mary
Dormant account
- Joined
- Dec 12, 2000
Form 10KSB/A for FIRSTBINGO COM
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7-Jun-2005
Annual Report
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULT OF OPERATIONS.
This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance and may contain forward-looking statements that involve risks and uncertainties. A number of important factors could cause our actual results to differ materially from those expressed in any forward-looking statements made by us.
Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that may cause actual results to differ materially from historical results or our predictions.
Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated any revenues and no revenues are anticipated until we begin operating and selling advertising space on our web site. Accordingly, we must raise funding from sources other than our operations.
Our only other source of funds at this time is investments by others in FirstBingo.com. We must raise capital to further implement our project and stay in business.
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In an effort to raise capital the Company filed an SB-2 Registration Statement pursuant to Section 8(a) of the Securities Act of 1993 that was declared effective 10/19/04 at 11:30 AM. The said Registration Statement permits the Company to issue a maximum of 12,000,000 treasury shares at an issue price of $0.6625. To date the Company has not sold any of these shares though efforts continue to be made in this regard. We cannot guaranty that we will be able to raise enough money through this offering to stay in business. The money that is raised, will be applied to the development of our web site, marketing and working capital. If additional capital is required, we will attempt to raise additional capital through a subsequent private placement, public offering or through loans. If we do not raise all of the capital that is required from this offering, we will have to find alternative sources such as second public offering, a private placement of securities, or loans from our officers or others. Our officers and directors have indicated that they are unwilling to make any commitment to loan additional capital at this time, other than to pay fees connected with our filings with the SEC. Accordingly, our officers and directors are under no legal obligation to make additional capital contributions to us in the future. Should we require additional funds and are unable to raise it we will either have to suspend operations until we do raise the funds, or cease operations entirely. If we raise the maximum amount of capital from this offering, it will last 24 months. If we raise less than the maximum amount, we do not believe the money will last 24 months. If we raise less than the maximum amount and further funds are required we will have to revert to obtaining additional funds as described in this paragraph. Other than as described in this paragraph, we have no other financing plans.
During the fourth quarter Ampang Investments Ltd. invested $200,000 U.S. in the form of promissory notes.
On October 12, the company completed the purchase of WorldWide-Exclusive Ltd. WorldWide- Exclusive Ltd. was acquired to expedite credit card transactions over the internet. This acquisition provided for the immediate clearing of credit cards allowing us to launch our Pay to Play model in a much more timely manner.
On December 15, the company announced the launch of its membership-based website www.triviabingo.com.
In the future the Company intends to file any and all Press Releases on a Form 8-K with the United States Securities and Exchange Commission.
We do not intend to hire additional employees at this time.
Limited Operating History; Need for Additional Capital
There is limited historical financial information about us, but no operations upon which to base an evaluation of our performance. We are a start-up stage corporation and have not generated any revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the development our game, and possible cost overruns due to price and cost increases in services.
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To become profitable and competitive, we have to start operating our web-site and sell advertising on it. We are seeking equity financing to provide for the capital required to complete and promote our web-site.
We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue to develop our game or web-site. Additional equity financing could result in additional dilution to existing shareholders.
Results of Operations
Since January 1, 2000
We are developing our Internet Bingo game and our web-site. Since May 1999, we have used our common stock to raise money for the development of the web-site, the development of our Internet Bingo game, and, for corporate expenses. We received a loan of $750,000 from Ampang Investments Ltd. evidenced by a debenture. The debenture was converted to 719,094 shares of common stock. Ampang Investments Ltd. is owned by The Bentley Group Ltd., a company which is owned and controlled by Richard Lyle Wachter, our President and Chief Financial Officer.
The only revenues that we have generated were in the third and fourth quarters of 2001. A total of $10,000 was generated from the sale of format licenses for our T.V. game show and internet software user agreement. This is not revenue generated from operations.
At December 31, 2004, we had negative working capital of $1,511,986 compared to negative working capital of $1,066,222 at December 31, 2003 for a total negative increase of $445,764.
