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To: flodyie (0 ) From: Wolff Thursday, Mar 18 1999 7:16PM ET Reply # of 20 The Con Artists, hypsters and Manipulators were wrong about TMRT!!! |\ TMRT /| ) \ --- / ( / \ , - - - - - ( . . ) \ ( ___ ) 2themart.com \ \ (o o) / \@@@ \ ~~~ / _ __ / ) \ \ \ ____ ( ( \ \ / \ / \ \ / vv vv v vv 2TheMart.com, With No Customers or Revenue, Is Worth $522 Mln 6/3/99 12:57 2TheMart.com, With No Customers or Revenue, Is Worth $522 Mln Irvine, California, June 3 (Bloomberg) -- 2TheMart.com's Internet auction site is still under development. It has no customers or revenue and has never released a balance sheet. Yet its stock has jumped 11-fold this year, giving it a market value of $522 million. Investors are placing a higher value on 2TheMart.com than three Internet auction companies that are conducting business on their Web sites: uBid Inc., Onsale Inc. and Bids.Com International Inc. ''It shows the lack of any underlying methodology to value Internet companies,'' said Ulric Weil, chief technology analyst for Friedman, Billings, Ramsey & Co. ''You can't even get data on (2themart.com) because it's a non-reporting company.'' The company's shares soared from 2 on Jan. 13 to a high of 50 on Jan. 20, the day after it said its site would be running by the second quarter and would compete with established auction sites such as eBay Inc. and uBid. The shares today fell 1 7/8 to 20 7/8, still leaving the company worth half a billion dollars. ''There's, I think, a lot of Internet euphoria out there of investors jumping on to what they may believe are companies that are emerging,'' Chief Executive Dominic J. Magliarditi said in an interview. ''A lot of it is people trying to get in on the ground floor of the emerging market.'' The Irvine, California-based company hasn't filed reports with the Securities and Exchange Commission. Companies are only required to when their assets exceed $10 million and they have more than 500 shareholders of record. Magliarditi said 2TheMart.com plans to file its SEC first report in a few days. Company's Roots The company went public in January under the direction of Magaliarditi, 35, and Chairman Steven Rebeil, 36. In 1997 both men were denied licenses to operate a casino by the Nevada Gaming Commission, which found them unqualified to be officers of a public company. Magliarditi and Rebeil registered the site's Internet address, 2TheMart.com, in December. They took the company public a month later by merging it with a shell company called CD-ROM Yearbook Co. The two men each own 8.9 million of the company's 25 million shares, worth a total of $181 million. Magliarditi declined to say how much they invested in 2TheMart.com. In the press release announcing the merger, the company said its Web site ''is intended to be one of the largest and preeminent online auction sites on the Web.'' It promised real- time video auctions, a chat room and secure transaction processing. To date, the site consists of a single screen: an animated billboard proclaiming, ''Soon Everyone Will Know Where to Find Anything!'' It isn't clear when the site will open. ''We have yet to determine a specific launch date,'' Magaliarditi said. He said he expects to announce the date within a week. Nevada Action Magliarditi and Rebeil have been business associates for more than six years. On Feb. 19, 1997, the Nevada Gaming Commission denied their applications for a casino license. The commission found both men ''not of good character, honesty and integrity.'' It also found that both lied to investigators for the State Gaming Control Board, and thus each ''failed to meet the burden of proving his qualifications and suitability as an officer, director or controlling shareholder of a publicly traded corporation.'' Magliarditi said that shouldn't deter investors from buying shares of 2TheMart.com. ''Those are the underlying requirements of the Nevada statute and so those are part of the statute for denying anybody an application,'' he said. According to a transcript of testimony before the Gaming Control Board in 1997, investigators for the agency also discovered Magliarditi, an attorney who previously practiced tax law, underreported his income by about $70,000 in 1994. ''The board felt this wasn't an honest mistake, but purposeful underreporting,'' Steve DuCharme, chairman of the Nevada Gaming Control Board, said in an interview. Magliarditi testified that he owed the IRS an additional $24,000 after he amended his federal tax return to include the previously unreported income. Testimony Magliarditi also testified that he altered K-1 tax schedules reporting Rebeil's partnership income after they were prepared and signed by the accounting firm of Arthur Andersen LLC. Magliarditi said the adjustments he made, at Rebeil's request, lowered Rebeils's 1994 income tax bill. ''I think they were whited out and then the numbers were inserted,'' testified Magliarditi. He said more than a year passed before the accounting firm received a copy of the altered document. Control Board investigators also found that Rebeil diverted ''millions of dollars'' from a home building company in which he was a partner to finance construction of his personal residence. Rebeil allegedly directed subcontractors to overcharge the builder and use the excess payments as credits toward work on his house, DuCharme said. Magliarditi testified that there ''could possibly be'' criminal wrongdoing by Rebeil in connection with the diversion. Frank Schreck, Rebeil's former attorney, testified that at first he believed Rebeil's denials about the skimming. However, after interviewing a concrete subcontractor, he said he became ''100 percent'' certain that Rebeil was lying when he denied the skimming. At that point, he said, he resigned as his attorney. Rebeil couldn't immediately be reached for comment. Surprise The Control Board alleged that Magliarditi told its investigators Rebeil's actions were a ''complete surprise'' to him, even after he'd been alerted to the activity by Rebeil's business partner and by subcontractors. In April 1997, Rebeil's office in Henderson, Nevada, was raided by Internal Revenue agents executing a criminal search warrant. No charges have been filed. Separately, in December, Magliarditi was fined $4,000, publicly reprimanded and placed on one-year probation by the Nevada State Bar Association. That followed his conditional guilty plea to allegations he had had a conflict of interest when he represented clients on both sides of an issue. ''It was a compromise that we reached with the state bar, since I no longer practiced for outside clients,'' said Magliarditi. --David Evans in Los Angeles (310) 827-2348 through the New York newsroom (212) 318-2300/wm Story illustration: To compare 2TheMart.com's historical stock performance against the Nasdaq Composite Index, enter TMRT US <Equity> COMP SPX <Go>. To hear interview with CEO Magliarditi, enter TMRT US <Equity> CNAV. Company news: TMRT US <Equity> CN 2TheMart.com EBAT US <Equity> CN eBay Inc. UBID US <Equity> CN uBid Inc. BIDS US <Equity> CN Bids.Com ONSL US <Equity> CN Onsale Industry news: NI HWY Internet NI ADV Advertising News by category: Regional news: NI COS Company news NI US U.S. NI TNM Shareholdings NI CA California NI MNA Mergers, acquisitions, NI NV Nevada divestitures NI IRS Internal Revenue Service People in the news: WHO DOMINIC JOSEPH MAGLIARDITI WHO STEVEN REBEIL For more stories on Internet mergers and acquisitions, type TNI HWY MNA <Go>. -0- (BN ) Jun/03/ 99 12:57 | ||||||||||||
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