using the following assumptions: no annual dividend, volatility of 161%, risk-free interest rate of 1.72% and a term of three years. . Due to the illiquidity of the Company's shares, a block discount of 40% ($13,615) was applied to this value providing a warrant debenture discount of $20,423.

The estimated discount value of the warrants will be amortized to interest expense over the next four years. Bingo, Inc. has the potential to become the largest single shareholder and a majority shareholder in the Company should Bingo, Inc. elect to convert any or all of the principal amount of Debenture "A" and its share of Debenture "B" into shares of the Company's common stock, or if the Company elects to repay the principal amount outstanding, and any accrued interest, in shares of the Company's common stock pursuant to the terms of Debenture "A" and Debenture "B".

BINGO.COM, INC.

Notes to Consolidated Financial Statements

Years ended December 31, 2002, 2001 (Restated) and 2000

8. Stockholders' equity:

(a) Common stock issuances:

During the year ended December 31, 2002 the Company issued 250,000 shares of common stock to the former Chief Executive of the Company under the terms of a revised employment agreement. The agreed value of $42,500 for these shares was recorded in accrued liabilities at December 31, 2001.

(b) Stock option plans:

(i) 1999 stock option plan:

The Company has reserved a total of 1,895,000 common shares for issuance under its 1999 stock option plan. The plan provides for the granting of non-qualified stock options to directors, officers, eligible employees and contractors of the Company. The Board of Directors determines the terms of the options granted, including the number of options granted, the exercise price and their vesting schedule.

The Company has granted a total of 1,800,000 (2001 - 1,600,000) stock purchase options under this plan, 1,700,000 (2001 - 1,575,000) of which remain outstanding at December 31, 2002.

(ii) 2001 stock option plan:

During the year ended December 31, 2001, the Company's Board of Directors adopted the 2001 stock option plan. The Company has reserved a total of 2,000,000 common shares for issuance under the 2001 stock option plan. The plan provides for the granting of incentive and non-qualified stock options to directors, officers, eligible employees and contractors of the Company. The Board of Directors determines the terms of the options granted, including the number of options granted, the exercise price and their vesting schedule.

The Company has granted a total of 1,400,000 (2001 - 865,000) stock purchase options under the 2001 plan, 1,000,000 (2001 - 865,000) of which remain outstanding as at December 31, 2002. Of the options outstanding at December 31, 2002, a total of 750,000 were issued where 10% vests at the grant date, 15% one year following the grant date and 2% per month starting 13 months after the grant date. A total of 108,000 (2001 - 26,500) of these common stock purchase options had vested at December 31, 2002.

Subsequent to the year ended December 31, 2002, the Company issued an additional 125,000 stock purchase options under the 2001 plan at $0.05. The options vest 10% at grant date, 15% one year following the grant date and 2% per month starting thirteen months after the grant date. In addition after the year ended December 31, 2002, 25,000 stock purchase options were cancelled.

BINGO.COM, INC.

Notes to Consolidated Financial Statements

Years ended December 31, 2002, 2001 (Restated) and 2000

8. Stockholders' equity: (Continued)

A summary of stock option activity for the stock option plans for the years ended December 31, 2002, 2001 and 2000 are as follows:

	Number of shares		Weighted average exercise price
Options outstanding, December 31, 1999	1,000,000	$	3.74

Granted (including repriced options)	1,310,000		0.63
Exercised	-		-
Cancelled/forfeited or repriced	(800,000)		3.93
Outstanding, December 31, 2000	1,510,000		0.95

Granted (including repriced options)	940,000		0.30
Exercised	-		-
Cancelled/forfeited or repriced	(10,000)		0.88
Outstanding, December 31, 2001	2,440,000		0.70

Granted (including repriced options)	735,000		0.05
Exercised	-		-
Cancelled/forfeited or repriced	(475,000)		0.30
Outstanding, December 31, 2002	2,700,000	$	0.59

