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| EXCEL - IDEA: XBRL DOCUMENT - KIDOZ INC. | Financial_Report.xls |
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
(Mark one)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2012
[
] [ ]
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE EXCHANGE ACT
For the transition period from _____________ to ____________
Commission File Number: 333-120120-01
BINGO.COM, LTD.
(Exact name of small business issuer as specified in its charter)
|
ANGUILLA |
|
98-0206369 |
|
(State or other jurisdiction of incorporation or organization) |
|
(I.R.S. Employer Identification No.) |
National Bank of Anguilla Corporate Building, 1St Floor
St Mary's Road, TV1 02P
The Valley, Anguilla, B.W.I
(Address of principal executive offices)
(264) 461-2646
(Issuer's telephone number)
|
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] |
|
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] |
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ] |
|
APPLICABLE ONLY TO CORPORATE ISSUERS The number of outstanding shares of the Issuer's common stock, no par value per share, was 64,877,703 as of November 14, 2012. |
BINGO.COM, LTD.
QUARTERLY REPORT ON FORM 10-Q
FOR THE PERIOD ENDED SEPTEMBER 30, 2012
TABLE OF CONTENTS
| PAGE | ||
| PART I - FINANCIAL INFORMATION | 2 | |
| ITEM 1. | Financial Statements | 2 |
| Consolidated Balance Sheets | 2 | |
| Consolidated Statements of Operations and Comprehensive Loss | 3 | |
| Consolidated Statements of Stockholders' Equity | 4 | |
| Consolidated Statements of Cash Flows | 5 | |
| Notes to the Consolidated Financial Statements | 6 | |
| ITEM 2 | Management's Discussion and Analysis of Financial Condition and Results of Operations | 16 |
| ITEM 4T. | Controls and Procedures. | 20 |
| PART II - OTHER INFORMATION | 22 | |
| ITEM 1. | Legal Proceedings | 22 |
| ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 22 |
| ITEM 3. | Defaults Upon Senior Securities | 22 |
| ITEM 4. | Submission of Matters to a Vote of Security Holders | 22 |
| ITEM 5. | Other Information | 22 |
| ITEM 6. | Exhibits and reports on Form 8-K | 23 |
| SIGNATURES | 25 | |
| EXHIBITS | 26 | |
| CERTIFICATIONS | 26 | |
| Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | 28 | |
Page 1
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements.
BINGO.COM, LTD. and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
|
As at |
|
September 30, 2012 |
|
|
December 31, 2011 (Restated Note 3) |
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash |
$ |
574,787 |
|
$ |
787,524 |
|
|
Accounts receivable less allowance for doubtful accounts $150,000 (December 31, 2011 - $150,000) |
|
296,188 |
|
|
148,119 |
|
|
Prepaid expenses |
|
189,290 |
|
|
219,279 |
|
|
Total Current Assets |
|
1,060,265 |
|
|
1,154,922 |
|
|
|
|
|
|
|
|
|
|
Equipment, net |
|
11,472 |
|
|
14,827 |
|
|
|
|
|
|
|
|
|
|
Other assets |
|
68,467 |
|
|
11,977 |
|
|
|
|
|
|
|
|
|
|
Domain name rights and intangible assets (Note 4) |
|
1,257,241 |
|
|
1,257,241 |
|
|
|
|
|
|
|
|
|
|
Deferred tax asset, less valuation allowance of $143,544 (December 31, 2011 - $141,699) (Note 7) |
|
- |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Total Assets |
$ |
2,397,445 |
|
$ |
2,438,967 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity |
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
Accounts payable |
$ |
15,815 |
|
$ |
13,261 |
|
|
Accrued liabilities |
|
50,214 |
|
|
72,349 |
|
|
Accounts payable and accrued liabilities - related party (Note 8) |
|
13,576 |
|
|
10,681 |
|
|
Total Current Liabilities |
|
79,605 |
|
|
96,291 |
|
|
|
|
|
|
|
|
|
|
Commitments (Note 6) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' equity (Note 5): |
|
|
|
|
|
|
|
Common stock, no par value, unlimited shares authorized, 63,877,703 shares issued and outstanding (December 31, 2011 - 63,877,703) |
|
18,237,685 |
|
|
18,237,685 |
|
|
Accumulated deficit |
|
(15,944,425) |
|
|
(15,919,589) |
|
|
Accumulated other comprehensive income: Foreign currency translation adjustment |
|
24,580 |
|
|
24,580 |
|
|
Total Stockholders' Equity |
|
2,317,840 |
|
|
2,342,676 |
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders' Equity |
$ |
2,397,445 |
|
$ |
2,438,967 |
|
See accompanying notes to the consolidated financial statements.
Page 2
BINGO.COM, LTD. and Subsidiaries
Consolidated Statements of Operations and Comprehensive Loss
For Periods Ended September 30, 2012 and 2011
(Unaudited)
|
|
|
Nine Months ended September 30, 2012 |
|
Nine Months ended September 30, 2011 |
|
Three Months ended September 30, 2012 |
|
Three Months ended September 30, 2011 |
|
|
|
|
|
|
|
|
|
|
|
Advertising revenue |
$ |
39,766 |
$ |
44,875 |
$ |
12,511 |
$ |
17,929 |
|
Gaming revenue |
|
1,172,031 |
|
982,393 |
|
445,237 |
|
398,803 |
|
Total revenue |
|
1,211,797 |
|
1,027,268 |
|
457,748 |
|
416,732 |
|
|
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
3,563 |
|
6,083 |
|
1,191 |
|
1,690 |
|
Directors fees |
|
9,000 |
|
9,000 |
|
2,500 |
|
2,500 |
|
General and administrative |
|
180,694 |
|
209,681 |
|
57,570 |
|
50,497 |
|
Loss on disposal of equipment |
|
- |
|
9,209 |
|
- |
|
- |
|
Salaries, wages, consultants and benefits |
|
291,010 |
|
643,568 |
|
90,693 |
|
95,641 |
|
Selling and marketing |
|
797,462 |
|
877,399 |
|
310,712 |
|
219,578 |
|
Total operating expenses |
|
1,281,729 |
|
1,754,940 |
|
462,666 |
|
369,906 |
|
|
|
|
|
|
|
|
|
|
|
(Loss) Income before other income (expense) and income taxes |
|
(69,932) |
|
(727,672) |
|
(4,918) |
|
46,826 |
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
Foreign exchange gain (loss) |
|
44,104 |
|
8,283 |
|
33,702 |
|
(32,229) |
|
Interest and other income |
|
1,052 |
|
2,386 |
|
218 |
|
561 |
|
|
|
|
|
|
|
|
|
|
|
(Loss) Income before income taxes |
|
(24,776) |
|
(717,003) |
|
29,002 |
|
15,158 |
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
(60) |
|
(2,651) |
|
- |
|
- |
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
$ |
(24,836) |
$ |
(719,654) |
$ |
29,002 |
$ |
15,158 |
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per common share, basic and diluted |
$ |
(0.00) |
$ |
(0.01) |
$ |
0.00 |
$ |
0.00 |
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding, basic and diluted |
|
63,877,703 |
|
63,877,703 |
|
63,877,703 |
|
63,877,703 |
See accompanying notes to the consolidated financial statements.
