-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HMD1rjHh7UZsE4PWb0tKuz35jE3tS5b0tGkxozfzk4xcBRcUZV/LkeadQR/qlqq8 5J8Txb/C+MDVZ3ePKq4QQg== 0001010412-97-000128.txt : 19971124 0001010412-97-000128.hdr.sgml : 19971124 ACCESSION NUMBER: 0001010412-97-000128 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971121 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: BINGO & GAMING INTERNATIONAL INC CENTRAL INDEX KEY: 0000355590 STANDARD INDUSTRIAL CLASSIFICATION: LESSORS OF REAL PROPERTY, NEC [6519] IRS NUMBER: 731092118 STATE OF INCORPORATION: OK FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-10519 FILM NUMBER: 97726638 BUSINESS ADDRESS: STREET 1: 11006 METRIC BOULEVARD STREET 2: SUITE 350 CITY: AUSTIN STATE: TX ZIP: 78758 BUSINESS PHONE: 5124900065 MAIL ADDRESS: STREET 1: 11006 METRIC BOULEVARD STREET 2: STE 350 CITY: AUSTIN STATE: TX ZIP: 78758 FORMER COMPANY: FORMER CONFORMED NAME: PRIMARY DEVELOPMENT CORP /OK/ DATE OF NAME CHANGE: 19941215 10QSB 1 FORM 10-QSB FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997 U.S. Securities and Exchange Commission Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to ____________________ Commission File No. 0-10519 Bingo & Gaming International, Inc. (Name of Small Business Issuer in its Charter) OKLAHOMA 73-1092118 (State or Other Jurisdiction of (I.R.S. Employer I.D. No.) incorporation or organization) 13581 Pond Springs Rd. Ste 105 Austin, Texas 78729 (Address of Principal Executive Offices) 11006 Metric Boulevard Austin, Texas 78758 (Former Address of Principal Executive Offices) (512) 335-0065 (Issuer's Telephone Number, including Area Code) 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. (1) Yes X No (2) Yes X No There were 8,417,600 shares of common stock, $.001 par value, outstanding as of September 30, 1997. PART I -- FINANCIAL INFORMATION Item 1. Financial Statements. BINGO & GAMING INTERNATIONAL, INC. BALANCE SHEETS (unaudited)
September 30, December 31 1997 1996 ASSETS Cash and cash equivalents $ 42,837 $ 53,307 Accounts Receivables 243,887 175,804 Inventory 23,300 54,327 Prepaid Expenses 26,487 420 Note Receivable 8,188 40,813 Total current assets 344,699 324,671 Property and equipment, net 113,858 115,524 Deferreds, intangibles, and 25,495 37,505 Other assets, net 67,260 63,549 Total Assets $551,312 $541,249 LIABILITIES AND STOCKHOLDERS' EQUITY Payables $117,668 $110,866 Other accrued expenses 396 Current maturities of long-term debt 56,313 122,363 Total current liabilities 174,377 233,229 Long-term debt 219,401 176,002 Common stock, $.001 par value: Authorized - 70,000,000 shares Issued and outstanding - 8,417,600 shares 8,418 8,415 Additional paid-in capital 393,187 391,539 Retained income (deficit) (244,071) (267,936) Total stockholders' equity 157,534 132,018 Total Liabilities and Stockholders' Equity $551,312 $541,249
See notes to financial statements. BINGO & GAMING INTERNATIONAL, INC. STATEMENTS OF OPERATIONS (unaudited)
Three Months Ended Nine Months Ended September 30, September 30, 1997 1996 1997 1996 Revenues: Phone Card Sales $ 323,458 $ 150,748 $1,110,766 $185,247 Management Fee Income 0 0 0 18,000 Rental Income 125,844 125,844 377,132 377,944 Concession Income 20,285 15,880 47,855 51,887 Total Revenue 469,587 292,472 1,535,753 633,078 Cost of Revenue: Cost of Goods-Phone Cards 147,487 30,909 402,165 49,374 Machine and Location Rental 50,908 24,896 253,964 31,146 Prizes Paid 54,838 61,578 186,127 62,552 Hall Rental 61,565 43,080 154,143 134,241 Total Cost of Revenue: 314,798 160,463 996,399 277,313 Gross Margin: 154,789 132,009 539,354 355,765 Operating Expenses 106,950 49,364 279,836 153,385 Salaries 61,693 46,221 181,277 146,266 General andAdministrative Expenses 5,835 27,383 27,469 86,785 Total Expenses 174,478 122,968 488,582 386,436 Operating Income(Loss) (19,689) 9,041 50,771 (30,671) Other Income 0 10 1,198 250 Interest 10,010 6,478 28,104 13,577 Net Income (Loss) before Taxes (29,699) 2,573 23,865 (43,998) Taxes on Income 0 0 0 0 Net Income (Loss) $(29,699) $2,573 $23,865 $(43,998) Net Income (Loss) per share * * * *
(* = less than $.01) See notes to financial statements. BINGO & GAMING INTERNATIONAL, INC, STATEMENTS OF CASH FLOW (unaudited)
