ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations

The following Management's Discussion and Analysis or Plan of Operation contains forward-looking statements that involve risks and uncertainties, as described below. Bingo.com, Ltd.'s (the "Company", "we", or "us") actual results could differ materially from those anticipated in these forward-looking statements. The following discussion should be read in conjunction with the unaudited interim consolidated financial statements and notes thereto included in Part I - Item 1 of this Quarterly Report, and the audited consolidated financial statements and notes thereto and the Management Discussion and Analysis or plan of Operations included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2008.

FORWARD LOOKING STATEMENTS

All statements contained in this Quarterly Report on Form 10-Q and the documents incorporated herein by reference, as well as statements made in press releases and oral statements that may be made by us or by officers, directors or employees acting on our behalf, that are not statements of historical fact constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause our actual results to be materially different from historical results or from any future results expressed or implied by such forward-looking statements. Readers should consider statements that include the terms "believe," "belief," "expect," "plan," "anticipate," "intend" or the like to be uncertain and forward-looking. In addition, all statements, trends, analyses and other information contained in this report relative to trends in net sales, gross margin, anticipated expense levels and liquidity and capital resources, constitute forward-looking statements. Particular attention should be paid to the facts of our limited operating history, the unpredictability of our future revenues, our need for and the availability of capital resources, the evolving nature of our business model, and the risks associated with systems development, management of growth and business expansion. Except as required by law, we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise. All cautionary statements made herein should be read as being applicable to all forward-looking statements wherever they appear. Readers should consider the risks more fully described in our Annual Report on Form 10-K for the year ended December 31, 2008, filed with the Securities and Exchange Commission (the "SEC") and should not place undue reliance on any forward-looking statements.

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OVERVIEW

We are in the business of developing and operating a bingo based web portal designed to provide a variety of Internet based games played by individuals plus other forms of entertainment, including an online community, chat rooms, contests, sweepstakes, tournaments, and more. Using our bingo.com domain name and incorporating a variety of games and content to attract and retain a large number of subscribers, we have built one of the leading bingo-based portals on the Internet. Our website has attracted millions of visitors of which over 1,950,000 have gone through a detailed sign-up process and become registered users. The levels of Internet traffic have a direct impact on our revenues as, generally, the greater the Internet traffic, the greater the amount of gaming or advertising revenue received.

We generate revenue from players depositing funds into their account on our website and then playing games for money. An additional source of revenue comes from selling advertising on our portal to other companies who wish to advertise their products to our user demographic. We obtained a gaming license and commenced gaming operations from Curacao, Netherlands Antilles in May 2005. During the quarter ended March 31, 2009, the Company was granted a Letter of Intent by the Lotteries and Gaming Authority of Malta, and commenced operating under this Maltese license. This Letter of Intent enables us to advertise in the United Kingdom.

Our website provides players the ability to purchase bingo cards online for cash, with the winner of each bingo game winning a percentage of the total cards purchased for that particular bingo game. In addition, we provide entertainment content to our players in the form of either free-to-play, or pay-to play multiplayer theme bingo games, such as Astrology Bingo, Cupid Bingo, and the like, as well as online video poker, sweepstakes and slot machines. We also offer our players other forms of entertainment such as chat rooms and member profiles.

We intend to continue to build on the success of the existing business by offering a greater depth and variety of content that we expect will hold existing subscribers as well as attract new subscribers and allow us to generate more revenue.

We have made a significant investment in the development of our website, purchase of domain name, branding, marketing, and maintaining operations. As a result we have incurred significant losses since inception, and as of March 31, 2009, had an accumulated deficit of $12,507,524.

On September 30, 2006, the United States Senate passed the Unlawful Internet Gambling Enforcement Act 2006 ("UIGEA"), which was signed into law by President Bush, on October 13, 2006. The legislation aimed to prohibit the funding of illegal online gambling to United States citizens and residents. Effective October 12, 2006, in response to the UIGEA we sold our United States player database and related assets to an unrelated company. The asset disposition includes the registered online gaming players, the gaming servers, and the complete database of real money players. The asset disposition price is $1,200,050 payable at a variable rate over the coming months.

During the quarter ended June 30, 2007, we launched our United Kingdom focused website, with games targeted to the United Kingdom audience and the games played in British pounds sterling. Gaming revenue from the Bingo.com website accounted for approximately 97% of our revenue for the quarter ended March 31, 2009. Moving forward we will focus our marketing on attracting additional players from the United Kingdom and other jurisdictions where Internet gambling is regulated and considered legal. In addition we will be launching in various languages and currencies.

