The First Stock Advisory Newsletter Offered Exclusively On-Line
pennystock.com
You are visitor number 15358 to read this report.
George T. Schlieben, Publisher
SPECIAL RESEARCH
REPORT
August 26, 1997
©1998. GLOBAL PENNY STOCKS, PO Box 372, Yardley PA 19067. Information contained herein is based on sources we believe
to be reliable but we do not guarantee its accuracy. Prices and opinions concerning the composition of market sectors included in this
report reflect the judgments as of this date and are subject to change without notice. This report is for information purposes only and is
not intended as an offer to sell or a solicitation to buy securities. Global Penny Stocks or persons associated with it may own
securities of the issue described herein and may make purchases or sales while this report is in circulation. The publisher, George
Schlieben, received a fee of not more than $5,000 from the company or its investor relations agency to write this report. The publisher
WILL NOT take a postion in a recommended security featured in this report.
WINNERS INTERNET NETWORK, INC.
Price: (OTC: BB: WINR)
$4.78
E.P.S.
Yearly Range:
$4.78 - $3.00
1998E
$.19
Shares Outstanding:
10.5 million
1999E
$.31
Estimated Float:
1 million
2000E
$.40
Market Cap:
$50 million
Book Value Per Share:
17.8¢
Estimated Growth Rate:
50% - 100%
BALANCE SHEET
Dividend:
Nil
Net Working Capital
$187,000
Return on Equity:
Nil
Current Ratio
1.1/1
Marginable:
Nil
Long Term Liabilities
$1,950,000
Average Daily Volume:
7,500
Shareholders Equity
$187,000
Location:
St. Augustine, FL
Suitability:
Speculation
Recommendation:
BUY
One-Year Target:
$8.00 to $10.00
Two-Year Target:
$9.00 to $12.00
INVESTMENT CONCLUSION
Internet gaming is still in its embryonic state. There presently are over 55 internet casinos, and
more are being added weekly. The current annual "take" on net gaming is pegged at around $100
million; a substantial sum, and, depending upon whom you ask, is estimated to reach $10 billion by
year 2002. This is still a wide-open market, and, in many respects, is reminiscent of the old gaming
frontier towns of the American Wild West. And, therein, has been net gaming's major drawback.
Not one of the 55 plus web gaming sites possess true creditability, because they do not have any
payoff structure and cannot provide players with true security. Also, there is no true firewall that
prevents a player from a "non-legal" country to gaining access to a web gaming site.
Today, a player goes to a web gaming site and enters a charge card number, or wires funds to the
site operator. The player hopes, and perhaps prays, that he/she is dealing with a scrupulous and
creditable net casino, but there are no guarantees! Doesn't give one the warm fuzzies, does it?
Soon, however, a company will be offering a solution to all these detriments. This company is
WINNERS INTERNET NETWORK, INC. (OTC BULLETIN BOARD: WINR).
Headed by a CEO with extensive offshore gaming connections, Winners owns the exclusive rights
to proprietary technology that offers to web gaming operators a new software and banking system
ensuring creditability and that provides them with a payoff structure. This should revolutionize
internet gaming, since it is expected that this system will become the standard for the industry. So
readily should this technology be accepted by the web gaming industry that the company
anticipates to grow 50% to 80% annually for the next five years.
Accordingly, we rate the shares of Winners Internet Network, Inc. a BUY with SPECULATION.
It is rare when a company has the rights to technology that could revolutionize an entire
industry, particularly one that promises to be as vast and worldwide as web gaming. Also, it is
seldom when a company such as Winners, has the confidence to give multi-year projections on
earnings. In the first year, the company anticipates 19¢ per share earnings; 31¢ in year two; 40¢
in year three; 66¢ in year four; and over $1.00 a share in the fifth year. These projections are
based on the current activity in web gaming, and do not take into account the industry potential
for extraordinary growth. Based on these projections, and the proprietary technology, we give the
stock a one-year target of $8.00 to $10 and a two-year target of $9.00 to $12.