Page 3
BINGO.COM, LTD. and Subsidiaries
Consolidated Statements of Stockholders' Equity
For the period ended September 30, 2012
(Unaudited)
|
|
Common stock |
|
Accumulated Other Comprehensive income |
|
||||
|
|
Shares |
Amount |
Accumulated Deficit |
Foreign currency translation adjustment |
Total Stockholders' Equity |
|||
|
Balance, December 31, 2011 (Restated Note 3) |
63,877,703 |
$18,237,685 |
$(15,919,589) |
$ 24,580 |
$2,342,676 |
|||
|
|
|
|
|
|
|
|||
|
Net loss |
- |
- |
(24,836) |
- |
(24,836) |
|||
|
Balance, September 30, 2012 |
63,877,703 |
$18,237,685 |
$ (15,944,425) |
$ 24,580 |
$ 2,317,840 |
|||
See accompanying notes to the consolidated financial statements.
Page 4
BINGO.COM, LTD. and Subsidiaries
Consolidated Statements of Cash Flows
Six Months Ended September 30, 2012 and 2011
(Unaudited)
|
|
|
|
2012 |
|
2011 |
|
Cash flows from operating activities: |
|
|
|
|
|
|
Net loss |
|
$ |
(24,836) |
$ |
(719,654) |
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
3,563 |
|
6,083 |
|
Loss on disposal of equipment |
|
|
- |
|
9,209 |
|
Issuance of consultant stock option |
|
|
- |
|
4,245 |
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
|
|
(148,069) |
|
(105,047) |
|
Prepaid expenses |
|
|
29,989 |
|
395,956 |
|
Other assets |
|
|
(481) |
|
1,971 |
|
Accounts payable and accrued liabilities |
|
|
(16,686) |
|
(45,941) |
|
Net cash used in operating activities |
|
|
(156,520) |
|
(453,178) |
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
Acquisition of equipment |
|
|
(208) |
|
(5,007) |
|
Software development |
|
|
(56,009) |
|
- |
|
Net cash used in investing activities |
|
|
(56,217) |
|
(5,007) |
|
|
|
|
|
|
|
|
Change in cash |
|
|
(212,737) |
|
(458,185) |
|
|
|
|
|
|
|
|
Cash, beginning of period |
|
|
787,524 |
|
1,396,384 |
|
Cash, end of period |
|
$ |
574,787 |
$ |
938,199 |
|
|
|
|
|
|
|
|
Supplementary information: |
|
|
|
|
|
|
Interest paid |
|
$ |
- |
$ |
- |
|
Income taxes paid |
|
$ |
1,363 |
$ |
5,380 |
|
Non-cash financing activity |
|
$ |
- |
$ |
- |
|
Non-cash investing activity |
|
$ |
- |
$ |
- |
|
|
|
|
|
|
|
See accompanying notes to the consolidated financial statements.
Page 5
BINGO.COM, LTD. and Subsidiaries
Notes to Consolidated Financial Statements
Nine Months ended September 30, 2012 and 2011
(Unaudited)
1. Basis of Presentation:
The accompanying unaudited financial statements have been prepared by Bingo.com, Ltd. ("the Company") in conformity with accounting principles generally accepted in the United States of America ("US GAAP") applicable to interim financial information and with the rules and regulations of the United States Securities and Exchange Commission. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed, or omitted, pursuant to such rules and regulations. In the opinion of management, the unaudited interim financial statements include all adjustments necessary for the fair presentation of the results of the interim periods presented. All adjustments are of a normal recurring nature, except as otherwise noted below. These financial statements should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the year ended December 31, 2011, included in the Company's Annual Report on Form 10-K/A, filed August 9, 2012, with the Securities and Exchange Commission. The results of operations for the interim periods are not necessarily indicative of the results of operations for any other interim period or for a full fiscal year.
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 from operations for the quarter ended September 30, 2012 and 2011, and has an accumulated deficit of $15,944,425 as at September 30, 2012.
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 sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability 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.
Page 6
BINGO.COM, LTD. and Subsidiaries
Notes to Consolidated Financial Statements
Nine Months ended September 30, 2012 and 2011
(Unaudited)
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, English Bay Office Management Limited (registered in British Columbia, Canada), Bingo.com N.V. (registered in Curacao, Netherlands Antilles), Coral Reef Marketing Inc. (registered in Anguilla), Bingo.com (Antigua) Inc., Bingo.com (Wyoming) Inc., Bingo Acquisition Corp, and the 99% owned subsidiary, Bingo.com (UK) plc. (registered in the United Kingdom). All inter-company balances and transactions have been eliminated in the consolidated financial statements.
(b) Use of estimates:
The preparation of consolidated financial statements in conformity with generally accepted accounting principles of the United States of America, 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 valuation of shares issued for the purchase of the remaining Domain Name Purchase payments, software development, the collectability of accounts receivable and the valuation of deferred tax assets. Actual results may differ significantly from these estimates.
(c) Revenue recognition:
Gaming revenues have been recognized on the basis of total dollars wagered, less commissions on all games less all winnings payable to players.
