A pair of online newsletters have been touting the prospects of an OTC Bulletin Board company called FirstBingo.com. Those newsletters say that the Company has projected revenues of $20 million for this year and $87 million in 2002. Those numbers are certain to grab some attention, but do they have any basis in reality? As we saw in our first article about the Company (FIRSTBINGO.COM, PART I – GAMES PEOPLE PLAY) FirstBingo generated no revenues for the first three months of this year. What does this bode for things to come? FirstBingo contacted StockPatrol after we published Part I of this report to advise us that “there is a revenue stream on the horizon.” While the Company did not identify the source of that future income, it expressed optimism “that it will be implemented in the very near future.”
The Company sought to clarify some other issues as well. It pointed out that FirstBingo differs from traditional Bingo because it combines “the skill testing aspect of trivia with the excitement of BINGO.” FirstBingo also indicated that it does have a bank account (the Company’s Form 10-K indicated that it maintains no checking account). The Company also explained that it is licensing trademark and format rights for its televised version of FirstBingo to production companies throughout the world, “where contestants in those countries will play to qualify for the show.”
The Company is also “very optimistic that it can reach their projections.” Does that mean FirstBingo expects to have revenues of $20 million this year? If so, it will need to start generating that income pretty soon. Until then, how will the Company finance its operations? FirstBingo says it has “increased their line of credit.” Exactly what does that mean?
A Family Affair
The uncertain nature of the Company’s revenue streams is troubling, despite the seemingly fanciful projections cited by those two online newsletters, “Penny Stock Talk” and “TipReporter.com.” The Company admits that it has sold no advertising space on its website and secured no sponsors for its television program. With no revenues at present, and none on the immediate horizon, how does the Company support itself? It’s all in the family.The Company has entered into a loan agreement with Ampang Investments Ltd., a Bahamian corporation whose majority shareholder is Wendy Frieda Wachter, the wife of FirstBingo President Richard Wachter. In March 2000, the Company and Ampang entered into a Debenture Agreement to secure a $750,000 line of credit. By the end of March 2001, FirstBingo had borrowed about $530,000 from Ampang, at an interest rate of 12% per year.
The Company owed about $51,000 in interest to Ampang by the end of March 2001. Since the loan is due on demand, and is collateralized by virtually all of the assets of FirstBingo, the Company – and its shareholders – would face quite a dilemma if Mrs. Wachter’s company decided to declare a default. Right now it appears that FirstBingo would not have sufficient cash to pay the debt – unless it borrowed more money from Ampang. That just might be possible. Last week, the Company announced that it had secured additional financing from Ampang. It did not, however, indicate the amount of that financing, or its terms. Did Mr. Wachter participate in the latest agreement between First Bingo and Ampang? Are there potential conflicts of interest for investors to consider and assess?
The Company has said that neither Mr. nor Mrs. Wachter are officers or directors of Ampang. So who is? And is Ampang actually engaged in any business – other than lending money? It seems that Ampang must have some other operations. In September 2000, FirstBingo issued Ampang 4 million shares of common stock in consideration for:
• Consulting services related to the development and ongoing maintenance of the Internet Trivia Bingo game;
• Consulting services related to the development of the television Trivia Bingo game show concept;
• Consulting services related to the production of the TV Trivia Bingo game show pilot;
• Design and invention of TV Trivia Bingo;
• Marketing and advertising support; and
• Investor relations and related services.
Just who was providing all of those services on behalf of Ampang? Was it Mrs. Wachter or someone else? Did Mr. Wachter provide the Company with this assistance before he ascended to its presidency? The Company says that Mr. Wachter is the “co-creator of the game Trivia Bingo.” If that is the case, what role was played by Mente Incorporated, the Internet and software development company that FirstBingo had previously credited with developing Internet Trivia Bingo.
Before becoming President, Mr. Wachter already had a close relationship with the Company as the sole officer, director, and shareholder of The Bentley Group Ltd., a Turks and Caicos Island, BWI corporation that is the Company’s largest shareholder with 7.85 million shares. How did The Bentley Group acquire those shares? The Form 10-K indicates that FirstBingo issued approximately 7.9 million shares for marketing and public relations and another 4 million shares to consultants in the year 2000. Could those include the shares issued to Bentley Group and Ampang, respectively?
Perhaps. The Company says that it issued 6 million shares in 2000 in order to pay for the acquisition of Lucky Port Ltd., a British Virgin Islands corporation whose sole asset was software. FirstBingo does not describe the nature of that software, or specify who received those 6 million shares – but the Company’s filings list only one shareholder that owns more than 6 million shares – The Bentley Group.
And Volume is its Name-O
Have those glowing newsletters and promotional press releases made an impression on investors? “Penny Stock Talk” and “TipReporter.com” each acknowledged that they were paid $500 by something called “Momentum Traders Network” to maintain profiles on the Company for one week. Perhaps that was sufficient to develop the desired “momentum.” The newsletters we received were dated May 15th, but they do not indicate when that “week” began. FirstBingo shares, which closed at 25 cents on May 3rd reached highs of 70 cents in intraday trading on May 10th. Shares were back at 50 cents by the close of trading on May 18th, but there had been plenty of trading by then. Volume also increased during this period, before trailing off over the last few days. The following reflects recent volume, as reported on Yahoo! Finance:May 8, 2001 - 7,400;
May 9, 2001 - 39,900;
May 10, 2001 - 160,700;
May 11, 2001 - 125,300;
May 14, 2001 - 216,800;
May 15, 2001 – 69,700;
May 16, 2001 – 109,800;
May 17, 2001 - 20,600;
May 18, 2001 – 59,400
Did any real news cause the price of FirstBingo shares to almost triple, and volume to spike so dramatically? None that we were able to discover. So who was buying those shares – and, perhaps more importantly, who was selling?
We don’t know who those sellers were, but we imagine one word that could have come to mind as they counted their recent profits. BINGO.
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