________________________________________________________________________________
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 OF THE
SECURITIES EXCHANGE ACT OF 1934
dated August 5, 2004
WORLD GAMING PLC
----------------------------------------
(Exact Name as Specified in its Charter)
N/A
----------------------------------
(Translation of Registrant's Name)
KFH Building, Liat Rd, Coolidge
Antigua, West Indies
---------------------------------------------------
(Address of principal executive offices) (Zip code)
Indicate by check mark whether the registrant files or will file annual
reports under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
----- -----
Indicate by check mark whether the registrant by furnishing the
information contained in this Form is also thereby furnishing the information to
the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of
1934.
Yes No X
----- -----
If "Yes" is marked, indicate below the file number assigned to the
registrant in connection with Rule 12g3-2(b): Not applicable.
________________________________________________________________________________
EXPLANATORY NOTE:
Attached hereto as a Exhibit 1 to this Form 6-K are the Registrant's unaudited
consolidated financial statements at and for the three and six month periods
ended June 30, 2004, and related Management's Discussion and Analysis of
Financial Condition and Results of Operations.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused the Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: August 5, 2004
WORLD GAMING PLC
By: /s/ David James Naismith
------------------------
Name: David James Naismith
Title: CFO
EXHIBIT 1
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
(All figures in thousands of US dollars, except per share data)
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
We make certain forward-looking statements in this document within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. To comply with the terms of the safe harbor, we note that a variety
of factors could cause our actual results and experience to differ substantially
from the anticipated results or other expectations expressed in our
forward-looking statements. When words and expressions such as: "believes,"
"expects," "anticipates," "estimates," "plans," "intends," "objectives,"
"goals," "aims," "projects," "forecasts," "possible," "seeks," "may," "could,"
"should," "might," "likely," "enable" or similar words or expressions are used
in this document, as well as statements containing phrases such as "in our
view," "there can be no assurance," "although no assurance can be given" or
"there is no way to anticipate with certainty," forward-looking statements are
being made. These forward-looking statements speak as of the date of this
document.
The forward-looking statements are not guarantees of future performance and
involve risk and uncertainties. These risks and uncertainties may affect the
operation, performance, development and results of our business and could cause
future outcomes to differ materially from those set forth in our forward-looking
statements. These statements are based on our current beliefs as to the outcome
and timing of future events, and actual results may differ materially from those
projected or implied in the forward looking statements. Further, some
forward-looking statements are based upon assumptions of future events which may
not prove to be accurate. The forward-looking statements involve risks and
uncertainties including, without limitation, the risks and uncertainties
referred to in our filings with the Securities and Exchange Commission,
including our most recent Form 20-F.
We undertake no obligation to publicly update or revise any forward-looking
statements as a result of future developments, events and conditions. New risk
factors emerge from time to time and it is not possible for us to predict all
such risk factors, nor can we assess the impact of all such risk factors on our
business or the extent to which any factor, or combination of factors, may cause
actual results to differ significantly from those forecast in any
forward-looking statements. Given these risks and uncertainties, investors
should not overly rely or attach undue weight to our forward-looking statements
as an indication of our actual future results.
1
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
(All figures in thousands of US dollars, except per share data)
OVERVIEW
World Gaming Plc ("World Gaming" or the "Company") is a holding company
incorporated under the laws of England and Wales that, through its subsidiaries,
is a developer, licensor and supplier of online gaming products, including
casino, sportsbook and pari-mutuel betting.
Inphinity Interactive Inc., a wholly-owned subsidiary of the Company,
incorporated and operating out of British Columbia, Canada, develops gaming
software and web pages on behalf of Starnet Systems International Inc., a
wholly-owned subsidiary of the Company incorporated and operating out of Antigua
("SSII"), licenses the gaming software to third parties for an initial licensing
fee and monthly royalties. Another wholly-owned subsidiary, World Gaming
Services Inc., also incorporated and operated out of Antigua, ceased operations
as an internet casino with effect from May 31, 2003. The cessation of these
operations did not have a material impact on the financial results of the
Company.