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CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which except for lack of all detailed note disclosures, have been prepared in conformity with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate these estimates, including those related to impairment or disposal of long-lived assets, contingencies and litigation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We consider the following accounting policies to be both those most important to the portrayal of our financial condition and require the most subjective judgment:

- Revenue recognition;

- Impairment of long-lived assets and long-lived assets to be disposed of;

Revenue recognition:

The Company generates the majority of its revenue from gaming revenue. Gaming revenues have been recognized on the basis of total dollars wagered, including bonus wagered, on all games less all winnings payable to players.

Advertising revenues have been recognized as the advertising campaign or impressions and clicks are made on the website and when collection of the amounts are reasonably assured. Cash received in advance of the advertising campaigns or impressions and clicks are recorded under unearned revenue.

Impairment of long-lived assets and long-lived assets to be disposed of:

The Company accounts for long-lived assets in accordance with the provisions of SFAS No. 144 "Accounting for the Impairment or Disposal of Long-Lived Assets" and SFAS No. 142 "Accounting for Goodwill and Other Intangible Assets". As of March 31, 2009, the only long-lived assets reported on the Company's consolidated balance sheet are equipment, intangible assets and domain name rights. These provisions require that long-lived assets and certain identifiable recorded intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceed the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount and the fair value less costs to sell.

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RESULTS OF OPERATIONS

Revenue

Total revenue decreased to $1,324,630 for the quarter ended March 31, 2009, a decrease from revenue of $1,344,347 for first quarter of 2008 and a decrease from revenue of $1,329,273 in the fourth quarter of 2008. Gaming Revenue increased to $1,284,732 in the quarter ended March 31, 2009, compared Gaming Revenue of $1,260,470 in the first quarter of 2008 and a decrease from revenue of $1,287,808 in the fourth quarter of 2008. When measured in Pounds Sterling, presently our depositing currency, the gaming operations provided revenue of GBP894,738 Pound Sterling, an increase of 40% from gaming revenue of GBP636,884 Pound Sterling for the first quarter of the prior year and an increase of 9% from gaming revenue of GBP819,953 Pound Sterling in the fourth quarter of 2008. The increase compared to the first and fourth quarter of 2008, is due to an increase in the player base. The decrease in Gaming Revenue as recorded in US Dollars is due to the weakness of the Pound Sterling in relation to the US Dollar. We earned advertising revenue of $39,898 in the quarter ended March 31, 2009, a decrease from advertising revenue of $83,877 in the first quarter of 2008 and a decrease from advertising revenue of $41,465 in the fourth quarter of 2008.

Cost of revenue

We recorded cost of revenue of $870,349 during the quarter ended March 31, 2009, a decrease of 7% compared to costs of $938,964 for the first quarter of 2008 and a decrease of 5% over costs of $917,916 in the fourth quarter of 2008. The gross margin increased to 34% for the quarter ended March 31, 2009, compared to gross margin of 30% in the first quarter of 2008 and 31% gross margin in the fourth quarter of 2008. Cost of revenue consists of bonuses granted on deposits made by players, the cost of hosting the website, payment processing fees in relation to deposits from and withdrawals to our players, software license fees, and the domain name purchase payments. The decrease in cost of revenue for the quarter ended March 31, 2009, compared to the first and fourth quarter of 2008, is due to the weakness of the Pound Sterling in relation to the US Dollar. This decrease is despite an increase in deposit bonus if recorded in Pound Sterling terms. The awarding of deposit bonuses is required both to be competitive with other bingo-oriented websites and to build a large customer base as quickly as possible.

Sales and marketing expenses

Sales and marketing expenses increased by 22% to $334,245 for the quarter ended March 31, 2009, an increase over expenses of $274,741 in the first quarter of 2008 and an increase of 3% from expenses of $323,905 in the fourth quarter of 2008. Sales and marketing expenses principally include costs for signup bonuses, marketing, prizes for our players and other bonuses and incentives offered to gaming players. The increase in sales and marketing expenses for the quarter ended March 31, 2009, compared to the first and fourth quarter of 2008 is due to the increase in marketing bonus granted to players and an increase in affiliates and affiliate commission.

We expect to continue to incur sales and marketing expenses to increase traffic from the United Kingdom and other selected markets and, consequently, deposits to our web portal. These costs will include bonuses and incentives, affiliate commissions, salaries, advertising, and other promotional expenses intended to increase our subscriber base and improve gaming revenue. There can be no assurances that these expenditures will result in increased traffic or significant additional revenue.

