There is a Company selling stock
FIRSTBINGO is its name–o
FIRST B-I-N-G-O
B-I-N-G-O
B-I-N-G-O
FIRST BINGO is its name-o
Bingo is big business. It is played in legion halls and civic auditoriums across the United States and in similar venues around the world. Visitors flock to Indian reservations to play. Dozens of websites feature Internet versions of the game. And now, an OTC Bulletin Board company called FirstBingo.com says it has plans for a game that combines Bingo and trivia. An initial version of the Company’s Trivia Bingo game is already available on the Internet, and FirstBingo says it has plans for a televised version. Considering the Company’s financial condition, however, the prospects for success seem to be quite a gamble. In other words, will investors be shouting BINGO!, or are they looking at a losing game card?
Maybe that depends on what you read. We looked at some online newsletters touting the stock, a series of press releases from the Company and FirstBingo’s public filings. Not surprisingly, we found some notably different spins on the prospects for this Company.
Flattering Profiles
Internet newsletters call them “profiles” – those glowing e-mail reports that implore investors to put their faith in some little known, undercapitalized, speculative company. Maybe “profile” is just the right word. After all, these reports often look at only one side of the picture – the positive one.That would seem to be the case with two “profiles” of FirstBingo that were circulated last week by a pair of Internet newsletters called “Penny Stock Talk” and “TipReporter.com.” The two newsletters struck remarkably similar chords, describing First Bingo as an “undervalued and undiscovered stock” that “may provide a great opportunity to take advantage of a new emerging sector: Advergaming.” Internet players, who would qualify for prizes and cash giveaways, would also be eligible to participate in a planned televised version of the game.
The Internet version of the game, which combines trivia and bingo, is now available on the Internet. Players earn spaces on a bingo card by answering trivia questions. When they have completed a “line” on their Bingo card (either vertical, horizontal or diagonal as in traditional Bingo games) they earn points. So far, however, there does not appear to be any cash to be won by visitors to the Internet site. That may be because FirstBingo has no money to spare. The Company has not reported any revenues so far. In fact, according to its most recent financial report, FirstBingo does not even have a checking account.
Is a revenue stream on the horizon? When we visited the FirstBingo game site we found no evidence of advertisers who might become a source of future revenues – or provide a reason to open a checking account. So how does FirstBingo plan to make money? The newsletters say that income will flow from
• A customer loyalty program;
• An advertiser/sponsor supported website;
• Sales of Trivia Bingo CDs and board games;
• Pay To Play; and
• Trivia Bingo Video Terminals
These newsletters even say that “FirstBingo is currently in discussions with a number of parties interested in becoming National or Regional Sponsors of Internet Trivia Bingo and TV Trivia Bingo” and that the Company “has already had discussions with a number of advertisers interested in participating in the Internet Trivia Bingo game.” Who are those prospective sponsors or advertisers? The “profiles” do not say. Nor do they offer any details of the status of those discussions. The “profilers” leave that part of their subject to the reader’s imagination.
WISHIN’ AND HOPIN’ AND PROJECTIN’
“Imagination” might also be the best word to describe the First Bingo revenue projections offered by “Penny Stock Talk” and “TipReporter.com.” According to the two newsletters, the Company projects total revenues exceeding $20 million, and operating expenses of $1.2 million for the year 2001. That would result in net income of $19 million for the year.How would FirstBingo achieve such remarkable results? According to the two newsletters, the Company apparently anticipates the following:
• Advertising Fees: $348,800
• Video Terminal Sales: $325,000
• Trivia Bingo CD Sales: $17,850
• Video Terminal Loyalties: $918,400
• Customer Loyalty Programs: $500,000
• Pay to play Trivia Bingo: $17,440,000
• TV Trivia Bingo Sales: $700,000
Even more striking are the 2002 projections: total revenues of $87 million (from those same sources); total operating expenses of $4.2 million; and net income before taxes of almost $83 million. The anticipated breakdown is remarkably similar:
• Advertising Fees: $1,352,400
• Video Terminal Sales: $1,325,000
• Trivia Bingo CD Sales: $124,950
• Video Terminal Loyalties: $11,653,200
• Customer Loyalty Programs: $2,350,000
• Pay to play Trivia Bingo: $67,440,000
• TV Trivia Bingo Sales: $3,000,000
Those projections contrast starkly with the Company’s past performance. Last year FirstBingo had no revenues. As it stands, there are no advertising fees; no Video Terminal sales; no Trivia Bingo CD sales; no revenues from Video Terminal Loyalties or Customer Loyalty Programs; no income from Pay to Play Bingo; and on TV Trivia Bingo sales. So if the Company is going to achieve any of its lofty goals for 2001 it will have to do so from a standing start. Sadly, it is off to a slow start this year. First Bingo’s Form 10-Q for the first quarter of 2001 reveals that the Company had no revenues for the first three months of this year. In fact, the Company’s financial condition is so shaky that its accountants fear it may be unable to continue as a going concern.
