Amendment to Current Report — Form 8-K Filing Table of Contents
Document/ExhibitDescriptionPagesSize 1: 8-K/A Amended 8-K/A HTML 289K
2: EX-3.2 Exhibit 3.2 Certificate of Incorporation of Left HTML 22K
Behind Games, Inc.
3: EX-3.2.1 Exhibit 3.2.1 Amendment to Certificate of HTML 12K
Incorporation of Left Behind Games, Inc.
4: EX-10.1 Exhibit 10.1 Share Exchange Agreement HTML 193K
13: EX-10.10 Exhibit 10.10 Addendum Dated February 1, 2005; HTML 15K
Employment Agreement for Thomas H.
5: EX-10.2 Exhibit 10.2 Troy A. Lyndon Employment Agreement HTML 75K
6: EX-10.3 Exhibit 10.3 Addendum Dated June 2, 2004; HTML 14K
Employment Agreement for Troy A. Lyndon
7: EX-10.4 Exhibit 10.4 Addendum Dated February 1, 2005; HTML 15K
Employment Agreement for Troy A. Lyndon
8: EX-10.5 Exhibit 10.5 Jefferey S. Frichner Employment HTML 73K
9: EX-10.6 Exhibit 10.6 Addendum Dated June 2, 2004; HTML 15K
Employment Agreement for Jefferey S.
10: EX-10.7 Exhibit 10.7 Addendum Dated February 1, 2005; HTML 15K
Employment Agreement for Jefferey S.
11: EX-10.8 Exhibit 10.8 Thomas H. Axelson Employment HTML 72K
12: EX-10.9 Exhibit 10.9 Addendum Dated June 2, 2004; HTML 15K
Employment Agreement for Thomas H.
14: EX-99.1 Miscellaneous Exhibit HTML 651K
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
communications pursuant to Rule 425 under the Securities Act (17 CFR
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
1 - Registrant’s Business and Operations
into a Material Definitive Agreement.
description of the principal terms of the Share Exchange Agreement are subject
to and qualified in their entirety by reference to the Share Exchange Agreement,
a copy of which is attached to this Form 8-K and which is incorporated herein
are strongly urged to read and carefully consider the Share Exchange Agreement
for a complete description of the terms of the Share exchange
February 7, 2006 (the "Closing" or the "Effective Time"), Bonanza Gold, Inc.
(sometimes the "Registrant" or "Bonanza"), acquired Left Behind Games Inc.
(“LBG”') as a subsidiary pursuant to a Share Exchange Agreement dated as of
January 26, 2005, by and among the Registrant and LBG. Pursuant to the terms
the Share Exchange Agreement, the Registrant acquired LBG through the purchase
of a majority of LBG’s outstanding stock. The stockholders of LBG exchanged
their LBG securities on a “1 for 1” basis for our substantially identical
consummation of the Share Exchange Agreement, LBG
pursuant to the Share Exchange Agreement, Troy A. Lyndon, Jeffrey S. Frichner,
Thomas H. Axelson, respectively the chief executive officer, president &
secretary and chief financial officer of LBG, were appointed to our board of
directors and named as our chief executive officer, president & secretary
and chief financial officer, respectively. Concurrently with Messrs. Lyndon’s,
Frichner’s, and Axelson’s appointment as all of our officers, Mr. Robert E.
Kistler resigned as our president and treasurer, and Hobart Teneff resigned
our vice president. Effective February 7, 2006 at noon PST, Messrs. Kistler,
Teneff and Terrence Dunne resigned as our directors.
Behind Games Inc. was founded in October 2001 for the purpose of developing
games based upon the popular Left Behind Series. We are attempting to become
leading independent developer and publisher of quality interactive entertainment
products that perpetuate family values and appeal to mainstream, Christian
the execution of the Share
Exchange Agreement and the 1 for 1 exchange of our stock for our stock, our
board of directors executed a resolution to reverse split our common stock
four for one basis so
stockholders now own one share of common stock for each 4 shares of common
held by the stockholder prior to the reverse split. Also
prior to the execution of the Share
Exchange Agreement, the board of directors of LBG executed a resolution to
reverse split its common stock
is difficult to assess the likelihood of success for an early stage
company without a long operating history like
our organization we have been engaged in start-up and development
limited operating history upon which investors may base an evaluation
our likely future performance.
is no assurance that we will enjoy successful business
can be no assurance that our business strategies will lead to any
We face risks and uncertainties relating to our ability to successfully
implement our strategies of creating and marketing video and PC games,
selling the games at a profit. Despite the popularity of Left Behind
and other media materials, we do not know whether we can produce
PC games for which there will be a demand, or whether Left Behind’s brand
success will cross over to video games. You must consider the risks,
expenses and uncertainties of a company like this, with an unproven
business model, and a competitive and somewhat evolving market. In
particular, you must consider that our business model is based on
expectation that we will be able to create games and that demand
games will sustain itself or
for substantial additional funds.
We currently need additional funds to complete the development of
video games and to fund increased employment compensation for 2005.
executives collectively are paid approximately $20,000 per month
collective total of $240,000 per year. In addition, our estimated
employment compensation outlays for the next 12 months are approximately
$500,000. Cash requirements for development and distribution of our
games in the next 12 months are expected to be approximately $1,000,000.
Our cash requirements may vary or increase materially from those
planned because of unexpected costs or delays in connection with
of video games, changes in the direction of our business strategy,
competition, and other factors. Adequate funds for these purposes
be available when needed or on acceptable
must pay expenses on
behalf of the officers and
directors to indemnify them for wrongdoing.
Our officers and directors are required to exercise good faith and
integrity in the management of their affairs. The bylaws specifically
limit the liability of such persons to the fullest extent permitted
law. As a result, aggrieved parties may have a more limited right
action than they would have had if such provisions were not present.
The bylaws also provide for indemnification of the officers and directors
from any losses or liabilities that may incur as a result of the
which they operated the business or conducted internal affairs, provided
that in connection with these activities they acted in good faith
and in a
manner which they reasonably believed to be in, or not opposed to,
best interest. Use of the capital or assets for such indemnification
reduce amounts available for the operations or for distribution to
of shares of our common stock have a greater risk than holders of
preferred stock because shares of preferred stock have liquidation
preferences over shares of our common stock. Holders of our preferred
stock have liquidation preferences over our shares of common stock.
result is that in the event of any liquidation, dissolution or winding
of our affairs, whether voluntary or involuntary, the holders of
our preferred stock will be entitled to recover their investment
in preference to any distribution of any of our remaining assets
surplus funds, if any remain, to the holders of our shares of common
RELATING TO THE VIDEO GAME INDUSTRY
revenues will be dependent on the popularity of the Left Behind series
novels. If the popularity of this series declines, it may have a
adverse effect on our revenues and operating results.
1995, the popularity of the Left Behind series of books has grown.
However, there can be no assurance that the series will sustain its
popularity and continue to grow. A decline in the popularity of the
Behind series could adversely affect the popularity of any product
upon the series, including the products that we intend to develop
distribute, and that, in turn, would have a material adverse effect
revenues and operating results. Despite the popularity of the Left
series, there can be no guarantee that any video game product based
the series will enjoy the same popularity or achieve commercial success.
regulations could adversely affect the video game industry, including
distribution of interactive products over the
Changes in domestic and foreign laws could affect our business and
development of our planned video game products, and, more specifically,
could adversely affect the marketing, acceptance and profitability
products. There can be no assurance that current laws and regulations
the interpretation of existing regulations) will not become more
in the future, or that we will not incur substantial costs in the
to comply with such requirements, or that we will not be subjected
previously unknown laws and regulations that may adversely impact
development and distribution of our intended products or the operation
our business in general. As Internet commerce continues to evolve,
expect that federal, state and foreign governments will adopt laws
regulations covering issues such as user privacy, taxation of goods
services provided over the Internet, pricing, content and quality
products and services. It is possible that legislation could expose
companies involved in electronic commerce to liability, taxation
increased costs, any of which could limit the growth of electronic
commerce generally. Legislation could dampen the growth in Internet
and decrease its acceptance as a communications and commercial medium.
enacted, these laws and regulations could limit the market for our
products to the extent we sell them over the Internet, and have a
adverse effect on our revenues and operating
we do not respond to rapid technological change, our products may
market for video game products and services is characterized by rapid
technological change and evolving industry standards. We cannot assure
that we will be successful in responding rapidly or in a cost effective
manner to such developments.
may not be able to achieve our distribution plans.
we believe that our plans for marketing and distributing our products
achievable, there can be no assurance that we will be successful in
efforts to secure distribution agreements with national or regional
wholesale or retail outlets, or to negotiate international distribution
sublicensing agreements regarding the distribution of Left Behind series
video games in countries and territories outside of the United States,
that we will be able to gain access to CBA wholesale or retail channels
products may have short life cycles and may become quickly obsolete.
