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Microcap & Penny Stocks : IELSF-Flight to Fortune Or? -- Ignore unavailable to you. Want to Upgrade?

To: flickerful who wrote (284)	7/20/1998 4:22:00 PM
From: LAWREAL	Read Replies (1) \| Respond to of 520

Interactive Entertainment Limited Announces Financial and Operational Developments MEMPHIS, Tenn.--(BUSINESS WIRE)--July 20, 1998--Interactive Limited ("IEL"), (Nasdaq:IELSF) announced today that it had restated earnings for the ten months ended December 31, 1997, and for the quarter ended March 31, 1998. As a result of the statement, the previously reported loss for 1997 of $30.8 million was reduced by approximately $12.7 million, while the quarterly loss increased from $2.6 million to $3.4 million. The restatements followed a review of the Company's financial statements by the Securities and Exchange Commission ("SEC") in connection with the filing of a registration statement. The registration statement, which was declared effective by the SEC on July 15, 1998, was filed for up to 2,290,814 common shares issuable upon conversion of the Company's Class B Convertible Preference Shares sold to an investment group led by affiliates of Credit Suisse First Boston in private placements during December and March and for other warrant holders of the Company's common stock who had been granted registration rights. The registration allows sales of such shares from time to time until no later than June 30, 2000. The per share impact of the restatements is as follows: -0- T Ten Months Ended Three Months Ended December 31, 1997 March 31, 1998 As Reported Restated As Reported Restated Loss before extraordinary item $1.87 $1.06 $0.14 $0.17 Extraordinary loss 0.12 0.12 -- -- ----- ----- ----- ----- Net loss per share $1.99 $1.18 $0.14 $0.17 T The restatement involved the transactions relating to the Company's June 1997 acquisition of the 20% minority interest in its previously 80% owned operating subsidiary from affiliates of Harrah's Entertainment, Inc. (NYSE:HET). Harrah's received 5,879,040 shares of the Company's stock in exchange for the minority interest and for termination of a management agreement under which Harrah's affiliates managed the daily operations of IEL. David Lamm, chief financial officer of IEL, said, "The purchase transactions were extremely complex. In the opinion of the SEC, the purchase accounting was too conservative, and the Company should have allocated more of the purchase consideration to goodwill where it will be amortized to expense over a period of 36 months rather than expensing it during the period of the transaction." The adjustments made were: -- Elimination of an expense in the amount of $10.1 million previously recognized for the value of shares issued to Harrah's for termination of the management agreement. -- Elimination of an expense in the amount of $1.8 million for shares issued in exchange for an agreement to cancel shares previously issued but held in escrow. -- Elimination of an expense in the amount of $2.6 million for the value of shares potentially issuable to Harrah's in the event that the Company's Class A Preference Shares were converted into common stock. The Company has subsequently reached an agreement with the holder of the Class A Preference Shares under which a portion of the shares are to be redeemed monthly through May 2000. -- $400,000 of the purchase price was allocated to software under development. -- $1.9 million of the purchase price was allocated to the value of the agreement with Singapore Airlines. -- An increase in depreciation and amortization expense of $1.8 million due to increased amortization resulting from the increase in goodwill. IEL also announced that it has retained Richmont Consulting International, Inc. of Los Angeles to provide investor relations services to the Company. Lamm stated, "With our successful launch of Sky Games(TM) on Singapore Airlines, we believe that this is the appropriate time to raise the awareness of the Company within the investment community. We selected Richmont Consulting after a long and exhaustive search. Richmont brings the experience and expertise that the Company needs to effectively communicate to the investment community." The Company announced that the trial of its Sky Games(TM) system onboard Princess Cruises' Sun Princess has been suspended pending evaluation of the commercial feasibility of the installation of an interactive system by Princess Cruises. Gordon Stevenson, president and CEO of IEL, stated, "We are anxious to continue with the trial and believe that our portfolio of games certainly adds value to the overall entertainment package being offered to the passengers." The trial was being conducted in conjunction with Transdigital Communication Corporation. IEL's Sky Games(TM) system was installed June 1, 1998, on one aircraft with Singapore Airlines. The aircraft completed 42 flight segments during the month. Stevenson stated, "While the participation rate of the passengers has been below the Company's forecasts, the average wager amount was higher than anticipated. We are anxious to see what effect direct marketing of our software will have on passenger participation." The Company anticipates that its software will be installed on a second aircraft in August or September and that one to two aircraft will be added each month over the next year. This press release contains forward-looking statements. Such statements are subject to risks and uncertainties that could cause actual results to vary materially from those anticipated. These include the Company's dependence on airlines' implementation of interactive entertainment systems, the regulatory environment, overall conditions in the the airline industry, and the Company's ability to raise the necessary capital to fund its operations. Please refer to the Company's documents, on file with the Securities and Exchange Commission, for a complete discussion of risks and trends. CONTACT: Interactive Entertainment Limited, Memphis David Lamm, 901/537-3800