Where’s The Magic?
An absence of revenues may pose a formidable problem, but it is hardly the only obstacle confronting FirstBingo. That is what investors will discover if they read – and rely upon – the Company’s public filings rather than those promotional newsletters. In its Form 10-K Annual Report for the year ended December 31, 2000, the Company conceded that it had not yet engaged in any business, and “there is no assurance that the Company will ever implement its plan of operation.” And while an Internet Bingo game is now up and running on the Company’s website, it lacks the most important characteristic of the game described in the Form 10-K - advertisements.According to the Company, all of the squares in the third (or center) horizontal line of the Bingo card, and all of the squares in the vertical line under the letter “N” on each card, are to be covered with advertising logos forming something called the “Magic Cross.” Additional squares covered with ads would also be generated on a random basis in the course of each game, and would entitle players to instant prizes, including cash. Those ads would represent revenue for the Company. Unfortunately, the “magic” seems to be missing. In its Form 10-K, the Company conceded that it had not sold any advertising for its Internet site.
So there are no ads on the Bingo card and no “Magic Cross.” When we last visited the Company’s website, we reviewed the game rules and found that they referred instead to a “Magic T” that is formed by filling in those same two lines on the Bingo card with blue squares rather than ads. The player still gets free spaces, but the Company generates no revenues. And there are no cash prizes – instead winners are promised an official FirstBingo watch.
Of course, with little cash, and no checking account, FirstBingo can hardly offer cash prizes just yet. Will Internet Trivia Bingo survive long enough for the company to generate even a small portion of those projected revenues? Regulators may have something to say about that. Both federal and state agencies in the United States have argued that Internet Bingo is subject to existing U.S. laws that prohibit Bingo games that have not been properly licensed and authorized. FirstBingo believes that such laws should not apply to its Internet version of Trivia Bingo because the game is based upon knowledge and skill rather than chance, and because players pay no fee to participate. Those government agencies may well disagree.
Which argument will prevail? The Company’s position may be correct, but winning that argument could prove costly. Regulators are unlikely to go away quietly, or without a fight that could include lengthy court proceedings. With only about $13,000 in the bank, FirstBingo can ill afford the expense of litigation. And federal legislation barring Internet Bingo may ultimately resolve this issue by prohibiting Internet companies from offering online Bingo game to U.S. residents. Of course, other jurisdictions may take a different view of Internet Bingo. The Company already seems to be hedging its bets on the fate of such legislation. Although FirstBingo is a Nevada corporation that trades on the United States OTC Bulletin Board, it maintains offices in Canada, and has no U.S. operations, directors or officers. Of course, the location of the Company’s office is not the only thing that matters. FirstBingo may still be liable if it permits the game to be played by individuals who live in states, jurisdictions, or countries that prohibit unlicensed Bingo.
TV or not TV?