The following tables set out selected consolidated information from the
statements of operations for the three months ended June 30, 2004 and June 30,
2003, the six months ended June 30, 2004 and June 30, 2003 and the balance
sheets as at June 30, 2004 and at December 31, 2003:
SELECTED STATEMENT OF OPERATIONS INFORMATION
(UNAUDITED)
For the three months ended For the six months ended
June 30, 2004 June 30, 2003 June 30, 2004 June 30, 2003
------------- ------------- ------------- -------------
Net Sales ........ $ 4,148 $ 2,986 $ 9,512 $ 7,523
Gross Profit ..... 3,967 2,654 8,832 6,617
Expenses including
interest ....... 2,283 2,911 5,173 6,473
Net Income/(Loss). 1,684 (236) 3,672 205
SELECTED BALANCE SHEET INFORMATION
June 30, 2004
(Unaudited) December 31, 2003
------------- -----------------
Working Capital ......................... $ 3,281 $ (126)
Total Assets ............................ 12,805 12,591
Total loans and capital lease obligations 1,535 2,944
Accumulated Deficit ..................... (20,051) (23,723)
Total Shareholders' Equity .............. 4,631 828
2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
(All figures in thousands of US dollars, except per share data)
Total revenues for the quarter ended June 30, 2004 increased by 38.9% or $1,162
to $4,148 compared to $2,986 for the same period last year. For the six months
ended June 30, 2004, revenues increased by $1,989 or 26.4% to $9,512 compared to
$7,523 for the same period last year. Net income for the quarter ended June 30,
2004 was $1,684 or $0.04 per share compared to a net loss of ($236) or ($0.01)
per share for the corresponding period last year. Net income for the six months
ended June 30, 2004 was $3,672 or $0.08 per share compared to a net income of
$205 or $0.01 per share for the same period last year.
In February 2004, the Company closed its transaction processing and customer
service divisions migrating licensees that utilized these services to an
industry leading supplier. There are no revenues or direct costs from these
divisions in the quarter to June 30, 2004. Despite the exclusion of transaction
processing fee income since February 2004, revenues have continued to grow due
to increases in total wagering volume experienced by licensees. For the three
and six months ended June 30, 2004, licensee gross wagering volumes increased
85.4% and 71.2%, respectively. In addition, overall net win experienced by these
licensees exceeded the same quarter last year. (Net win for the Company's
licensees is the difference between the amount wagered (bet placed) by a
customer and the amount paid back to (won by) that customer). Consequently,
licensee revenues increased 75.2% and 47.4% for the three and six month periods
ended June 30, 2004, respectively, over the corresponding prior year periods.
The gross margin for the six months ended June 30, 2004 was 92.9% compared to
88.0% for the same period last year reflecting an increase of approximately 5%.
The increase represents a more profitable revenue mix due to the closure of the
transaction processing division in February 2004.
Operating expenses including interest and depreciation decreased 21.6% to $2,283
during the second quarter of 2004 compared to $2,911 for the same period last
year. The decrease was primarily due to the following:
o Elimination of advertising and promotion expenses that were utilized in
launching the worldgaming.com gaming site during the second quarter of
2003;
o Professional fees declined $88 or 22.1% when compared to the same
period last year.
o A 31.9% reduction in other corporate overhead or a reduction of $113,
when compared to the same period last year.
The Company has stabilized the cost base over the past twelve months while
maintaining its commitment to continue investing in enhanced infrastructure and
product offerings for its existing licensees.
3
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
(All figures in thousands of US dollars, except per share data)
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2004, the Company had $3,907 in cash and cash equivalents up from
$2,657 at December 31, 2003. The increase over the six month period was
primarily due to the increased royalty revenues from licensees and collections
from transaction processors on behalf of licensees in respect of outstanding
transaction processing balances towards the end of the quarter. Such transaction
processing balances continue to be forwarded to licensees as they are collected.
Working capital at June 30, 2004 improved to $3,281 from $(126) at December 31,
2003. This improvement in working capital is due primarily to profit generated
over the six month period and improved cash collections described above.
Reserves and deposits held by credit card processors on behalf of our licensees
were $2,959, down from $5,948 at December 31, 2003. These funds are held as
rolling reserves and are typically released to the Company after six months. The
decrease in these reserves results from the closure of the Company's transaction
processing division in February, 2004. These reserves are expected to continue
to decline until all amounts have either been received or written off. As these
funds are held on behalf of licensees, the Company does not release such funds
to the licensee until they are collected from the respective processor.