Nine Months Ended September 30, 1997 1996 OPERATING ACTIVITIES Net income $23,865 $ 2,574 Adjustments to net income: Depreciation and amortization 44,113 45,119 Changes to current assets and liabilities: Receivables (68,083) (39,352) Prepaid expenses (26,067) 440 Payables and accrued expenses 7,198 6,989 Inventory 31,027 (23,796) Net cash provided by (used for) operating activities 12,053 (8,026) INVESTING ACTIVITIES Increase in property and equipment (30,437) (10,050) Increase in deferreds and other assets (3,711) (5,770) Decrease in notes receivables 32,625 22,137 Net cash provided by (used for) investing activities (1,523) 6,317 FINANCING ACTIVITIES Issuance of common stock 1,651 0 Proceeds from long term debt 31,997 154,400 Payments on long term debt (54,648) (72,831) Net cash provided by (used for) financing activities (21,000) 84,569 CASH AND CASH EQUIVALENTS Net increase (decrease) (10,470) 39,225 Balances at beginning of period 53,307 74,062 Balances at end of period $ 42,837 $ 113,287
See notes to financial statements. BINGO & GAMING INTERNATIONAL, INC. NOTES TO THE FINANCIAL STATEMENTS Note 1. BASIS OF PRESENTATION The Company's consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. Such financial statements as of September 30, 1997 and for the three months ended September 30, 1997 and September 30, 1996 and for the nine months ended September 30, 1997 and September 30, 1996 are unaudited, but, in management's opinion, they include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results from such interim periods. The results from interim periods are not necessarily indicative of results from full years. Such interim period financial statements, including the notes thereto, are condensed and do not include all disclosures required by generally accepted accounting principles. They should, therefore, be read in conjunction with the Company's consolidated financial statements which were included in the Company's Form 10-KSB for the year ended December 31, 1996. Note 2. INCOME TAXES At September 30, 1997 and 1996, the Company had, for tax reporting purposes, net operating loss carryfowards of approximately $200,000 and $245,000, respectively, available to offset future taxable income. The statutory federal tax rate was 34% for nine months ended September 30, 1997 and 1996. The effective tax rate was zero due to the Company's net operating loss carryfowards as mentioned above. Note 3. EARNINGS PER SHARE Net Income (loss) per share is based upon the weighted average number of shares outstanding during the periods (8,417,600 shares outstanding during the nine months ended September 30, 1997 and 8,349,200 during the nine months ended September 30, 1996). Note 4. RECLASSIFICATION Certain amounts previously reported have been reclassified to conform to current year presentation. MANAGEMENT'S DISCUSSION AND ANALYSIS Introduction: During the three months ended March 31, 1996, the Company, through its wholly owned subsidiaries Tupelo Industries, Inc., Meridian Enterprises, Inc., Monitored Investments, Inc., and Red River Bingo, Inc. operated three charity bingo facilities for itself (Iuka, Mississippi, Tupelo, Mississippi, and Meridian, Mississippi) and managed two other such facilities (McAllen, Texas and Columbus, Mississippi) for two other corporations which share some common stockholders with the Company During the three months ended June 30, 1996, an officer and director of the Company indicated an intent to divest himself of over 1,000,000 shares of stock, thereby reducing his holdings in the Company to less than 10% and relinquished his management and director's position in the Company. In return for services rendered and release of the director's employment contract, the Company issued stock options to purchase 225,000 shares of its of its common stock and transferred the two management agreements (McAllen, Texas and Columbus, Mississippi) to the him. During the three months ended September 30, 1997 the Company operated only the three charity Furthermore, in April 1996, the Company executed an exclusive Distribution Agreement for the State of Texas for