preferences in the video game industry are continuously changing and
difficult to predict. Few products achieve market acceptance, and even
when they do achieve commercial success, products typically have short
life cycles. We cannot be certain that the products we introduce will
achieve any significant degree of market acceptance, or that if our
products are accepted, the acceptance will be sustained for any
significant amount of time, or that the life cycles of any of our products
will be sufficient to permit us to recover development, manufacturing,
marketing and other costs associated with them. In addition, sales
games are expected to decline over time unless they are enhanced or
products are introduced. If the products we create fail to achieve
sustain market acceptance, it could result in excess inventory, require
reductions in the average selling prices of the affected products,
require us to provide retailers with financial incentives, any one
of which would have a material adverse effect on our operating results
we are unable to maintain our license to Left Behind or other intellectual
property, our operating results will be adversely
All of our planned products are based on or incorporate intellectual
property owned by others. All of our current products are based on
Behind names and themes. We expect that some of the products we publish
the future may also be based on intellectual property owned by others.
rights we enjoy to licensed intellectual property may vary based on
agreement we have with the licensor. Competition for these licenses
intense and many of our competitors have greater resources to take
advantage of opportunities for such licenses. If we are unable to maintain
our current licenses and obtain additional licenses with significant
commercial value, we believe our sales will decline. In addition,
obtaining licenses for popular franchises owned by others could require
to expend significant resources and the licenses may require us to
relatively high royalty rates. If these titles are ultimately unpopular,
we may not recoup our investment made to obtain such licenses.
Furthermore, in many instances we do not have exclusive licenses for
intellectual property owned by others. In these cases, we may face
competition from other publishers holding a similar
video game industry is very competitive, and we may not be able to
successfully with larger, more established video game publishers.
interactive entertainment software industry is intensely competitive
new interactive entertainment software products and platforms are
regularly introduced. We will compete primarily with other publishers
interactive entertainment software for personal computers and video
consoles. We will also compete with other forms of entertainment and
ability to develop and market our video game products depends entirely
upon our license from the publisher of the Left Behind series.
October 11, 2002, White Beacon secured the license from the publisher
the Left Behind series to use the copyrights and trademarks relating
the Left Behind series to develop video game products. This license
been sublicensed to Left Behind Games in entirety. The license requires
Left Behind Games to pay royalties and other fees on an ongoing basis
the publisher of the Left Behind series and to meet certain product
development, manufacturing and distribution milestones. The license
grants the publisher of the Left Behind series significant control
the development of products under the license. In the event we are
to perform all of the obligations to the publisher of the Left Behind
series under the license, the publisher of the Left Behind series may
terminate the license leaving us without the ability to develop,
manufacture and distribute our video game products. The publisher of
Left Behind series rights to review and approve our products may cause
delays in shipping those products. Our success and our business plan
heavily dependent upon our ability to comply with the terms and conditions
of the license and the sublicense and yet there can be no assurance
we will be able to comply with all terms and conditions of the license
from the publisher of the Left Behind series and sublicense from White
Beacon. In the event the license or sublicense is terminated for any
reason, we would likely be unable to continue to develop, sell or
otherwise distribute video games based on the Left Behind
manufacturers are primary competitors and have approval rights and
expected to control the manufacturing of our video game products.
vast majority of commercial video game products are designed to play
specific platform. The platform is the system that runs the game. Within
the video game industry, there are currently many platforms, including
Microsoft Xbox 360, Sony Playstation 2, Sony PSP, Sony Playstation
Nintendo DS, Nintendo GameCube and Gameboy Advance, Microsoft Windows,
Mac OS. The majority of PC games are designed to play on computers
the Microsoft Windows or the MAC OS platform. In order to develop a
that will run on a particular console platform, it is necessary to
into a platform licensing agreement with a console or portable platform
manufacturer. The platform manufacturers, Sony, Nintendo, and Microsoft,
also publish their own video game products and are therefore competitors
of ours. If we are successful in securing a platform licensing arrangement
with one or more of these companies, we will most likely be required
give them significant control over the approval and manufacturing of
products. This could leave us unable to get our products approved,
manufactured and shipped to customers. Control of the approval and
manufacturing process by the platform licensors could also increase
our manufacturing and shipping lead times and related costs. Such delays
could harm our business and adversely affect our financial performance.
Additionally, while we are not aware of any reason that would prevent
from obtaining any desired development and/or publishing agreements
any of the hardware platform licensors, we have not yet signed any
agreement with any platform manufacturer, and we cannot guarantee that
will be able to conclude agreements with these third parties, or that
we do, the provisions of the agreements will be favorable or even as
as the comparable agreements executed by any of our competitors. If
unable to secure development and/or publishing agreements with the
platform manufacturers, we would not be able to bring our products
market on any such affected platform.
may not be able to regularly pay dividends to our stockholders or
shares of preferred stock.Our
ability to pay dividends or redeem shares of preferred stock in the
depends on our ability to operate profitably and to generate cash
operations in excess of our operating expenses and debt service
obligations. The payment of dividends or redemption of shares of
stock is in the sole discretion of our board of directors.
terrorist attacks in the United States may result in declining economic
activity, which could reduce the demand for our
terrorist attacks in the United States, such as the attacks that
in New York and Washington, D.C. on September 11, 2001, and other
terrorism or war, may result in declining economic activity and reduced
demand for our products. A decrease in demand would make it difficult
us to renew or release our products. Terrorist activities also could
directly impact the value of our products through damage, destruction
of events also may adversely affect the markets in which our securities are
sold. These acts may cause further erosion of business and consumer confidence
and spending and may result in increased volatility in national and
international financial markets and economies. Any one of these events may
a decline in the demand for video games, delay the time in which our video
can be created and sold and limit our access to capital or increase our cost
economic conditions may adversely affect our financial condition
results of operations.
of economic slowdown or recession in the United States and in other
countries, rising interest rates or declining demand for video games,
the public perception that any of these events may occur, could result
a general decline economic activities, which would adversely affect
financial position, results of operations, and cash flow.
success of our company depends on the continuing contributions of
have a skilled management team to seek out developers for our video
However, members of our management team are required to devote only
much time to our operations as they, in their sole discretion, deem
necessary in carrying out our operations effectively. Any or all
members of our management team, including Jeffrey S. Frichner, Troy
Lyndon and Thomas H. Axelson, may fail to divide their time efficiency
operating our business given their outside obligations. In addition,
not have agreements with any of our management team that hinder their
ability to work elsewhere or quit at will and, thus, any executive
or key employee may terminate his or her relationship with us at
without advanced notice.
Behind Games Inc., a Delaware corporation (sometimes referred to herein as
“LBG”), was incorporated on August 27, 2002. LBG is an early stage company
founded to develop and publish video game products based upon the popular Left
Behind series of novels. We have the exclusive world-wide rights to the Left
Behind book series and brand, for the purpose of making video games. Left Behind
novels and products are based upon fictional storylines focused on events at
end of the world, including the ultimate battles of good against evil, which
very action oriented and supremely suitable for an engaging series of video
games. Left Behind’s series of books has sold more than 63 million copies. Left
Behind branded products have generated more than $500 million at retail for
Left Behind book series. Left Behind has also become a recognized brand name
more than 1/3 of Americans. Our management believes that Left Behind products
have experienced financial success, including the novels, children's books,
graphic novels (comic books), movies, and music. Our interest in the Left Behind
brand is limited to our sublicense to make video games. We have no interest
nor do we profit from any other Left Behind brand.
rights to use the Left Behind brand to make video games is based solely on
sublicense with White Beacon to all of White Beacon's rights and obligations
under its license with the publisher of the Left Behind book series. White
Beacon’s exclusive worldwide license from the publisher of the Left Behind book
series grants it, and us through our sublicense, the rights to develop,
manufacture, market and distribute video game products based on the Left Behind
assembled a team of individuals experienced in the video game industry to
develop and market video games based upon the Left Behind series that offers
challenging and positive oriented alternative to video games with gratuitous
and violence currently marketed.
Computer And Video Game Industry.
to the Entertainment Software Association (“ESA”), the modern-day video game
industry took form in 1985 with the release of the 8-bit Nintendo System
("NES"). Following upon the heels of Nintendo’s introduction of the NES, Sega
Enterprises Ltd. released its 16-bit “Genesis” system, which, in turn, was
followed by Nintendo’s introduction of the “Super NES.” The early 1990s led to a
rise in the PC game business with the introduction of CD-ROMs, with decreases
prices for multimedia PCs, and the introduction of high-level 3D graphics cards.
