Starnet Reports 26% Increase in Revenues in Fiscal Second Quarter

Business Wire, Dec 15, 2000

Business Editors

ST. JOHNS, Antigua--(BUSINESS WIRE)--Dec. 15, 2000

Starnet Communications International Inc. (OTC-BB: "SNMM") ("Starnet"), a leading provider of interactive media and information systems for companies engaged in the Internet gaming industry, today reported results for the three- and six-month periods ended October 31, 2000.

Total revenues for the second quarter of fiscal 2001 were $5.5 million, an increase of 26% percent from the same period last year and 36% from the preceding quarter. Net loss for the quarter was $1.3 million, or a loss of $0.04 per share, compared to a net gain of $0.3 million, or $0.01 per share, during the corresponding quarter in fiscal 2000.

For the six-month period ended October 31, 2000, revenue increased 19% to $ 9.5 million, compared to $ 8.0 million in the same period last year. Net loss for the period was $3.1 million, or a loss of $0.10 per share, compared to a net gain of $ 0.9 million, or $0.03 per share, during the corresponding six-month period in fiscal 2000.

These losses are attributed primarily to an increase in general and administrative and legal costs. Starnet incurred costs associated with the ongoing search for a new CEO and the Company's efforts to reorganize into a new holding company incorporated in the United Kingdom. Additionally, depreciation costs rose due to the addition of a second server site, and lower than expected sportsbook profits occurred in October despite record wagers.

Interim President and Chief Executive Officer Fred Hazell commented, "Until Starnet has selected a new CEO and the corporate restructuring is settled, Starnet will continue to incur costs related thereto. However, these expenditures are extraordinary, and will not affect the company on a recurring basis. Sales, marketing, development and operations costs for the quarter were up only 2% from last quarter despite a 36% rise in revenue over the same period."

Mr. Hazell continued, "Our Beyond2000 software features games that target a new, untapped customer base, offering outstanding opportunities for growth. We have further diversified our revenue base with the addition of our increased online pari-mutuel capabilities."

Chris Thompson, chief financial officer, said, "This enhanced, diversified revenue base provides Starnet with a solid foundation for stable, consistent growth, as these capabilities will help attract and retain key business partners. Revenue has increased by over 100% over the past three years. As revenues continue to expand over the next several quarters, and as our expenses level off or decrease, we anticipate recording strong results, and project that Starnet will be cash flow positive by the fourth quarter of 2001."

The following highlights were announced during Starnet's second fiscal quarter:

New Customers - The company signed and renewed simulcast agreements with leading racetracks including Delta Downs, Northfield Park, and Lebanon Raceway.

Partnerships - Starnet forged an agreement with a new licensee, Casino Marketing S.A., a wholly owned subsidiary of Poker.com, to provide Casino Marketing with a full Internet casino and sportsbook. Starnet also forged a partnership with Panix Promotions to simulcast Panix' boxing matches on Starnet's worldbroadcasts.com Web site. Starnet will be the exclusive provider of online gaming services for events promoted by Panix.

Product Development - Starnet focused on the development and launch of Pari-mutuel wagering software, adding critical value to the Starnet suite of Beyond2000 gaming products.

Starnet management will be holding a conference call to discuss these financial results on Wednesday, December 20, 2000, at 4:30 p.m. EDT. A live Web cast and further details about the call will be available on the Starnet Web site, www.snmm.com. To listen to the Internet broadcast, please go to the Web site at least 15 minutes prior to the call to register, download and install any necessary audio software.

About Starnet

Starnet is a leading developer and producer of Internet technologies for gaming applications. The company's new software, Beyond2000, which began a phased launch in August, 2000, will offer a full suite of gaming products, including casinos, sports betting, bingo, lotto, and horse racing. Games are available in a number of different formats including Java, C , and HTML and comprehensive marketing support software is also provided. For more information, please visit www.snmm.com or email sales@starnetsystems.net.

Starnet is an SEC reporting US (Delaware) corporation, which currently trades on the Over-The-Counter Bulletin Board. The company began trading in September of 1997 under the symbol "SNMM". Starnet is also listed on the Berlin and Frankfurt Stock Exchanges where it is traded on the Over-The-Counter market under the symbol "SNM".

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995: The statements contained herein which are not historical fact are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, including, but not limited to, certain delays in testing and evaluation of products, shareholder approval of the proposal to reorganize into a new holding company incorporated in the U.K., regulation of the online gaming industry, and other risks detailed from time to time in Starnet's filings with the Securities & Exchange Commission. We assume no responsibility for the accuracy and completeness of these statements and are under no duty to update any of the forward-looking statements contained herein to conform these statements to actual results. This is not an offer to sell or a solicitation of an offer to purchase any securities.