ASX probe as Adultshop dumped

Good work Everyone, we have an investigation now but ASIC will stay out of it.

Adultshop are not returning their phone calls.

http://www.smh.com.au/articles/2002/09/06/1031115938614.html

ASX probe as Adultshop dumped
By Eli Greenblat
September 7 2002




Under scrutiny ... Malcolm Day, managing director of Adultshop.com, has the ASX on his tail over a profit warning statement. Photo: Tamara Voninski


The Australian Stock Exchange will investigate sex products e-tailer Adultshop.com after a shock profit warning from the company triggered a near 70 per cent collapse in its share price yesterday.

It is understood that the Australian Securities and Investments Commission will not join the stock exchange in delving into the Perth-based dot com.

As late as August 6, Adultshop.com told the market it could not explain a July dip in its share price and had no concerns that would alter its bullish financial forecasts for 2002-03.

An ASX spokesman declined to comment on whether heavy trading in Adultshop.com shares in the lead-up to yesterday's downgrade would also be looked into. "We can confirm that we will be pursuing this announcement [from Adultshop. com] as a matter of priority," the spokesman said. "We will have several lines of inquiry".

He said the ASX would investigate statements from Adultshop.com managing director Malcolm Day in August that there was no fresh news about the company's performance the market needed to be aware of.



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"We will be seeking more information from the company and other people regarding those announcements and previous announcements," the ASX spokesman said. "This includes the information the market has been given under listing rules."

Shares in Adultshop.com collapsed yesterday after promises earlier this year of bumper profits and bloated cash reserves were replaced by a warning that problems with credit-card processing for its online operations would trigger an unspecified net loss for the six months to December 2002.

The company had promised a $11.62 million profit in the six months to December 2002 and revenue of $106.5 million.

Adding salt to investor wounds, Adultshop.com's much-hyped forecast of cash reserves of $30.3 million by the end of this year were slashed to between $10 million and $12 million for the period.

Investor revenge was quick. Shares in Adultshop.com, which closed before a trading halt on Monday at 23.5¢, opened at 7.9¢ - a 66 per cent drop. The shares touched a low of 7.5¢ before closing at 10¢. The market was also unimpressed by the company's 2001-02 result of a net profit of $5.71 million on revenue of $117.3 million.

Calls to Adultshop were not returned yesterday.