In 1995-1996, consumers reacted positively to the release of the Sony
PlayStation and Nintendo 64 and ushered in a new generation of video game
consoles. Since 1996, computer and video game sales have seen a steady
to ESA, in 1999 and 2000, the computer and video game industry reached new
heights with the introduction of new video game consoles that allowed users
play games, as well as watch DVDs and listen to audio CDs. According to ESA,
video game business experienced strong growth, in spite of the economic
recession after the turn of the century.
to the NPD Group, a provider of consumer and retail information based in Port
Washington New York, annual 2005 U.S. retail sales of video games, which
includes console and portable hardware, software and accessories (but not PC),
saw sales of over $10.5 billion. This represents a six percent increase over
$9.9 billion generated in 2004 and it exceeds the previous industry record
$10.3 billion from 2002.
growth in the game software industry is more than double the growth rate of
U.S. economy as a whole, according to a study of the U.S. Government Census
other economic data, as reported in an ESA report. Analysts predict that more
money will be spent again this year on interactive software than at the box
On-line and wireless Video Games.
Internet has spawned the phenomenon of multiplayer on-line gaming, which we
believe will increase with the emergence of broadband capabilities, in addition
to new wireless mobile phone platforms. With advances in broadband technology
and the ever increasing use of the Internet, the computer and video game
industry has witnessed substantial growth in the development of games that
be played over the Internet, thereby opening up another market as well as other
revenue models. Organizations have been placing their games on the Internet
consumer consumption either for the purpose of expanding their markets or as
way for companies not in the traditional video game industry to gain entrance.
It is our intent, once the initial products have been published, established,
and shown to be financially successful, to expand into these new
to an October 15, 2002 article by Reuters, Sony, the world's largest
audio-visual electronics maker joined the Internet video gaming industry when
launched EverQuest in March 1999 in the United States. EverQuest, a multi-player
on-line game, involves a detailed, three-dimensional world where thousands
players can simultaneously participate in battles or quests, hold conversations
or meet with friends. Currently, Sony has more than 500,000 subscribers paying
up to $13 per month to play this game on-line. Sony is planning to launch
versions of its on-line EverQuest game in Japan, China and other countries.
Electronic Arts, Microsoft, LucasArts and others have also expanded their video
game business onto the Internet.
provider of technology intelligence, IDC industry analysis and market data,
projects that the number of households with access to on-line video games will
rise at a rate of over 25% in the coming few years with U.S. revenue to rise
over $1.8 billion in 2006. According to Reuters, this increase is expected
request, in June 2004, the publisher of the Left Behind book series distributed
a 20 question survey for the purpose of helping us to understand the demographic
link between Left Behind readership and potential purchasers of such branded
video games. More than 3,500 responses were received. Of those responding,
classified themselves as players of video games, and 92% said they would
consider buying a Left Behind video game for themselves or a family
usage of video games, although targeted to predominately younger markets, are
not exclusive to this marketplace. As technology evolves and game quality
improves, the sale of hardware is shifting to middle-aged and older audiences.
The demographics of the interactive industry continue to change as players
have grown up with games are now buying them as adults, as well as for their
to a Peter D. Hart Research Associates study, 75% of American heads-of-household
play computer & video games, 39% of computer gamers are over the age of 35
and the average game player is 30 years old, 19% are age 50 or older, and 43%
also found the typical game purchaser is 37 years old, and adult gamers have
been playing for an average of 12 years. Further data shows just 35% of gamers
are under the age of 18, while 43% are 18-49. Interestingly, women age 18+
constitute a greater portion of the game playing population (28%) than boys
survey illustrated an average adult male plays games 7.6 hours per week, with
the average adult female closing the historical gender gap at 7.4 hours per
indicates that the popularity of computer and video games rivals baseball and
amusement parks. According to ESA, three times as many Americans (approximately
145 million) played computer and video games as went to the top five U.S.
amusement parks and twice as many as attended major league baseball games.
poll by ESA of 1,600 households ranked computer and video games number one
their most enjoyable activity.
with past years' numbers, announced by the ESA and annually compiled by the
Group, the majority of games that sold were rated "E" for "Everyone" (53%),
followed by "Teen" (T) rated games (30.%) and by "Mature" (M) rated games (16%).
In 2002 E-rated games accounted for 55.7% of games sold, T-rated games 27.6%
M-rated games made up 13.2% of games sold.
to ESA, all interactive games are rated by the Entertainment Software Rating
Board ("ESRB"), a self-regulatory unit of ESA. The ESRB rating system is the
benchmark rating system for software for all interactive platforms. The ESRB
uses the following key elements to evaluate and rate software products:
violence, sexual content, language, and early childhood development skills.
70% of games are rated "E" for Everyone (appropriate for ages 6 and
step in creating a successful video game product launch is to create a good
concept, ideally based upon a brand name with consumer awareness. Confirmation
of the quality of the game is often provided by industry trade publications.
in comparable industries, previews and reviews can provide significant
information regarding marketing viability prior to the completion of development
and commercial release, enabling companies to more effectively manage
development, marketing expenses and potential inventory risks.
product is completed and approved by the appropriate platform licensor,
inventory is purchased from the major interactive platform manufacturers (e.g.,
Sony, Microsoft, and Nintendo) and distributed to independent distributors,
retail outlets and other resellers.
the popularity and success of the Left Behind Series with all ages, we believe
the Left Behind Brand is uniquely positioned for success in the interactive
video game marketplace. Recent interactive game market studies reveal a rapidly
growing market comprised of people from all ages and cultures. Based on
statements by the president of the ESA, we believe that the last few years
the next several years are watershed years for interactive products. “Leading
analysts forecast that video and computer game software sales alone will soon
surpass $10 billion, and that the next generation of video game consoles may
achieve household penetration rates approaching 70%, making them nearly as
commonplace in American homes as video cassette recorders."
continue to grow - a record 12 games sold more than one million units in 2004,
with 9 of these 12 being rated “E” or “T”, and 52 console games sold more than
500,000 units. Additionally, 55% of the 2004 Top 20 selling computer games
units sold were Teen (11/20) with 25% Mature (5) and 20% rated Everyone (4).
Top 20 selling console games were rated 55% as Everyone (11) followed by 25%
Mature (5) and 20% Teen (4). The NPD Group has announced it will be updating
PC Games in particular will be reported, to more accurately assess the impact
subscription-based online games (MMOs) as well as the industry impact from
2005 study found 42% of most frequent gamers play online, with 56% being male
and 44% being female. A full 34% of heads of households play games on a wireless
device such as a cell phone or PDA reflecting a substantial increase from 20%
Game Software And Hardware Industries.
to Michael Pachter, Interactive Entertainment Research Analyst for Wedbush
Morgan, "The most successful publishers are those who build diverse
libraries of branded games that produce sequels and recurring revenue
streams. With a base-load of steady, sequel-driven revenues, publishers
have better visibility into their future performance, which leads to better
planning and investment. A less-volatile revenue and earnings model also
leads to more confidence from Wall Street and higher public
media and politicians focused on Mature-rated video games in 2003, new data
reveals that the percentage of M-rated games sold last year actually declined
while the number of Teen-rated games sold rose, according to ESA, the U.S.
association representing computer and video game software publishers. The data
shows that combined sales for computer and video games exceeded $7 billion
the first time ever, and that a record number of console video games sold more
than 500,000 and one million units.
2005 E3 commencement speech, Doug Lowenstein said, “The (video game) industry
needs to continue broadening its audience and creating more games with
mass-market appeal. Though videogames have been around for 30 years, their
penetration remains below that of film and television, he pointed out, asking,
“What do they have that we don’t?” That missing element, he said, is content
with mass-market appeal at mass-market prices. “There is powerful
market-expanding potential for making games for audiences that we are less
accustomed to,” Lowenstein said. As an example, he said that the film The
Passion of the Christ had a record-breaking $612 million in box-office revenue,
thus revealing something Hollywood was missing—the religious content was of
interest to a big audience that doesn’t normally go to movies.
2003 U.S. sales of console games totaled $5.8 billion (186.4 million units)
while computer games accounted for $1.2 billion (52.8 million units) in sales.
Total game software sales in 2002 were $6.9 billion, with console games bringing
in $5.5 billion in sales and computer games accounting for $1.4 billion. (Note:
The numbers released by the ESA today do not include sales of game hardware
accessories.) A record nine console games sold more than one million units,
all were rated E or T. Thirty-nine console games sold more than 500,000 units
and 83 exceeded the 250,000 unit barrier. Comparable numbers for 2002 were
33, and 73, respectively.
future strength and promise of interactive entertainment comes across loud
clear when we note that ours was the only entertainment industry to continue
grow in 2003," added Lowenstein. According to numbers compiled by the NPD Group,
total game software sales in 2003 grew while both the movie and music industries
reported losses compared with 2002 sales according to estimates made by
Exhibitor Relations and Nielsen SoundScan, respectively.
to 2004 NPD study data, console game players most often purchased action 30.1%,
sports 17.8%, and shooters 9.6%, followed by children/family 9.5%, racing 9.4%,
role-playing 9.0% and fighting games at 5.4%.
gamers, however, most often purchase strategy 26.9%, family & children
20.3%, and shooter games 16.3%, followed by role-playing games 10%, adventure
5.9%, sports 5.4% and action games with 3.9%. Our games target both the strategy
and family markets. Based upon Wedbush Morgan Securities’ research, every game
in the top ten of 2002 independently generated more than a hundred million
Behind Video Games.
mission of Left Behind Games is to become the world’s leading independent
developer and publisher of quality interactive entertainment products that
perpetuate positive values and appeal to mainstream and Christian audiences,
while remaining committed to increasing shareholder value and pursuing the
highest standards of integrity and professionalism in all business
to accomplish these goals, our staff and advisory board have extensive
experience and relationships with professionals from the video game industry,
including producers, directors, artists, programmers, musicians and others.