COMPANY BACKGROUND
Winners Internet Network, Inc. assumed its present identity on July 21, 1997. To effect public
trading of its shares, the company was backed into a shell corporation previously named
Comstock Empire International, Inc. Winners owns and controls The Davki Agency, Inc., which
has an exclusive right to a software program that provides a means of payout for customers of
Internet casinos and sportsbooks.
Although Winners is a recent start-up, it is a pioneer company, and, like a pioneer, stands to reap
huge rewards, since it has no known competition. Because of this fact, the company has
positioned itself to profit from most wager transactions made over the internet, and the market
appears limitless.
Presently, there does not exist in the web gaming industry a uniform payoff structure to playing
customers who enter video casinos, and, with few exceptions, web gaming sites have been unable
to design and format a system that will ensure complete creditability. Web gaming is an exploding
industry, but, without these glitches, it could become even more explosive. If a person wishes to
gamble on the internet, they are given a menu of nearly 60 web gaming sites from which to choose.
Most players have no real confidence in many of these sites because they have no real guarantees
they will ever see their money again, or be paid their winnings, if any.
What all web gaming sites need is something akin to the Good Housekeeping Seal of Approval.
Enter Winners, who, through their 100%-owned The Davki Agency, feels it has overcome the
confidence gap by developing a Global Gaming Payout System which could revolutionize both the
video casino and the international sportsbook method of payoff. This system, which will link to
the international banking community, also will ensure compliance with all existing laws and
provide an audit structure for governments. It also provides an audit function to guarantee
governments receipt of their percentage of profits.
Winners feels it has set the stage to offer "the only secure payout system". The company has
signed an exclusive 10-year agreement with Global Gaming Link Systems (GGLS), the designer of
the proprietary software; this agreement is renewable. Winners developed the system concept and
GGLS wrote the software. As part of the accord, GGLS will also represent Winners in establishing
the worldwide system of gaming and sportsbook payoffs.
GGLS has contracted with a Liechtenstein company to provide the management and accounting
services to guarantee not only the accuracy of payments, but confidentiality to the customers. It is
believed that the method of payment cannot be duplicated. The Liechtenstein company has been
able to provide the unique services of a highly regarded software company that provides services
for many banking and government institutions.
The central bank, through which the gaming transactions will be made, is purported to be an
extremely respected European financial institution. Its name, and that of the Liechtenstein
company, must be kept confidential until final details of the payout systems are announced, which
should be within the next several months.
Not only should the system establish the only legal and foolproof payout structure, it should also
add light years to players confidence in casino gaming. A player will send his/her money to the
bank, which guarantees its safety, and also guarantees that players will receive their winnings, if
any. Players are issued pin numbers, and within the next six to nine months, the bank should also
be offering debit cards, also a first for internet gaming. The bank will list on its web pages the web
gaming sites that are enrolled in the Winners system. Players will be paid in the currency of their
country.
The Winners system should also end the money laundering that is now rampant throughout web
gaming. Safegaurds are already established to prevent this from continuing, and it is believed that
the Winners system will be the model used throughout the net casino industry. Likewise, the
company will ensure that all illegal betting will not be serviced. For instance, if it is illegal to
gamble in New York City, no payouts will be made to Big Apple residents, thereby giving added
creditability to offshore gaming operations.
Winners does not foresee major hurdles in selling their system to legitimate web gaming sites.
Besides giving a site respectability with "The Winners Seal of Assurance" (or something like
that), and providing a payout structure, the company's system will also save gaming operators
significant amounts of overhead. No longer will operators need to employ legions of workers to
cut thousands of checks weekly. The proprietary software will be able to interface through the
existing software now being used by all internet casinos, so as to enable the casinos to be totally
serviced for all payouts. Winners has been informed by hands-on operators that it is virtually
impossible for a self-user to match the payout systems that Winners/GGLS offers.
So, how does Winners make money from this? Transaction fees. The company will receive 0.5% of
al system transactions. For example, if there is a $100,000 payout, $500 goes to Winners. If total
annual transactions amount to $10 billion, and that could be the case in five or six years, Winners
would get $50 million.
