Updated Saturday, August 28, 1999

Jan 1, 1999 portfolio up by 88.7% year to date, down by 12.3 points - 2 weeks to August 27, 1999

The January 1 portfolio experienced its largest points fall in the past two weeks, following the police raids to the offices and homes of 6 directors of Starnet. The stock fell from $13 to as low as $3 on Friday, August 20 (wiping off $300M from the company's market value) and closed at $4.06 on Friday, August 20, 1999 but has since recovered and seem to find some support at the $5 range.

Starnet was accused of illegal betting and child pornography, which it has vehemently denied. ``We believe the selective investigation into the operations of our company is a result of misunderstanding of Internet issues as they relate to the process of our business and the venues in which our services are offered,'' Mark Dohlen, Starnet's chief executive, said Monday (August 23, 1999) in a written statement.

Readers will remember the false $1B lawsuit targeted at Starnet a few weeks back which led to a price decline in Starnet stock from the low $20's to $13.

As part of this 18-month investigation, the premier of British Columbia's home was raided earlier this year. The warrant to raid Clark's home was one of 14 issued in the investigation. Police also seized evidence from provincial offices and homes and businesses of people associated with the casino license application.

The Globe & Mail (Canada's Business paper) reported on Saturday, August 28, 1999 that Ernst & Young has resigned as the auditor of Starnet. In a filing with the Securities and Exchange Commission in Washington yesterday, Starnet disclosed that the accounting firm "declined to stand for re-election as an independent auditor as of Aug. 24, 1999"

As we have mentioned in the past, one thing we cannot live with as investors is uncertainty. We sold off our position at $17 following the uncertainties created by the false $1B lawsuit. The question now is what next? We are reviewing our stance on this company and will report back to investors very soon.

The financialweb.com is expected to significantly revamp its financial website in the coming weeks and the expectation is that this will see an upward movement in the price of this stock. Readers will remember that at its peak, (this stock we had purchased on Jan 1, 1999 at $9.75) was trading at $27.75. It closed at $6.875 last Friday, which we believe is a good entry level for long term investors.