a video-enhanced dispenser to market one-minute emergency phone cards. The Company began placing the dispensers in June 30, 1996 and by September 30, 1996; approximately 50 had been placed and were in operation. During the three months ended September 30, 1997, the following events occurred with regard to the Company's distribution of pre-paid phone card dispensers. The Company increased the number of dispensers on location from 110 to 134, as the result of placing them in various locations through a vending route operator. During this quarter, the Company's exclusive Distribution Agreement for the State of Texas with Diamond Game Enterprises ("Diamond") for their prepaid phone card dispensers was changed to a non-exclusive distribution agreement by Diamond. As a result, the Company sought to secure an exclusive Distribution Agreement with another manufacturer of similar prepaid phone card dispensers. Effective September 18, 1997, the Company executed an Exclusive Distribution Agreement with Cyberdyne Systems, Inc., to distribute their phone card dispensers. The new agreement grants exclusivity for the United States and Canada. Consequently, the Company began returning Diamond's dispensers in anticipation of replacing them with those of Cyberdyne as of September 30, 1997. Initial distribution of the new dispenser will not begin until October 1, 1997. The Company intends to further develop and substantially expand its business, principally by continuing its operation and expansion of the distribution of the video enhanced phone card dispensers; and to a lessor extent by acquiring existing bingo facilities (for cash or for notes or for its own stock or in combination thereof) or by establishing new bingo facilities. Its ability to do so will be limited by its available liquidity and other capital resources as to which no assurances can be given. Results of Operations: Three Months Ended September 30, 1997 Compared with Three Months Ended September 30, 1996 Revenues include rental income from the charitable organizations which lease the Company's bingo facilities, management fees from managing similar facilities for others, related concession and vending income, and beginning in 1996, phone card sales related to the video enhanced dispensers. In total, such revenue was $469,587 and $292,472 for the three months ended September 30, 1997 and 1996, respectively. Phone Card sales from the distribution of approximately 134 phone card dispensers were $323,458 for the three months ended September 30, 1997 compared to $150,748 for the same three month period in 1996. Costs of revenue represent expenses directly attributable to the operation of facilities, and operation of the phone card dispensers. In total, such cost was $314,798 and $160,463 for the three months ended September 30, 1997 and 1996, respectively. Cost of revenue specifically related to the phone card dispensers includes phone cards and royalties cost, machine and location rental and prizes paid. Such costs were $253,234 and $117,383 for the three months ended September 30, 1997 and 1996, respectively. This increase was because the initial distribution of the phone dispensers did not begin until June of 1996, as previously mentioned. Cost of revenue specifically related to the operations of the bingo facilities represents rental costs of such facilities, such cost were $61,564 and $43,080, for the three months ended September 30, 1997 and 1996, respectively. Other expenses include salaries and wages, indirect operating cost, and other general and administrative expenses. Such expenses were $174,478 and $122,968 for the three months ended September 30, 1997 and 1996, respectively. The 42% increase was principally the result of the increase in operations with regards to the distribution of phone card dispensers and an increase in salaries due to additional personnel. Principally for the reasons set forth in the five preceding paragraphs, the Company had a net loss of $29,699 for the three month ended September 30, 1997 compared with a net income of $2,573 three months ended September 30, 1996. Nine Months Ended September 30, 1997 Compared with Nine Months