Losing $500K a month, Youbet looks for help

Youbet.com, the online horse racing wagering and broadcasting company, is currently going through $500,000 a month and, as of Jan. 1, had only $3.6 million in cash left, Youbet officials disclosed late Wednesday.

The ongoing losses are putting significant pressure on company officials to raise cash over the next several months. David Marshall, the company's new chief executive officer, said on the conference call that the company has gone through about $70 million since 1999 and would need additional cash to continue operating.

"Clearly, securing new financing is one of my priorities," Marshall said. Marshall declined to be specific about his plans to raise cash or how much the company would be seeking.

According to figures the company released on Wednesday, Youbet lost $14.8 million in 2001 on revenue of $6.3 million. The company's balance sheet listed $12.1 million in cash at the end of 2000, compared to just $3.6 million at the end of last year.

In Youbet's annual discussion of year-end results, Marshall said he believed that Youbet would post much stronger numbers in the first quarter of 2002 and continue to reduce expenses.

Marshall said Youbet was studying several "guerrilla and co-marketing initiatives that are not that expensive." Marketing has been one of Youbet's largest expenses.

Marshall took over as chief executive officer on March 22 after injecting $750,000 into the company.

Revenues in the fourth quarter of 2001 were up 31 percent, to $1.8 million, compared to the fourth quarter of 2001, but David Hermann, Youbet's president, said much of that was because of an accounting change. Expenses were $7.3 million in the quarter.

In the fourth quarter last year, Youbet began operating its own wagering hub in Oregon. Before that, bets by Youbet customers were processed by Ladbrokes Call-a-Bet operation in Pennsylvania, and Youbet received a fee from Ladbrokes on each bet made.

Youbet's stock was up one cent on Thursday, to 65 cents. NASDAQ has said that it will delist the stock if it does not trade above $1 for 10 consecutive trading days before May 15.