Greenhawk Resources Inc C.GRHK

Bachus Passes on Third Try

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CRYPTOLOGIC CRYP–NASDAQ : US$7.83; CRY-TSX : C$10.58 — SPECULATIVE BUY 12 JUNE, 2003 Scott Preston 415.401.0301 [e-mail] Jonathan Wiesblatt, Associate 416.860.7779 U.S. Anti-Online Gaming Bill (Bachus) Passes on Third Try Price: $7.83 Basic Sh. O/S (mm): 12.2 Target Price (1 yr.): $10.00 FD Shares (mm): 12.2 Projected Return: 28% Float (Shares mm): 11.9 52 W k. High: $14.90 Market Cap (mm): $95.5 52 W k. Low: $3.12 FY Dec. 31 2001A 2002A 2003E 2004E EPS $1.22 ($0.15) $0.61 $0.76 P/E 6.4x n/a 12.8x 10.3x Rev $43.60 $34.40 $35.7 $39.2 P/Rev 2.2x 2.8x 2.7x 2.4x Per Share Data EVENT
U.S. Anti-Online Gaming bill passes after third try and lengthy debate. HIGHLIGHTS
The Bachus Anti-Online Gaming bill was voted through by the House of Representatives on Tuesday night in a narrow win that required an extra session in which several Republicans changed their votes in order to pass the bill. After the bill was pulled twice due to limited support last week, we were surprised to see it get through the House, especially without the Sensenbrenner amendment that allowed no carve outs and basically killed the Leach bill.
The Bachus bill at this point contains no civil or criminal enforcement provisions. So, although it deems online gambling illegal, no penalties could be levied against parties that conduct such activities.
The next step will occur in the U.S. Senate, where Senator Kyl will try to push through his anti-online gaming bill. This bill will likely first go to the banking committee. If Kyl’s bill happens to make it through committee and the Senate, the two bills must be reconciled and then passed by the two Houses before making it to the White House for final passage into law. INVESTMENT CONCLUSION
Despite this slightly negative legislative development, the regulation/prohibition fight is long from over, and we expect many more negative headline events to create some overhang until the regulatory situation in the U.S. is fully resolved. Until the U.S. regulation/prohibition fight is settled, investors should continue to focus on the growth of CRYP’s European business (now 50% of revenue) and traction with its new games (poker, bingo). Stock remains a SPECULATIVE BUY. The information contained in this report has been drawn from sources believed to be reliable but its accuracy or completeness is not guaranteed, nor in providing it does Research Capital Corporation assume any responsibility or liability. Research Capital Corporation, its directors, officers and other employees may, from time to time, have positions in the securities mentioned herein. A copy of the firm’s statement of financial condition, along with a list of partners, directors and senior officers is available on request. Contents of this report cannot be reproduced in whole or in part without the expressed permission of Research Capital Corporation. (U.S. Institutional Clients - Research Capital U.S.A. Inc. (a wholly owned subsidiary of Research Capital Corporation) accepts responsibility for the contents of this report subject to the terms & limitations set out above. Firms or institutions receiving this report should effect transactions in securities discussed in the report through Research Capital U.S.A. Inc., a Broker-Dealer Registered with the United States Securities and Exchange Commission). * San Francisco is an office of Research Capital USA Inc. Toronto 416.860.7600 Montreal 514.399.1500 Vancouver 604.662.1800 Calgary 403.265.7400 * San Francisco 415.401.0301 Courtesy of BigCharts.com Profile CryptoLogic (www.cryptologic.com) is the leading software development company serving the Internet gaming market. The company's proprietary technologies enable secure, high-speed financial transactions over the Internet. Upcoming Events Q2/03: Expecting revenue of US$8.9 mm and EPS of US$0.15. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ toothless Good luck to all