At December 31, 2004 and 2003, our primary assets were software and cash, and the primary liabilities consisted of accounts payable, accrued interest and notes payable, and accrued salaries.
Upon the successful completion of our intended financing we intend to derive our operating revenues from the following sources:
1. advertising campaigns on its website, including merchandising its products;
2. the sale of CD ROMS and our "board game";
3. launching our television game show.
In 2000, we issued a total of 6,100,000 shares of common stock in director, consulting and marketing fees valued $12,978,700. 1,850,000 shares were issued to Sharpe Capital for marketing and public relations; 4,000,000 shares were issued to Ampang Investments for consulting; and, 250,000 shares were issued to Marco Stifani, Michael DeMarco and Edgar Clark, former directors, as director's fees.
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Fiscal December 31, 2004 Compared to Fiscal December 31, 2003
We have had no revenues from operations in fiscal year end 2003, and only a small amount of revenue in fiscal 2004 from the Beta test of the Trivia Bingo.com website.
At December 31, 2004, we had negative working capital of $1,511,986 compared to negative working capital of $1,066,221 at December 31, 2003. This was a result of and increase in accrued salaries, along with notes and accounts payable. Accounts payable increased from $116,871 on December 31, 2003 to $141,686 December 31, 2004. This was a result of normal operating expenses. This includes legal and accounting fees of $49,999. The remainder was general and administrative expenses.
We continue to include our operating website and license, as well as Trivia Bingo Software with a net value of $137,667 as our major asset. At December 31, 2003, our primary asset was the website and license. Our primary liabilities consisted of accounts payable, notes payable, and accrued salaries. Additionally at December 31, 2003, we had substantial accrued interest on our books.
During the December 31, 2003, we did not have any revenues from operations and only limited revenues in 2004 from the Beta test version of the Trivia Bingo website.
Liquidity and Capital Resources
We continue to maintain a minimal cash balance in order to fulfill our financial commitments. The minimal cash balance or burn rate required to fulfill financial commitments is $32,000 per month. This amount does not include any cash or prizes which may be awarded in the future. It is anticipated that any cash or prize giveaways will be funded through the sale of securities through our SB-2 Registration Statement.
The approximate amount of time through which our current assets will fund existing operations, not assuming additional advances from shareholders, is eight months. All of this cash balance has been obtained through borrowing. We are not in a liquid position at December 31, 2004, having $162,619 of cash. This compares to cash of $1,436 at December 31, 2003. In the past the majority shareholders have had to fund any cash shortfalls experienced by us.
Current assets increased from $1,436 at December 31, 2003 to $162,619 at December 31, 2004. This was due to loans totaling $200,000 from a related party. Current liabilities at December 31, 2003, were $1,065,257. These liabilities increased at December 31, 2004, to $1,672,205. This is due mainly to loans of $209,788 from related parties and accrued interest on the notes.
We continue to be funded by our majority shareholders, in order to meet our day-to-day expenses and our ongoing marketing initiatives. As of December 31, 2003, these shareholders have covered $272,501 in our shortfalls. That is because we are not generating any revenues from operations, but we continue to accrue expenses as though we were generating revenues. This is reflected in the "Note payable-related party" of $387,989 and interest of $54,530 has been accrued and expensed which represents monies advanced to us by our majority shareholders in the fiscal year of 2003. It is also reflected in the accounts payable, related party of $82,339. It is important to note that the "Note Payable" and the "Accrued Interest" from the December 31, 2001 statements were converted to equity on January 3, 2002, with the issuance of 719,094 common shares at a rate of One (1) common share for each dollar of indebtedness calculated by adding the principal amount of the "Note Payable" together with "Accrued Interest."
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We have continuously maintained minimal liquidity as a result of majority shareholders funding of our operations. The total short-fall that these shareholders assumed was $72,501 however, they are unwilling to fund operations in the future and if we do not receive sufficient proceeds to fund our operations, we may have to suspend operations until we obtain additional funding or cease operating entirely. We have no material commitments for capital expenditures other than as set forth in the Use of Proceeds section of this prospectus. While we are committed to spend the money as disclosed therein, we have not entered into any contracts with third parties for the services described therein. We will not enter into any contracts with third parties for services, until we receive proceeds from this offering. Management believes that there will be insufficient funds generated by operations to satisfy working capital requirements and the majority shareholders are unwilling to make any further capital contributions to our operations. Accordingly, if this offering is unsuccessful, in all likelihood, we will have to suspend or cease operations.