The following table summarizes information concerning outstanding and exercisable stock options at December 31, 2002:

Range of exercise prices per share		Number outstanding	Number exercisable	Expiry date
$	0.05	585,000	58,500	July 12, 2007
	0.15	150,000	150,000	September 21, 2006
	0.30	300,000	300,000	September 21, 2006
	0.30	165,000	49,500	October 15, 2006
	0.44 to 0.75	1,100,000	1,100,000	August 31, 2003
	0.76 to 3.00	400,000	400,000	December 1, 2004
		2,700,000	2,058,000

During the year ended December 31, 2002, the Company recorded non-cash compensation expense of $13,245 (2001 - $nil, 2000 - $64,500) relating to the issuance of common stock purchase options to certain employees, officers, and directors of the Company, in accordance with FASB 123, Accounting for Stock-based Compensation.

During the year ended December 31, 2002 the Company recorded a non-cash reduction of compensation expense totaling $21,000 (2001 - $40,000) in connection with common stock purchase options that were repriced in 2001. The Company is accounting for the repriced options in accordance with FIN 44.

BINGO.COM, INC.

Notes to Consolidated Financial Statements

Years ended December 31, 2002, 2001 (Restated) and 2000

8. Stockholders' equity: (Continued)

(c) Warrants:

Warrant "A"

During 2001, the Company issued a total of 12,000,000 stock purchase warrants in connection with the Debenture "A" financing described in note 8. Each warrant allows the holder to purchase 1 common share at a price of $0.25 per share for a three year period from the date of issuance. The warrants expire on April 16, 2004. Using the Black-Scholes model, the warrants have an estimated value of $539,036, using the following assumptions: no annual dividend, volatility of 137%, risk-free interest rate of 5.17% and a term of three years. Due to the illiquidity of the Company's shares, a block discount of 40% ($359,357) was applied to this value providing a warrant debenture discount of $539,036.

As of the date of this report, none of the Warrants have been exercised, and with the surrender for cancellation of all of the 7,200,000 warrants issued to Redruth Ventures Inc., there remains 4,800,000 Warrants outstanding under this debenture.

Warrant "B"

During the year ended December 31, 2002, the Company issued a total of 580,000 stock purchase warrants in connection with the Debenture "B" financing described in note 8. Each warrant allows the holder to purchase 1 common share at a price of $0.25 per share for a three year period from the date of issuance. The warrants expire on July 2, 2005. Using the Black-Scholes model, the warrants have an estimated value of $34,038, using the following assumptions: no annual dividend, volatility of 161%, risk-free interest rate of 1.72% and a term of three years. Due to the illiquidity of the Company's shares, a block discount of 40% ($13,615) was applied to this value providing a warrant debenture discount of $20,423.

9. Operating leases:

The Company leases office facilities in Vancouver, British Columbia, Canada under an operating lease agreement that expires on September 29, 2005. Minimum lease payments under this operating lease are approximately as follows:


2003	$	29,000
2004		29,000
2005		21,750

The Company paid rent expense totaling $22,683 for the year ended December 31, 2002 (2001 -$67,437, 2000 - $113,369).

BINGO.COM, INC.

Notes to Consolidated Financial Statements

Years ended December 31, 2002, 2001 (Restated) and 2000

10. Income taxes:

Income tax benefit attributable to losses from United States of America operations was $nil for the years ended December 31, 2002, 2001 and 2000, and differed from the amounts computed by applying the United States of America federal income tax rate of 34 percent to pretax losses from operations as a result of the following:

		2002		RESTATED 2001		2000
Computed "expected" tax benefit	$	329,360	$	664,768	$	1,133,864
Increase (reduction) in income taxes resulting from Income taxes in a higher tax jurisdiction		(193,834)		(264,185)		(349,112)
Other		(2,775)		(4,035)		(6,079)
Change in valuation allowance		(132,751)		(396,548)		(778,673)
	$	-	$	-	$	- -

