To: Fli-by (2492 )
From: DaiTN Tuesday, Jun 8 1999 6:53PM ET
Reply # of 2495
Hi all,
OK, here is my second report of the shareholders meeting at Las Vegas! First, I will share some facts from my research and from the "Questions & Answers" session at the meeting, follow by my input and thought of eConnect Inc. both from past history and future developments.
A) Facts:
1) eConnect Inc. is a fully reporting company on OTC:BB with approximately 16,000,000 shares outstanding. Management and insiders currently holding 10,385,000 shares, divided into: ET&T owns 7,685,000 shares, James Clinton owns 1,700,000 shares, Tom Hughes owes 1,000,000 shares. The rest of approximately 6,000,000 shares are public floats.
2) ET&T is privately held company, Tom owns 70% of ET&T and has been chairman since 1993. Currently, ET&T functions as a bank host for eConnect to process P.E.R.F.E.C.T transactions for a fee. ET& T also provided the technologies (Paymaster, Slick, PocketPay, TV PinPad) to eConnect by signing a licensing agreement of $2,000,000 per patent for a total of $8,000,000 dollars (There are 4 patents to date). This amount will be paid installment of $30,000/month by eConnect to ET&T beginning June 01, 2000.
3) eConnect just filed with SEC to increase the authorized shares to 100 Millions. Of that amount, 10 million shares will be issued this week or next to pay for the acquisitions of 77wins.com. eSportbet, Rogel Technologies; to cover rule 144 stocks, and option warrants that will be exercised in the futures. (There are 3,000,000 option warrants issued to date).
4) There will be another 900,000 shares issue to pay for consultant S-8.
5) 777wins.com Internet casino and eSportbet (eGaming division) are up and running with positive income, earning will be reporting on next 10Q report. (with 5 and 7 employees respectively).
6) Rogel Technologies is a wholly owned subsidiary of eConnect, is presently developing the Internet MRS Portal Site (MRS stand for Merchant Response Software which is what an Internet merchant will download from eConnect MRS Portal site to the merchant's site). Rogel technologies is not yet produced any income, and currently has 11 employees.
7) eConnect Inc. management team consists of five members: Tom Hughes (chairman & CEO), Harry Hargens (President and COO), Jim Wexler (President of eGaming subsidiary), Gerry Gay (Vice-president of Sales and Marketing), and Bob Hodgson (Vice-president of Development & Operations).
8) eConnect Inc. Fiscal year has been changed to calendar year effective immediately, the next 10K report is at the end of December 1999. It is now a NEVADA corporation.
B) Past development from eConnect:
For those who follow BETT since last year, these following news releases and developments are no longer existed (either the agreements were terminated or nothing were developed as of today).
-No income generated or reported for "Shop While You Wait" (Paymaster) as of May 31, 1999 (All paymasters distributed in LA area and Redondo Beach has been recalled).
-No agreement with Newcome Technology to develop Pocketpay.
-No agreement with LA Dodger regarding "Shop While You Wait" deal.
-No agreement with Uganda to develop PERFECT transitions
-No agreement with SBI Communication to pursue PERFECT Bingo.
-No agreement with Goldmine Casino.
-eConnect did not issued 504D of 1,000,000 shares as announced back on Jan. 99.
-No agreement with VIP Sports Casino to use ATM or Smartcard.
-No agreement with Telemax to develop wireless eCommerce Pocketpay.
C) What are the assets and future products of eConnect:
- Building a management team.
- Making a good plan to grow revenue & profits from existing businesses such as 777wins Internet casino, eSportbet, and EZShop (formerly Shop While you Wait).
-Using eConnect SLICK to offer P.E.R.F.E.C.T services to Internet Merchants for a fee.
-Using eConnect PAYMASTER to allow the unbanked to use smart cards to store value, and pay bills.
-Create a Web site that allows consumers to make EZshop purchases over the internet using EZPay (ATM card), EZcard (SMART card) for a fee.
-Introducing EZbet (ATM card) to players for opening and replenishing accounts with Internet casino and sports betting.
-Introducing Pay-Per-Play Lotto (ATM card) to purchase lottery tickets.
D) My input and thoughts about eConnect Inc. and the shareholders meeting:
eConnect is still in its infant stage of a start-up company. Up until last month, the company was a one man show run by Tom Hughes with only a vision and limited funding. With a recent addition of a management team and acquisitions, eCconnect has a chance to take it to the next level. The company idea of "bringing the Internet from Credit to Cash" is a good concept, especially with the casino wagering and sport betting industries.
In the past, eConnect has moved slowly because there was not a clear direction of what to do with its technologies. The company signed many deals and agreements that never came into fruition (more misses than hits), and along the way, have expensed and accumulated a deficit of 5.6 millions dollars. Plus, there were no one there to implement, develop, or follow up those deals. Tom has a great vision, but (with due respect Tom) not a very good business man.
I met with Harry Hargens, the new President &COO, and were impressed with his knowledge and down to earth plans and implementations. His point of view for eConnect is to stay "focus", finish one project at a time (before jumping onto the next) fall in line with what I think eConnect needed at this point in time due to limited funding and minimal revenue.
Unless we see an explosive earnings from 777wins.com and esportbet, the company will continue to operate at a deficit until eGate (PERFECT transaction) begin to produce revenues. Currently, the launching date is projected about September 99.
Regarding the company moving to NASDAQ small-cap, it is unrealistic to say or announce at this point in time due to the requirements from the SEC. I do not see it happen this year.
There are some uncertainties with BETT due to the fact that the company has:
-Limited diversification
-Limited liquidity
-Ability to utilize funds for the successful development
-Use of secondary offering proceeds not specific
-Too much reliance on management with no track records (all decisions will be made exclusively by Tom, with limited info about management specific intentions)
Tom Hughes is the majority owner of ET&T (70%); in turn, is also a majority shareholders of eConnect. He controls the Board of Directors of both company (it means that Tom can authorized or killed any deals or agreements). ET&T and eConnect had signed a licensing agreement of $8,000,000 dollars for the next 20 years!!?? That to me is a major conflict of interest. This issue need to be address and resolve before eConnect expect any serious Wall Street money pumps into BETT.
I heard many investors asked about the proxy statement and the votes. As I mentioned, ET&T and Tom Hughes have full control of the voting powers and the Board of Directors. The investors votes are merely for cosmetic purposes as we are the minority of the shareholders.
I walked away from the meeting with a mixed feeling. I am glad that Tom is bringing in a solid team to build eConnect, but as the same time, I found out that many news, and agreements, and potential incomes, and developments such as SLICK and POCKETPAY were never took place as announced. In another word, eConnect has potential, but if will not get rich overnight.
The market will be diluted with more share after the secondary offerings. The total outstanding will be around 25.4 millions shares. (14.5 M + 10 M +. 9 M).
That is all folks, feel free to let me know your opinion.
Dai
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