I spoke to Steve Saferin. Here's the jest of our conversation.
I opened the conversation commenting about today's stock price. He answered with: "This will be short lived". The rest of our conversation went something like this.
1. The Merger¡K¡Kwhy has industry turmoil served to delay or otherwise affect the merger of LTRY with Lottery.com?
We felt like things were coming together. MDI had SG and TLC had NBC as strategic partners. We had agreements in principle. We knew that SG was trying to enhance their shareholder value. The Autotote buy out of SG threw a wrench into the plans. Although Autotote may still invest in MDI, they are so focused on closing the deal with SG that they can¡¦t make any other commitments at this time. The SG/Autotote merger should close on August 8th. We will then go back and see what we can work out with Autotote as a Strategic Partner.
„X the approximate date of the consummation of the merger?
It can¡¦t go on too much longer. I need to get this thing done. If it can¡¦t be completed soon we may need to walk away. Investment Bankers are working on it but can¡¦t speculate on the time it will be completed.
2. Private Placement¡K¡KIs the PP's still planned with those identified and in the amounts set forth in the merger agreement, i.e. NBC.
NBC¡¦s involvement is ¡§soft money¡¨ not much more than advertising. House Bill HR 3125 has cast a gray cloud over peoples attitude. Also, the SG-TTE deal caught us by surprise. SG was wanting to put more money in to the deal than originally committed. Then, they were bought out.
Our negotiating with TTE is on-going. They may still follow through as SG wanted to but they are finalizing the merger. The turmoil with TTE/SG has delayed us. Now, TTE has to make those decisions. They might be interested but they can¡¦t focus on it until the buy-out is complete. That¡¦s after 8/8/00.
Had conversations with Gtech & Camelot. Much more serious about it once SG announced they were being bought out by Autotote. However, then the announcement came about Gtech and the bottom fell out of the UK Lottery. Since then we¡¦ve lost our contact with Gtech.
The UK deal is not allowing Camelot to commit to LTRY. We will follow up with them once the UK deal is done.
3. Alliances¡K¡K.. What other alliances are anticipated? Specifically GTECH and or Camelot.
We¡¦ve talked to Gtech and Camelot. Both were interested in us before the situation in the UK Lottery. I personally think Camelot and Gtech will win the UK Lottery but I don¡¦t know for sure. The UK Lottery should be decided before the end of August. We will be able to have more discussions with them after the lottery.
MDI was not a player in the UK Lottery. Not as it was bid. Perhaps our relationship with Camelot would have grown into something substantial. Especially if they invest in us. However, we were not originally part of anything relative to the UK Lottery with either Gtech or Camelot.
„h Comments about us and Executone-(ELOT)?
We¡¦ve spoken with Executone. We see them at lottery shows, etc. However, they are not a company that we are currently negotiating with.
„X They are a primary competitor¡K.
We don¡¦t see it that way. Our vision is to be a multiple retailer. ELOT wants to sell lottery tickets. WE believe that if States want to they have two options. 1) Sell lottery tickets themselves over the internet. Or 2) Do an RFP and accept the lowest bid. We see ELOT heading the direction of selling lottery tickets over the internet. Although that¡¦s a possibility for MDI, it¡¦s not the priority.
„X Should we expect any surprises with the merger/business plan when the merger is announced?
It¡¦s hard to say. We are trying to get the Private Placements done to complete the merger. There may be parties involved that we haven¡¦t identified yet.
„X Will the shareholders be satisfied with the final outcome as now planned?
It¡¦s to goal of the MDI Management team to increase shareholder value. We will do that. Everything may not come together as planned but it¡¦s all done in an attempt to increase shareholder value.
4. Given the defeat of HR 3125 does he believe there is a window of opportunity insofar as the Internet lottery is concerned and what specifically is LTRY doing to seize that opportunity now?
„h The Kyle Bill
„h The Goodlatte Bill
HR 3125 is not at all defeated. It¡¦s actually a little unclear as to where it stands. No state is likely to allow Internet Lottery Sales ahead of this issue being resolved. States have declining internet sales but do not have any pressure on them to fix it. Their lottery sales are a small portion of their tax revenues. Right now the economy is doing well and the states have surplus tax revenues. Therefore, there is no reason for them to ¡§be the first¡¨ to launch Internet Lotteries. No state will likely approve Internet Lottery until it¡¦s approved by Government.
IF HR 3125 was gone everything would free up. Private Placement money would be no problem and the cloud surrounding Lotteries and Internet Gaming would go away.
The United States does about 1/3 of the world wide lottery business. However, most of the 2/3rds doesn¡¦t apply to the internet. There is significant opportunities in the Pacific Rim areas though.
5. Are the 3 main projected revenue sources a) sale of branded and licensed merchandise either through scratch-offs or internet e-commerce b) advertising and email fees c) commissions resulting from the sale of lottery tickets over the internet and, if so, which is the proper order of significance?
This is the correct order as we at MDI see it.
6. What is our relationship with Oracle? How does that position us relative to Microsoft and Branson in the UK Lottery?
I don¡¦t think the Branson - Microsoft deal is for real. I think Camelot will be awarded the UK Lottery.
It¡¦s interesting and I was surprised. I felt the Oracle relationship with their technology was important. However, the more people we talk to have made me believe that the Technology for the Internet is not a big deal. It can be gotten from multiple places. Oracle being one of them. What people get excited about is..
„X The CONTENT that MDI can bring and,
„X Lottery.com as a Portal.
Technology is not a big deal to us although we have committed to Oracle.
7. What is LTRY doing about it¡¦s bottom line? Focus seems to have been ¡§taken off the ball¡¨ with these recent developments and profitability has suffered.
You really hit the nail on the head here. This has taken a lot of my time. I personally can¡¦t allow this to continue. We have a very good backlog going into next year but I need to get back to spending all my time here.
8. What is the anticipated timeframe for a News Release relevant to these items?
Hopefully very soon.
All in all I had a very good conversation with Mr. Saferin. I found him knowledgeable, alert and not at all unwilling to answer tough questions. It is quite evident that the Autotote-SG deal; the UK Lottery with Camelot and Gtech and the House Bill HR 3125 have all had major influence on the time table of the Merger events and the Private Placement.
That's it for now.
David D. |