Ended September 30, 1996 Revenues were $1,535,753 for the nine months ended September 30, 1997 and $633,078 for the nine months ended September 30, 1996. The 143% increase was principally the result of the matters more fully described in the above "Three Months Compared with the Three months" discussion. Cost of revenue represents $996,399 and $277,313 for the nine months ended September 30, 1997, and 1996, respectively. This 259.3% increase was principally the result of the increase in cost associated with the distribution of the phone card dispensers as more fully described in the above "Three Months Compared with Three Months" discussion. Other expenses were $488,582 and $386,436 for the nine months ended September 30, 1997 and 1996, respectively. The 26.4% increase was principally the result of the matters more fully described in the above "three months compared with three months" discussion. The Company had a net income of $23,865 for the nine months ended September 30, 1997 compared with a net loss of $43,998 for the nine months ended September 30, 1996. The significant changes in revenue and related expenses are explained in the above paragraphs under the three month ended analysis. Financial Position: During the nine months ended September 30, 1997, the Company's equity increased by $25,516, such increase being principally the result of the net income for the nine months. In addition, in February of 1997, a former officer and director of the Company exercised options to purchase 3,000 shares of common stock. These options were originally issued in return for services rendered and release of the employment contract as previously mentioned. Liquidity: The Company's net cash position at September 30, 1997 decreased by approximately $10,500 from what it was at December 31, 1996, primarily from the Company's costs related in the increase in distribution of phone cards. The Company's plans to further develop its business by continuing to expand the distribution of the phone card dispensers inside and outside of Texas. The Company will, however, need to obtain additional financing to achieve substantial profitability and there is no assurance that the Company will be able to obtain such additional financing. PART II - OTHER INFORMATION Item 1. Legal Proceedings. No further developments Item 2. Changes in Securities. None Item 3. Defaults Upon Senior Securities. None Item 4. Submission of Matters to a Vote of Security Holders. On September 24, 1997, the Company held its Annual Meeting of Stockholders in Austin, Texas. Stockholders of record at the close of business on September 2, 1997 were entitled to vote at the meeting. By a unanimous vote of the stockholders present in person and by proxy, the following individuals were elected to the Board of Directors to serve until the next Annual Meeting: W. Reid Funderburk, George Majewski, R. E. Wilkin, Rick Redmond, and Robert H. Hughes. At a Board of Directors Meeting immediately following the Annual Stockholders Meeting, the Directors unanimously elected the following individuals to serve as officers of the corporation: W. Reid Funderburk, Chairman and C.E.O.; George Majewski, President and C.O.O.; Clay McCalla, Vice-President; and Robert Chappell, Secretary and Treasurer. Item 5. Other Information. None Item 6. Exhibits and Reports on Form 8-K. (a) EXHIBIT None (b) Reports on Form 8-K None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized. BINGO & GAMING INTERNATIONAL, INC. Dated as of November 19, 1997 By:/s/Reid Funderburk ----------------------------- Reid Funderburk C.E.O., Chairman, Director By:/s/George Majewski ----------------------------- George Majewski President, Director By:/s/R. E. Wilkin ----------------------------- R. E. Wilkin Director By:/s/Rick Redmond ----------------------------- Rick Redmond Director By:/s/Robert Chappell ----------------------------- Robert Chappell Secretary, Treasurer EX-27 2
5 9-MOS DEC-31-1997 SEP-30-1997 42837 0 243887 0 23300 344699 113858 0 551312 174377 0 0 0 8418 149116 551312 1110766 1535753 402165 996399 488582 0 28104 23865 0 0 0 0 0 23865 0 0
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