Accounts receivable increased by $1,604 from $1,538 at December 31, 2003 to
$3,142 at June 30, 2004. The increased accounts receivable balance is due to
increased royalties as a result of the higher revenue earned by our licensees in
the six months ended June 30, 2004. Royalties due from operating licensees are
usually collected towards the end of the following month. In addition, with the
closure of the transaction processing division, the Company now collects all
funds processed by our licensees in the previous month by the 15th day of the
following month. The Company then collects its royalty from these funds before
distributing to respective licensees. Prior to February 2004, such amounts would
have been disclosed as amounts due from processors.
Prepaid expenses and deposits decreased by $47 to $547 at June 30, 2004 compared
to $594 at December 31, 2003 primarily due to prepaid insurances amortized
during the quarter.
During the first six months of 2004, the Company's accounts payable and accrued
liabilities balances increased by $195.
Net cash used in investing activities for the six months ended June 30, 2004 was
$1,148 compared to $78 for the same period last year. This amount primarily
represents payments under the current Oracle license contract, and those under
the upgrade described below, investment in new hardware infrastructure and
Denial of Service (DoS) defence equipment. Towards the end of the second quarter
of 2004 the Company began investing in a major upgrade to its hosting facilities
in Antigua. The upgrade will involve moving to an Oracle 10g database platform
in addition to replacement and expansion of disk storage sub-systems. This
platform together with other new hardware infrastructure will produce a more
robust operating system with greater scalability. The Company expects to expend
an additional $80 on this specific upgrade project over the remainder of 2004,
which it expects to fund from working capital.
4
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
(All figures in thousands of US dollars, except per share data)
Net cash used for financing activities for the six months ended June 30, 2004
was $1,409 compared to $170 provided by financing activities for the same period
last year. Cash was primarily used for payments on lease settlements negotiated
during the later half of 2003, and repayments of amounts due to Sportingbet PLC.
The Company previously disclosed that during the first quarter of 2004, the
Company agreed in principle with Sportingbet Plc to a two-year extension of its
existing software license agreement. During the year ended December 31, 2003,
Sportingbet represented approximately 80% of the Company's royalty revenues. In
addition, the licensee is a substantial shareholder of the Company owning
approximately 29.6 percent of the Company's outstanding equity capital with the
ability to acquire an additional 14 percent interest upon conversion of certain
convertible debt of the Company. As previously disclosed, the licensee has
indicated that it wishes to explore alternative structures to its existing
relationship with the Company. The Company has been working with Sportingbet to
resolve this issue and, although no assurances can be given, the Company
believes that resolution may be reached in the near term. To the extent such a
solution may not be reached, there is a risk that future revenues from
Sportingbet past the existing two-year period could be materially and adversely
affected.
REGULATORY DEVELOPMENTS
Early in the 108th Congress, U.S. Congressman Jim Leach (R-IA) introduced HR 21,
the Unlawful Internet Gambling Funding Prohibition Act, which was based on
similar legislation that he introduced in the 107th Congress. This legislation
attempts to prohibit Internet gambling byprohibiting all financial transactions
pertaining to illegal Internet gambling. Shortly afterwards, U.S. Senator Jon
Kyl (R-AZ) introduced similar legislation, S. 627, in the U.S. Senate. In June
of 2003, HR 21 was reintroduced as HR 2143 by U.S. Congressman Spencer Bachus
(R-AL) without any civil and criminal sanctions in order to bypass the U.S.
House of Representatives Committee on Judiciary. The House of Representatives
passed that legislation. In late October 2003, the U.S. Senate's Committee on
Banking reported the Senate bill out of Committee and it was placed on the
Senate Legislative Calendar. No action has been taken since that time. The
Company continues to monitor this situation because the passage of the
legislation could substantially impact the business of the Company's licensees
and ultimately the Company.
5
WORLD GAMING PLC AND SUBSIDIARIES
Consolidated Balance Sheets
(In Thousands of U.S. Dollars)
ASSETS
------
June 30, December 31,
2004 2003
----------- ------------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents ......................... $ 3,907 $ 2,657
Reserves and deposits with credit card processors . 2,959 5,948
Accounts receivable, net .......................... 848 242
Accounts receivable from related party ............ 2,294 1,296
Prepaid expenses .................................. 547 594
-------- --------
Total Current Assets ............................ 10,555 10,737
Capital Assets, net ............................... 2,250 1,854
-------- --------
TOTAL ASSETS .................................... $ 12,805 $ 12,591
======== ========
The accompanying notes are an integral part of
these consolidated financial statements.