The tax effects of temporary differences that give rise to significant portions of the future tax assets and future tax liabilities at December 31, 2002 and 2001 are presented below:

		2002		2001
Deferred tax assets:
Net operating loss carry forwards	$	3,346,803	$	2,993,179

Total gross deferred tax assets	$	3,346,803	$	2,993,179

The valuation allowance for deferred tax assets as of December 31, 2002 and 2001, was $3,346,803 and $2,993,179, respectively. The net change in the total valuation allowance for the years ended December 31, 2002 and 2001, was an increase of $329,360 and $664,768, respectively. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in assessing the realizability of deferred tax assets. In order to fully realize the deferred tax asset attributable to net operating loss carryforwards, the Company will need to generate future taxable income of approximately $9,500,000 prior to the expiration of the net operating loss carryforwards, which begin expiring in 2014.

11. Discontinued operations:

In January 2000, the Company announced that it had discontinued and wound-up its Antigua based Internet gaming operations. The financial statements for the year ended December 31, 2000, were adjusted to include the effects of reclassification of the discontinued operation. In addition, the Company recorded a provision of $60,000 for on-going costs associated with

BINGO.COM, INC.

Notes to Consolidated Financial Statements

Years ended December 31, 2002, 2001 (Restated) and 2000

11. Discontinued operations: (Continued)

the wind-up. The provision was applied to the 2000 operating expenses for the Antigua operations.

The balance sheet as of December 31, 2000, included the following amounts applicable to the Antigua operations:

Current assets	$	3,710
Capital assets, net of accumulated depreciation		40,395
Other assets		905
Current liabilities		16,344
Non-current liabilities		-

12. Related party transactions:

The Company has received total loans of $154,626 (2001 - $45,385) from a current director and officer during the year ended December 31, 2002. This loan is made up as follows:

(i) $121,931 (2001 - $45,385). This loan has no fixed repayment terms and is non-interest bearing.

(ii) $32,695 related to half of the purchase price for the acquisition of Bingo.com (UK) plc. The balance of the purchase price plus interest was to be paid no later than six months after the Effective Date. After December 31, 2002, this was extended for an additional six months. Interest accrues on the outstanding amount at the rate of 5% per annum.

During the year ended December 31, 2002, the Company received a loan for $42,508 (2001 - $nil) from a company owned by a current director and officer of the Company during the year ended December 31, 2002. Interest accrues on the outstanding amount at the rate of 7% per annum.

In addition the Company has a liability for $151,075 (2001 $84,843) to a company owned by a current director and officer of the Company for payment of services rendered and expenses incurred by the current director and officer of the Company.

On April 16, 2001, the Company issued a $500,000 face amount of secured convertible Debenture "A" to Bingo Inc. (note 8), an Anguilla corporation. Effective May 21, 2002 Bingo Inc. acquired $750,000 of the Debenture "A" from an unrelated party. On July 2, 2002 Bingo Inc. acquired a $50,000 convertible Debenture "B". A current director and officer of the Company, is the potential beneficiary of various discretionary trusts that hold approximately 80% of the shares of Bingo Inc. However the director did not hold an office in the Company at the time Debenture "A" agreement was entered into by the Company in 2001. The Company has accrued interest payable to Bingo, Inc. of $206,694 (2001 - $25,032) on Debenture "A" and $3,008 on Debenture "B".

In addition Bingo, Inc. was issued a total of 4,800,000 common stock purchase warrants in connection with the Debenture "A" and 200,000 common stock purchase warrants in connection with the Debenture "B". These warrants are exercisable at a price of $0.25 per share for a period of three years from the dates of issuance of each of the Debenture "A" and

BINGO.COM, INC.