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. Cash received in advance of the advertising campaigns or impressions and clicks are recorded under unearned revenue.
(d) Foreign currency:
The consolidated financial statements are presented in United States dollars, the functional currency of the Company. 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. Non-monetary 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.
Page 7
BINGO.COM, LTD. and Subsidiaries
Notes to Consolidated Financial Statements
Nine Months ended September 30, 2012 and 2011
(Unaudited)
2. Summary of significant accounting policies: (Continued)
(e) Impairment of long-lived assets and long-lived assets to be disposed of:
During the periods presented, the only long-lived assets reported on the Company's consolidated balance sheet are equipment, other assets, and domain name rights. Long-lived assets and certain identifiable recorded intangibles are 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 exceeds 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.
(f) Domain name and intangible assets:
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 Accounting Standards Codification ("ASC") 350, where companies are no longer required to amortize indefinite life 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. During the year ended December 31, 2010, the Company purchased the remaining Domain Name payments for $900,000, payable in 6,000,000 common shares of Bingo.com, Ltd., at a value of $0.15 per share. In accordance with ASC Topic 420-10-25-11, the Company expensed $900,000 during the year ended December 31, 2010. The domain name is tested for impairment by comparing the future cash flows of the domain name with its carrying value. The Company determined that as a result of level 3 unobservable inputs in accordance with ASC 820, Fair Value Measurements and Disclosures, that the fair value of the domain name exceeded the carrying value and therefore no impairment existed for the periods presented.
(g) Software Development Costs: Development costs incurred in the research and development of new software products and enhancements to existing software products for external use are expensed as incurred until technological feasibility has been established. After technological feasibility is established, any software development costs are capitalized and amortized on a straight-line basis over the estimated economic life of the related product. The Company performs an annual review of the estimated economic life and the recoverability of such capitalized software costs. If a determination is made that capitalized amounts are not recoverable based on the estimated cash flows to be generated from the applicable software, any remaining capitalized amounts are written off. Although the Company believes that its approach to estimates and judgments as described herein is reasonable, actual results could differ and the Company may be exposed to increases or decreases in revenue that could be material.
Page 8
BINGO.COM, LTD. and Subsidiaries
Notes to Consolidated Financial Statements
Nine Months ended September 30, 2012 and 2011
(Unaudited)
2. Summary of significant accounting policies: (Continued)
(h) New accounting pronouncements and changes in accounting policy:
In December 2011, the Financial Accounting Standards Board ("FASB") issued ASU 2011-11, "Balance Sheet (Topic 210), Disclosures about Offsetting Assets and Liabilities". The guidance in this update requires the Company to disclose both gross information and net information about both financial instruments and transactions eligible for offset in the balance sheet and transactions subject to an agreement similar to a master netting arrangement. The amendment is designed to enhance disclosures about the financial instruments and derivatives, which will allow the users of an entity's financial statements to evaluate the effect or potential effect of netting arrangements on an entity's financial position. The scope includes derivatives, repurchase agreements and security borrowings. The pronouncement is effective for fiscal years and interim periods beginning on or after January 1, 2013 with retrospective application for all comparative periods presented. The Company's adoption of the new standard is not expected to have a material effect on the Company's consolidated financial position or results of operations.
In December 2011, the FASB issued ASU 2011-12, Comprehensive Income. This Update defers changes in Update 2011-05 that relate to how, when, and where reclassification adjustments are presented. The amendments are being made to allow the Board time to deliberate whether to present on the face of the financial statements the effects of reclassifications out of accumulated other comprehensive income on the components of net income and the other comprehensive income for all periods presented. While the Board is considering the operational concerns about the presentation requirements for reclassification adjustments and the needs of financial statement users for additional information about reclassification adjustments, entities should continue to report reclassifications out of accumulated other comprehensive income consistent with the presentation requirements in effect before Update 2011-05. All other requirements in Update 2011-05 are not affected by this Update. Public entities should apply these requirements for fiscal years, and interim periods within those years, beginning after December 15, 2011. The adoption of ASU No. 2011-12 by the Company did not have a material impact on the presentation of our results of operations.
In July 2012, the FASB issued ASC Update No. 2012-02, Intangibles - Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment . Update No. 2012-02 provides companies with the option to assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If the company concludes that it is more likely than not that the asset is impaired, it is required to determine the fair value of the intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying value in accordance with Topic 350. If the company concludes otherwise, no further quantitative assessment is required. In addition, ASU 2012-02 does not revise the requirement to test indefinite-lived intangible assets annually for impairment, and does not amend the requirement to test indefinite-lived intangible assets for impairment between annual tests if there is a change in events or
Page 9
BINGO.COM, LTD. and Subsidiaries
Notes to Consolidated Financial Statements
Nine Months ended September 30, 2012 and 2011
(Unaudited)
2. Summary of significant accounting policies: (Continued)
(h) New accounting pronouncements and changes in accounting policy: (Continued)
circumstances. However, it does revise the examples of events and circumstances to be considered in interim periods. ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The Company is assessing the impact that the adoption of ASU 2012-12 may have on its financial reporting for future periods.
(i) Financial instruments:
(i) Fair values:
The fair value of accounts receivable, accounts payable, accrued liabilities and accounts payable and accrued liabilities - related party approximate their financial statement carrying amounts due to the short-term maturities of these instruments. Cash is carried at fair value using a level 1 fair value measurement.
In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and included situations where there is little, if any, market activity for the asset. The Company's cash was measured using Level 1 inputs.
(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.
(j) Reclassification
Certain comparative figures have been reclassified to conform to the presentation adopted in the current year.
3. Restatement:
These financial statements reflect amendments as previously filed as follows:
- The Consolidated balance sheet - This has been amended for the year ended December 31, 2011, to expense the purchase of the remaining 4% Domain Name Purchase payments for $900,000, in accordance with ASC Topic 420-10-25-11. This had the effect to reduce the intangible asset and to increase the accumulated deficit by $900,000 as at December 31, 2011.