Effects of Inflation
Inflation and changing prices will not and are not expected to have a
significant effect on our operations during the foreseeable future.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
TABLE OF CONTENTS
INDEPENDENT AUDITOR'S REPORT F-1
FINANCIAL STATEMENTS
Balance Sheets F-2
Statements of Operations F-3
Statement of Stockholders' Equity (Deficit) F-4 - F-5 Statements of Cash Flows F-6
NOTES TO FINANCIAL STATEMENTS F-7
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Board of Directors
FirstBingo.com
Toronto, Ontario
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have audited the accompanying consolidated balance sheets of FirstBingo.com (a Nevada corporation and development stage enterprise) as of December 31, 2004 and 2003, and the related consolidated statements of operations, stockholders' deficit and cash flows for the years then ended and for the period from March 30, 1990 (inception) to December 31, 2004. 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.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of FirstBingo.com as of December 31, 2004 and 2003, and the results of its operations, stockholders' deficit and cash flows for the years then ended and for the period from March 30, 1990 (inception) to December 31, 2004 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2, the Company has a history of operating losses, has limited cash resources, has negative working capital and its viability is dependent upon its ability to meet its future financing requirements and the success of future operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans regarding those matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Williams & Webster, P.S.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
March 30, 2005
F-1
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FIRSTBINGO.COM
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS
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December 31, December 31,
ASSETS 2004 2003
------------ ------------
CURRENT ASSETS
Cash $ 162,619 $ 1,436
------------ ------------
Total Current Assets 162,619 1,436
------------ ------------
OTHER ASSETS
Website and software license, net of accumulated 130,753 217,922
amortization
Goodwill 6,924 -
------------ ------------
Total Other Assets 137,677 217,922
------------ ------------
TOTAL ASSETS $ 300,296 $ 219,357
------------ ------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 59,347 $ 56,695
Accounts payable - related party 82,339 60,176
Accrued interest 54,530 32,183
Accrued salaries 1,050,000 700,000
Note payable - related party 387,989 178,201
Convertible note payable 38,000 38,000
------------ ------------
Total Current Liabilities 1,672,205 1,065,257
------------ ------------
COMMITMENTS AND CONTINGENCIES 2,400 2,400
------------ ------------
STOCKHOLDERS' DEFICIT
Common stock, 50,000,000 shares authorized, $0.001
par value;
31,928,524 and 31,828,524 shares issued and 31,928 31,828
outstanding, respectively
Additional paid-in capital 15,833,749 15,810,849
Accumulated deficit during development stage (17,239,986) (16,690,977)
------------ ------------
Total Stockholder's Equity (Deficit) (1,374,309) (848,300)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 300,296 $ 219,357
------------ ------------
The accompanying notes are an integral part of these financial statements.