6
WORLD GAMING PLC AND SUBSIDIARIES
Consolidated Balance Sheets (Continued)
(In Thousands of U.S. Dollars)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
June 30, December 31,
2004 2003
----------- ------------
(Unaudited)
CURRENT LIABILITIES
Accounts payable and accrued liabilities .......... $ 6,639 $ 6,444
Accrual for legal claims .......................... - 215
Funds held on deposit ............................. - 2,160
Current portion of loans payable to related party . 348 803
Current portion of loans payable .................. 10 645
Current portion of capital lease obligation ....... 277 596
-------- --------
Total Current Liabilities ....................... 7,274 10,863
Convertible Note payable to related party ............ 900 900
-------- --------
TOTAL LIABILITIES .................................... 8,174 11,763
-------- --------
STOCKHOLDERS' EQUITY
Capital stock ..................................... 25,992 25,992
Accumulated deficit ............................... (20,051) (23,723)
Accumulated other comprehensive loss .............. (1,310) (1,441)
-------- --------
Total Stockholders' Equity ...................... 4,631 828
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...... $ 12,805 $ 12,591
======== ========
The accompanying notes are an integral part of
these consolidated financial statements.
7
WORLD GAMING PLC AND SUBSIDIARIES
Consolidated Statements of Operations and Other Comprehensive Income/(Loss)
(In Thousands of U.S. Dollars, except share amounts)
(Unaudited)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
--------------------------- -------------------------
2004 2003 2004 2003
------------ ------------ ----------- ------------
REVENUE
Royalties and fees ...................... $ 4,147 $ 2,976 $ 9,435 $ 7,488
Other ................................... 1 10 77 35
------------ ------------ ----------- ------------
Total Revenue ......................... 4,148 2,986 9,512 7,523
Cost of sales ........................... 181 332 680 906
------------ ------------ ----------- ------------
Gross Profit .......................... 3,967 2,654 8,832 6,617
------------ ------------ ----------- ------------
OPERATING EXPENSES
Development, selling, general,
and administrative ...................... 1,932 2,679 4,398 5,780
Recovery on legal settlements............ - (300) - (300)
Depreciation and amortization ........... 355 516 752 964
Interest and bank charges ............... (4) 16 23 29
------------ ------------ ----------- ------------
Total Operating Expenses .............. 2,283 2,911 5,173 6,473
------------ ------------ ----------- ------------
Net Income/(Loss) From Operations .......... 1,684 (257) 3,659 144
------------ ------------ ----------- ------------
OTHER INCOME
Other income ............................ - 21 13 61
------------ ------------ ----------- ------------
Total Other Income .................... - 21 13 61
------------ ------------ ----------- ------------
(Loss)/Profit before income taxes .......... 1,684 (236) 3,672 205
Income taxes ............................... - - - -
------------ ------------ ----------- ------------
NET INCOME/(LOSS) .......................... 1,684 (236) 3,672 205
------------ ------------ ----------- ------------
OTHER COMPREHENSIVE INCOME/(LOSS)
Foreign currency translation ............ (57) (275) 130 (406)
------------ ------------ ----------- ------------
Total other comprehensive (loss)/income (57) (275) 130 (406)
------------ ------------ ----------- ------------
Net Comprehensive Income/(Loss) ............ $ 1,627 $ (511) $ 3,802 $ (201)
============ ============ =========== ============
LOSS PER SHARE - Basic ..................... $ 0.04 $ (0.01) $ 0.08 $ (0.01)
============ ============ =========== ============
- Fully Diluted ............. $ 0.03 $ (0.01) $ 0.06 $ (0.01)
============ ============ =========== ============
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING - Basic ................ 45,781,407 37,090,681 45,781,407 37,090,681
============ ============ =========== ============
- Fully Diluted ........ 59,017,790 37,090,681 59,017,790 37,090,681
============ ============ =========== ============
The accompanying notes are an integral part of
these consolidated financial statements.