Another potential source of revenue for Winners is through Master Licenses. Presently, there are
three Master Licenses available - The Internet Casino, The Internet Sportsbook, and The Call-In
Sportsbook. The Master License would allow the Licensee to sell to other casino/sportsbook
operations and to participate in the transaction fees and a portion of the license renewal. The basic
cost for a Master License is $110,000. The Sub-Licensee would acquire the yearly rights for the
Master License at an annual fee of $40,000, or more, according to the size of the License. One half
of the proceeds will be paid to GGLS and Winners will receive 25% of those proceeds. In addition,
the Licensee will participate in the transaction fee based on a flat amount of a handle percentage.
A new age in internet gaming is about to unfold, and Winners is on the cutting edge of proprietary
technology that will allow this infant industry to gain quick creditability. It should set the industry
trend for payouts and attain worldwide acceptance.
Could Winners become the Microsoft of the gaming industry?
The company's address is Winners Internet Network, Inc., 15 Eight Street, St. Augustine, FL
32084. Phone: 800-358-4242 or 904-471-4242; fax: 904-471-5155.
COMPETITION/RISKS
Presently, there is no known competition to the proprietary software for which Winners has
exclusive rights. However, there is always the possibility that another company (ies) could
develop a superior or similar product, therefore, severely impeding the company's operations.
Changes in government regulations toward gaming could affect Winners' operations. United
States citizens, as well as those in many other countries, are mostly barred from internet gaming.
Should those offshore governments that now allow net gaming negatively alter their regulations
toward the industry, the market for new customers would be greatly reduced and could severely
change Winners revenue projections, growth, and operations.
Should the web gaming industry not utilize the Winners system, or the industry's response to the
system not be accepted as anticipated, Winners may not be able to continue operations.
Should any of the companies with whom Winners has alliances falter or fail to perform their
functions, Winners could be severely affected.
Since this is a start-up company, an investment in it must be considered highly speculative, and
investors should be prepared to lose a portion, or all, of their investment.
For the company to fulfill its objectives, it may need more capital. This funding may have to be
raised through secondary stock offerings, as has current funding been raised. As these new
shares enter the market, they could cause downward pressure on stock price.
MANAGEMENT
David Skinner, Jr., Chairman, President, Treasurer, also manages Skinner, Varney & Assocs., a tax
and business consulting firm. Since 1995, Mr. Skinner has also been affiliated with the Grand
Holiday Casino of Aruba, where he set up and now monitors the payout structure for an the
international Sportsbook; he is also responsible for financial transactions between customers and
foreign banks. From 1995 to 1997, he was instrumental in the daily operations of Enterprise
Distributors, Inc., a maker of video gaming devices. Since 1996, Mr. Skinner has also served as
President of the publicly-traded Caribbean Palace, Inc. (Club Casablanca), of Myrtle Beach, SC,
which offers fine dining, a sports lounge, and legalized gaming devices.
Sandra Varney, Vice President, Secretary. As with Mr. Skinner, she too is affiliated with Skinner,
Varney & Associates and serves as its Executive Vice President, where her duties include liaison
with international and regional master franchises, marketing, and overseeing day-to-day
operations.
Kimberly Stein, Executive Vice President. From 1996 to the present, Ms. Stein has been Vice
President of the Davki Agency, where she has been the liaison with the European market in the
development of the proprietary software, and instrumental in establishing a network of financial
institutions for implementing the business plan. She has held accounting and technology posts
with H&M Air Charter and the Holiday Inn Corp.
Charles Scott, Technical Vice President. From 1995 to the present, Mr. Scott has been affiliated
with Skinner & Associates. In this position, he has designed and implemented secure internet and
intranet to multiple sportsbooks in Curacao. He has a B.S. in Computer Information Systems from
Florida State University, and is quite knowledgeable about most computer systems and software
applications.
Also, of note, is that David Skinner, Sr., the President's father, is serving as a consultant to
Winners. Mr. Skinner was once the Assistant Chief of the IRS Criminal Division in Jacksonville,
Florida.