F-2
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FIRSTBINGO.COM
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
Period from
March 30, 1990
Year Ended (Inception) to
December 31, December 31,
2004 2003 2004
---------- ---------- --------------
REVENUES $ 168 $ - $ 168
COST OF REVENUES - - -
---------- ---------- --------------
GROSS PROFIT 168 - 168
---------- ---------- --------------
EXPENSES
Amortization 87,169 64,168 438,089
Consulting fees 17,238 28,820 4,059,195
Directors' fees - - 1,252,600
Officers' salaries 350,000 350,000 1,250,000
Salaries - sales and office - - 40,725
Filing fees 4,478 3,130 7,608
Marketing and public relations - 3,583 8,044,984
Legal and professional fees 37,348 53,307 240,076
Travel and entertainment - - 41,348
Office and administration 10,428 9,726 69,312
Software and internet services 3,302 3,063 239,633
Trade show expenses - - 37,492
Trivia bingo development - - 22,274
Pilot development 16,867 - 67,909
Loss on impairment of software - - 1,275,000
---------- ---------- --------------
TOTAL OPERATING EXPENSES 526,830 515,797 17,086,245
---------- ---------- --------------
LOSS FROM OPERATIONS (526,662) (515,797) (17,086,077)
OTHER INCOME (EXPENSES)
Other income - - 10,000
Interest expense (22,347) (21,750) (163,909)
---------- ---------- --------------
TOTAL OTHER INCOME (EXPENSES) (22,347) (21,750) (153,909)
---------- ---------- --------------
LOSS BEFORE INCOME TAXES (549,009) (537,547) (17,239,986)
INCOME TAXES - - -
---------- ---------- --------------
NET LOSS $ (549,009) $ (537,547) $ (17,239,986)
---------- ---------- --------------
NET LOSS PER COMMON SHARE,
BASIC AND DILUTED $ (0.02) $ (0.03)
---------- ----------
WEIGHTED AVERAGE NUMBER OF COMMON STOCK
SHARES OUTSTANDING, BASIC AND DILUTED 31,850,442 18,939,788
---------- ----------
The accompanying notes are an integral part of these financial statements.
F-3
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FIRSTBINGO.COM
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
-------------------------------------------------------------------------------------------------------------------
Deficit
Common Stock Accumulated Total
Additional During Stockholders'
Number Paid-in Stock Development Equity
of Shares Amount Capital Options Stage (Deficit)
--------- ------ ---------- -------- ------------ ------------
Initial issuance of common stock in April 1,678,080 $ 1,678 $ 822 $ - $ - $ 2,500
1990 for cash
Cumulative net loss for the years ended
December 31, 1990
through December 31, 1996 - - - - (3,200) (3,200)
--------- ------ ---------- -------- ------------ ------------
Balance, December 31, 1996 1,678,080 1,678 822 - (3,200) (700)
Net loss for year ending, December 31, - - - - (1,050) (1,050)
1997 --------- ------ ---------- -------- ------------ ------------
Balance, December 31, 1997 1,678,080 1,678 822 - (4,250) (1,750)
Net loss for year ending, December 31, - - - - (1,275) (1,275)
1998 --------- ------ ---------- -------- ------------ ------------
Balance, December 31, 1998 1,678,080 1,678 822 - (5,525) (3,025)
Net loss for year ending December 31, 1999 - - - - (1,575) (1,575)
--------- ------ ---------- -------- ------------ ------------
Balance, December 31, 1999 1,678,080 1,678 822 - (7,100) (4,600)
Issuance of common stock for services at 976,000 976 12,978,724 - - 12,979,700
an average of $13.31 per share
Options issued for consulting fees - - - 15,000 - 15,000
Issuance of common stock for acquisition
of Lucky Port
Limited at an average of $1.56 per 960,000 960 1,499,040 - - 1,500,000
share
Net loss for year ending December 31, 2000 - - - - (13,275,236) (13,275,236)
--------- ------ ---------- -------- ------------ ------------
Balance, December 31, 2000 3,614,080 3,614 14,478,586 15,000 (13,282,336) 1,214,864
Options granted for consulting fees - - - 41,600 - 41,600
Expiration of stock options - - 15,000 (15,000) - -
Issuance of common stock for services at 28,044 28 52,472 - - 52,500
an average of $1.88 per share
Net loss for the year ending December 31, - - - - (574,337) (574,337)
2001 --------- ------ ---------- -------- ------------ ------------
Balance, December 31, 2001 3,642,124 3,642 14,546,058 41,600 (13,856,673) 734,627
Issuance of common stock for services at 800,000 800 199,200 - - 200,000
$0.25 per share
Issuance of common stock for accrued 2,876,376 2,876 716,218 - - 719,094
interest and debt at $0.25 per share
Issuance of common stock for services at 140,000 140 69,860 - - 70,000
$0.50 per share
Issuance of common stock for services at 140,000 140 87,360 - - 87,500
$0.63 per share
. . .