- The Consolidated Statement of Stockholders' Equity - This has been amended to restate the accumulated deficit as at December 31, 2011, to expense the purchase of the remaining 4% Domain Name Purchase payments for $900,000,in accordance with ASC Topic 420-10-25-11.
Page 10
BINGO.COM, LTD. and Subsidiaries
Notes to Consolidated Financial Statements
Nine Months ended September 30, 2012 and 2011
(Unaudited)
4. Domain name rights and intangible assets:
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 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 was 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, over the 99 year period ending December 31, 2098. These minimum payment 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 were made monthly, based on 4% of the preceding month's gross revenue. During the year ended December 31, 2010, the Company purchased the remaining Domain Name payments for $900,000, with the issuance of 6,000,000 common shares of the Company, at a value of $0.15 per share. In accordance with ASC Topic 420-10-25-11, the Company expensed the Domain Name Purchase payments of $900,000 during the year ended December 31, 2010.
Domain name rights have been capitalized on the balance sheet based on the present value of the future minimum purchase payments. In 2002, the Company suspended the amortization of the domain name in accordance with ASC 350, Intangibles - Goodwill and Others, where companies are no longer permitted to amortize indefinite life intangible assets.
|
September 30, 2012 |
|
Cost |
|
Accumulated amortization |
|
Net book Value |
|
|
|
|
|
|
|
|
|
Domain name rights |
$ |
1,934,500 |
$ |
677,259 |
$ |
1,257,241 |
|
December 31, 2011 (Restated note 3) |
|
Cost |
|
Accumulated amortization |
|
Net book Value |
|
|
|
|
|
|
|
|
|
Domain name rights |
$ |
1,934,500 |
$ |
677,259 |
$ |
1,257,241 |
5. Stockholder's Equity:
No options were granted or exercised during the period ended September 30, 2012.
Subsequent to the quarter ended September 30, 2012, the Company completed a private placement for 1,000,000 shares at $0.45 per share for proceeds of $450,000.
6. Commitments:
The Company leases office facilities in Vancouver, British Columbia, Canada, The Valley, Anguilla, British West Indies and London, United Kingdom. These office facilities are leased under operating lease agreements. The Canadian operating lease expires on April 30, 2014. The Anguillan operating lease expired on April 1, 2011 but automatically renews for a further 3 month period until a 3 month cancelation notice is given. The United Kingdom lease is leased from Bingo, Inc. This lease is for 30 days and is automatically renewed with a 30 day notice period.
Page 11
BINGO.COM, LTD. and Subsidiaries
Notes to Consolidated Financial Statements
Nine Months ended September 30, 2012 and 2011
(Unaudited)
6. Commitments: (Continued)
Minimum lease payments under these operating leases are approximately as follows:
|
|
|
|
|
2012 |
$ |
9,502 |
|
2013 |
|
18,843 |
|
2014 |
|
6,281 |
|
|
|
|
The Company paid rent expense totaling $18,509 for the quarter ended September 30, 2012 (September 30, 2011 - $18,086).
The Company has a management consulting agreement with T.M. Williams (Row), Inc., an Anguilla incorporated company, and Mr. Williams, a related party, for a consultancy payment of $11,666 per month payable in arrears. This contract is for the provision of services by Mr. Williams as Executive Chairman of the Company.
7. Income Taxes :
Bingo.com, Ltd. is domiciled in the tax-free jurisdiction of Anguilla, British West Indies. However certain of the Company's subsidiaries incur income taxation.
The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities at September 30, 2012, and December 31, 2011, are presented below:
|
|
|
September 30, 2012 |
|
December 31, 2011 |
|
Deferred tax assets: |
|
|
|
|
|
Net operating loss carry forwards |
$ |
143,544 |
$ |
141,699 |
|
|
|
|
|
|
|
Valuation Allowance |
|
(143,544) |
|
(141,699) |
|
|
$ |
- |
$ |
- |
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 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.
8. Related Party Transactions :
The Company has a liability of $nil (December 31, 2011 - $3,900), 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.
The Company has a liability to Bingo, Inc. for rental of the UK office of $7,332 (December 31, 2011 - $nil) for rental for the quarter ended September 30, 2012 of $11,850 (Quarter ended September 30, 2011 - $nil).
Page 12
BINGO.COM, LTD. and Subsidiaries
Notes to Consolidated Financial Statements
Nine Months ended September 30, 2012 and 2011
(Unaudited)
8. Related Party Transactions :
The Company has a liability of $2,502 (December 31, 2011 - $4,001), to the independent directors of the Company for payment of services rendered. The Company incurred independent directors fees of $2,500 for the quarter ended September 30, 2012. (Quarter ended September 30, 2011 - $2,500)
The Company has a liability of $1,702 (December 31, 2011 - $nil), to a director and officer of the Company for payment of services rendered and expenses incurred by the director and officer of the Company.
The Company has a liability of $2,040 (December 31, 2011 - $2,780), to an officer of the Company for payment of services rendered and expenses incurred of $13,395 during the quarter ended September 30, 2012 (Quarter ended September 30, 2011 - $14,516), by the officer of the Company.
The related party transactions are in the normal course of operations and were measured at the exchange amount, which is the amount of consideration established and agreed to by the related party.
9. Segmented information:
Revenue
The Company operates in one reportable business segment, the business of marketing games and entertainment based principally on the game of bingo through its Internet portal, Bingo.com. Bingo.com is supported by the revenue generated from the deposits received for the games for money and by selling advertising on the website. The revenue for the quarters ended September 30, 2012 and 2011, has been derived primarily from the revenue generated from the deposits received for the games for money.