Notes to Consolidated Financial Statements

Years ended December 31, 2002, 2001 (Restated) and 2000

12. Related party transactions: (Continued)

Debenture "B". Payments made to Bingo, Inc. in relation to the Domain name purchase payment totaled $196,795 during the year ended December 31, 2002 (2001 - $361,869), of which $185,000 related to the final payment made in accordance with the agreement for the minimum guaranteed domain name purchase payments of the domain name rights and the remaining $12,023 related to payments based on the continuing 4% of the proceeding months gross revenue as defined in the amended agreement, of which $6,327 was due at December 31, 2002.

A former director of the Company, who resigned during the year ended December 31, 2002, was a director of two companies with which the Company conducted business during the recently completed financial year. Sales of $121,000 and expenses of $84,000, relating to web hosting, advertising and license fee for "Skill Bingo", were incurred during the period the director held office in the Company.

13. Segmented information:

The Company operates in one business segment, the business of providing games and entertainment based on the game of bingo through its Internet portal, bingo.com, supported mainly by selling advertising on the website. The revenue for the three years ended December 31, 2002, has been derived primarily from business in the United States of America.

14. Business Acquisitions

All business acquisitions have been accounted for using the purchase method. The Company's consolidated results of operations include the operating results of the acquired company (Bingo.com (UK) plc.) from its acquisition date of August 15, 2002. Acquired assets and liabilities were recorded at their estimated fair market value at the acquisition date and the aggregate purchase price plus the cost directly attributable to the acquisitions has been allocated to the assets and liability acquired.

On August 15, 2002 (note 12) ("the Effective Date"), the Company, in a related party transaction, acquired from a director and officer of the Company, 99% of the share capital of Bingo.com (UK) plc. for $61,440.

Under the terms of the Purchase agreement the Company paid half the purchase price on the Effective Date. The balance of the purchase price plus interest will be paid no later than six months after the Effective Date. This was extended after year end for a further six months. Interest shall accrue on the outstanding amount at a fixed rate of 5% per annum.

The balance sheet of Bingo.com (UK) plc. as at August 15, 2002 included the following amounts:


Current assets	$	59,026
Current liabilities		(777)

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

On March 26, 2003, the Board of Directors of Bingo.com, Inc. (the "Company") approved the appointment of Dohan & Company, CPA's, P.A., . ("Dohan") of Miami, Florida, as our new independent auditors effective March 27, 2003 and the termination of Davidson & Company ("Davidson") as the principal accountant engaged to audit the Company's financial statements. The change in the Company's certifying accountant was due to the Company requiring a United States registered accountant is needed to audit our financial statements. During the year ended December 31, 2001 and from the date of appointment of Davidson as the Company's independent accountant on August 7, 2001 and through the date of this report, (i) there were no "reportable events," as defined in Item 304(a)(1)(v) of Regulation S-K, and (ii) we did not and nobody on our behalf has consulted Dohan regarding any of the accounting and auditing matters or events set forth in Item 304(a)(2)(i) or (ii) of Regulation S-K.

The report of Davidson on our financial statements for the year ended December 31, 2001 did not contain an adverse opinion or disclaimer of opinion nor was it qualified or modified as to uncertainty, audit scope or accounting principles, except that the report contained an explanatory paragraph regarding our ability to continue as a going concern. The change of Davidson was effective as of March 27, 2003, was approved by our directors, and was not due to any disagreement between us and Davidson.

During the year ended December 31, 2001, and from the date of appointment of Davidson as the Company's independent accountant on August 7, 2001, and the subsequent interim periods preceding Davidson's dismissal, there were no disagreements with Davidson on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which disagreements, if not resolved to the satisfaction of Davidson's, would have caused Davidson to make reference to the subject matter of the disagreement in connection with its report. We have authorized Davidson to respond fully to any subject matter with respect to our financial statements.