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7-Jun-2005
Annual Report
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULT OF OPERATIONS.
This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance and may contain forward-looking statements that involve risks and uncertainties. A number of important factors could cause our actual results to differ materially from those expressed in any forward-looking statements made by us.
Forward-looking statements are often identified by words like: believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that may cause actual results to differ materially from historical results or our predictions.
Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated any revenues and no revenues are anticipated until we begin operating and selling advertising space on our web site. Accordingly, we must raise funding from sources other than our operations.
Our only other source of funds at this time is investments by others in FirstBingo.com. We must raise capital to further implement our project and stay in business.
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In an effort to raise capital the Company filed an SB-2 Registration Statement pursuant to Section 8(a) of the Securities Act of 1993 that was declared effective 10/19/04 at 11:30 AM. The said Registration Statement permits the Company to issue a maximum of 12,000,000 treasury shares at an issue price of $0.6625. To date the Company has not sold any of these shares though efforts continue to be made in this regard. We cannot guaranty that we will be able to raise enough money through this offering to stay in business. The money that is raised, will be applied to the development of our web site, marketing and working capital. If additional capital is required, we will attempt to raise additional capital through a subsequent private placement, public offering or through loans. If we do not raise all of the capital that is required from this offering, we will have to find alternative sources such as second public offering, a private placement of securities, or loans from our officers or others. Our officers and directors have indicated that they are unwilling to make any commitment to loan additional capital at this time, other than to pay fees connected with our filings with the SEC. Accordingly, our officers and directors are under no legal obligation to make additional capital contributions to us in the future. Should we require additional funds and are unable to raise it we will either have to suspend operations until we do raise the funds, or cease operations entirely. If we raise the maximum amount of capital from this offering, it will last 24 months. If we raise less than the maximum amount, we do not believe the money will last 24 months. If we raise less than the maximum amount and further funds are required we will have to revert to obtaining additional funds as described in this paragraph. Other than as described in this paragraph, we have no other financing plans.
During the fourth quarter Ampang Investments Ltd. invested $200,000 U.S. in the form of promissory notes.
On October 12, the company completed the purchase of WorldWide-Exclusive Ltd. WorldWide- Exclusive Ltd. was acquired to expedite credit card transactions over the internet. This acquisition provided for the immediate clearing of credit cards allowing us to launch our Pay to Play model in a much more timely manner.
On December 15, the company announced the launch of its membership-based website www.triviabingo.com.
In the future the Company intends to file any and all Press Releases on a Form 8-K with the United States Securities and Exchange Commission.
We do not intend to hire additional employees at this time.
Limited Operating History; Need for Additional Capital
There is limited historical financial information about us, but no operations upon which to base an evaluation of our performance. We are a start-up stage corporation and have not generated any revenues from operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including limited capital resources, possible delays in the development our game, and possible cost overruns due to price and cost increases in services.
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To become profitable and competitive, we have to start operating our web-site and sell advertising on it. We are seeking equity financing to provide for the capital required to complete and promote our web-site.
We have no assurance that future financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we may be unable to continue to develop our game or web-site. Additional equity financing could result in additional dilution to existing shareholders.
Results of Operations
Since January 1, 2000
We are developing our Internet Bingo game and our web-site. Since May 1999, we have used our common stock to raise money for the development of the web-site, the development of our Internet Bingo game, and, for corporate expenses. We received a loan of $750,000 from Ampang Investments Ltd. evidenced by a debenture. The debenture was converted to 719,094 shares of common stock. Ampang Investments Ltd. is owned by The Bentley Group Ltd., a company which is owned and controlled by Richard Lyle Wachter, our President and Chief Financial Officer.
The only revenues that we have generated were in the third and fourth quarters of 2001. A total of $10,000 was generated from the sale of format licenses for our T.V. game show and internet software user agreement. This is not revenue generated from operations.
At December 31, 2004, we had negative working capital of $1,511,986 compared to negative working capital of $1,066,222 at December 31, 2003 for a total negative increase of $445,764.