Collectively, we are experienced in the techniques that are essential to today's
interactive games, including video, photography, motion capture, 3D face and
body rendering, programming technologies, computer graphics, stereo sound
effects and music production.
upon the success of the children’s book series, in addition to the success of
the Graphic Novels by DC Comics, our management believes these games will appeal
to people of all ages through their intriguing and exciting stories which
provide excellent storylines for adaptation to video games for children and
to develop games so as to include the same types of elements that have made
interactive games popular for years and yet offer an alternative to the sexual
themes and gratuitous violence currently found in many games. We plan to make
all games visually and kinetically appealing and anticipate the games will
classified as both action and adventure and will receive either an "E" rating
(appropriate for ages 6 and up) or a "T" rating (appropriate for ages 13 and
Behind Games commenced development and plans to complete the development of
first high quality video game and other associated products based upon the
Behind trademark in 2006.
exploring various avenues for promoting and marketing our products, including
print advertising and broadcast media, trade shows, as well as the Internet.
anticipate the Internet will become a cost effective method for developing
awareness and promoting our products.
software publishers use various strategies to differentiate themselves and
build competitive advantages within the industry such as Platform Focus,
internal vs. external development, third party distribution, International
and Game Genre Focus. According to Michael Pachter of Wedbush Morgan, "Deciding
which platforms to publish games for is one of the most important decisions
publisher faces. Different game platforms require varying development
costs, time to market, gross margins, and marketing budgets.” Accordingly, we
will focus, during the first year, on the PC/Multi-player version of the game.
This strategy will allow us to focus on the development of our first game,
without the required processes posed by licensors Sony, Microsoft and Nintendo.
We intend to release console and portable games into the marketplace in the
second and/or third year.
first order of development business, we have developed a technology
demonstration using internally developed 3D engine technologies. These have
made in association with former employees of the chief executive officer and
overseas group located in Eastern Europe. At present, our first product is
pre-alpha stage of development which means that it is approximately 70%
is designed to support two game modes, Storyline and Game World Modes. In
Storyline mode, gamers will have the opportunity to interact within events
the novels. In Game World mode, gamers will compete and fight for territory
an effort to defeat all opponents. The gamers goal will be to fight against
Global Community (commanded by the Anti-Christ) with Tribulation Forces. In
Player game mode, all opponents will be computer generated. However, in
Multi-player mode, gamers online will compete against each other. Although
are not focused on the development of an MMOG (Massive Multi-player Online
Game), at some point in the future, our game could migrate to the MMOG platform
without any major change in game play, storylines and
future success and ability to compete are dependent, in part, upon our
proprietary technology. We rely on patent, trade secret, trademark and copyright
law to protect our intellectual property. We cannot be sure that any patents
will be issued pursuant to future patent applications or that patents issued
us will not be invalidated, circumvented, challenged or licensed to others.
addition, we cannot be sure that the rights granted under any such patents
provide us with competitive advantages or that any patents issued to us will
adequate to stop unauthorized third parties from copying our technology,
designing around our patents or otherwise obtaining and using our products,
designs or other information. In addition, we cannot be sure that others will
not develop technologies that are similar or superior to our technology.
Furthermore, we believe that factors such as the technological and creative
skills of our personnel, new product developments, product enhancements and
marketing activities are just as essential as the legal protection of
proprietary rights to establishing and maintaining a competitive
addition to patent protection, we rely on unpatented trade secrets and know-how
and proprietary technological innovation and expertise, all of which are
protected in part by confidentiality and invention assignment agreements with
our employees and consultants, and, whenever possible, our suppliers. We cannot
make any assurances that these agreements will not be breached, that we will
have adequate remedies for any breach, or that our unpatented proprietary
intellectual property will not otherwise become known or independently
discovered by competitors. We also cannot make any assurances that persons
bound by an invention assignment agreement will not develop relevant
participants in the computer software and game market have a significant number
of patents and have frequently demonstrated a readiness to commence litigation
based on allegations of patent and other intellectual property infringement.
cannot be sure that future claims will be resolved on favorable terms, and
failure to resolve such claims on favorable terms could result in a material
adverse effect on our business, financial condition and results of operations.
We expect that companies will increasingly be subject to infringement claims
the number of products and competitors in our industry segment grows and the
functionality of products in different industry segments overlaps. Responding
such claims, regardless of merit, could cause product shipment delays or require
us to enter into royalty or licensing arrangements to settle such claims. Any
such claims could also lead to time-consuming, protracted and costly litigation,
which would require significant expenditures of time, capital and other
resources by our management. Moreover, we cannot be sure that any necessary
royalty or licensing agreement will be available or that, if available, such
agreement could be obtained on commercially reasonable terms.
Left Behind License.
October 11, 2002, the publisher of the Left Behind book series granted White
Beacon an exclusive worldwide license to use the copyrights and trademarks
relating to the storyline and content of the books in the Left Behind series
novels for the manufacture and distribution of video game products for personal
computers, CD-ROM, DVD, game consoles, and the Internet. White Beacon is owned
by Troy A. Lyndon, our chief executive officer and Jeffrey S. Frichner, our
president. Messrs. Lyndon and Frichner are members of our board of directors
White Beacon has sublicensed its Left Behind book series license in its entirety
to Left Behind Games Inc., with the written approval of the publisher of the
Left Behind book.
license requires Left Behind Games to pay the royalties based on the gross
receipts on all non-electronic products and for electronic products produced
use on personal computer systems, and a smaller percentage of the gross receipts
on other console game platform systems. According to the license agreement,
Behind Games is required to guarantee a minimum royalty during the initial
four-year term of the license, of which Left Behind Games has already paid
one third of the minimum royalty, which is considered an advance against future
payable royalties. This advance will be set off as a credit against all monies
owed subsequently under the license.
Left Behind Games Sublicense.
Beacon has granted Left Behind Games a sublicense of all of its rights and
obligations under its license with the publisher of the Left Behind book series.
In consideration for receiving the sublicense, Left Behind Games has issued
White Beacon 5,850,000 shares of its common stock (which shares have been
reduced to 3,496,589 pursuant to Left Behind Games’ reverse split on January 25,2006.
to the terms and conditions of the sublicense, we are required to comply with
all terms, conditions and obligations of the original license with the publisher
of the Left Behind book series. This sublicense is a pass-through to Left Behind
Games of the identical, original license with no attachments.
December 29, 2005 our first Left Behind game went on pre-sale through 3,500
retail locations nationwide. Called the Sneak Peak Pack, gamers get access
special key codes and a DVD featuring the official trailer of the game. We
anticipate distributing this product at the traditional locations where North
American video gamers go to purchase and/or rent their video games in the next
12 months. Retail outlets where we intend to distribute our products include
Wal-Mart®, Toys R Us®, Kmart®, Best Buy®, Circuit City®, GameStop®, EB Games®,
Blockbuster®, and Target® along with other national and regional retailers,
discount store chains and specialty retailers. We plan to access these U.S.
retailers using a group of independent sales representative companies who
solicit orders from traditional retailers. We also plan to pursue distribution
agreements with companies with strong relationships with retailers who can
support our sales and marketing efforts.
to undertake international distribution by building relationships with game
publishers in countries comprising the principal markets, most notably in
Europe, Asia and other territories. As such, we plan to pursue international
agreements for various geographic regions most beneficial to us.
