E-district.net coughs up to ‘financial irregularities’
Looks to the future
E-district.net has confirmed that key financial and operational data was fabricated at the dotcom.
Releasing full year results for the year ended 31 December 2000, the entertainment and games outfit confirmed preliminary investigations which pointed to widespread "financial irregularities" at the AIM-listed company.
The full year results showed that the company made a pre-tax loss of £2.19 million compared £384,000 for the 17 months to December 31 1999.
Reports from Cap Gemini Ernst & Young and PricewaterhouseCoopers Forensic Services confirmed that there was "substantial overstatement of registered users, page impressions and revenues" and evidence of "collusion".
The reports found that no one implicated in the collusion remains at the company.
In February, CEO Steven Laitman was sacked and his assets frozen in connection with irregularities at the company. Two senior managers at the company also resigned.
The investigation also confirmed that Mr Laitman used around £980,000 of his own cash between November 1999 and February 2001 to inflate artificially revenues for the business.
The irregularities at e-district.net are currently under investigation by the Fraud Squad.
In a bid to draw a line under the affair and look to the future, Frank Lewis, Chairman and acting CE, said: "Despite continued expansion of the company's activities in developing its interactive television services...the financial year to 31 December 2000 has proved extremely difficult.
"We faced the challenge of a significant downturn affecting valuations in the technology sector, followed by the discovery of financial irregularities."
E-district said that it would focus on providing subscription and pay-per-play services tailored for digital TV and broadband Internet services.
As of May 31, the company had £10.5 million in the bank and is burning cash at a rate of £200,000 a month. ®