Online Stock Investment Scheme Shut Down
A federal court in Florida has shut down two companies that used the Internet to sell fraudulent high-tech stock offerings, Newsbytes reported. The U.S. District Court for the Southern District of Florida placed several restraining orders against Internet Capital Holdings Inc. and Internet Capital Holdings II, Inc. after the Securities and Exchange Commission filed a complaint about the companies' activities. According to the SEC, the defendants, Peter J. Buzani and William E. Griffis, told investors that they held substantial equity positions in a number of Internet start up companies, when neither man held such equity in the companies. The two were able to raise more than $2 million through the scheme. The SEC is asking for civil penalties against the company, as well as repayment of the investors' funds.
New Corporate Governance Bylaws Adopted
eLot, Inc. (ELOT) has adopted several amendments to its bylaws to improve corporate governance, and filed a form 8-K with the SEC on November 22 outlining these amendments. The bylaw amendments require that two-thirds of the members of the board of directors be independent, establish a definition of independence and mandate audit, compensation, nominating and transaction committees of the board, all members of which must be independent as defined in the bylaws. The bylaws as amended also require that the independent directors elect a ``lead director' of the independent directors whenever the chairman of the board is also an executive officer of the company
or for any other reason is not independent. In addition, the bylaws require
that the lead director and the other independent directors meet in executive
session following every meeting of the full board.
These provisions may not be amended or repealed without either approval by the stockholders or approval by a two-thirds majority of all the authorized number of directors of the company including two-thirds of the independent directors. The bylaws also require that the nominating committee shall not nominate candidates for election to the board except as may be consistent with the new governance provisions, and no
corporate funds may be used to solicit proxies in any way that is inconsistent with the governance provisions.
Shareholders in the company, meanwhile, have little to celebrate. eLot's stock price hit a 52-week low on November 22, selling for $0.688. By the 24th, shares were up nominally, closing the week at 13/16.
Starnet's Happenings
Starnet Communications International (SNMM) is well on its way to changing its name (to World Gaming Plc) and hometown (in England and Wales). Although these proposed changes still await shareholder approval, the company has filed a form F-6 registration statement with the SEC for registration of American depository shares evidenced by American depository receipts (ADR) for World Gaming, Plc. ADRs are negotiable U.S. securities that represent a non-U.S. company's publicly traded equity. Their prices are quoted in U.S. dollars, settled in the same way as U.S. shares, and pay dividends or interest in U.S. dollars. Starnet shareholders will vote on the proposed changes on December 8.
"We have embarked on a process to present for shareholders' consideration a reorganization proposal to create a United Kingdom parent company that we believe will allow us to further capitalize on the inherent strengths of our business and increase
shareholder value," explained Fred Hazell, interim president and CEO. "I strongly believe the activities currently underway are in the best interests of the company and our shareholders and I, along with the board of directors and management team, look forward to working for our shareholders to continue developing the exciting opportunities that lie before us."
Like many other Internet companies, Starnet's stock prices have been down. The company hit a 52-week low last week, dropping down to $0.625. "The company is not aware of any new developments, which would account for the recent change in share price," commented Hazell. "Revenues are growing, ongoing business operations are thriving, and we are projecting our overall financial position for the current quarter to show improvement over last quarter. The company is positioning itself to successfully capitalize on the burgeoning global I-gaming market and we are aggressively pursuing the opportunities that market represents. In light of these factors, it is my personal opinion that the current price of Starnet's stock simply does not reflect the value of our ongoing concerns."
Zetters Reports £1 Million Losses
Chairman Anthony Wollenberg of Zetters Group Plc (ZTTR.L) reported more than £1 million in betting turnover losses for the company during the first half of 2000, This Is London said. Conversely, if Zetters had owned IFX, its London-based market exchange site, for a year, Wollenberg added, it would have contributed £1.81 million to profits, which were £1.48 million at the same time last year. Zetters acquired IFX in September.
Paddy Power Plans IPO
One of Ireland's largest bookmakers, Paddy Power, is getting ready for an IPO. According to published reports, Paddy Power's IPO is being managed by Goodbody Corporate Finance, which is likely to raise the company's profile and raise capital (an estimated £14 million) for any future acquisitions. News of the stock flotation plan followed on the heels of the company's announced intention to head offshore to Malta, where the company was awarded a betting license last month. Managing Director Stuart Kenny reportedly has threatened to move the company's Internet and telephone betting services to Malta if the Irish government won't lower its betting duty. According to one unnamed source, someone in the government must be listening, because betting duty may get slashed during the December budget announcement, possibly dropping as low as 0.3 percent for international bets and 3 percent on domestic bets.
A Little Flotsam from the U.K.
Following the failure of its $1 billion stock flotation, Coral (CRU), one of the largest bookmakers in the U.K., is hoping to attract a buyer, reports The Sunday Telegraph. Meanwhile, The Independent reported on Sunday that talks between Enic Plc (ENI.L) and Victor Chandler are in critical condition. After 15 months of negotiation, it's believed that Enic is unable to close the deal, placing the deal in jeopardy. Camelot, current operator of the U.K. National Lottery, reported that profits are up four percent for the first nine months of this year.
Shares Fall After Surgery Reported
Kerry Packer, Australia's richest man, reportedly had a kidney transplant last week, news of which caused shares prices in his companies to fall. Among the share prices affected were those for ecorp (A.ECP), which saw its price fall nearly 3 percent to A$1.85. In addition, Packer's Publishing and Broadcasting Ltd. (A.PUB), which owns 80 percent of ecorp, saw its share price drop 19 cents to $13.32.
ILTS Issues Reports
Results for International Lottery & Totalizator (ITSI.OB) were released last week, showing profits for the third quarter 2000 came in at $3.9 million compared to $1.2 million for the same quarter last year. Net loss for the quarter was $1.2 million or $0.10 per share caused by a $1.8 million reserve taken as a provision for a doubtful account receivable from a customer which has ceased operating its U.K. lottery. This compares with a net loss of $1.1 million or $0.19 per share in 1999.
For the nine months ending September 30, 2000, the company reported earnings per share were $0.05 compared with a net loss of $0.47 per share for the same last year. In addition, net income for the first nine months of this year was $0.6 million on revenues of $20.6 million, as compared to a $2.8 million net loss on revenues of $4.4
million for the prior comparable period. ILTS statements showed:
ILTS REPORTS RESULTS FOR THIRD QUARTER AND NINE MONTHS ENDING
SEPTEMBER 30, 2000
STATEMENT OF OPERATIONS
(thousands of dollars except per share amounts)
THREE MONTHS NINE MONTHS
ENDED ENDED
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2000 1999 2000 1999
(unaudited) (unaudited) (unaudited) (unaudited)
Revenue
$3,947 $1,241 $20,603 $4,386
Net Income
(loss) $(1,259) $(1,144) $605 $(2,826)
Net income (loss) per share
$(0.10) $(0.19) $.05 $(0.47)
BALANCE SHEET SUMMARY
(thousands of dollars)
Sept. 30, 2000
(unaudited)
Cash and cash equivalents $3,121
Total current assets $7,225
Total assets $7,736
Total liabilities $3,675
Shareholders' equity $4,061