We have not been advised by Davidson of any of the following:

a) lack of internal controls necessary for us to develop reliable financial statements;

b) any information that has come to the attention of our independent accountants that has lead them to no longer rely on management's representations or that has made them unwilling to be associated with the financial statements prepared by management;

c) any need to expand significantly the scope of their audit or information that has come to their attention during the fiscal years prior to and preceding the change in independent accountants that, if further investigated, would:

(i) materially impact the fairness or reliability of the previously issued independent accountants' report or the financial statements issued or covering such period; or

(ii) cause Davidson to become unwilling to rely on management's representations or that has made them unwilling to be associated with our financial statements, or due to the dismissal of Davidson or any other reason, Davidson did not so expand the scope of the audit or conduct such further investigation; or

d) any information that has come to the attention of Davidson that has lead them to conclude that such information materially impacts the fairness or reliability of the audit reports or the financial statements issued covering the two fiscal years prior to and preceding the change in the independent accountants (including information that, unless resolved, to the satisfaction of such independent accountant, would prevent it from rendering an unqualified audit report on those financial statements ) and due to the dismissal of Davidson or any other reason, any issue has not been resolved to such independent accountants satisfaction prior to the dismissal of Davidson.

The Company provided Davidson with a copy of the letter addressed to the Securities and Exchange Commission ("Commission"). prior to filing it with the Commission. The Company requested that Davidson furnish the Company with a letter to the Commission stating whether Davidson agrees with the foregoing disclosure. On August 7, 2001, Grant Thornton LLP, ("Grant Thornton") the Company's former principal accountants previously engaged to audit the Company's financial statements were dismissed, which lead to the appointment of Davidson as principal accountants to replace Grant Thornton. This change was made in connection with the relocation of the Company's executive offices to Vancouver, British Columbia. The Company's board of directors approved the engagement of Davidson.

The audit report of Grant Thornton on the Company's financial statements for the fiscal year ending December 31, 2000, did not contain any adverse opinion or disclaimer of opinion, nor was it qualified or modified as to uncertainty, audit scope, or accounting principles, except such report was modified to include an explanatory paragraph for a going concern uncertainty. The change of Grant Thornton was effective as of August 7, 2001, was approved by our directors, and was not due to any disagreement between Grant Thornton and us.

In connection with the audit of the fiscal year ending December 31, 2000, including the subsequent interim periods prior to August 7, 2001, the date of Grant Thornton's termination, there were no disagreements with Grant Thornton on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which disagreements, if not resolved to the satisfaction of Davidson's, would have caused Grant Thornton to make reference to the subject matter of the disagreement in connection with its report.

During the fiscal year ending December 31, 2000, and from the date of appointment of Grant Thornton as the Company's independent accountant on July 24, 2000, and the subsequent interim periods preceding Grant Thornton's dismissal, the Company (or anyone on its behalf) did not consult with Davidson regarding any of the accounting or auditing concerns stated in Item 304(a)(2) of Regulation S-B. Since there were no disagreements or reportable events (as defined in Item 304(a)(2) of Regulation S-B), the Company did not consult Davidson in respect to these matters during the time periods detailed.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

The following documents are filed as part of this Form 10-K:

(1) FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES

The following audited financial statements of the Company are included in Item 8, together with notes thereto:

Consolidated Financial Statements:

Balance Sheets

Statements of Operations

Statements of Stockholders' Equity

Statements of Cash Flows

All financial statement schedules are omitted because they are not required, they are not applicable or information appears included in the financial statements or notes thereto.

(2) EXHIBITS

The exhibits required by Item 601 of Regulation S-K are listed in the accompanying Exhibit Index. Each management contract or compensatory plan or arrangement required to be filed as an exhibit to this Form 10-K has been identified.

(3) REPORTS ON FORM 8-K

Current Report on Form 8-K filed November 14, 2002, filing as an exhibit Statements Under Oath of Principal Executive Officer and Principal Financial Officer Regarding Facts and Circumstances Relating to Exchange Act Filings pursuant to 18 U.S.C. Sec. 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002.

