The Unabridged History of Winners and Losers

[Tatari Gami]

Here's an old one I missed:

Friday, June 29, 2001

Story last updated at 8:04 p.m. on Thursday, June 28, 2001

SEC looking into Winners Internet PR dealings

By Mark Basch
Times-Union business writer

Winners Internet Network Inc., an Internet transaction processing company formerly based in St. Augustine, said yesterday that the company is in "a very weak but salvageable position" and that the Securities and Exchange Commission is investigating the company's relationship with a public relations firm.

According to a letter to shareholders posted on the company's Web site yesterday, the SEC is investigating the relationship between Winners Internet and a European firm called Stockreporter that issued favorable research reports about Winners Internet after being retained by the company.

Winners Internet said efforts to settle the investigation last year were unsuccessful and that the investigation is ongoing.

Winners Internet was formed in the 1990s to provide clearinghouse services for Internet casinos. The company was headquartered in St. Augustine, but when founder David C. Skinner Jr. resigned as president and chief executive officer in March, the company apparently moved its headquarters operations to Liechtenstein, where its computers were located. Liechtenstein resident Stefan Vogt was appointed president and CEO when Skinner resigned.

The company has not reported any financial data since recording revenue of $822,673 and a profit of $5,067 in 1999. Its stock, which trades in the over-the-counter market, has been priced below 10 cents a share in recent days.

Winners Internet and Stockreporter issued a joint press release in January 2000 announcing that Stockreporter was beginning coverage of Winners Internet with a "strong buy" recommendation and a "conservative target price" of $12. The stock was trading at $2.50 at the time and rose to a high of $7.88 in March 2000.

Stockreporter is a Germany-based company that publishes research on small companies through its Web site at www.stockreporter.de.

The press release with Winners Internet did disclose that Stockreporter usually receives consideration in cash or stock when it evaluates a company and that investors should view that as a potential conflict of interest. It did not say anything specific about the relationship between Winners Internet and Stockreporter.

Vogt and Stockreporter did not respond to e-mail inquiries yesterday.

The Winners Internet shareholder letter said the company has a "serious liquidity problem" and "it is possible that the company will not be able to pay its bills in June" without additional funds. The company is looking for new investors.

While Winners Internet was started to provide processing services for Internet casinos, it has expanded to provide transaction processing for other types of e-commerce businesses. In the shareholder letter, the company said it plans to change its focus away from gambling and toward more traditional e-commerce.

The complete text of the letter can be seen at the company's Web site at www.winr.net

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