Inspirational Bookseller Market.
anticipate that the Christian Bookseller Association (CBA) and related sales
channels represent additional sell-through opportunities for the Left Behind
Series brand. Left Behind books were originally sold exclusively through CBA
retailers, until gaining mainstream acceptance and tremendous financial success
in other distribution venues. Veggie Tales by Big Idea Productions, which has
sold millions of videos, also released products to the CBA market before gaining
mainstream acceptance. This distribution channel includes thousands of retail
outlets and is an anticipated marketplace for Left Behind Games’
competitors include established media development companies. Many of our current
and potential competitors have longer operating histories and financial, sales,
marketing and other resources substantially greater than those we possess.
result, our competitors may be able to adapt more quickly to changes in the
media market or to devote greater resources than we can to the sales of our
game industry is intensely competitive and new video game products and platforms
are regularly introduced. We will compete primarily with other creators of
games for personal computers and game consoles. We will also compete with other
forms of entertainment and leisure activities. Significant third party software
competitors currently include, among others: Activision, Atari, Capcom,
Electronic Arts, Konami, Namco, Midway, Take-Two, THQ, and Vivendi.
addition, integrated video game console hardware and software companies such
Sony Computer Entertainment, Nintendo Co. Ltd. and Microsoft Corporation will
compete directly with us in the development of software titles for their
competitors vary in size from small companies to very large corporations, with
far longer operating histories, and significantly greater financial, marketing
and product development resources than we have. Due to these greater resources,
certain of our competitors will be able to undertake more extensive marketing
and promotional campaigns, adopt more aggressive pricing policies, pay higher
fees to licensors for desirable products, and devote substantially more money
game development than we can. We believe that the main competitive factors
the interactive entertainment software industry include product features and
quality, compatibility of products with popular platforms, brand name
recognition, access to distribution channels, marketing support, ease of use,
price, and quality of customer service. There can be no assurance that we will
be able to compete successfully with larger, more established video game
publishers or distributors.
competitors could also attempt to increase their presence in our markets by
forming strategic alliances with other competitors. Such competition could
adversely affect our gross profits, margins and results of operations. There
be no assurance that we will be able to compete successfully with existing
new competitors. Most of our competitors have substantially greater financial
resources than we have, and they have much larger staffs allowing them to create
Discussion and Analysis of Financial Condition or Plan of Operation
statements in this Section and elsewhere in this report are forward-looking
nature and relate to trends and events that may affect the Company's future
financial position and operating results. Forward Looking Statements are
within the meaning of Section 27-A of the Securities Act of 1933 and Section
21-E of the Securities Act of 1934. The terms "expect,""anticipate,""intend,"
and "project" and similar words or expressions are intended to identify
forward-looking statements. These statements speak only as of the date of
report. The statements are based on current expectations, are inherently
uncertain, are subject to risks, and should be viewed with caution. Actual
results from experience may differ materially from the forward-looking
statements as a result of many factors, including changes in economic conditions
in the markets served by the company, increasing competition, fluctuations
prices and demand, and other unanticipated events and conditions. It is not
possible to foresee or identify all such factors. The company makes no
commitment to update any forward-looking statement or to disclose any facts,
events, or circumstances after the date hereof that may affect the accuracy
any forward-looking statement.
generated no significant revenue as we move forward to complete development
the Company’s first product. Our first product is anticipated for a
2006 release. We may choose to release our first product in the months that
follow to take full advantage of the holiday marketing season.
expenses were $4,570,656 for the six months ended September 30, 2005, compared
to $130,336 for the six months ended September 30, 2004, a 3,407% increase.
addition, operating expenses were $5,487,370 from August 27, 2002 (inception)
September 30, 2005. These increases are directly attributable to increased
staffing, development-related costs, and the acquisition of office space
facilitate the development of the Company’s first product; the highly
anticipated PC video game based upon the popular LEFT BEHIND brand of novels.
Additionally, we expensed certain consulting transactions included in prepaid
expense - as the underlying agreements were terminated on September 30, 2005
with no further services to be performed with future funding of $90,000 to
provided by the related consultants. The expensing of the consulting
transactions resulted in additional consulting expense of approximately $3.1
million which is included in general and administrative expenses for the
months ended September 30, 2005.
(Loss)/Profit . Other
Income (Expense). Other income and (expense) was $1,692 for the six months
September 30, 2005, compared to ($3,000) for the six months ended September30,2004. The increase is due to nominal increases in Online sales and no interest
expense related to notes payable during the six months ended September 20,2005.
We expect the sales of our online store to multiply, but not represent any
significant revenue in the next 12 months.
Loss. We reported a net loss of ($4,568,964) for the six months ended
September 30, 2005, compared to a net loss of ($133,336) for the six months
ended September 30, 2004, resulting in an increased loss of ($4,435,628).
increase is attributable primarily to the factors outlined above that
contributed to our increased operating costs. As stated above, the long-term
existence of the Company has been the primary concern of management, especially
considering that our enterprise is both pre-revenue and pre-product. The
increase in losses is a result of management’s belief that using equity for
services, instead of cash, has been the best way to finance the growth of
Company during a time when cash flow is so vital.
March 31, 2005, we had generated no significant revenue as we moved forward
complete the development of the Company’s first product. Our first product is
anticipated to be release in the 2nd
calendar 2006. We may choose to release our first product in the months that
follow to take full advantage of the holiday marketing season.
expenses were $482,993 for the year ended March 31, 2005, compared to $299,862
for the year ended March 31, 2004, a 61% increase. In addition, operating
expenses were $916,714 from August 27, 2002 (inception) to March 31, 2005.
increases are directly attributable to the growth of our development team.
Operations expanded beyond our facilities in Ukraine to include three additional
offices, in the short term, in Romania.
Expense. Other expense was ($2,813) for the year ended March 31, 2005, compared
to ($17,500) for the year ended March 31, 2004. This decrease is primarily
to the conversion of loans from original shareholders into common shares
Company which resulted in a decrease in interest expense.
Loss. We reported a net loss of ($486,606) for the year ended March 31,2005, compared to a net loss of ($318,162) for the year ended March 31, 2004,
resulting in an increased loss of ($168,444). In addition, our accumulated
deficit at March 31, 2005 totaled ($938,627). These increases are attributable
primarily to the factors outlined above that contributed to our increased
requirements, Liquidity and Capital Resources
source of operating capital has been provided by private sales of our common
stock. Until we receive additional funding from outside sources, our operations
will be severely limited by the financial resources that can be provided
sales of common stock. At September 30, 2005, the Company had $33,237 of
During the six months ended September 30, 2005, the Company issued 762,000
shares of common stock valued at $0.50 and $1.00 for cash resulting in gross
proceeds of $462,000. In addition, the Company issued 4,656,262 shares for
services rendered and to be rendered, totaling $3,868,762. Of this amount,
$3,663,118 is attributable to services rendered during the six months ended
September 30, 2005 and, accordingly, was expensed during the period and included
in general and administrative expenses. During the six months ended September30, 2005, the Company issued 100,000 shares of common stock in accordance
an anti-dilution agreement, and 10,000 shares of common stock for the
acquisition of a web address.
Company has not generated any revenue and has incurred net losses of $5,507,591
and had negative cash flows from operations of $895,678 since its inception
through September 30, 2005. In addition, the Company has negative working
capital of $395,603 and a stockholders’ deficit of $253,380 as of September 30,2005. The Company’s ability to continue as a going concern is dependent upon its
ability to generate profitable operations in the future and/or to obtain
necessary financing to meet its obligations and repay its liabilities arising
from normal business operations when they come due. Management plans to continue
to provide for its capital requirements by issuing additional equity securities
and is currently in the process of soliciting additional capital. The Company
has been successful in raising $1,009,500 in gross proceeds from April 1,2005
through February 1, 2006.
requirements, Liquidity and Capital Resources
March 31,2005 we had $215,974 of cash compared to $98 at March 31, 2004, an increase
$215,876. For the year ended March 31, 2005the Company issued 1,770,000
of common stock valued at $.05 and $.50 for cash resulting in gross proceeds
$435,000. In addition, the Company issued 3,600,000 shares of preferred stock
valued at $163,900 pursuant to the conversion of 3,000,000 shares of common
stock and $167,500 in notes payable and associated accrued interest. Also,
Company converted a note payable into 30,000 shares of common stock, valued
$15,000. For the year ended March 31, 2005, common shares totaling 2,822,200
were issued for services both rendered and to be rendered, valued at
February 1, 2006, we will require a minimum of an additional $1,000,000 in
over the next twelve months to effect our business plan. We expect to obtain
this cash from the proceeds of one or more private or public offerings. The
following sets forth the approximate amounts of minimum cash needed for each
category of expenses:
advertising and promotion
and administrative expenses
incorporated in August 2002 through February 1, 2006, we have successfully
raised over $1.5 million through funds provided by founders and private
placement offerings. This has been sufficient to keep development of our
product moving forward without delay. Although we expect this trend to continue,
we can make no guarantee that we will be adequately financed going forward.
However, it is also anticipated that in the event we are able to continue
raising funds at a pace that exceeds our minimum requirements, we may expect
spend cash to expand operations or take advantage of business and marketing
opportunities for the long-term benefit of the Company. Additionally, the
Company intends to continue to use equity whenever possible to finance
marketing, PR and development services it may not otherwise be able to obtain
consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States. The preparation
of these financial statements requires us to make estimates and judgments
affect the reported amounts of assets, liabilities, revenues and expenses,
related disclosure of contingent assets and liabilities. The Company bases
Company’s estimates on historical experience and on various other assumptions
that are believed to be reasonable under the circumstances, the results of
form the basis of making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results
differ from these estimates under different assumptions or conditions, however,
in the past the estimates and assumptions have been materially accurate and
not required any significant changes. Specific sensitivity of each of the
estimates and assumptions to change based on other outcomes that are reasonably
likely to occur and would have a material effect is identified individually
each of the discussions of the critical accounting policies described below.