The Company had the following revenue by geographical region.
|
|
|
Nine Months ended September 30, 2012 |
|
Nine Months ended September 30, 2011 |
|
Three Months ended September 30, 2012 |
|
Three Months ended September 30, 2011 |
|
|
|
|
|
|
|
|
|
|
|
Gaming revenue |
|
|
|
|
|
|
|
|
|
Western Europe |
$ |
178,928 |
$ |
171,226 |
$ |
72,089 |
$ |
61,468 |
|
Central, Eastern and Southern Europe |
|
16,742 |
|
26,912 |
|
4,682 |
|
6,100 |
|
Nordics |
|
964,284 |
|
770,612 |
|
366,832 |
|
325,547 |
|
Other |
|
12,077 |
|
13,643 |
|
1,634 |
|
5,688 |
|
Total gaming revenue |
$ |
1,172,031 |
$ |
982,393 |
$ |
445,237 |
$ |
398,803 |
|
|
|
|
|
|
|
|
|
|
|
Advertising revenue |
|
|
|
|
|
|
|
|
|
Nordics |
$ |
6,636 |
$ |
6,896 |
$ |
4,495 |
$ |
4,680 |
|
Other |
|
33,130 |
|
37,979 |
|
8,016 |
|
13,249 |
|
Total advertising revenue |
$ |
39,766 |
$ |
44,875 |
$ |
12,511 |
$ |
17,929 |
|
|
|
|
|
|
|
|
|
|
Page 13
BINGO.COM, LTD. and Subsidiaries
Notes to Consolidated Financial Statements
Nine Months ended September 30, 2012 and 2011
(Unaudited)
9. Segmented information: (Continued)
|
|
|
Nine Months ended September 30, 2012 |
|
Nine Months ended September 30, 2011 |
|
Three Months ended September 30, 2012 |
|
Three Months ended September 30, 2011 |
|
Total Revenue |
|
|
|
|
|
|
|
|
|
Western Europe |
$ |
178,928 |
$ |
171,226 |
$ |
72,089 |
$ |
61,468 |
|
Central, Eastern and Southern Europe |
|
16,742 |
|
26,912 |
|
4,682 |
|
6,100 |
|
Nordics |
|
970,920 |
|
777,508 |
|
371,327 |
|
330,227 |
|
Other |
|
45,207 |
|
51,622 |
|
9,650 |
|
18,937 |
|
Total revenue |
$ |
1,211,797 |
$ |
1,027,268 |
$ |
457,748 |
$ |
416,732 |
Equipment
The Company's equipment is located as follows:
|
Net Book Value |
|
September 30, 2012 |
|
December 31, 2011 |
|
|
|
|
|
|
|
Anguilla |
$ |
981 |
$ |
1,308 |
|
Canada |
|
6,632 |
|
8,374 |
|
United Kingdom |
|
1,272 |
|
1,696 |
|
United States of America |
|
2,587 |
|
3,449 |
|
|
$ |
11,472 |
$ |
14,827 |
10. Concentrations
Major customers
For the quarter ended September 30, 2012, there was no single player on the gaming site who had wagered more than 10% of the total gaming revenue. The Company is reliant on Unibet, a related party, to provide contracted services pursuant to its Partner Program. The Company has a receivable from Unibet of $285,643 as at September 30, 2012 (December 31, 2011 - $133,363).
During the quarter ended September 30, 2012 and 2011, the Company offered limited advertising. Therefore there were no advertising sales representing more than 10% of the total sales.
11. Concentrations of Credit Risk:
Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and accounts receivable. The Company places its cash with high quality financial institutions and limits the amount of credit exposure with any one institution.
The Company currently maintains a substantial portion of its day-to-day operating cash balances at financial institutions. At September 30, 2012, the Company had total cash balances of $574,787 (December 31, 2011 - $787,524) at financial institutions, where $253,898 (December 31, 2011 - $436,719) is in excess of federally insured limits. The Company has concentrations of credit risk with respect to accounts receivable, as large amounts of its accounts receivable are concentrated geographically in the United Kingdom amongst a small number of customers.
Page 14
BINGO.COM, LTD. and Subsidiaries
Notes to Consolidated Financial Statements
Nine Months ended September 30, 2012 and 2011
(Unaudited)
11. Concentrations of Credit Risk: (Continued)
As of September 30, 2012, the Company had one customer totaling $285,643, who accounted for total accounts receivable greater than 10%. As of December 31, 2011, the Company had one customer, totaling $133,363 who accounted for greater than 10% of the total accounts receivable.
The Company controls credit risk through monitoring procedures and receiving prepayments of cash for services rendered. The Company performs credit evaluations of its customers but generally does not require collateral to support accounts receivable.
Page 15
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
The following Management's Discussion and Analysis or Plan of Operation contains forward-looking statements that involve risks and uncertainties, as described below. Bingo.com, Ltd.'s (the "Company", "we", or "us") actual results could differ materially from those anticipated in these forward-looking statements. The following discussion should be read in conjunction with the unaudited interim consolidated financial statements and notes thereto included in Part I - Item 1 of this Quarterly Report, and the audited consolidated financial statements and notes thereto and the Management Discussion and Analysis or plan of Operations included in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2011.
FORWARD LOOKING STATEMENTS
All statements contained in this Quarterly Report on Form 10-Q and the documents incorporated herein by reference, as well as statements made in press releases and oral statements that may be made by us or by officers, directors or employees acting on our behalf, that are not statements of historical fact constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause our actual results to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. Readers should consider statements that include the terms "believe," "belief," "expect," "plan," "anticipate," "intend" or the like to be uncertain and forward-looking. In addition, all statements, trends, analyses and other information contained in this report relative to trends in net sales, gross margin, anticipated expense levels and liquidity and capital resources, constitute forward-looking statements. Particular attention should be paid to the facts of our limited operating history, the unpredictability of our future revenues, our need for and the availability of capital resources, the evolving nature of our business model, and the risks associated with systems development, management of growth and business expansion. Except as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise. All cautionary statements made herein should be read as being applicable to all forward-looking statements wherever they appear. Readers should consider the risks more fully described in our Annual Report on Form 10-K/A for the year ended December 31, 2011, filed with the Securities and Exchange Commission (the "SEC") and should not place undue reliance on any forward-looking statements.
Page 16
OVERVIEW
Bingo.com, Ltd. (the "Company") is in the business of owning and marketing a bingo based entertainment website that provides a variety of Internet games plus other forms of entertainment, including an online community, chat rooms, and more. Located at www.bingo.com, the Company has built one of the leading bingo portals on the Internet. The Bingo.com website has attracted millions of visitors from over 200 countries. The level of Internet traffic that arrives at Bingo.com has a direct impact on our revenues as, generally, the greater the Internet traffic, the greater the amount of gaming or advertising revenue received.
