October 27, 2008 (InfoPowa News) — Fouad (Foo) Katan and John Corre, respectively CEO and chairman of online gambling software provider Playwize plc, have announced that all trading in the company's stocks has been halted, and all employees made redundant. The company has been struggling since 2006, and is thought to be another victim of the U.S. ban on financial transactions with online gambling companies (UIGEA).
The move is a likely precursor to the firm and its subsidiaries Bits Studios Ltd; Playwize Games Ltd; Pokerwize Ltd and Magnet Limited going into administration, as it had mounting losses, a declining stock price and significant debt believed well in excess of £1.5 million.
Although there has been little overt activity in the company since its reported agreement a year ago to provide 3D poker software to U.K. gambling group Ladbrokes, CEO Katan reported as recently as May this year that the company had secured an extension of a longstanding £700,000 loan facility from the Headstart Global Fund and Headstart Global Aggressive Fund.
The extension agreement required that Playwize repay the outstanding interest that has accrued during the initial two-year term of the facility, together with other fees and expenses. Having executed these payments, the outstanding loan notes totaling £700,000 were extended for a further 12 months at 9.5 percent interest. But further draw downs from the original facility were halted.
The company's stock price went from highs around £2.80 to less than 2p over the past year.
In July this year the company suspended trading in its shares on London's AIM market "pending clarification of its current financial position." This was followed on October 23rd with the announcement that all trading had ceased and all employees had been made redundant.
Chairman John Corre commented: "Due to very disappointing trading results, and the substantial losses incurred as a result, the Playwize group has ceased all trading operations and made all of its employees redundant.
"In order to raise sufficient funds to pay creditors, the board of directors of the Company has decided to seek shareholder approval for the sale of the proprietary software technology and other assets owned by the Company and its subsidiaries, and contracts have been signed for the sale of these assets subject to the aforementioned approval being granted in a general meeting of the Company.
"Following completion of the sale, and after settling all creditors (other than its existing convertible loan notes), the Company will have approximately £40,000 cash remaining in the bank. This amount is subject to the debenture in favor of the Headstart funds given by the Company as security for the £700,000 of convertible loan notes issued by the Company to Headstart, which are outstanding and have accrued interest of a further £25,000 to date.
"Headstart has agreed to consider any request from a company which has been identified as a suitable target for the Company to acquire by way of a reverse takeover, to convert their existing outstanding loan notes into Ordinary Shares. The Company has also reached an agreement in principle with Headstart for Headstart to make a further £250,000 facility available to the Company at a future date to be agreed, for the purpose of ensuring the attractiveness of the Company as a vehicle for a reverse takeover."
In a difficult market, the possibilities of finding a buyer for what remains of the company are probably limited, but Playwize has more than just online gambling software going for it. The company had a track record of designing, developing and leveraging software for the video entertainment and gaming industry.
It developed video games for XBOX, PS2 and Nintendo consoles that included Constantine, Rogue Ops, Die Hard Vendetta, Sega Arcade Gallery, Warlocked, and R-Type DX.
The firm's 3D online poker games featured real-time voice chat, full statistics calculators and tutorials with TV and poker celebrity Helen Chamberlain. Game brands include Pokerwize Poker and Casino, Payout Poker and Casino.