Staffers dismissed, financing future uncertain
HOLLYWOOD — All bets are now off for the Hollywood Stock Exchange’s planned merger with online sports gaming and betting venture Predict It.
Talks between the two companies ended abruptly Friday after New York-based Predict It announced it has pink-slipped all but four of its 30 staffers.
Company prexy Andrew Merkatz said it is trying to secure additional financing but may be forced to declare bankruptcy in the coming weeks.
For HSX, Predict It’s woes means that it is no longer guaranteed the much-needed $10 million round of financing it was once promised from investors including SBS Broadcasting, Citigroup Investments, Dawntreader Fund, Robert H. Lessin, Verus Intl., Keystone Venture Capital, Commonwealth Associates, Genesys Angelbridge and HSX co-founders Michael Burns and Max Keiser.
The new round of financing was seen at the time as necessary to rescue HSX, which industryites said was close to running out of cash and closing its doors.
A combined venture would have also expanded HSX into what’s become a lucrative online sports gaming market, thus pumping more revenue in HSX, which enables Netizens to buy and sell stock in celebrities and movies.
Both companies said Friday that the necessary financing required to complete the proposed merger was not secured, with investors souring on the deal.
An HSX spokesman said that the deal may have also fallen apart due to problems associated with merging with a publicly traded company, whose stock plummeted from a 52-week high of $2.25 to 19¢ on Friday.
“Due to extremely difficult capital market conditions and a general lack of investor enthusiasm for interactive entertainment companies, we were unable to secure the financing to complete the HSX deal or continue to meet our current payroll obligations,” Merkatz said. “After six weeks of trying to get the deal to happen, it became obvious the money was not there.”
An HSX spokesman said that the company is searching for additional funding and that when investors looked at HSX and its upcoming projects, “they felt confident in backing us as a stand-alone company.”
When the merger talks began, HSX chairman-CEO Andrew Kaplan announced he would depart his posts once the deal eventually closed (Daily Variety, Sept. 20). But Kaplan has already left the company, leaving HSX to be run by an executive committee headed by senior veep Steven Lehrhoff and head of research Brian Dearth.