I just got this email from admin...
Did anybody else get this emai?
Thanks;
Bag Of Gold
Stockhouse threatens suppliers with bankruptcy
admyn
<strong>Reputation</strong>: A calculation of the weighted quality, performance, and participation scores on a scale of one to ten.</p>")">2
on 9/3/2009 3:21:17 PM
my Note: WHATS NEXT? Stockhouse is the best place for Stock talk IMO
Stockhouse threatens suppliers with bankruptcy
2009-09-03 11:53 ET - Street Wire
by Stockwatch Business Reporter
StockhouseInc., a stock market website company, reveals in notes to its secondquarter financials that it is pressing its long-suffering informationsuppliers for debt forgiveness -- or bankruptcy may loom on Oct. 31,2009. That is the date upon which a $557,000 (all figures U.S. exceptstock prices) debenture comes due, and the company does not have themoney to pay it out.
Note 1 to the financials for the quarterended June 30, 2009, filed on Aug. 28, 2009, states: "Management plansto renegotiate with the holders of the company's $557,000 in debenturesto extend the October 31, 2009, due date. Management approached all ofthe company's significant vendors with proposals to settle thecompany's outstanding liabilities to the vendors for significantlyreduced amounts. Management believes that success in settling itsliabilities with its vendors for significantly lower amounts willsignificantly reduce the company's working capital deficit which willallow the company to successfully renegotiate an extension to thedebenture due dates."
The implied threat for suppliers isunless you help us reduce our working capital deficit, thedebentureholders will not accommodate an extension.
The mostrecent financials reveal more of the same money-losing patternStockhouse has had for years. As of June 30, 2008, the company had aworking capital deficiency of $623,000, which by June 30, 2009, hadballooned to $3.71-million (including the one-year debenture of$557,000, issued Oct. 31, 2008). During this one-year period, thecompany lost $3.7-million. Cash reserves suffered accordingly, fallingfrom $3.49-million in June, 2008, to $353,000 in June, 2009. A portionof this money went to software development. To save on expenses,Stockhouse laid off 19 employees, including three executives, on top ofthe 13 it had let go in June, 2008.
On Oct. 31, 2008, in aneffort "to increase working capital," the company sold $557,000 ofone-year-term debentures with an 18-per-cent interest rate, secured byassets of its chief subsidiary, Stockgroup Media Inc. There were sixsubscribers but Stockhouse has disclosed only one, Yvonne New, the wifeof Stockhouse's president, Marcus New. She bought $200,000 (Canadian)worth.
Subsequent to June 30, 2009, Stockhouse disclosed in aU.S. filing dated July 21, 2009, that it had discontinued its wirelessand pager product line, which had supplied $569,000 of the company's$2.15-million revenue in its first quarter of 2009, because of marketconditions and a lack of profitability. This information remainsundisclosed in Canada.
To date, Stockhouse has been surprisinglysuccessful keeping its supplier/creditors at bay. The company does notdisclose its creditors, but it lists Comstock Inc., Comtex NewsNetworks Inc. and Hemscott Inc. on its website as informationsuppliers.
The large amount Stockhouse owes its patientsuppliers might surprise many companies, but there is a likelyexplanation. These suppliers all provide information, and except for asmall communication charge, the incremental cost of supplying anadditional customer is arguably zero. Using this logic, it is in thesuppliers' interest to carry an ailing customer until conditionsimprove, he repays the debt and the profitable relationship resumes.
Havingbeen kept in business thus far by its supplier/creditors, it appearsStockhouse is rolling the dice for further concessions, and using thematuring debenture as a pursuader. No further largesse, and thedebentureholders, including the president's wife, will demand fullpayment plus 18-per-cent interest by Oct. 31, 2009. This would drivethe company into bankruptcy and the debentureholders could seize theassets before year-end.
The documents Stockhouse has filed withthe Securities and Exchange Commission indicate Mrs. New may be open toreceiving shares for the debt, but there is no word on whether theremaining five debentureholders are as open to the idea. In the firstof three proxy statements for the upcoming AGM, Stockhouse proposed toissue shares for the debentures, providing shareholders approve thetransaction at the AGM. In some places the U.S. documents refer to Mr.New as the debtholder, and elsewhere it refers to Mrs. New. The companyexplains the bearer of the debt as follows. "As of Dec. 31, 2008, thecompany owed Marcus New, our president and chief executive officer,$200,000 (Canadian) for money loaned to the company. The majority ofthe debt is evidenced by debentures secured by a general securityagreement over the assets of the company's wholly owned subsidiary,Stockgroup Media Inc., held by Mr. New's wife, Yvonne New, that bearinterest at the rate of 18 per cent per annum."
The first proxystatement said it would issue four million shares at five cents for the$200,000 debt. This would increase Mr. New's shareholdings to9,567,977, making him owner of 23.2 per cent of the outstanding shares.
Astime went on, however, Stockhouse's stock dropped further. On Aug. 25,2009, in the third and so far final proxy statement, four millionshares at five cents became 6,666,666 shares at three cents. Thispossible transaction went unmentioned in the most recent financialstatement on SEDAR.
Recently Stockhouse voluntarily ended itsregistration with the Securities and Exchange Commission, explained asa cost-cutting measure. The proxy material for the upcoming AGM werethe last documents filed with the SEC.
The AGM
Shareholdersof the two-cent stock have much to consider at this year's AGM, whichthe company delayed to Sept. 30, 2009, from June 30, 2009. It blamedthe delay on the SEC's examination of its proxy material. As mentioned,one of the matters is issuing Mr. New, who earned $254,160 in 2008,shares for the $200,000 (Canadian) debt. The company is also askingshareholders to approve (1) selling more than 20 per cent of itsassets; and (2) consolidating its shares up to 1:20.
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