The Company generates its main source of revenue from players who deposit funds into their Bingo.com accounts and play games for money. An additional source of revenue comes from selling advertising on the website to other companies who wish to advertise their products to our user demographic. During the year ended December 31, 2010, Bingo.com joined the Unibet International Limited ("Unibet") Partner Program as a network operator of their multi-language and multi-currency bingo and casino system. The Unibet Partner Program provides a turnkey solution to Bingo.com which includes gambling licenses, multi-language customer support, financial processing capabilities, website technology, bingo games, soft games, casino games and many other services required to operate an online gambling business. Bingo.com players continue to play on the website www.bingo.com but now participate in bingo rooms shared across the entire Unibet Partner Program alongside players from Maria.com, Bingo.se, and other partner sites. These combined games increase the gaming liquidity and create one of the largest and most international online gaming systems in operation.
Unibet is paid a commission based on a fixed percentage of the gaming revenues generated on the Bingo.com website. This agreement was for 2 years and automatically extends for additional years unless written notice is provided. Unibet will own, create and run the service offered and it will be the Company's responsibility to drive traffic to the website. Bingo.com continues to own the player data contained within the database of players that register at www.bingo.com. As a member of the Partner Program, Bingo.com is not required to secure or maintain any online gambling licenses of its own as the Company is permitted to offer Internet gambling products to its players pursuant to Unibet's licenses in relevant jurisdictions.
Since joining the Unibet Partner Program, we embarked on a cost focused restructure of the Bingo.com organization which has included a significant staff downsizing, the termination of hosting and other operational contracts, the sale of computer hardware, a reduction in office space, the release of both our Maltese and Curacao gaming licenses, and much more. The Bingo.com restructuring program was completed in the quarter ending June 30, 2011. The remaining costs of Bingo.com are now focused behind the marketing function of the organization as we attempt to generate increasing amounts of targeted Internet traffic to www.bingo.com and build a large base of valuable customers. We intend to expand our business, leveraging the many different languages and currencies supported by Unibet's system, by launching targeted marketing campaigns in jurisdictions which we expect will be most responsive to Bingo.com's online gambling offering. Furthermore, in an attempt to maximize the value of our North American visitors to whom we cannot offer online gambling services, we have commenced the development of an innovative social bingo game that we expect to launch in the first half of 2013.
The Bingo.com website provides players the ability to purchase bingo cards online for cash, with the winner of each bingo game winning a percentage of the total cards purchased for that particular bingo game. The website is divided into two main sections: (1) the main section is accessible to players from countries where the Company offers its pay-to-play games; and, (2) the second section is focused on a free-to-play offering for the remaining countries. Depending on the pay-to-play or free-to-play section of the website, the Company provides online entertainment content to players consisting of multiplayer bingo games, video poker, casino games and slot machines.
Page 17
Gaming revenue from the Bingo.com website accounted for approximately 97% of our revenue for the quarter ended September 30, 2012.
We have made a significant investment in the development of our website, the purchase of our domain name, branding, marketing, and operations. As a result we have incurred significant losses since inception, and as of September 30, 2012, had an accumulated deficit of $15,944,425.
CRITICAL ACCOUNTING POLICIES
Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which except for lack of all detailed note disclosures, have been prepared in conformity with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, management evaluates these judgments and estimates, including whether there are any uncertainties as to compliance with the revenue recognition criteria described below, and recoverability of long-lived assets, as well as the assessment as to whether there are contingent assets and liabilities that should be recognized or disclosed for the consolidated financial statements to fairly present the information required to be set forth therein. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We consider the following accounting policies to be both those most important to the portrayal of our financial condition and require the most subjective judgment:
- Revenue recognition;
- Impairment of long-lived assets and long-lived assets to be disposed of;
Revenue recognition:
The Company generates the majority of its revenue from gaming revenue. Gaming revenues have been recognized on the basis of total dollars wagered, less commissions on all games less all winnings payable to players.
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. Cash received in advance of the advertising campaigns or impressions and clicks are recorded under unearned revenue.
Impairment of long-lived assets and long-lived assets to be disposed of:
Management evaluates long-lived assets for impairment in accordance with the provisions of ASC 360 Property, Plant and Equipment and ASC 350, Intangibles-Goodwill and Others. These assets comprise mainly property and equipment, other assets and the bingo.com domain name. The impairment review is performed by management, whenever events and circumstances indicate that the assets may be impaired. In performing this review, we estimate the future net cash flows from the assets and compare this amount to the carrying value. If this review indicates the carrying value may not be recoverable, impairment losses are measured and recognized based on the difference between the estimated discounted cash flows over the remaining life of the assets and the assets' carrying value. Changes in our future net cash flow estimates may impact our assessment as to whether a particular long-lived asset has been impaired.
Page 18
RESULTS OF OPERATIONS
Revenue
Total revenue for the quarter ended September 30, 2012, was $457,748, an increase of 10% from revenue of $416,732 for third quarter of 2011 and an increase of 32% from revenue of $347,742, in the second quarter of 2012. Gaming Revenue was $445,237, an increase of 12% in the quarter ended September 30, 2012, compared Gaming Revenue of $398,803 in the third quarter of 2011 and an 31% increase from revenue of $339,869 in the second quarter of 2012. This increase compared to the third quarter of 2011 and the second quarter of fiscal 2012 is due to an increase in players as a result of increased marketing. We earned advertising revenue of $12,511 in the quarter ended September 30, 2012, a decrease of 30% from advertising revenue of $17,929 in the third quarter of 2011 and an increase of 59% from advertising revenue of $7,873 in the second quarter of 2012.
Sales and marketing expenses
Sales and marketing expenses were $310,712 for the quarter ended September 30, 2012, an increase of 42% over expenses of $219,578 in the third quarter of 2011 and an increase of 65% from expenses of $188,411 in the second quarter of 2012. Sales and marketing expenses principally include costs for television marketing, Search Engine Optimization expenses, prizes for our players and other bonuses and incentives offered to gaming players. The increase in sales and marketing expenses for the quarter ended September 30, 2012, compared to the third quarter of 2011 and the second quarter of 2012 is due to a larger media budget in the third quarter of fiscal 2012 to drive additional players to the website.