Should the Company experience significant changes in the estimates or
assumptions which would cause a material change to the amounts used in the
preparation of the Company’s financial statements, material quantitative
information will be made available to investors as soon as it is reasonably
believes the following critical accounting policies, among others, affect
Company’s more significant judgments and estimates used in the preparation of
the Company’s financial statements:
and development costs, which consist of software development costs, are expensed
as incurred. Software development costs primarily include payments made to
independent software developers under development agreements. SFAS No. 86,
for the Cost of Computer Software to be Sold, Leased, or Otherwise
provides for the capitalization of certain software development costs incurred
after technological feasibility of the software is established or for the
development costs that have alternative future uses. The Company believes
the technological feasibility of the underlying software is not established
until substantially all product development is complete, which generally
includes the development of a working model. No software development costs
been capitalized to date.
Company has adopted SFAS No.142, “Goodwill and Other Intangible Assets.” SFAS
No. 142 requires that goodwill and intangible assets that have indefinite
not be amortized but rather be tested at least annually for impairment, and
intangible assets that have finite useful lives be amortized over their useful
lives. If the Company’s patents and trademarks are challenged, current values
could become impaired. Currently the Company is not aware of any existing
infringements or other such challenges to its patents or trademarks that
cause possible impairment to their values.
of Long-Lived Assets. The
Company reviews its long-lived assets 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
comparison of the carrying amount of the assets to future net cash flows
expected to be generated by the assets. If the assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which
carrying amount exceeds the present value of estimated future cash flows.
September 30, 2005, the Company’s management believes there is no impairment of
its long-lived assets. There can be no assurance however, that market conditions
will not change or that there will be demand for the Company’s products, which
could result in impairment of long-lived assets in the
offices are located at a
square foot facility on Technology Drive in Murrieta, California under a lease
agreement through March 2006. Upon funding, our intention is to lease additional
suitable office space in Temecula or Murrieta, California, unless it becomes
desirable to relocate our primary location as a result of economic opportunity.
we employ 10 persons in the United States and expect to employ up to 20 people
in the next 12 months. Current offices are adequate for our present needs.
Office space will
increased as we deem necessary.
OWNERSHIP OF CERTAIN BENEFICIAL
table presents information about the beneficial ownership of our voting
February 7, 2006 by:
person or entity who is known by us to own beneficially more than 5% of the
outstanding shares of our voting securities;
our directors and named executive officers;
directors and executive officers as a group.
ownership is determined in accordance with the rules of the Securities and
Exchange Commission and generally includes voting or investment power with
respect to securities, subject to community property laws, where applicable.
percentage of beneficial ownership of our shares of voting securities subject
this SEC filing is based on a total of 17,877,172 combined shares of voting
preferred and common stock outstanding as of February 7, 2006, plus an
additional 5,889,951 total shares that may be issued at any time at the
unilateral demand of Troy A. Lyndon, Jeffrey S. Frichner and Thomas Axelson
pursuant to conversion of their deferred compensation totaling $530,526.
outstanding securities plus securities that the group may acquire
the next 60 days pursuant to privileges to convert deferred salary
preferred shares. All of these securities, including those derived
conversion of deferred salaries reflect the reverse split of Left
Games and the 4 for 1 reverse split of Bonanza Gold effectuated prior
the closing of the Share Exchange
A. Lyndon is our chief executive officer and a member of our board
directors. Mr. Lyndon beneficially owns 1,748,295 shares of our common
stock through his 50% ownership of White Beacon Inc.’s 3,496,589 shares.
In addition, he has the present right to convert his deferred compensation
into an additional 2,242,441 shares of our common stock at post reverse
split rate of $0.084 per share .
S. Frichner is our president and a member of our board of directors.
Frichner beneficially owns 1,748,295 shares of our common stock through
his 50% ownership of White Beacon Inc.’s 3,496,589 shares. In addition, he
has the present right to convert his deferred compensation into an
additional 2,721,463 shares of our common stock at post reverse split
ranging from $0.084 to $1.68 per
H. Axelson is our senior vice president, chief financial officer
member of our board of directors. Mr. Axelson beneficially owns 194,255
shares of our common stock. In addition, he has the present right
convert his deferred compensation into an additional 926,048 shares
common stock at post reverse split rate ranging from $0.084 to $1.68
Dixon has voting and investment control of Southpointe Financial.
Dixon is a member of our board of directors and is the owner of 1,434,498
shares of our series A preferred stock.
series A preferred stock is convertible into common stock on a 1
basis at his sole discretion of the
E. Kistler was a member of our board of directors until February
Teneff was a member of our board of directors until February 7.
Dunne was a member of our board of directors until February 7.
Parker’s 1,604,845 shares of voting stock consist of 1,434,498 shares of
our series A preferred stock and 170,347 shares of our common
AND EXECUTIVE OFFICERS
directors and executive officers of Bonanza Gold, Inc., as of February 7, 2006,
include the following persons:
Chairman & Chief Executive Officer
Director, President and Secretary
Director and Chief Financial Officer
chief executive officer and chairman of the board of
Troy A. Lyndon is the chief executive officer of Left Behind Games Inc. As
former chief executive officer of Studio Arts Multimedia, Inc., he managed
worked to develop six multi-million dollar video game projects for Corel
Corporation. Previously, Mr. Lyndon served as president of Park Place
Productions where he managed operations, including the publication and/or
development for over 50 video game projects. Park Place Productions under Mr.
Lyndon’s leadership, became North America’s largest independent video game
development company. Mr. Lyndon has over 20 years experience in the management
and development of software projects, including computer and video game products
such as Madden Football, Batman Returns, Defender of the Crown, and Street
Fighter. Mr. Lyndon is also a recipient of the Entrepreneur of the Year award
from Inc. Magazine, Merrill Lynch and Ernst & Young. Mr. Lyndon has also
served many ministries and Christian publishers, including the Billy Graham
Evangelistic Association, Campus Crusade for Christ International, the Bright
Media Foundation, the publisher of the Left Behind book series and
secretary and member of the board of directors,
Jeffrey S. Frichner is the president and secretary of Left Behind Games Inc.
Previously, he was national accounts manager for Raindance Communications,
formerly Evoke Communications, Inc. Prior to that, Mr. Frichner was the director
of business development for Enable Incorporated where his efforts directly
contributed to the successful acquisition of the company by Cotelligent, Inc.
Previously, he was Vice President of Corporate Finance and Investments for
Janda, Phillips and Garrington, LLC. Prior, Mr. Frichner was a registered
representative and held the position of account executive and retirement
planning specialist with Dean Witter Reynolds. He holds a BA in business and
marketing from National University and is a former United States
financial officer and member of the board of directors,
is the chief financial officer of Left Behind Games Inc. He also currently
serves as the Director of Administration and the chief financial officer of
largest ministry of Campus Crusade for Christ International. For more than
years, Mr. Axelson has devoted his life to ministry. During the past 15 years,
he has managed allocations of more than $350 million to support Campus Crusade
for Christ operations worldwide. Mr. Axelson received his B.S. in Chemistry
Biology from Bemidji State University and holds an M.A. in Management from
Claremont Graduate School.
member of the board of directors,
has decades of experience in operations management of publishing and lending
institutions. As President of Morgan Rae Publishing, he is experienced in
manufacturing and distribution of products for the general and Christian
marketplaces. Further, Mr. Dixon has 22 years experience in real estate finance
and investments and has served as COO for Southpointe Financial, recognized
leader in mortgage lending.
and non-cash compensation that we have paid during the fiscal year ended March31, 2005, or that was earned by our chief executive officer and our other
executive officers is detailed in the following table.
and Principal Position
A. Lyndon (3)
S. Frichner (4) President
H. Axelson (5)
E. Kistler (6)
salaries for Messrs. Lyndon, Frichner and Axelson may be converted
common stock at a post-reverse split rate of $0.084 per share for
deferred compensation earned through December 31, 2004, a rate of
for deferred compensation earned between January 1, 2005 and May31, 2005
and rate of $1.67 per share for all deferred compensation earned
June 1, 2005.
Executive officer salaries were deferred until October 2004. Cash
paid since that date.
A. Lyndon deferred his compensation through October 2004, but no
defers his compensation.
S. Frichner deferred his compensation through October 2004, but no
defers his compensation.