8
WORLD GAMING PLC AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In Thousands of U.S. Dollars)
(Unaudited)
For the Six Months Ended
June 30,
------------------------
2004 2003
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income ........................................... $ 3,672 $ 205
Adjustment to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization ...................... 752 964
Changes in operating assets and liabilities:
(Increase) decrease in reserves with credit card
processors ....................................... 2,989 (179)
(Increase) decrease in accounts receivable ......... (1,604) 2,187
(Increase) in prepaid expenses and deposits ........ 47 (176)
Increase (decrease) in accounts payable and accrued
liabilities ...................................... 196 (1,586)
Increase (decrease) in accrual for legal claims .... (215) (150)
Increase (decrease) in funds held on deposit ....... (2,160) (491)
------- -------
Net Cash Provided by Operating Activities ........ 3,677 774
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment ................... (1,148) (78)
------- -------
Net Cash (Used For) Investing Activities ......... (1,148) (78)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common shares ............................... - 600
New loan receipts ....................................... - 1,002
Repayment of loans payable .............................. (1,090) (1,114)
Principal payments on capital lease obligations ......... (319) (318)
------- -------
Net Cash (Used for) Provided by Financing Activities (1,409) 170
------- -------
Effects of exchange rate on cash ................... $ 130 $ (406)
------- -------
The accompanying notes are an integral part of
these consolidated financial statements.
9
WORLD GAMING PLC AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
(In Thousands of U.S. Dollars)
(Unaudited)
For the Six Months Ended
June 30,
------------------------
2004 2003
----------- -----------
INCREASE/(DECREASE) IN CASH ............................ $ 1,250 $ 460
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ....... 2,657 1,753
------- -------
CASH AND CASH EQUIVALENTS END OF PERIOD ................ $ 3,907 $ 2,213
======= =======
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
----------------------------------------------
CASH PAID DURING THE PERIOD FOR
Interest and Bank charges ............................. $ 23 $ 29
Income taxes .......................................... $ - $ -
Other non-cash transactions:
Issue of shares in part settlement of class action suit $ - $ 1,050
Capital assets acquired under financing plan ........... $ - $ 1,002
The accompanying notes are an integral part of
these consolidated financial statements.
10
WORLD GAMING PLC AND SUBSIDIARIES
Notes to the Unaudited Consolidated Financial Statements
June 30, 2004 and December 31, 2003
NOTE 1 - ACCOUNTING POLICIES
The consolidated financial statements at June 30, 2004 and for the six
months ended June 30, 2004 are unaudited, but include all adjustments
(consisting only of normal recurring adjustments) which in the opinion of
management, are necessary to state fairly the financial information set
forth therein in accordance with accounting principles generally accepted
in the United States of America. The financial amounts presented in the
notes are in thousands of U.S. dollars unless the currency has been
otherwise indicated.
NOTE 2 - UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements have been
prepared by the Company in accordance with accounting principles generally
accepted in the United States of America for interim financial reporting.
Accordingly, certain information and footnote disclosures normally included
in financial statements prepared under accounting principles generally
accepted in the United States of America have been condensed or omitted
pursuant to such regulations. These consolidated financial statements for
the six months ended June 30, 2004 should be read in conjunction with the
Company's annual report on Form 20-F for the fiscal year ended December 31,
2003. The Results of Operations for the three months and six months ended
June 30, 2004 may not be indicative of the results that may be expected for
the year ending December 31, 2004 because the royalties and fees are based
on gaming activity in each of the Company's offerings some of which have
major seasonal fluctuations.
NOTE 3 - INCOME TAXES
No income taxes arise as no taxation charges are levied in the main
operating territory and elsewhere as there are losses brought forward from
previous periods.
NOTE 4 - STOCK OPTIONS
On March 12, 1998, the Board of Directors approved a stock option plan,
which authorized the issuance of 3,000,000 options to employees of the
Company and its subsidiaries at an exercise price of $0.74. The options
expire on January 1, 2008. On December 31, 1998, the Board of Directors
authorized the issuance of up to 4,000,000 additional options at an
exercise price to be determined based on the trading price of the Company's
shares on the grant date. On December 23, 1999, the Board of Directors
authorized the issuance of up to 5,000,000 additional options at
11
WORLD GAMING PLC AND SUBSIDIARIES
Notes to the Unaudited Consolidated Financial Statements
June 30, 2004 and December 31, 2003
NOTE 4 - STOCK OPTIONS (continued)
an exercise price to be determined based on the trading price of the
Company's shares on the grant date.
On August 5, 2003 the Board of Directors authorized the issuance of up to
1,500,000 additional options to employees at an exercise price of $0.15,
being the closing market price on the date of grant, of which 1,475,000
were issued.