The Company’s plans for a televised version of the Trivia Bingo game faces a host of its own hurdles. Does FirstBingo have the experience, personnel, funding or resources necessary to develop, market and produce a national, or international television program? The Company has no employees other than the three men who serve as its officers and directors. Their biographies contain nothing to indicate that they have been involved in the television industry in any capacity. The Company’s Chairman and President, Richard Lyle Wachter, is a real estate developer who once developed retirement homes. He is also the third person to serve as President of FirstBingo since late last year. He was preceded by Paul LeBreux, a Canadian attorney who acted as the Company’s sole officer and director from April 2000 until late 2000 or early 2001; and Sander Shalinsky, a Canadian entertainment lawyer who was named to that post on January 16, 2001 – only to be replaced by Mr. Wachter on February 16, 2001.The other current directors of this Nevada corporation are corporate lawyers practicing in Canada: Thomas Michael Sheppard (who also serves as Chief Executive Officer) and the Honorable Doug Lewis (whose biography indicates that he also served in a variety of Canadian government positions).
In the absence of experienced personnel, how does FirstBingo plan to develop its television program? In February 2001, FirstBingo said that it had “completed production of TriviaBingo in English, Mandarin, Spanish and German” in order to enhance its ability to sell the concept around the globe. It was unclear, however, whether the Company had produced multi-lingual versions of its Internet game or foreign language pilots for its game show.
All of this lingual diversity and global distribution could pose some potential problems. FirstBingo says that people who play the Internet game will qualify to become guests on the television version. It also states that the television show will be aired before a live audience. How does the Company plan to transport Internet players from around the world to a central studio in order to participate in the live program? What will it cost, and who will pay the freight? What will happen when one Internet player hails from New Mexico, another lives in Nigeria and a third resides in the Philippines? How will FirstBingo deal with the fact that players may speak different languages? In what language will the live program air? Will there be multiple programs, in different languages, and, if so, how will participants be selected? So far, FirstBingo has not addressed these potential problems.
In any event, recent press releases suggest that FirstBingo may not be producing the game show itself. Instead, the Company has been looking to license the “format” of that show in different countries. On February 5th, FirstBingo announced that it had signed a Letter of Intent with Western Broadcasting Group, Inc. of Florida, under which Western Broadcasting Group would “solicit purchasers of FirstBingo.com’s game show format, TV TriviaBingo, throughout the People’s Republic of China.” What are the terms of that agreement? How much will Western Broadcasting pay for those rights? What license fees can the Company expect if the program is sold in China? The Company does not say.
Then, on April 9th, the Company said it had entered into a “definitive licensing agreement with Tesauro Productions of Spain.” According to the April 9th press release, the Company had licensed Tesauro Productions to produce and distribute the “game show format, TV Trivia Bingo” throughout Spain. What were the terms of the licensing agreement? Is it exclusive? Does Tesauro have an obligation to produce the show within any specified time frame? Although FirstBingo stated that this relationship could produce significant revenue for the Company, the press release did not contain any details of the license or offer any basis for assessing potential revenues.
The next day, on April 10th, the Company announced another licensing agreement. This time, FirstBingo said that it had TV Selection International of France to market the game show format in France. Once again, however, the Company failed to provide any details of that license agreement.
In a similar vein, on May 14th, FirstBingo issued a press release stating that it had given DLT Entertainment Ltd. the rights to license the Trivia Bingo format throughout the United States and the United Kingdom. As before, the Company remained silent on the terms of that agreement or the potential revenue stream from sales of the license.
Does the “format” for FirstBingo’s television show have any value? How does it differ from existing programs, like “Hollywood Squares” which uses the trivia format to play Tic Tac Toe, rather than Bingo? Investors will have to wait for the answers to those questions.
Does FirstBingo still plan to produce and market the show on its own? That could prove difficult. After all, the Company has now parceled out rights to license the program in some of the world’s largest television markets – the United States, the United Kingdom, France and Spain. Will all of those potential licensees be prepared to play along with the Company’s plans and use Internet players as television contestants? If so, how in the world – literally – will they coordinate those efforts? Unfortunately, the Company’s recent announcements provide few details of the potential licensing agreements and no basis upon which investors can conclude that these arrangements are likely to generate any significant future revenues for the Company.
The Company’s future will certainly depend upon its ability to generate income. But what about the present. How has the Company financed operations so far, and where will it get the funds necessary to stay alive? We will consider these questions, and search for some answers, in Part II of our series on FirstBingo.com.
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