E-district loses £2.7m on sales of only £2,000 as turnover collapses

E-district.net, the online entertainment business that sacked its chief executive in February over allegations he inflated sales figures, yesterday announced a collapse in turnover in the first-half of the year.

The embattled company generated only £2,183 in turnover in the six months to 30 June, a 93 per cent fall on the same period last year.

The first-half results also showed that e-district had spent £787,000 on the ongoing legal action against Steven Laitman, who was forced to leave the company after allegations emerged that he exaggerated the number of customers using the site and its advertising revenue. The expense contributed to a £2.7m first-half loss.

Mr Laitman, who founded e-district, is under investigation by the Fraud Squad and is due to face trial next May. Detectives have also interviewed e-district's chairman, Frank Lewis, and its finance director, Eddie Abrams, as part of the investigation into the allegations Mr Laitman is facing.

E-district said the dramatic fall in its turnover was due to a strategy decision to reposition the business in the face of a slump in internet advertising. The small amount of turnover came from banner advertising, which e-district has now completely stopped.

The company is now concentrating on offering games which customers pay to play on interactive television. E-district invested heavily in the new strategy in the first-half and its products are carried by NTL, Telewest and ITV Digital.

The company expects to announce the launch of more new products in the fourth-quarter, leading to the possibility of revenue growth next year.

Yet some of the company's shareholders are becoming restless and want to see it either produce much more growth in the short term, or return its cash stockpile of nearly £10m to investors. The company has twice as much cash in the bank as its entire market capitalisation. Yesterday its shares rose 0.5p to 6.5p.

Mr Abrams rejected suggestions that the business should wind up. He said: "People want to see progress, but there is a good future for the business by focusing on interactive TV."

Separately, the troubled internet incubator bizzbuild.com said that it was putting its subsidiary Carbusters.com into administration because it had run out of money.

Bizzbuild bought Carbusters in April from the Consumers' Association for £50,000. The company sells new cars online. Bizzbuild said earlier this month that trading had been below management forecasts and it rejected the idea of injecting more of its own cash into the business.