Options issued to employees generally vest at the conclusion of two years
of service, while options issued to directors vest partially within 1 year
with the remainder vesting at the conclusion of a two year service period.
Options expire ten years after the date granted.
A summary of the Company's stock option activity and related information
follows:
Six months ended Year ended
June 30, 2004 December 31, 2003
-------------------- --------------------
Beginning of period ......... 10,818,724 $ 0.78 6,942,219 $ 1.49
Granted ..................... 640,000 0.43 5,475,000 0.15
Exercised ................... (300,000) 0.21 - -
Forfeited and adjusted ...... (1,679,341) (1.06) (1,598,495) (1.65)
---------- ----- ---------- ------
End of period ............... 9,479,383 $ 0.70 10,818,724 $ 0.78
========= ====== ========== ======
At June 30, 2004 options outstanding were as follows:
Options Outstanding Options Exercisable
----------------------------------- ------------------------------------
Weighted Weighted
Average Weighted Average Weighted
Remaining Average Remaining Average
Range of Exercise Number of Contractual Exercise Number of Contractual Exercise
Prices Options Life (Years) Price Options Life (Years) Price
----------------- --------- ------------ -------- ---------- ------------ --------
$0.01 - $1.00 7,501,667 7.4 $ 0.26 3,761,667 5.9 $ 0.34
$1.01 - $1.50 451,684 4.6 $ 1.36 448,684 4.5 $ 1.36
$1.51 - $2.50 829,370 2.5 $ 2.16 829,370 2.4 $ 2.16
$2.51 - $5.99 678,162 5.6 $ 3.43 678,162 5.6 $ 3.43
$6.00 - $11.00 18,500 5.0 $ 8.01 18,500 5.0 $ 8.01
----------------- --------- ------------ --------- ---------- ------------ --------
$0.01 - $11.00 9,479,383 6.7 $ 0.70 5,736,383 5.2 $ 1.07
================= ========= ============ ========= ========== ============ ========
12
WORLD GAMING PLC AND SUBSIDIARIES
Notes to the Unaudited Consolidated Financial Statements
June 30, 2004 and December 31, 2003
NOTE 5 - COMMITMENTS AND CONTINGENCIES
At June 30, 2004, the Company had employment contracts with its three
principal officers. The salary and bonus compensation resulting from these
contracts are as follows:
TERM POTENTIAL BONUS
OF THE BASE (AS A PERCENTAGE
NAME AND PRINCIPAL POSITION CONTRACT SALARY OF BASE SALARY)
--------------------------- -------- ------ ----------------
A. Daniel Moran,
Director & CEO ongoing $208 Up to 50%
David Naismith,
Director & CFO ongoing $172 Up to 50%
Mark Thompson,
Operations Director ongoing $130 Up to 75%
James H. Grossman was appointed as a director and Chairman of the Board on
April 11, 2003. His annual compensation for such service and up to five
hours a month of legal services is (pound) 55, plus up to US $2 per month
for certain additional legal services.
On April 11, 2003 the company entered into an employment agreement with Mr.
Daniel Moran as a Director of the Board and Chief Executive Officer. The
agreement provides for an annual salary of $208, an annual housing
allowance of $25, in addition to other normal executive employment
benefits.
On August 1, 2003 the company entered into an employment agreement with Mr.
David Naismith as a Director of the Board and Chief Financial Officer. The
agreement provides for an annual salary of $172, an annual housing
allowance of $25, in addition to other normal executive employment
benefits.
Mr. Mark Thompson was appointed to the position of Operations Director and
Managing Director of Starnet Systems on December 1, 2002 on a salary of
$130 with an annual housing allowance of $30 and certain other additional
benefits.
By letter dated January 6, 2004, Mr. Fleming, the Company's Chief
Technology Officer's, employment contract and services there under were
terminated effective January 16, 2004. The amicable settlement in respect
of Mr. Fleming's resignation entitled him to a payment of CDN $33,333.33 in
respect of accrued bonuses, four months salary including benefits payable
until May 16, 2004 and other costs of CDN $8,700. In addition Mr. Fleming
will retain his options granted on September 10, 2001 at an exercise price
of $0.88 which were to vest annually on the anniversary dates over a three
year period of which 66,666 had vested at the date of his resignation.
Under the settlement agreement, Mr. Fleming waived any rights that he had
under his employment agreement and the agreement had certain restrictions
with respect to Mr. Fleming's soliciting or competing with the Company.
13