At December 31, 2004 and 2003, our primary assets were software and cash, and the primary liabilities consisted of accounts payable, accrued interest and notes payable, and accrued salaries.
Upon the successful completion of our intended financing we intend to derive our operating revenues from the following sources:
1. advertising campaigns on its website, including merchandising its products;
2. the sale of CD ROMS and our "board game";
3. launching our television game show.
In 2000, we issued a total of 6,100,000 shares of common stock in director, consulting and marketing fees valued $12,978,700. 1,850,000 shares were issued to Sharpe Capital for marketing and public relations; 4,000,000 shares were issued to Ampang Investments for consulting; and, 250,000 shares were issued to Marco Stifani, Michael DeMarco and Edgar Clark, former directors, as director's fees.
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Fiscal December 31, 2004 Compared to Fiscal December 31, 2003
We have had no revenues from operations in fiscal year end 2003, and only a small amount of revenue in fiscal 2004 from the Beta test of the Trivia Bingo.com website.
At December 31, 2004, we had negative working capital of $1,511,986 compared to negative working capital of $1,066,221 at December 31, 2003. This was a result of and increase in accrued salaries, along with notes and accounts payable. Accounts payable increased from $116,871 on December 31, 2003 to $141,686 December 31, 2004. This was a result of normal operating expenses. This includes legal and accounting fees of $49,999. The remainder was general and administrative expenses.
We continue to include our operating website and license, as well as Trivia Bingo Software with a net value of $137,667 as our major asset. At December 31, 2003, our primary asset was the website and license. Our primary liabilities consisted of accounts payable, notes payable, and accrued salaries. Additionally at December 31, 2003, we had substantial accrued interest on our books.
During the December 31, 2003, we did not have any revenues from operations and only limited revenues in 2004 from the Beta test version of the Trivia Bingo website.
Liquidity and Capital Resources
We continue to maintain a minimal cash balance in order to fulfill our financial commitments. The minimal cash balance or burn rate required to fulfill financial commitments is $32,000 per month. This amount does not include any cash or prizes which may be awarded in the future. It is anticipated that any cash or prize giveaways will be funded through the sale of securities through our SB-2 Registration Statement.
The approximate amount of time through which our current assets will fund existing operations, not assuming additional advances from shareholders, is eight months. All of this cash balance has been obtained through borrowing. We are not in a liquid position at December 31, 2004, having $162,619 of cash. This compares to cash of $1,436 at December 31, 2003. In the past the majority shareholders have had to fund any cash shortfalls experienced by us.
Current assets increased from $1,436 at December 31, 2003 to $162,619 at December 31, 2004. This was due to loans totaling $200,000 from a related party. Current liabilities at December 31, 2003, were $1,065,257. These liabilities increased at December 31, 2004, to $1,672,205. This is due mainly to loans of $209,788 from related parties and accrued interest on the notes.
We continue to be funded by our majority shareholders, in order to meet our day-to-day expenses and our ongoing marketing initiatives. As of December 31, 2003, these shareholders have covered $272,501 in our shortfalls. That is because we are not generating any revenues from operations, but we continue to accrue expenses as though we were generating revenues. This is reflected in the "Note payable-related party" of $387,989 and interest of $54,530 has been accrued and expensed which represents monies advanced to us by our majority shareholders in the fiscal year of 2003. It is also reflected in the accounts payable, related party of $82,339. It is important to note that the "Note Payable" and the "Accrued Interest" from the December 31, 2001 statements were converted to equity on January 3, 2002, with the issuance of 719,094 common shares at a rate of One (1) common share for each dollar of indebtedness calculated by adding the principal amount of the "Note Payable" together with "Accrued Interest."
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We have continuously maintained minimal liquidity as a result of majority shareholders funding of our operations. The total short-fall that these shareholders assumed was $72,501 however, they are unwilling to fund operations in the future and if we do not receive sufficient proceeds to fund our operations, we may have to suspend operations until we obtain additional funding or cease operating entirely. We have no material commitments for capital expenditures other than as set forth in the Use of Proceeds section of this prospectus. While we are committed to spend the money as disclosed therein, we have not entered into any contracts with third parties for the services described therein. We will not enter into any contracts with third parties for services, until we receive proceeds from this offering. Management believes that there will be insufficient funds generated by operations to satisfy working capital requirements and the majority shareholders are unwilling to make any further capital contributions to our operations. Accordingly, if this offering is unsuccessful, in all likelihood, we will have to suspend or cease operations.
