Business Editors
NORWALK, Conn.--(BUSINESS WIRE)--Dec. 22, 2000
eLOT, Inc. (NASDAQ:ELOT) a leading provider of web-based retailing and Internet marketing services to governmental lotteries, today announced a number of actions to reduce its burn rate, preserve its cash resources and improve the Company's business performance.
The actions taken include a 16% reduction in headcount and numerous other cost savings which will take effect immediately and in the coming months. These actions are part of the implementation of the Company's 2001 business plan, which is focused on cutting costs and growing revenue. The full impact on these actions will begin to yield favorable results on the Company's operating cash burn in the first quarter of 2001. The Company also announced that it expects to achieve its previously identified revenue target of $1 million for 2000.
The Company announced that it has received approximately $1.2 million in combined proceeds from a private placement of eLOT shares, the sale of Metropolitan Life shares received as a policyholder in the course of demutualization and an insurance settlement. eLOT has filed an S-3 registration statement for 3.95 million shares of common stock of which approximately 1.95 million shares will be payment to certain vendors in an effort to preserve cash. The sale of the shares given to vendors will be subject to certain restrictions. The balance of the filing represents shares issued to MDI under the recent strategic alliance agreement and shares sold to a private individual for investment purposes.
eLOT also announced it has received a final settlement with Inter-Tel, Incorporated regarding certain claims made by Inter-Tel against the $3.5 million in restricted cash that has been held in escrow related to the sale of the computer telephony division earlier this year. During the course of 2000, Inter-Tel submitted claims in excess of $3 million. As part of this settlement, the Company has received $2 million, which has been released from the escrow. Although the Company believed it was entitled to the majority of the remaining $1.5 million despite the claims submitted, the settlement and receipt of the cash proceeds was deemed preferable to the cost, delay and uncertainty of the legal proceedings that would have been required to obtain the remaining funds.
As has been previously announced, eLOT is currently seeking to monetize approximately 50% of its 2.2 million shares it owns in Dialogic Communications Corporation ("DCC"). DCC is currently pursuing a private placement to raise capital to execute its own business model and repurchase a portion of the shares owned by eLOT. At the conclusion of this private placement, eLOT will retain a significant portion in DCC common shares for future disposition.
The combined effect of eLOT's current cash resources, cost reductions, cash preservation efforts, increased revenues and the proceeds from the DCC share disposal will provide sufficient working capital to pursue the Company's business plan into 2002.
Edwin McGuinn, eLOT's President and CEO, commented, "We are reducing expenses overall and expect to achieve significant revenue growth in 2001 thereby reducing our cash burn rate. These actions are intended to improve the business in 2001, as we build the Company for long-term growth. eLOT has sufficient resources to capture significant market share as the lottery industry rapidly adopts the Internet as a marketing medium and distribution channel."
eLOT also announced that it expects to be informed by NASDAQ that its common stock has not maintained a minimum bid price of $1.00 for thirty consecutive trading days as required by NASDAQ rules. The Company has 90 days to get back in compliance with a closing bid of $1.00 or greater for 10 consecutive trading days. If at the end of the 90-day period the stock is still below $1.00 the company can request a hearing to present its case as to why it should remain on the NASDAQ. The hearing usually takes about 4-6 weeks to schedule. After the hearing NASDAQ will then decide if the company can remain trading on the National Market or be required to trade on the OTC market.
About eLOT, Inc.
eLOT, Inc. is committed to leading the governmental lottery industry into the e-commerce market. The Company's subsidiary, eLottery, Inc., is a leading web-based retailer of governmental lottery tickets and has developed, installed and operated systems that have processed e-commerce lottery ticket sales and transactions. It has operated Internet, Intranet, telephone, communications, accounting, banking, database and other applications and services that can facilitate the electronic sale of new and existing lottery products worldwide.
In addition to web-based lottery ticket sales eLottery offers a number of products and services to governmental lotteries including Internet advertising and marketing, Internet subscription services, direct email programs and web site design and maintenance capabilities.
The Company also maintains consumer sites located at www.eLotteryFreeWay.com and www.eLottoNet.com. eLotteryFreeWay is a reward-entertainment web site designed to build an Internet community whose members are expected to be highly predisposed to purchase governmental lottery tickets over the Internet. eLottoNet.com offers a free daily lottery email notification service (LENS) of state lottery results and other information. eLottery's corporate web site is located at www.eLottery.com.
This news release contains forward-looking statements. Such statements are subject to certain factors, which may cause eLOT's plans to differ or results to vary from those expected including the risks associated with the development of new products and the uncertainty of product acceptance, the competitive nature of the Company's industry, rapid technological change, legal uncertainties, the Company's dependence on key personnel, and a variety of risks set forth from time to time in Company filings with the Securities and Exchange Commission.
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