Strategy First - New Ownership

New Ownership

In 2004, Strategy First Inc filed for bankruptcy protection. On April 21, 2005 Strategy First was acquired by Silverstar Holdings. Terms of the acquisition included "cash consideration to the creditors of Strategy First of $609,000; we issued 377,000 shares of our common stock; warrants to purchase 200,000 shares of our common stock; and assumed approximately $400,000 in existing bank debt, as well as contingent consideration based on the future profitability of Strategy First." Silverstar Holdings Ltd. was a publicly traded company registered in Bermuda (traded on NASDAQ under symbol SSTR), with their web home page stating that they are "focusing on acquiring controlling positions in high-growth retail-driven and fee-based electronic game businesses that stand to benefit from the economies of scale generated by the Internet and other technology-related platforms." Silverstar completed a purchase of game developer Empire Interactive on December 4, 2006, and claimed in a December 14, 2006 press release that with the addition of Empire Interactive titles to the Valve 'Steam' service, "we are delighted that in this short time the first collaborative effort between Empire and Strategy First has born fruit."

The Silverstar SEC filing for its quarter ended September 30, 2006, indicates that Strategy First was not providing a significant flow of revenue: "We have recognized a net loss of $941,000 during first quarter fiscal 2007 compared to a net loss of $48,000 during the same period in the prior fiscal year. Significant items that contributed to the increased loss included an increase in operating losses to $583,000 in the first quarter of fiscal 2007 as compared to $421,000 in the first quarter of fiscal 2006. This increase was primarily caused by decreases in sales recognized by Strategy First."