We expect to continue to incur sales and marketing expenses to increase traffic and, consequently, deposits to our web portal. These costs will include affiliate commissions, salaries, advertising media purchases, and other promotional expenses intended to increase our subscriber base and improve gaming revenue. There can be no assurances that these expenditures will result in increased traffic or significant additional revenue.
General and administrative expenses
General and administrative expenses consist primarily of premises costs for our office, legal and professional fees, and other general corporate and office expenses. General and administrative expenses increased to $57,570 for the third quarter of 2012, an increase of 14% from costs of $50,497 for the third quarter of 2011 and an increase of 1% from costs of $56,882 in the second quarter of 2012. General and administrative expenses have increased in comparison to the prior year due to an increase in costs due to the decline of the US dollar in relation to the Canadian dollar.
We expect to continue to incur general and administrative expenses to support the business, and there can be no assurances that we will be able to generate sufficient revenue to cover these expenses.
Salaries, wages, consultants and benefits
Salaries, wages, consultants and benefits decreased to $90,693 for the quarter ended September 30, 2012, a decrease of 5% compared to salaries, wages, consultants and benefits of $95,641 in the third quarter of 2011 and a decrease of 7%, over salaries, wages, consultants and benefits of $97,210 in the second quarter of 2012. The majority of the Company's salaries, wages, consultants and benefits are incurred in Canadian Dollars. This decrease compared to the third quarter of 2011 and the second quarter of 2012, is due to a decrease in consulting expenses required in the third quarter of 2012.
Page 19
Depreciation and amortization
Equipment is depreciated using the declining balance method over the useful lives of the assets, ranging from three to five years. Depreciation and amortization decreased to $1,191 during the quarter ended September 30, 2012, a decrease over costs of $1,690 during the same quarter in the prior year and a decrease from costs of $1,192 in the second quarter of 2012. This decrease in depreciation and amortization compared to the third quarter of fiscal 2011, is due to the aging of the Company's equipment and the disposal of obsolete equipment.
Income taxes
The Company incurred income tax expense of $nil during the quarter ended September 30, 2012, in relation to profits earned in its subsidiaries in different jurisdictions compared to taxation expense of ($1) in the third quarter of fiscal 2011 and taxation expense of $nil in the second quarter of fiscal 2012. During the year ended December 31, 2005, Bingo.com, Inc. merged with its subsidiary Bingo.com, Ltd. in Anguilla, British West Indies. Anguilla is a zero tax jurisdiction.
Net loss and loss per share
Net income for the three months ended September 30, 2012, amounted to $29,002, a gain of $0.00 per share, an increase in net income compared to net income of $15,158, a gain of $0.00 per share for the same period in 2011 and an increase in net income compared to a net loss of ($28,908) or loss of ($0.00) per share in the second quarter of 2012. The increase in net income for the quarter ended September 30, 2012, compared to the third quarter of 2011 and the second quarter of 2012, is due to the increase in revenue as a result of the increased marketing campaign and movements in exchange rates.
LIQUIDITY AND CAPITAL RESOURCES
We had cash of $574,787 and positive working capital of $980,660 at September 30, 2012. This compares to cash of $787,524 and positive working capital of $1,058,631 at December 31, 2011.
During the quarter ended September 30, 2012, we used cash of ($114,682) in operating activities compared to providing cash of $51,771 in the same period in the prior year and compared to providing cash of $71,479 in the second quarter of 2012.
Our future capital requirements will depend on a number of factors, including costs associated with the marketing of our Web portal, the success and acceptance of gaming operations and the possible acquisition of complementary businesses, or development of new products and technologies.
ITEM 4T. Controls and Procedures
(a) Evaluation of disclosure controls and procedures.
As required by Rule 13a-15 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Company carried out an evaluation under the supervision and with the participation of the Company's management, including the President and Chief Executive Officer and the Chief Financial Officer, of the effectiveness of the Company's disclosure controls and procedures as of September 30, 2012. In designing and evaluating the Company's disclosure controls and procedures, the Company and its management recognize that there are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their desired control objectives. Additionally, in evaluating and implementing possible controls and procedures, the Company's management was required to apply its reasonable judgment. Furthermore, in the course of this evaluation, management considered certain internal control areas, in which we have made and are continuing to make changes to improve and
Page 20
enhance controls. Based upon the required evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that as of September 30, 2012, the Company's disclosure controls and procedures were effective (at the "reasonable assurance" level mentioned above) to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.
From time-to-time, the Company and its management have conducted and will continue to conduct further reviews and, from time to time put in place additional documentation, of the Company's disclosure controls and procedures, as well as its internal control over financial reporting. The Company may from time to time make changes aimed at enhancing their effectiveness, as well as changes aimed at ensuring that the Company's systems evolve with, and meet the needs of, the Company's business. These changes may include changes necessary or desirable to address recommendations of the Company's management, its counsel and/or its independent auditors, including any recommendations of its independent auditors arising out of their audits and reviews of the Company's financial statements. These changes may include changes to the Company's own systems, as well as to the systems of businesses that the Company has acquired or that the Company may acquire in the future and will, if made, be intended to enhance the effectiveness of the Company's controls and procedures. The Company is also continually striving to improve its management and operational efficiency and the Company expects that its efforts in that regard will from time to time directly or indirectly affect the Company's disclosure controls and procedures, as well as the Company's internal control over financial reporting.
(b) Changes in internal controls.
There were no significant changes in the Company's internal controls or other factors that could significantly affect the Company's internal controls subsequent to the date of their evaluation.
Page 21
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
We are not currently a party to any legal proceeding, and was not a party to any other legal proceeding during the quarter ended September 30, 2012. We are currently not aware of any other legal proceedings proposed to be initiated against the Company. However, from time to time, we may become subject to claims and litigation generally associated with any business venture.
ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
There were no unregistered sales of equity securities during the quarter ended September 30, 2012.
Subsequent to the quarter ended September 30, 2012, the Company closed a private placement of 1,000,000 shares at $0.45 per share for proceeds of $450,000.
ITEM 3. Defaults Upon Senior Securities
Not applicable.