Effects of Inflation
Inflation and changing prices will not and are not expected to have a
significant effect on our operations during the foreseeable future.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
TABLE OF CONTENTS
INDEPENDENT AUDITOR'S REPORT F-1
FINANCIAL STATEMENTS
Balance Sheets F-2
Statements of Operations F-3
Statement of Stockholders' Equity (Deficit) F-4 - F-5 Statements of Cash Flows F-6
NOTES TO FINANCIAL STATEMENTS F-7
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Board of Directors
FirstBingo.com
Toronto, Ontario
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We have audited the accompanying consolidated balance sheets of FirstBingo.com (a Nevada corporation and development stage enterprise) as of December 31, 2004 and 2003, and the related consolidated statements of operations, stockholders' deficit and cash flows for the years then ended and for the period from March 30, 1990 (inception) to December 31, 2004. 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.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of FirstBingo.com as of December 31, 2004 and 2003, and the results of its operations, stockholders' deficit and cash flows for the years then ended and for the period from March 30, 1990 (inception) to December 31, 2004 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2, the Company has a history of operating losses, has limited cash resources, has negative working capital and its viability is dependent upon its ability to meet its future financing requirements and the success of future operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans regarding those matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Williams & Webster, P.S.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
March 30, 2005
F-1
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FIRSTBINGO.COM
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS
---------------------------------------------------------------------------------------
December 31, December 31,
ASSETS 2004 2003
------------ ------------
CURRENT ASSETS
Cash $ 162,619 $ 1,436
------------ ------------
Total Current Assets 162,619 1,436
------------ ------------
OTHER ASSETS
Website and software license, net of accumulated 130,753 217,922
amortization
Goodwill 6,924 -
------------ ------------
Total Other Assets 137,677 217,922
------------ ------------
TOTAL ASSETS $ 300,296 $ 219,357
------------ ------------
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 59,347 $ 56,695
Accounts payable - related party 82,339 60,176
Accrued interest 54,530 32,183
Accrued salaries 1,050,000 700,000
Note payable - related party 387,989 178,201
Convertible note payable 38,000 38,000
------------ ------------
Total Current Liabilities 1,672,205 1,065,257
------------ ------------
COMMITMENTS AND CONTINGENCIES 2,400 2,400
------------ ------------
STOCKHOLDERS' DEFICIT
Common stock, 50,000,000 shares authorized, $0.001
par value;
31,928,524 and 31,828,524 shares issued and 31,928 31,828
outstanding, respectively
Additional paid-in capital 15,833,749 15,810,849
Accumulated deficit during development stage (17,239,986) (16,690,977)
------------ ------------
Total Stockholder's Equity (Deficit) (1,374,309) (848,300)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 300,296 $ 219,357
------------ ------------
The accompanying notes are an integral part of these financial statements.
