The following is the full text of the letter containing our questions about the company which will be sent to American Bingo & Gaming this morning. Formatting of the actual letter is somewhat different but the content is exactly the same. Thanks to everyone for their input.
DELIVERED VIA FAX, EMAIL, AND REGISTERED MAIL
January 28, 1998
Mr. Gregory Wilson, President, Chief Executive Officer
Mr. Courtland Logue, Chairman, Board of Directors
American Bingo & Gaming, Inc.
515 Congress Avenue, Suite 1200 Austin, Texas 78701
RE: Shareholder Questions and Concerns
Dear Sirs:
My name is Tod K. Allen. I am a contributing member of the Silicon Investor (SI) American Bingo & Gaming (AB&G) discussion thread. Recent AB&G press releases and the sharp decline in share price have raised many questions among AB&G shareholders. When AB&G indicated a conference call would be held to address investor concerns, I posted a message on the SI thread suggesting we (SI members) develop a list of questions which, in our opinion, AB&G needs to address. This letter,
then, is the result of input from many shareholders and is presented on behalf of the many AB&G shareholders associated with the SI discussion thread.
The AB&G website contains the following statement: "American Bingo prides itself on keeping investors fully informed about important developments in the company." However, at this time, many shareholders have serious doubts AB&G's willingness and ability to communicate effectively with shareholders. This letter presents an excellent opportunity for AB&G management to re-establish effective communication with shareholders and to resolve concerns about AB&G management, current business, and future acitivities.
We realize the following list is extensive and there may not be time to address each question during the conference call. However, we request that each of the questions presented below be addressed either in the upcoming conference call or on AB&G's website. Within each section below, questions are listed with the most important question at the top. It is our hope that these high-priority issues will be addressed during the conference call.
MANAGEMENT:
- Is Greg Wilson planning on leaving AB&G?
- If Wilson is planning on leaving, is finding a buyer for his stock the only issue preventing his departure?
- If Wilson is planning on leaving, how much longer is it anticipated he will continue to serve as President and CEO?
- Are there any other material facts associated with the recent resignation and immediate reinstatement of Greg Wilson that shareholders should know about?
- If Wilson leaves, will Corky Logue become President of AB&G or will a search be conducted for a new President?
- If Corky Logue becomes President, will his compensation continue to be solely from stock options or will he draw a salary?
- How is Logue's option exercise price determined?
- Who determines executive and Board compensation? Is there a committee? Have any outside consultants looked at this issue?
- How are the "outside" directors chosen?
- What are the names of all members of the Board of Directors?
BUSINESS PLAN:
- Previous news releases have indicated AB&G was considering all types of options for future investment. If Wilson leaves, will all options continue to be considered or will new management and two new Board members (Mims and Harrison) set a new direction for future investment?
- Currently over 60% of our profits are coming from South Carolina VGMs. What action has AB&G taken to protect its investment in the South Carolina gaming industry? What action has AB&G taken to support the South Carolina gaming industry in general?
- How many VGMs does AB&G expect to have in operation by the end of the first quarter of 1998? How many VGMs are expected to be in operation by the end of FY 1998?
- How many VGM's are "game room" machines and how many are "route" machines? Of the "route" machines, how many are 100% company-owned and how many are shared ownership?
- What action would AB&G take if South Carolina were to outlaw VGMs?
- What percentage of AB&G's South Carolina VGM's would be characterized as requiring "a certain degree of skill", therefore, being less likely to be deemed an "illegal lottery" as claimed by the South Carolina Attorney General?
- What percentage of AB&G's South Carolina VGM's contain a "slot machine" and/or "keno" option?
- What areas outside of South Carolina (other states, Canada, etc.) are conducive to AB&G's gaming business? Which of these areas are being seriously considered?
- What is the status of the bingo halls which were to have opened by the end of 1997?
- How many bingo halls does AB&G expect to have open by the end of 1998?
- What areas (other states, Canada, etc.) are being seriously considered for expansion of AB&G's bingo business?
NASDAQ NMS APPLICATION:
- Will the recent decline in share price below $5.00 cause NASDAQ to reject BNGO's application for NMS listing?
- Has an application for NASDAQ National Market System (NMS) listing been filed? If so, on what date was the application submitted to NASDAQ?
- NMS " Corporate Governance" criteria require two "outside" directors. Does AB&G meet this requirement? If so, what are the names of the Board members who qualify as "outside" directors?
MISCELLANEOUS:
- Just prior to the press release of 1/16/98, it was reported on the SI thread that someone with Mike Fearnow's company, Financial Broker Relations, had said during a telephone call that the upcoming press release "will knock your socks off" and, after the press release, the "price per share will never again be below $6.50". Will AB&G clarify its relationship with Financial Broker Relations and how AB&G expects to have information released to the public?
- Can we expect to maintain 30% ROI on invested new funds as we have in the past?
- Who filed the Form 144? What is their ownership position before and after the sale? Has the sale taken place yet? Why do they want to sell some shares?
- Can AB&G provide any information on institutional investors who have purchased BNGO shares? Have there been any meetings or discussions with brokers or institutional investors recently and are any scheduled or anticipated for the future?
- Have any analysts (other than Mr. Kecseg) begun to follow BNGO? If so, who are they?
- The warrant call brought in about $12 million. Has there been talk of buying out Wilson or other stockholders with that money?
- What is the current cash position on hand?
- Our cash position is now approximately $14 million. What is the company's strategy in leveraging this amount through borrowing, leases, notes, etc?
- When do you expect to announce 4th Quarter, 1997 earnings?
- In November, 1997, AB&G promised to create a section of the company's website devoted to addressing shareholder questions. This website "Q&A section" was to be updated approximately once per month. Do you expect to continue the website "Q&A section" idea? If so, when can we expect an update?
- Has there been any consideration or discussion of AB&G as a CANDIDATE for acquisition by a larger company?
Thank you very much for your time and careful consideration of our questions and concerns. We look forward to your response.
Respectfully,
Tod K. Allen
On behalf of all shareholders associated with the SI discussion thread. |