ITEM 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to the shareholders during the period.
ITEM 5. Other Information
The Company did not enter any new reportable agreements during the quarter ended September 30, 2012.
Page 22
ITEM 6. Exhibits and reports on Form 8-K
Exhibits
The following instruments are included as exhibits to this Report. Exhibits incorporated by reference are so indicated.
|
Exhibit Number |
Description |
|
4.4 |
Convertible Debenture between the Company and unrelated parties dated July 2, 2002. (b) |
|
4.5 |
Common Stock Purchase Warrant between the Company and unrelated parties dated July 2, 2002. (b) |
|
10.2 |
Asset Purchase Agreement by and between Bingo, Inc. and Progressive Lumber, Corp. dated January 18, 1999. (a) |
|
10.24 |
Amended Consulting Agreement dated February 28, 2002, between the Company, T.M. Williams (Row), Ltd., and T.M. Williams. (c) |
|
10.29 |
Amendment of Asset Purchase Agreement dated July 1, 2002. (d) |
|
10.32 |
Code of Business Conduct and Ethics dated December 22, 2006. (e) |
|
10.33 |
Amended Consulting Agreement dated June 16, 2010, between the Company, T.M. Williams (Row), Ltd., and T.M. Williams. (f) |
|
10.35 |
Consulting agreement dated April 1, 2011, between the Company and H. W. Bromley (g) |
|
10.36 |
The Marketing Service Agreement between the Bingo.com, Ltd. wholly owned subsidiary, Coral Reef Marketing Inc. and with Unibet International Limited dated March 19, 2010. (h) |
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31.1 |
Certificate of Chief Executive Officer pursuant to the Securities Exchange Act Rules 13a-15(e) and 15d -15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated November 14, 2012. |
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31.2 |
Certificate of Chief Financial Officer pursuant to the Securities Exchange Act Rules 13a-15(e) and 15d -15(e) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated November 14, 2012. |
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32.1 |
Certification from the Chief Executive Officer of Bingo.com, Ltd. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated November 14, 2012. |
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32.2 |
Certification from the Chief Financial Officer of Bingo.com, Ltd. pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 dated November 14, 2012. |
(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 September 30, 2002, on November 14, 2002.
(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 year end report on Form 10-K/A for the year ended December 31, 2002, on May 8, 2003.
(e) Previously filed with the Company's report on Form 8-K on December 26, 2006.
(f) Previously filed with the Company's report on Form 8-K on June 17, 2010.
(g) Filed with the Company's report on Form 10-Q on May 12, 2011.
(h) Previously field with the Company's report on Form 8-K/A on June 18, 2012.
Page 23
Reports on Form 8-K.
During the quarter ended September 30, 2012, no Form 8-K were filed for Bingo.com, Ltd.
Reports Subsequent to the quarter ended September 30, 2012.
None
Page 24
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Date: |
November 14, 2012 |
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BINGO.COM, LTD. |
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(Registrant) |
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Date: |
November 14, 2012 |
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/S/ J.M. Williams |
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J. M. Williams, Chief Executive Officer, and President (Principal Executive Officer) |
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Date: |
November 14, 2012 |
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/S/ H. W. Bromley |
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H.W. Bromley, Chief Financial Officer (Principal Accounting Officer) |
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Page 25
EXHIBIT 31.1
CERTIFICATIONS
I, J. M. Williams, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Bingo.com, Ltd.;
2. Based on my knowledge, this 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 report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of Bingo.com, Ltd. as of, and for, the periods presented in this quarterly report;
4. Bingo.com, Ltd.'s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to Bingo.com, Ltd., including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of Bingo.com, Ltd.'s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of as of September 30, 2012, covered by this quarterly report based on such evaluation; and
(d) Disclosed in this report any change Bingo.com, Ltd.'s internal control over financial reporting that occurred during Bingo.com, Ltd.'s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, Bingo.com, Ltd.'s internal control over financial reporting; and
5. Bingo.com, Ltd.'s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to Bingo.com, Ltd.'s auditors and the audit committee of Bingo.com, Ltd.'s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect Bingo.com, Ltd.'s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Signed: /S/ J. M. Williams Date: November 14, 2012
J. M. Williams,
Chief Executive Officer and President
(Principal Executive Officer)
Page 26
EXHIBIT 31.2
CERTIFICATIONS
I, H. W. Bromley, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Bingo.com, Ltd.;
2. Based on my knowledge, this 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 report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of Bingo.com, Ltd. as of, and for, the periods presented in this quarterly report;
4. Bingo.com, Ltd.'s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to Bingo.com, Ltd., including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of Bingo.com, Ltd.'s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of as of September 30, 2012, covered by this quarterly report based on such evaluation; and
(d) Disclosed in this report any change Bingo.com, Ltd.'s internal control over financial reporting that occurred during Bingo.com, Ltd.'s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, Bingo.com, Ltd.'s internal control over financial reporting; and
5. Bingo.com, Ltd.'s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to Bingo.com, Ltd.'s auditors and the audit committee of Bingo.com, Ltd.'s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect Bingo.com, Ltd.'s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Signed: /S/ H. W. Bromley Date: November 14, 2012
H.W. Bromley,
Chief Financial Officer
(Principal Accounting Officer)
Page 27
EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Bingo.com, Ltd. (the "Company") on Form 10-Q for the period ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, J. M. Williams, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
a) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
b) The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/S/ J.M. Williams
J. M. Williams
President and Chief Executive Officer
November 14, 2012
A signed original of this written statement required by Section 906 has been provided to Bingo.com, Ltd. and will be retained by the company and furnished to the Securities and Exchange Commission or its staff upon request.
Page 28
EXHIBIT 32.2
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Bingo.com, Ltd. (the "Company") on Form 10-Q for the period ended September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, H. W. Bromley, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
a) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
b) The information contained in this Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/S/ H. W. Bromley
H. W. Bromley
Chief Financial Officer
November 14, 2012
A signed original of this written statement required by Section 906 has been provided to Bingo.com, Ltd. and will be retained by the company and furnished to the Securities and Exchange Commission or its staff upon request.
Page 29