OT:An introduction to CRYP:Nasdaq (effective 03/20/2000) /CRY:TSE (updated 2000.03.17)
1. CryptoLogic Inc. is the leader in the growing online gaming industry, with more revenue and
profit than any online gaming company to the end of 1999. To date in 2000, CRY has gained
well over 100% in share price, driven in part by Nasdaq approval, but also by the launch of the
live version of williamhillcasino.com and the signing of Jupiters, a leading Australian
land-based casino. These two most recent licencees have firmly established CRYP as the
premier gaming software developer, and are expected to lead to more high-profile licencee
signings in 2000 and beyond.
2. Bear Stearns recently released a 100 page research report on Internet gambling. The report
was written by all-star gaming analyst Jason Ader. The headline from their press release on
the report asked: ?Is Internet Gambling the Next Internet Explosion? Bear Stearns unveils a
comprehensive report on what could be the next big investment opportunity on the Internet?
3. Bear Stearns? research report includes CRY in a list of companies to watch, that are likely to
?survive future changing market conditions throughout the world.? Mr. Ader describes CRY as
?the company with the largest market share in Internet gaming.?
4. CRY?s corporate website at cryptologic.com includes company info plus all
press releases and financial statements. Frequently asked questions from investors are
summarized at cryptologic.com .
5. Trades as CRYP on the Nasdaq National Market (effective Mar. 20), and as CRY on the
Toronto Stock Exchange.
6. CRY closed today at C$57.00, for a market cap of C$890 mm (US$600 mm).
7. Weiss, Peck & Greer, an investment manager with $16 billion under management, has
acquired 1.4 million shares in CRYP, most recently buying 575,000 shares (of 2.4 mm traded)
on January 12, 2000. Adam Smith & Company and R-H Capital are among the other US-based
investment firms recently purchasing shares in CRYP.
8. Altamira?s e-business fund holds CRY ? manager Ian Ainsworth listed CRY as a top pick in
a recent Stockhouse interview.
9. The company?s application for NASDAQ listing was sponsored by Salomon Smith Barney,
Fahnstock and Pacific Crest Capital.
10. CRYP has developed an e-cash product used in their licenced casinos, that is now housed
in a separate division. CRYP has said they intend to create a separate company for e-cash,
likely involving a rights offering to shareholders and an IPO for the new company.
11. CRY?s flagship casino at intercasino.com, the biggest and best online casino,
was launched in November, 1996, and now has over 230,000 registered users. CRY has 14
licencees, with some hosting multiple casino sites. Total registered users for all licencees now
exceed 500,000.
12. CRYP licenced a casino to William Hill, the second largest betting shop in Britain (with over
1,500 offices). That casino, at williamhillcasino.com, is now taking real-money bets.
CRYP has stated that the response has exceeded their expectations.
13. CRYP has signed an agreement with Jupiters, a leading land-based casino in Australia, to
launch an online casino in Australia?s regulated environment. Jupiters described it as a 50/50
joint venture. A multi-lingual ?play-for-fun? version will be up shortly, with the real money version
expected in about six months (after the software receives regulatory approval.).
14. CRY?s most recent software (version 3) includes 3-D elements and live-chat with other
players for some games. Version 4, to include sportsbooks for all licencees and other
enhancements should be released in April.
15. CRY software is the best-reviewed casino software, including 3 « Aces (out of 4) rating
from Rolling Good Times (http://www.rgtonline.com), the highest rating of any online casino,
and Green Light rating from PC Computing magazine.
16. CRY purchased Gamesmania, a leading web-gaming (non-gambling) site, for about
$450,000, and sold its interest for $1.7 million in cash and stock in the purchaser, Hip
Interactive (HIPI on the Canadian OTC market).
17. CRYP owns a 4.3% interest in creditcards.com.
18. CRYP processed over $1.6 billion in secure deposits in 1999 for its licencees.
19. CRY had revenue of $12.5 mm in 97, $22.9 mm in 98 and $32.7 mm in 99. In 1999, net
margins exceeded 60%. That?s not a misprint. Net income after tax from continuing operations
exceeded 60% of revenue.
20. CRY had fully-diluted earnings per share of $0.43 in 97 ($0.63 before unusual items), $1.10
in 98 ($0.94 before unusual items), and $1.35 in 99 ($1.31 before unusual items).
21. CRYP has shares outstanding of 11.1 mm, (15.6 mm fully-diluted).
22. CRYP had cash of $46.0 mm as of 99.12.31, and no debt. The company is looking for
potential acquisitions, including possible consolidation within its own industry.
23. CRY announced a normal course issuer bid to buy back 5% of its shares. They have
purchased around 35,000 shares under C$20.
24. CRY is covered by 3 analysts in Canada, with two strong buys and one speculative buy
ratings. Sprott Securities upgraded CRY to a strong buy recently, with a new target price of
C$75. CTI Capital recently upgraded CRY?s target price to C$100. Consensus earnings
estimates are C$2.56 (US$1.77) for 2000.
25. CRYP is included in Investor?s Business Daily?s E-Commerce Index.
26. A bill to ban Internet gambling has been sponsored by Senator Kyl. It died in the last
Congress, but has been re-introduced. There are mixed opinions on its prospects, but it has
kept name-brand casinos from entering this market.
27. A competitor, Starnet, was raided by the RCMP in August 1999. No charges have yet been
filed, but if filed they could relate to gaming in Canada.
28. The market is growing, with analysts projecting various growth targets in the range of 100%
a year.
29. As Andrew Rivkin, President and CEO says: ?CryptoLogic enters year 2000 stronger than
ever, with market leadership, industry-setting technology and a focused growth strategy that
will enable us to further strengthen our premier position in the global Internet gaming and
e-commerce markets.? |
