Bermuda start-up e-commerce company First Ecom cost the Island dear, as its investors bailed out and the company changed into a gas exploration company.

The venture forced the Bank of Bermuda write off $10 million at the beginning of the year because of its investment in the start-up.

First Ecom Inc. saw its stock fall from $34 to under $1 in less than 12 months and then merged with a US gas and oil exploration company in a bid to diversify out of the electronic card processing business.

Net loss for the second quarter of 2001 after amortisation, depreciation and non-cash compensation associated with stock options was $1.6 millon as compared to the first quarter of 2000 net loss of $4.3 million — a sizeable improvement over the previous year.

Lines Overseas Management also heavily invested in the start-up which first dropped the “dot-com” from its name and then signed a memorandum of understanding with Denver-based Gasgo Energy Ltd., a company which explores and petroleum and natural gas properties.

First Ecom, which was launched on the Nasdaq at the end of 1999, posted revenue from continuing operations for the quarter of $24,152 as compared with revenue for the same quarter in 2000 of $5,730.

Bank of Bermuda owned more than ten percent of the company, and LOM owned more than 13 percent. Both are believed to have bought into the company for $7 a share.

A full report on the company is available at the SEC’s Edgar database at www.freeedgar.com.