The Proposed Prosecution of Lee Thurburn

November 11, 1999

    FlashNet Communications (NASDAQ:FLAS) is currently selling for almost $8.00 per share.  The losses keep piling up.  Some stats for those not keeping score:

    -FlashNet ranks 56th of 65 in the Internet Services Industry.
    -Last Quarter Earnings per Share: -.45.
    -This Quarter EPS: -.44.
    -As of June 20, FlashNet had 220,000 subscribers (219,999 in July when I fired them).
    -FlashNet is accesible to more than 80% of the US population.
    -FlashNet has never had a profitable Quarter.

    FlashNet went public in March of 1999 to the tune of about $45.00 per share by the close of the day.  People that read their prospectus knew that this company had a serious hinderage in their balance sheet: it was not profitable.  Led by Chairman Lee Thurburn, who had failed in business ventures before, FlashNet was ready to go public.  Here is the distribution of FlashNet insiders and what the initially filed for:

    Lee Thurburn        March 12        745,110 Shares
    Scott Leslie           March 15        788,970 Shares
    John Kleinheinz      March 12        1,666,394 Shares
    Kevin Stadler         March 12        560,133 Shares

    These "directors" all had become extremely wealthy and appeared to be ready to conquer the world of internet servicability.  Their prospectus and press releases told of visions of grandeur and used words like "DSL" "FreePC" and other cool buzzwords that kept investors, customers and employees happy and excited.  The world of business and finance, however, did not agree.

    By the time May rolled around, Flashnet's stock, which never found a levelling point until it tanked, was just over $30.00 a share.  Over the course of May and June, the stock tumbled as low as $18.00 per share, but rebounded strongly to get back to $30.00 a share by July 1.  August saw the stock sink to about $16.00 per share and in September, FlashNet stock was treading water around the $12.00 price.  The formailty of going public seemingly did nothing for the actual operation of FlashNet.  It still had internal problems and God awful customer service.  The FreePCs apparently served more like Free peices of shit and people lost faith within the internet wonderwalls of FlashNet.

    On September 30, a release came out that said Lee Thurburn was stepping down.  Six months after going public, Thurburn quit.  The official press release reason is the Thurburn was going to strat another internet venture.  Here is the point:

    FlashNet stock tanked to less than $10.00 per share after Thurburn quit.  For the sake of argument, let's say $10.00.  Thurburn acquired 745,110 shares on opening day.  Between September 13 and October 29, 1,341,678 shares of restricted FlashNet stock were put up for sale.  Restricted shares mean they were bought directly from the issuer and not through a broker or public offering.  Thurburn did not list his shares as restricted stock.  His shares, equalling about $7,451,100, are still being held apparently.  The shares purchased by insiders were all optioned before the stock was made available to the public.  This means they got the stock somewhere around $20 to $25 per share.  So who took the loss?  Who are the people that paid top dollar for FlashNet stock only to see it dwindle to far less than what it was paid for?  The public.  Individual investors.  Mutual fund holders.  The common person that puts their money in these companies on the faith that the company will maximize their return.  FlashNet did not come through for them.  More realitically, Lee Thurburn did not come through for them.

    In a nutshell, Lee Thurburn took a losing company public, got rich, saw the company he created fall through the floor, and then he quit.  The baggage is left with thousands of people who are a little wiser, a little more cautious and a lot poorer.  The company still bleeds red ink, the customer service is pathetic and there have been no signs of growth at any level.  Prodigy saw a light called customer database and purchased FlashNet for stock last week.  Lee Thurburn's nightmare has become Prodigy's customer base.  He has gotten away with taking millions of dollars and funnelling it to himself.  What a tragedy.

    Of course in today's land of legalese and disclaimers, there is no way Thurburn could ever be prosecuted, but he should.  Besides that, from what I've heard, he's a total dick.