Form 8-K filed on November 20, 2002, reporting on the events and outcome of the business conducted at the Company's Annual General Meeting held October 8, 2002.

Form 8-K filed on March 31, 2003, reporting the change of independent accountants from Davidson & Company, Chartered Accountants to Dohan & Company, CPA's, P.A..

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 behalf of the undersigned, thereunto duly authorized.

BINGO.COM, INC.

By: /s/ T. M. Williams

T. M. Williams

President and Chief Executive Officer

Date: May 8, 2003

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated:

Signature

Title

Date

By: /s/ T. M. Williams President and Chief May 8, 2003

T. M. Williams Executive Officer and

Director (Principal

Executive Officer)

By: /s/ P. A. Crossgrove Director May 8, 2003

P. A. Crossgrove

By: /s/ H. W. Bromley Chief Financial Officer May 8, 2003

H. W. Bromley (Principal Financial and

Principal Accounting Officer)

CERTIFICATIONS

I, T. M. Williams, certify that:

1. I have reviewed this annual report on Form 10-K of Bingo.com, Inc.;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the Bingo.com, Inc. as of, and for the periods presented in this annual report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b) evaluated the effectiveness of Bingo.com, Inc. disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as the Effective Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors, audit committee of the registrant's board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Signed : /S/ T. M. Williams Date : May 8, 2003

T. M. Williams, Chairman of the Board,

Chief Executive Officer, President and Secretary

(Principal Executive Officer)

CERTIFICATIONS

I, H. W. Bromley, certify that:

1. I have reviewed this annual report on Form 10-K of Bingo.com, Inc.;

b) evaluated the effectiveness of Bingo.com, Inc. disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as the Effective Date;

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

Signed : /S/ H. W. Bromley Date : May 8, 2003

H.W. Bromley,

Chief Financial Officer

(Principal Accounting Officer)

EXHIBIT LIST

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 Secured Convertible Debenture "A" between the Company, Redruth Ventures Inc, and Bingo, Inc. dated April 16, 2001. (b)

4.2 Common Stock Purchase Warrant "A" between the Company and Redruth Ventures Inc. a British Virgin Islands corporation dated April 16, 2001. (b)

4.3 Common Stock Purchase Warrant "A" between the Company and Bingo, Inc. dated April 16, 2001. (b)

4.4 Convertible Debenture "B" between the Company and unrelated parties dated July 2, 2002. (d)

4.5 Common Stock Purchase Warrant "B" between the Company and unrelated parties dated July 2, 2002. (d)

10.2 Asset Purchase Agreement by and between Bingo, Inc. and Progressive Lumber, Corp. dated January 18, 1999. (a)

10.25 The restructuring of the existing relationship between CYOP Systems Inc., CYOP Systems International Incorporated, Bingo.com Inc. and Bingo.com (Canada) Enterprises Inc. dated May 21, 2002. (c)

10.26 The Purchase and Sale Agreement Between Redruth Ventures Inc. and Bingo.com, Inc. dated May 21, 2002. (c)

10.27 Consulting agreement dated July 2, 2002, between the Company, Bromley Accounting Services Ltd and Mr. H. W. Bromley. (c)

10.28 Share Purchase agreement between T.M. Williams and Bingo.com, Inc. for the purchase of shares in Bingo.com (UK) Plc. dated August 15, 2002. (d)

10.29 Amendment of Asset Purchase Agreement dated July 1, 2002.

(a) Previously filed with the Registrant's registration statement on Form 10 on June 9, 1999.

(b) Previously filed with the Company's quarterly report on Form 10-Q for the period ended June 30, 2001, on June 25, 2001.

(c) Previously filed with the Company's quarterly report on Form 10-Q for the period ended June 30, 2002, on August 14, 2002.

(d) Previously filed with the Company's quarterly report on Form 10-Q for the period ended September 30, 2002, on November 14, 2002.

Exhibit 10.29

AMENDMENT OF ASSET PURCHASE AGREEMENT

THIS AGREEMENT made effective as of the 1^st day of July, 2002.