General and administrative expenses

General and administrative expenses consist primarily of premises costs for our office, legal and professional fees, and other general corporate and office expenses. General and administrative expenses decreased to $113,083 for the first quarter of 2009, a decrease of 13% from costs of $129,334 for the first

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quarter of 2008 and a decrease of 19% from costs of $139,191 in the fourth quarter of 2008. The decrease in general and administrative expenses for the quarter ended March 31, 2009, compared to the first and fourth quarter of 2008, is due to the weakness of the Pounds sterling and the Canadian Dollar in relation to the US dollar. In addition, the decrease in general and administrative expenses compared to the first quarter of 2008, is due to legal fees incurred in the first quarter of 2008 for the incorporation of Bingo.com (Alderney) Limited in Alderney, Channel Islands and Coral Reef Marketing Inc. in Anguilla. The decrease in general and administrative expenses compared to the fourth quarter of 2008, is due to the legal fees incurred in the fourth quarter of 2008, for the application for a Maltese gaming license, which was granted in the first quarter of 2009.

We expect to continue to incur general and administrative expenses to support the business, and there can be no assurances that we will be able to generate sufficient revenue to cover these expenses.

Salaries, wages, consultants and benefits

Salaries, wages, consultants and benefits decreased by 10% to $239,799 for the quarter ended March 31, 2009, compared to salaries, wages, consultants and benefits of $265,070 in the first quarter of 2008 and an increase of 3% over salaries, wages, consultants and benefits of $232,211 in the fourth quarter of 2008. This decrease compared to the first quarter of 2008, is due to the weakness of the Canadian Dollar in relation to the US Dollar. This increase compared to the fourth quarters of 2008, is due to the recruitment of additional staff in order to run the expanded business and regular increases in the rates of pay.

Depreciation and amortization

Depreciation and amortization includes depreciation of our equipment, as well as amortization of intangible asset relating to the email list. Equipment is depreciated using the declining balance method over the useful lives of the assets, ranging from three to five years. Depreciation and amortization increased to $16,701 during the quarter ended March 31, 2009, an increase of 23% over costs of $13,597 during the same quarter in the prior year and an increase of 6% from costs of $15,790 in the fourth quarter of 2008. This increase in depreciation and amortization can be explained due to the acquisition of equipment, especially computers and servers in Malta, to enable us to run the website out of Malta.

Stock based Compensation

Stock based compensation decreased to $13,250 during the quarter ended March 31, 2009, a decrease of 17% over stock based compensation of $16,022 during the same quarter in the prior year and a decrease of 48% from stock based compensation of 25,633 in the fourth quarter of 2008. The decrease in stock based compensation compared to the first and fourth quarters of 2008, expiration of stock options during the quarter ended March 31, 2009.

Profit on sale of US Gaming players

Effective October 12, 2006, the Company, in response to the United States Unlawful Internet Gambling Enforcement Act, sold its United States players and related assets for $1,200,050, to an arms length third party payable by the purchaser at a variable rate over the subsequent months until fully paid. We recognize the profit from the sale of these assets as and when payment is received. During the quarter ended March 31, 2009, we collected $7,500 of the $1,200,050 due, compared to payments received of $30,000 during the same quarter in the prior year and $7,500 in the fourth quarter of 2008.

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Net loss and loss per share

Net loss for the three months ended March 31, 2009, amounted to $243,974, a loss of $0.01 per share, a decrease of 7% compared to a net loss of $262,543, a loss of $0.01 per share for the same period in 2008 and an decrease in net loss of 37% compared to a net loss of $390,282 or $0.01 per share in the fourth quarter of 2008. The decrease in net loss for the quarter ended March 31, 2009, compared to the first and fourth quarter of 2008, is due to lower expenses as a result of the weakness of the Pound Sterling and Canadian Dollar in relation to the US Dollar, especially in the fourth quarter of 2008, where large foreign exchange losses were incurred.

LIQUIDITY AND CAPITAL RESOURCES

We had cash of $805,392 and working capital of $425,428 at March 31, 2009. This compares to cash of $412,002 and working capital of $124,495 at December 31, 2008. During the quarter ended March 31, 2009, we completed private placement offerings of 3.5 million units at $0.15 per unit. Total proceeds of the offerings were $525,000.

During the quarter ended March 31, 2009, we used cash of $139,625 from operating activities compared to using cash of $206,519 in the same period in the prior year and compared to using cash of $327,335 in the fourth quarter of 2008.

Our future capital requirements will depend on a number of factors, including costs associated with development and marketing of our Web portal, the success and acceptance of gaming operations and the possible acquisition of complementary businesses, products and technologies.