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To: flodyie (0 )
From: Wolff Thursday, Mar 18 1999 7:16PM ET
Reply # of 20
The Con Artists, hypsters and Manipulators were wrong about TMRT!!!
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( ___ ) 2themart.com \
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2TheMart.com, With No Customers or Revenue, Is Worth $522 Mln
6/3/99 12:57
2TheMart.com, With No Customers or Revenue, Is Worth $522 Mln
Irvine, California, June 3 (Bloomberg) -- 2TheMart.com's
Internet auction site is still under development. It has no
customers or revenue and has never released a balance sheet.
Yet its stock has jumped 11-fold this year, giving it a
market value of $522 million. Investors are placing a higher
value on 2TheMart.com than three Internet auction companies that
are conducting business on their Web sites: uBid Inc., Onsale
Inc. and Bids.Com International Inc.
''It shows the lack of any underlying methodology to value
Internet companies,'' said Ulric Weil, chief technology analyst
for Friedman, Billings, Ramsey & Co. ''You can't even get
data on (2themart.com) because it's a non-reporting company.''
The company's shares soared from 2 on Jan. 13 to a high of
50 on Jan. 20, the day after it said its site would be running by
the second quarter and would compete with established auction
sites such as eBay Inc. and uBid. The shares today fell 1 7/8 to
20 7/8, still leaving the company worth half a billion dollars.
''There's, I think, a lot of Internet euphoria out there of
investors jumping on to what they may believe are companies that
are emerging,'' Chief Executive Dominic J. Magliarditi said in an
interview. ''A lot of it is people trying to get in on the ground
floor of the emerging market.''
The Irvine, California-based company hasn't filed reports
with the Securities and Exchange Commission. Companies are only
required to when their assets exceed $10 million and they have
more than 500 shareholders of record. Magliarditi said
2TheMart.com plans to file its SEC first report in a few days.
Company's Roots
The company went public in January under the direction of
Magaliarditi, 35, and Chairman Steven Rebeil, 36. In 1997 both
men were denied licenses to operate a casino by the Nevada Gaming
Commission, which found them unqualified to be officers of a
public company.
Magliarditi and Rebeil registered the site's Internet
address, 2TheMart.com, in December. They took the company public
a month later by merging it with a shell company called CD-ROM
Yearbook Co. The two men each own 8.9 million of the company's 25
million shares, worth a total of $181 million. Magliarditi
declined to say how much they invested in 2TheMart.com.
In the press release announcing the merger, the company said
its Web site ''is intended to be one of the largest and
preeminent online auction sites on the Web.'' It promised real-
time video auctions, a chat room and secure transaction
processing.
To date, the site consists of a single screen: an animated
billboard proclaiming, ''Soon Everyone Will Know Where to Find
Anything!''
It isn't clear when the site will open.
''We have yet to determine a specific launch date,''
Magaliarditi said. He said he expects to announce the date within
a week.
Nevada Action
Magliarditi and Rebeil have been business associates for
more than six years. On Feb. 19, 1997, the Nevada Gaming
Commission denied their applications for a casino license.
The commission found both men ''not of good character,
honesty and integrity.'' It also found that both lied to
investigators for the State Gaming Control Board, and thus each
''failed to meet the burden of proving his qualifications and
suitability as an officer, director or controlling shareholder of
a publicly traded corporation.''
Magliarditi said that shouldn't deter investors from buying
shares of 2TheMart.com.
''Those are the underlying requirements of the Nevada
statute and so those are part of the statute for denying anybody
an application,'' he said.
According to a transcript of testimony before the Gaming
Control Board in 1997, investigators for the agency also
discovered Magliarditi, an attorney who previously practiced tax
law, underreported his income by about $70,000 in 1994.
''The board felt this wasn't an honest mistake, but
purposeful underreporting,'' Steve DuCharme, chairman of the
Nevada Gaming Control Board, said in an interview. Magliarditi
testified that he owed the IRS an additional $24,000 after he
amended his federal tax return to include the previously
unreported income.
Testimony
Magliarditi also testified that he altered K-1 tax schedules
reporting Rebeil's partnership income after they were prepared
and signed by the accounting firm of Arthur Andersen LLC.
Magliarditi said the adjustments he made, at Rebeil's request,
lowered Rebeils's 1994 income tax bill.
''I think they were whited out and then the numbers were
inserted,'' testified Magliarditi. He said more than a year
passed before the accounting firm received a copy of the altered
document.
Control Board investigators also found that Rebeil diverted
''millions of dollars'' from a home building company in which he
was a partner to finance construction of his personal residence.
Rebeil allegedly directed subcontractors to overcharge the
builder and use the excess payments as credits toward work on his
house, DuCharme said. Magliarditi testified that there ''could
possibly be'' criminal wrongdoing by Rebeil in connection with
the diversion.
Frank Schreck, Rebeil's former attorney, testified that at
first he believed Rebeil's denials about the skimming. However,
after interviewing a concrete subcontractor, he said he became
''100 percent'' certain that Rebeil was lying when he denied the
skimming. At that point, he said, he resigned as his attorney.
Rebeil couldn't immediately be reached for comment.
Surprise
The Control Board alleged that Magliarditi told its
investigators Rebeil's actions were a ''complete surprise'' to
him, even after he'd been alerted to the activity by Rebeil's
business partner and by subcontractors.
In April 1997, Rebeil's office in Henderson, Nevada, was
raided by Internal Revenue agents executing a criminal search
warrant. No charges have been filed.
Separately, in December, Magliarditi was fined $4,000,
publicly reprimanded and placed on one-year probation by the
Nevada State Bar Association. That followed his conditional
guilty plea to allegations he had had a conflict of interest when
he represented clients on both sides of an issue.
''It was a compromise that we reached with the state bar,
since I no longer practiced for outside clients,'' said
Magliarditi.
--David Evans in Los Angeles (310) 827-2348 through the New York
newsroom (212) 318-2300/wm
Story illustration: To compare 2TheMart.com's historical stock
performance against the Nasdaq Composite Index, enter TMRT US
<Equity> COMP SPX <Go>.
To hear interview with CEO Magliarditi, enter TMRT US <Equity>
CNAV.
Company news:
TMRT US <Equity> CN 2TheMart.com
EBAT US <Equity> CN eBay Inc.
UBID US <Equity> CN uBid Inc.
BIDS US <Equity> CN Bids.Com
ONSL US <Equity> CN Onsale
Industry news:
NI HWY Internet
NI ADV Advertising
News by category: Regional news:
NI COS Company news NI US U.S.
NI TNM Shareholdings NI CA California
NI MNA Mergers, acquisitions, NI NV Nevada
divestitures
NI IRS Internal Revenue Service
People in the news:
WHO DOMINIC JOSEPH MAGLIARDITI
WHO STEVEN REBEIL
For more stories on Internet mergers and acquisitions, type TNI
HWY MNA <Go>.
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