INVESTMENT CASE AND OUTLOOK
Management Expertise. When investing in a start-up company, such as Winners, an investor first
needs to closely scrutinize management, since management will assuredly make or break this sort
of enterprise. Without sounding overly trite, Winners has winning management. Not only does
management possess the backgrounds in gaming, accounting, and hi-tech that are paramount to
achieving its goals, it also appears to be very well-connected to offshore gaming operations and
European financial institutions. Within the next few months, the
Historical and Pro Forma Financial Information
1998E
1999E
2000E
2001E
Revenues
5,000,000
7,980,000
14,930,000
24,480,000
Direct Costs
2,960,000
4,670,000
10,720,000
17,470,000
NET INCOME (LOSS)
2,040,000
3,310,000
4,210,000
7,470,000
Net gain (loss) per share
0.19
.31
.40
.66
Average # of shares outstanding
10,500,000
10,500,000
10,500,000
10,500,000
company will reveal the complete details of its payout system. We also suspect that management
has its ducks in order, and will announce its first customers at that time, or shortly thereafter.
Proprietary and Revolutionary Technology. The second thing investors should do when
considering an investment in a start-up is to ask, "What makes this company unique? What sets it
apart from the herd?" The proprietary software for which Winners has exclusive rights promises to
revolutionize an entire industry by bringing to web casinos a payout structure, creditability,
much-needed respectability, and player confidence. Presently, net gaming lacks all of these
requisites, and, if the industry hopes to maximize its full potential, it will need the technology being
offered by Winners and its allied companies.
Legitimacy For Net Gaming. This is a point that cannot be over-emphasized. When players
currently enter the world of net gaming they feel as if they are sitting down in a saloon and playing
poker with Doc Holiday and Wyatt Earp. By combining the technology for a payout structure
along with the services of a highly regarded software company and a highly respected European
financial institution, Winners should help to allay many of the apprehensions that players now
have about net gaming.
Potential Governmental Backing. This could be a key factor in determining how expeditiously
Winners markets its payout structure to the net gaming industry. Web gaming sites are primarily
hosted by offshore governments that fret about money laundering, compliance with their laws,
illegal betting, and receiving their tax revenues. The Winners systems should provide the needed
safeguards to ease all these governmental concerns. Once the various governments recognize
this, it is very possible they could enact regulations requiring gaming site operators to utilize the
Winners system.
Cost Savings for Web Gaming Operators. Another determinant in selling the payout structure is
the potentially immense cost savings for web gaming operators. A single operator may now need
to employ up to ten or twenty people to cut thousands of checks weekly. With the Winners
system, this enormous overhead could be eliminated, thereby, adding tens of thousands of dollars
to a site operator's bottom line, and enhancing the marketability of the company's payout
structure.
Revenue/Earnings Potential. Winners will garner 0.5% of all wagers made on web gaming sites that
implement its payout structure. Although a half a percentage point at first seems minuscule, it can
translate into millions of dollars in revenue and earnings for Winners, particularly when one
considers that a single web gaming site can transact thousands of wagers daily with bets ranging
from several hundred to several thousands of dollars. The box above shows what Winners is
projecting from revenue and earnings for its first four years. The company anticipates a 300%
increase in earnings during this period. Given the anticipated industry response to the Winners
system, coupled with possible governmental backing and the support of a major banking
institution, it is quite possible that the company has been modest in its projections.
The Microsoft of the Gaming Industry? Too often, a small company mentions Microsoft when
describing itself. However, if Winners does indeed prove that they have the only legal and
foolproof system for a payout structure for the web gaming industry, then the Microsoft analogy
will be justified.
Is the stock's current price of almost $5.00 warranted, since it gives the company a market cap of
$50 million? That question will be better answered once Winners announces the details of its
system and reveals its initial customers. Taking into account the backgrounds of management, we
are inclined to believe that Winners should make a fast start out of the gate. We give the company
the benefit of the doubt and give its stock price a one-year target of $8.00 to $10; two-year target
of $9.00 to $12.
For additional information, contact Columbia Financial Group at 888-301-6271.
This report prepared by:
George T. Schlieben, Publisher
Global Penny Stocks
Box 372
Yardley, PA, 19067
pennystock.com
[ Overview | Portfolio Sampler | Track Record | Other Web Resources | Benefits | Subscription Info | Reciprocal
Link Info | FAQs | Home Page ]
All contents Copyright ©1998 Global Penny Stocks
PInG created with the assistance of Princeton Internet Group, Inc.
|