H. Axelson currently defers his
E. Kistler served as our principal executive officer through February7,2006, but did not receive a salary. During
the fiscal year ended March 31, 2004, Mr. Kistler received $2,750
Incentive Plan Awards/Employment Agreements
maintain any long-term incentive plans. However, we intend to implement an
plan in the next 12 months. Additionally, our executive management, Messrs.
Lyndon, Frichner and Axelson, may convert all or some of their deferred
compensation to common stock.
employment agreements with each of our three executives. The employment
agreements are substantially similar except with respect to compensation.
Each agreement provides for:
at will term for the employee wherein he may resign or where he is terminated
without cause is entitled to receive an amount equal to six (6) months'
monthly salary, plus reimbursement of expenses; and
covenant to not engage anywhere directly or indirectly in (as a principal,
shareholder, partner, director, officer, agent, employee, consultant or
otherwise) or be financially interested in any for profit business which is
involved in business activities which are the same as, similar to, or in
competition with business activities carried on by LBG or any business that
current or potential customer, broker or competitor of LBG without prior written
approval from the Board of Directors of LBG
employment agreements, Messrs. Lyndon, and Frichner are entitled to $95,000
year, respectively, in compensation. In the future, based upon revenue
benchmarks, this amount can increase along with increased revenues to up to
$300,000 per year, plus a respective $150,000 bonus and up to a respective
$5,000 per month expense account to be spent at their discretion. Mr. Axelson
entitled to $24,000 per year. In the future, based upon revenue benchmarks,
amount can increase with revenues up to $150,000 per year, plus a $50,000 bonus
and up to a $5,000 per month expense account to be spent at his discretion.
addition to their current base compensation, each of our officers receives
for reimbursement of corporate expenses.
addition to our executive officers, our vice president of sales Dereck Wong,
48, is a significant employee.
Wong is president and Owner of Wong & Associates. Mr. Wong has more than 20
years experience in consumer electronic sales, software sales and management.
has represented the interactive software and video game companies such as
Capcom, Bethesda Softworks, Interplay, Mattel and Mindscape. Mr. Wong’s retail
clients in California include Fry's, Good Guys and Warehouse Entertainment.
grant any options to our executive officers in the fiscal year ended March31,2005.
our directors who are not also an employee receives director fees not to exceed
$10,000 per annum.
RELATIONSHIPS AND RELATED TRANSACTIONS
with Third Party Companies Owned by Executive Officers
entered into related party transactions with LB Games Ukraine, LLC, a management
company in which Troy A. Lyndon, our chief executive officer is the majority
shareholder. LB Games Ukraine, LLC, currently employs several workers within
offices of a development company in the Ukraine. In addition, we have paid
Games Ukraine, LLC, $25,275 through September 30, 2005 for services rendered.
accordance with Mr. Lyndon’s employment agreement with LBG, he received no
compensation or financial benefit from LB Games Ukraine, LLC’s ongoing
operational funds resulting from his ownership of LB Games Ukraine, LLC.
Behind Games’ financials have been consolidated with those of LB Games Ukraine
in July 2005, we adopted FIN 46(R). This resulted in the consolidation of
Games Ukraine LLC, a variable interest entity in which we are considered
primary beneficiary. LB Games Ukraine was established to provide software
development and consulting services and is currently providing these services
only to us. LB Games Ukraine is 85% owned by our Chief Executive Officer.
Pursuant to the LB Games Ukraine operating agreement, our Chief Executive
Officer is required to fund operations as needed in relation to his ownership
interest LB Games Ukraine. During the three month period ended September30,2005, we contributed approximately $5,600 to LB Games Ukraine on behalf of
Chief Executive Officer to provide working capital to LB Games Ukraine. We
recorded such amount as due from an officer our consolidated balance sheet.
Games Ukraine is currently providing software development services only to
and due to our history of providing on-going financial support to this entity,
through consolidation we absorb all net losses of this variable interest
in excess of the equity. The variable interest entity’s sole asset is
approximately $2,000 in cash. LB Games Ukraine reported a net loss of
approximately $3,500 for the three months ended September 30, 2005. During
three months ended September 30, 2005, we paid approximately $25,000 for
software development services provided by LB Games Ukraine, all of which
been eliminated in consolidation.
of Securities by Management
majority shareholder is White Beacon Inc., a Delaware Corporation (“White
Beacon”), an entity beneficially owned and controlled by Troy A. Lyndon, our
chief executive officer, and Jeff Frichner, our president. White Beacon holds
exclusive worldwide license from the publisher of the Left Behind book series
develop, manufacture and distribute video games and related products based
the “Left Behind Series” of novels published by the publisher of the Left Behind
book series. White Beacon has granted us a sublicense to exploit the rights
fulfill the obligations of White Beacon under the license. All of the shares
common stock presently issued and outstanding are “restricted securities” as
that term is defined under the Securities Act of 1933, as amended, and, as
may not be sold in the absence of registration under the Securities Act of
as amended or the availability of an exemption from registration.
Directors’ Other Business Activities
directors are involved in a variety of business and professional activities
outside of managing our operations. These other activities may result in a
conflict with respect to the allocation of management resources away from our
operations and to other activities.
Management devotes only such time to our operations as they, in their sole
discretion deem necessary to carry out our operations effectively. Our officers
and directors may work on non-profit projects in accordance with their
respective employment agreements. Conflicts of interest may arise in allocating
management time, services or functions among such affiliates.
Bylaws provide that our management will not be liable for actions taken by
in good faith in furtherance of our business, and will be entitled to be
indemnified by us in such cases. Therefore, our stockholders may have a more
limited right against the management, their affiliates and their respective
related parties than they would have absent such limitations in the Bylaws.
addition, indemnification of the management, their affiliates and their
respective related parties could deplete our assets possibly resulting in loss
by the stockholders of a portion or all of their investment.
currently not involved in any legal proceedings.
Stock is traded in the over-the-counter market on the NASD Bulletin Board under
the symbol “BZAG”. The following table shows the high ask and low bid prices for
the Common Stock for each quarter during the last two fiscal years ended March
31, and the three most recent fiscal quarters. The quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission and may
represent actual transactions. All
quotations reflect prices prior to our 1 for 4 reverse split effectuated on
February 7, 2006.
declared or paid cash dividends or made distributions in the past, and we do
anticipate that it will pay cash dividends or make distributions in the
foreseeable future. We currently intend to retain any future earnings to finance
February 7, 2006, our shares of common and preferred voting stock issued and
outstanding were held by approximately 1,250 shareholders of record. As
discussed in the section entitled “Executive Compensation”, several executive
officers have a right to convert deferred salaries into our common stock. There
are no other outstanding options or rights to acquire shares.
authorized to issue two hundred million (200,000,000) shares of $0.001 par
common stock of which 17,877,172 shares are currently outstanding as of February7, 2006, plus an additional 5,889,951 that may be issued pursuant to deferred
salary conversion privileges held by three members of our executive management
team. Holders of common stock are entitled to one vote per share on each matter
submitted to a vote at any meeting of stockholders. Shares of common stock
not carry cumulative voting rights and, therefore, holders of a majority of
outstanding shares of common stock will be able to elect the entire board of
directors, and, if they do so, minority stockholders would not be able to elect
any members to the board of directors. Our board of directors has authority,
without action by the stockholders, to issue all or any portion of the
authorized but unissued shares of common stock, which would reduce the
percentage ownership of the stockholders and which may dilute the book value
the common stock.
have no pre-emptive rights to acquire additional shares of common stock. The
common stock is not subject to redemption and carries no subscription or
conversion rights. In the event of liquidation, the shares of common stock
entitled to share equally in corporate assets after satisfaction of all
liabilities. The shares of common stock, when issued, will be fully paid and
of common stock are entitled to receive dividends as the board of directors
from time to time declare out of funds legally available for the payment of
dividends. We have not paid dividends on common stock and do not anticipate
we will pay dividends in the foreseeable future.
an agreement with Charter Financial Holdings, LLC, to ensure that its ownership
of our subsidiary, Left Behind Games, does not fall below 1%. The result is
for each time the subsidiary issues or sells stock, we must issue that amount
stock to Charter Financial Holdings, LLC to maintain their ownership percentage.
Charter Financial Holdings, LLC is not required to pay additional consideration
for those shares.
no conversion, preemptive, or other subscription rights or privileges with
respect to any shares. Our stock does not have cumulative voting rights which
means that the holders of more than fifty percent (50%) of the shares voting
an election of directors may elect all of the directors if they choose to do
In such event, the holders of the remaining shares aggregating less than fifty
percent (50%) would not be able to elect any directors.
authorized to issue ten million (10,000,000) shares of $0.001 stated value
preferred stock of which 3,586,246 preferred A shares are issued and
outstanding. Preferred A shares are convertible on a one for one basis with
common stock at the sole discretion of the holder. Our preferred A shares enjoy
one for one common stock voting rights. The preferred stock is entitled to
preference over the common stock with respect to the distribution of our assets
in the event of our liquidation, dissolution, or winding-up, whether voluntarily
or involuntarily, or in the event of any other distribution of our assets of
among our shareholders for the purpose of winding-up our affairs. The authorized
but unissued shares of preferred stock may be divided into and issued in
designated series from time to time by one or more resolutions adopted by the
Board of Directors. The Directors in their sole discretion shall have the power
to determine the relative powers, preferences, and rights of each series of
consider it desirable to have one or more classes of preferred stock to provide
us with greater flexibility in the future in the event that we elect to
undertake an additional financing and in meeting corporate needs that may arise.
