Troubled EConnect Reports Loss for ’99

EConnect Inc., a developer of Internet banking equipment whose shares plunged as federal regulators accused it of securities fraud, reported a loss of $23 million on sales of $40,000 in 1999. The San Pedro-based company, which has 12 employees, said its liabilities exceeded assets by $5.3 million on Dec. 31. EConnect’s outside auditor, L.L. Bradford & Co. of Las Vegas, warned of “substantial doubt” about the company’s ability to continue as a “going concern” in a letter included in its annual report, filed this week with the Securities and Exchange Commission. The company had a market value of $3.6 billion as recently as March 9, when its share price touched $21.88. The stock had surged from under $1.50 in February. The SEC halted trading March 13, citing questions about the accuracy of the company’s news releases. The stock now trades around 88 cents on the Bulletin Board. On April 6, EConnect settled the SEC charges without admitting or denying wrongdoing. In its annual report, the company said its decision to fire President Stephen Pazian on April 17--less than a month after hiring him--could require EConnect to pay him $1.26 million for the balance of his four-year contract. Last month, criminal charges were filed against Stephen Sayre of Los Angeles, alleging he made $1.4 million selling shares of EConnect as he issued “buy” recommendations for the stock. Sayre is being sought by U.S. authorities.