BETWEEN:

BINGO, INC., a corporation incorporated pursuant to the laws of Anguilla, having an address for notice at P.O. Box 1127, The Hansa Bank Building, Landsome Road, The Valley, Anguilla, B.W.I.

(the "Vendor")

AND:

BINGO.COM, INC., a corporation incorporated pursuant to the laws of the state of Florida, having an address for notice at P.O. Box 1078, Suite 1500, 885 West Georgia Street, Vancouver, British Columbia, Canada V6C 3E8

(the "Purchaser")

BACKGROUND:

A. Under an asset purchase agreement (the "Asset Purchase Agreement") dated 18 January 1999 made between the Vendor and the Purchaser, the Vendor agreed to sell and the Purchaser agreed to purchase all of the Vendor's right, title, and interest in and to the second-level domain name "bingo.com."

B. The Vendor and the Purchaser acknowledge and confirm that, as of the date of this Agreement, the Purchaser has paid $1 100 000 as the minimum Purchase Price set out in the Asset Purchase Agreement.

C. The Vendor and the Purchaser have agreed to amend the Asset Purchase Agreement on the terms and conditions set out in this Agreement.

AGREEMENTS:

In consideration of the mutual covenants and agreements contained in this Agreement, the parties covenant and agree as follows:

1. Definitions. The definition in section 1.1 (e) of the Asset Purchase Agreement is deleted and replaced with the following:

(e) "Escrow Agent" means .

2. Default. Article 4 of the Asset Purchase Agreement is amended by adding the following as new section 4.1A:

4.1A Unless waived by the Vendor, it will be a default under this Agreement and the security constituted by section 4.2 of this Agreement will immediately become due and enforceable in the same manner as if the Default Period had expired and the Purchaser has not made the outstanding payment specified therein if:

(a) a receiver or receiver-manager is appointed over the assets or undertaking of the Purchaser;

(b) distress, execution, or seizure of any of the Purchaser's assets occurs; or

(c) the Purchaser is in default of, or terminates without the consent of the Vendor, the Escrow Agreement made between the Purchaser and the Escrow Agent.

3. Schedule A. The parties agree that, in consideration of the Vendor accepting a debenture (and associated Warrant) issued by the Purchaser in the form attached as Exhibit 1 to this Agreement on account of $50 000 of the payment owing by the Purchaser pursuant to section 4 of Schedule A to the Asset Purchase Agreement, sections 5 and 6 of Schedule A to the Asset Purchase Agreement are deleted, and the following text is added as new section 5 of Schedule A to the Asset Purchase Agreement:

5. for each month from 1 July 2002 to 31 December 2098, four percent of the Gross Revenue of the Purchaser for the month will become due and payable to the Vendor at the following times:

(a) for the months of July 2002, August 2002, and September 2002, on 15 October 2002; and

(b) for each month from 1 October 2002 to 31 December 2098, on the fifteenth day of the immediately following month.

4. Ratification. Except as expressly amended by this Agreement, the parties ratify and confirm the Asset Purchase Agreement. The Asset Purchase Agreement and this Agreement will be read and construed as one document.

5. Time. Time is of the essence of this Agreement and remains of the essence of the Asset Purchase Agreement.

6. Counterparts. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which when so executed and delivered is deemed an original, but all of which together constitute a single instrument. Delivery of an executed counterpart of a signature page of this Agreement by facsimile transmission is as effective as delivery of a manually executed counterpart of this Agreement.

TO EVIDENCE THEIR AGREEMENT the parties have executed this Agreement with effect as of the date written on page one, above.

Bingo, Inc. Bingo.com, Inc.

by: _/s/D. Curtis________ by: /s/ T. M. Williams___

Authorized Signatory Authorized Signatory

ACT OF 1934

TABLE OF CONTENTS

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

Supplementary Financial Information