If opportunities arise that would make it desirable to issue preferred stock
through either public offerings or private placements, the provision for these
classes of stock in our certificate of incorporation would avoid the possible
delay and expense of a stockholders’ meeting, except as may be required by law
or regulatory authorities. Issuance of the preferred stock would result,
however, in a series of securities outstanding that may have certain preferences
with respect to dividends, liquidation, redemption, and other matters over
common stock which would result in dilution of the income per share and net
value of the common stock. Issuance of additional common stock pursuant to
conversion right that may be attached to the preferred stock may also result
the dilution of the net income per share and net book value of the common stock.
The specific terms of any series of preferred stock will depend primarily on
market conditions, terms of a proposed acquisition or financing, and other
factors existing at the time of issuance. As a result, it is not possible at
this time to determine the respects in which a particular series of preferred
stock will be superior to our common stock. Other than one for one exchanges
preferred stock held by shareholders of our subsidiary, the board of directors
does not have any specific plan for the issuance of preferred stock at the
present time and does not intend to issue any such stock on terms which it
are not in our best interest or the best interests of our
paid no dividends and propose for the foreseeable future to utilize all
available funds for the development of our business. Accordingly, we have no
plans to pay dividends even if funds are available, as to which there is no
currently utilize the services of Columbia Stock Transfer Company, 410 Sherman
Avenue, Suite 207, Coeur d’Alene, ID83814, as our transfer agent and
OF DIRECTORS AND OFFICERS
bylaws provide for indemnification of directors and officers to the fullest
extent permitted by law and provide for the advancement of expenses to such
officers and directors. Our bylaws provide that, to the fullest extent permitted
by law, our executive officers and directors shall have no personal liability
us or to our stockholders for damages for breach of their fiduciary duty as
executive officers and directors except for damages resulting from acts or
omissions which involve willful misconduct, fraud or a knowing violation of
Accordingly, our executive officers and directors may have no liability to
stockholders or Bonanza Gold for their acts or omissions performed or omitted
pursuant to the authority granted to them under our bylaws.
bylaws provide that any of our executive officers or directors shall be
indemnified to the fullest extent permitted by law and as provided therein.
bylaws provide that we will indemnify any executive officers and directors
any liability incurred by it in connection with any proceeding by a third party
if the executive officer or director conducted him or herself in good faith,
reasonably believed that his or her conduct was in or at least not opposed
our best interest, and, in the case of a criminal proceeding, had no reasonable
cause to believe its conduct was unlawful. Such indemnity as to actions by
applies against all liability of the proceeding and is subject to the same
conduct standards of third party claims but is not applicable to liability
resulting from the gross negligence or misconduct of such parties unless the
court determines that the party is fairly and reasonably entitled to
indemnification. We also have the power to indemnify other parties acting in
as indemnification for liabilities arising under the 1933 Act may be permitted
to stockholders, directors, officers, or persons controlling our operations,
SEC is generally of the opinion that such indemnification is against public
policy and is therefore unenforceable.
of a Material Definitive Agreement.
2 - Financial Information
of Acquisition or Disposition of Assets.
of Operations and Financial Condition.
of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet
Arrangement of a Registrant.
Events That Accelerate or Increase a Direct Financial Obligation or an
Obligation Under an Off-Balance Sheet Arrangement.
Associated with Exit or Disposal Activities.
3 - Securities and Trading Markets
of Delisting or Failure to Satisfy a Continued Listing Rule or Standard:
Transfer of Listing.
Sales of Equity Securities.
to the Share
our subsidiary, LBG, we issued the following securities to the entities and
individuals identified below:
of Shares of Bonanza
Received at the
Series "A" Preferred Stock
Damon and Barbara Parker
Common Stock Shareholders
Damon and Barbara Parker
Charter Financial Holdings, LLC
White Beacon Inc.
Thomas N. Mahoney
James J. Mahoney
Thomas H. Axelson
James Alan Cook
James H. Amos, Jr.
Louis and Anita Prata
Loyd and Darla G. Trantham
Mike and Dolores Flores
Aspect Technology & Eqpt, Inc.
Grover and Clara Roundtree
Kevin M. Atkins
George Hughes, III
Paul and Lisa Sumrall
George & Debbie Hughes
Donna Kenney and John Mahoney
James Revocable Living Trust
Bobby W Roundtree IRA Rollover
Geir & Melissa Fjugstad
Victoria & Philip Padula
Love Family Trust
Robert and Jayne Love
Richard and Linda Carlson
Global Media Solutions Inc.
Marketing Systems, Inc.
Cher Hong Wang
Richmond Jaymes Love
Douglas and Barbara Casavant
Jeffrey D. Mullen
Valerie & Jeff Deyo
Rabecca A. Deyo
Peter Brian Quigley
Robert DeVries and Flora G. DeVries
Andrew W. and Karen M. Watling
John R. Coghlan
Leeg Family Trust
John and Sharon Barry
Kirby D. Cochran
Hooper Group Inc.
Total LBG Shares
the shares in reliance upon an exemption from registration pursuant to Section
4(2) of the Securities Act of 1933. We believe that this sale of securities
not involve a public offering because it involved the issuance of a relatively
small amount of our securities to a limited number of accredited and
sophisticated individuals with whom we already had a relationship.
Modification to Rights of Security Holders.
4 - Matters Related to Accountants and Financial
in Registrant’s Certifying Accountant.
Maichel & Teague P.S., Certified Public Accountants located in Spokane,
Washington audited the financial statements of Bonanza Gold, Inc. for the year
ended March 31, 2005. Due to acquisition of LBG and the movement of our primary
operations to the State of California, we have retained LBG’s auditor, Corbin
& Company, LLP, located in Irvine, California to provide audits for 2006 and
on an ongoing basis.
decision to accept the change was approved by the board of
were no disagreements between the Company and DeCoria, Maichel & Teague P.S.
whether resolved or not resolved, on any matter of accounting principles or
practices, financial statement disclosure or auditing, scope or procedure which,
if not resolved, would have caused them to make reference to the subject matter
of the disagreement in connection with their reports.
Reports of DeCoria, Maichel & Teague P.S. for the year of 2005 did not
contain any adverse opinions or disclaimers of opinion, but noted as to
uncertainty, audit scope or accounting principles as follows:
the audited financial statements of Bonanza Gold, Inc. for the year ended March31, 2005, addressed "Going Concern" uncertainties, which stated, in part, “the
Company has incurred losses since its inception and has no recurring source
revenue. These conditions raise substantial doubt as to the Company’s ability to
continue as a going concern. Management's plans for the continuation of the
Company as a going concern include financing the Company's operations through
sales of its unregistered common stock and the eventual acquisition of an entity
with profitable business operations. There are no assurances, however, with
respect to the future success of these plans. The financial statements do not
contain any adjustments, which might be necessary, if the Company is unable
continue as a going concern.” Management does not disagree with this
did not consult DeCoria, Maichel & Teague P.S. regarding the application of
accounting principles to a specific completed or contemplated transaction or
type of audit opinion that might be rendered, nor concerning any matter that
the subject of any disagreement or event.
on Previously Issued Financial Statements or a Related Audit Report or Completed
5 - Corporate Governance and Management
in Control of Registrant.
following the consummation of the Share Exchange Agreement described in Item
1.01 above, we issued 13,000,000 shares of our common stock and 3,500,000 shares
of our preferred stock to stockholders of Left Behind Games Inc. Following
new issuances of our stock pursuant to the Share Exchange Agreement, there
change in control of the company.
of Directors or Principal Officers; Election of Directors; Appointment of
February 7, 2006, our board of directors appointed Troy
board of directors and named Messrs.
of our officers. A discussion of the experience and relevant business activities
over the past five years for Messrs.
can be found in Item 1.01, in the section entitled, “Directors and Executive
with Messrs. Lyndon’s, Frichner’s, and Axelson’s appointment as all of our
officers, Mr. Robert E. Kistler resigned as our president and treasurer, and
Hobart Teneff resigned as our vice president. Effective February 7, 2006 at
PST, Messrs. Kistler, Teneff and Terrence Dunne resigned as our directors.
Messrs. Kistler, Teneff, and Dunne’s resignation as a director of the company
was not because of any disagreements with the company on matters relating to
operations, policies and practices.