The Unabridged History of Winners and Losers

[Tatari Gami]

August Shareholder's Letter
http://www.winr.net/text/Inv-8-30-01.htm
August 30, 2001

Dear Shareholders,

I promised to provide monthly written updates about our efforts to improve the financial performance of Winners Internet Network, Inc. (the “Company”). Here’s the first report.

Overall Business

Overall business conditions have not changed. But, we are making progress on some issues.

Specific Issues

Liquidity

The Company’s liquidity situation has not changed. Visa has indicated that a portion of the funds being held will be sent to us this week. Our fees and charges will be deducted from the amount sent to us and the balance will be forwarded to our vendors. Overall, our cash position is sufficient to continue operations for a couple more months unless we find new investors. Efforts are being made to find new investors and we have identified some possibilities. However, we still do not have firm commitments and as time goes on it becomes less likely that we will find them.

SEC Investigation

The investigation is ongoing. We had a cordial discussion with representatives from the SEC in mid-August for purposes of helping them gather facts. We do not know when the investigation will be concluded although it is reasonable to expect that the process could last another 3-6 months. The ultimate outcome of this process and the impact on us remains highly uncertain.

Financial Statements

No work is being done to prepare financial statements except that we are reviewing the records sent to us from the U.S. We’ll work diligently to prepare a good set of baseline financial statements after we’re confident that the customer base and revenue stream can be rebuilt.

Visa/UBS Card Contracts

Visa/UBS produced the draft contract on schedule as promised. We met with Visa/UBS representatives on August 24 to discuss the contract and discussed a number of provisions that we asked them to consider changing. They are considering some of the proposed changes. At least one important point relative to the draft contract will probably not change: Visa/UBS will continue to hold funds due us for up to 180 days (due to the nature of our business, the businesses using our service and current customer base). As you can imagine, that point will make it difficult for us to secure new customers. Notwithstanding this difficult provision, we do expect to sign the new contract with Visa in late September. In anticipation of this, we continue to build a database of potential customers for marketing and have had discussions with large potential customers. Once the Visa contract is signed, we can contract with new customers.

There are no changes to report concerning the status of SEC reporting, relisting, the management team, or the Board of Directors.

This is the first monthly report. I’ll prepare another one in September or as soon as a significant development occurs.

Sincerely,

Stefan Vogt

Chief Executive Officer

Ruggell, Liechtenstein