F-2
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FIRSTBINGO.COM
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
Period from
March 30, 1990
Year Ended (Inception) to
December 31, December 31,
2004 2003 2004
---------- ---------- --------------
REVENUES $ 168 $ - $ 168
COST OF REVENUES - - -
---------- ---------- --------------
GROSS PROFIT 168 - 168
---------- ---------- --------------
EXPENSES
Amortization 87,169 64,168 438,089
Consulting fees 17,238 28,820 4,059,195
Directors' fees - - 1,252,600
Officers' salaries 350,000 350,000 1,250,000
Salaries - sales and office - - 40,725
Filing fees 4,478 3,130 7,608
Marketing and public relations - 3,583 8,044,984
Legal and professional fees 37,348 53,307 240,076
Travel and entertainment - - 41,348
Office and administration 10,428 9,726 69,312
Software and internet services 3,302 3,063 239,633
Trade show expenses - - 37,492
Trivia bingo development - - 22,274
Pilot development 16,867 - 67,909
Loss on impairment of software - - 1,275,000
---------- ---------- --------------
TOTAL OPERATING EXPENSES 526,830 515,797 17,086,245
---------- ---------- --------------
LOSS FROM OPERATIONS (526,662) (515,797) (17,086,077)
OTHER INCOME (EXPENSES)
Other income - - 10,000
Interest expense (22,347) (21,750) (163,909)
---------- ---------- --------------
TOTAL OTHER INCOME (EXPENSES) (22,347) (21,750) (153,909)
---------- ---------- --------------
LOSS BEFORE INCOME TAXES (549,009) (537,547) (17,239,986)
INCOME TAXES - - -
---------- ---------- --------------
NET LOSS $ (549,009) $ (537,547) $ (17,239,986)
---------- ---------- --------------
NET LOSS PER COMMON SHARE,
BASIC AND DILUTED $ (0.02) $ (0.03)
---------- ----------
WEIGHTED AVERAGE NUMBER OF COMMON STOCK
SHARES OUTSTANDING, BASIC AND DILUTED 31,850,442 18,939,788
---------- ----------
The accompanying notes are an integral part of these financial statements.
F-3
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FIRSTBINGO.COM
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)
-------------------------------------------------------------------------------------------------------------------
Deficit
Common Stock Accumulated Total
Additional During Stockholders'
Number Paid-in Stock Development Equity
of Shares Amount Capital Options Stage (Deficit)
--------- ------ ---------- -------- ------------ ------------
Initial issuance of common stock in April 1,678,080 $ 1,678 $ 822 $ - $ - $ 2,500
1990 for cash
Cumulative net loss for the years ended
December 31, 1990
through December 31, 1996 - - - - (3,200) (3,200)
--------- ------ ---------- -------- ------------ ------------
Balance, December 31, 1996 1,678,080 1,678 822 - (3,200) (700)
Net loss for year ending, December 31, - - - - (1,050) (1,050)
1997 --------- ------ ---------- -------- ------------ ------------
Balance, December 31, 1997 1,678,080 1,678 822 - (4,250) (1,750)
Net loss for year ending, December 31, - - - - (1,275) (1,275)
1998 --------- ------ ---------- -------- ------------ ------------
Balance, December 31, 1998 1,678,080 1,678 822 - (5,525) (3,025)
Net loss for year ending December 31, 1999 - - - - (1,575) (1,575)
--------- ------ ---------- -------- ------------ ------------
Balance, December 31, 1999 1,678,080 1,678 822 - (7,100) (4,600)
Issuance of common stock for services at 976,000 976 12,978,724 - - 12,979,700
an average of $13.31 per share
Options issued for consulting fees - - - 15,000 - 15,000
Issuance of common stock for acquisition
of Lucky Port
Limited at an average of $1.56 per 960,000 960 1,499,040 - - 1,500,000
share
Net loss for year ending December 31, 2000 - - - - (13,275,236) (13,275,236)
--------- ------ ---------- -------- ------------ ------------
Balance, December 31, 2000 3,614,080 3,614 14,478,586 15,000 (13,282,336) 1,214,864
Options granted for consulting fees - - - 41,600 - 41,600
Expiration of stock options - - 15,000 (15,000) - -
Issuance of common stock for services at 28,044 28 52,472 - - 52,500
an average of $1.88 per share
Net loss for the year ending December 31, - - - - (574,337) (574,337)
2001 --------- ------ ---------- -------- ------------ ------------
Balance, December 31, 2001 3,642,124 3,642 14,546,058 41,600 (13,856,673) 734,627
Issuance of common stock for services at 800,000 800 199,200 - - 200,000
$0.25 per share
Issuance of common stock for accrued 2,876,376 2,876 716,218 - - 719,094
interest and debt at $0.25 per share
Issuance of common stock for services at 140,000 140 69,860 - - 70,000
$0.50 per share
Issuance of common stock for services at 140,000 140 87,360 - - 87,500
$0.63 per share
. . .
