CHICAGO — Auditors expressed concern about struggling Coolsavings.com Inc.’s ability to stay in business as the online-marketing company said it violated some conditions attached to its lines of credit with banks and forecast a sharp drop in first-quarter revenue.
The firm also increased reserves for bad debt and deferred recognition of revenue from some of its electronic-commerce customers.
CoolSavings offers coupons, savings-incentive programs and shopping information to consumers on its Web site. It sells consumer data to online and traditional retailers as well as manufacturers. Clients purchase either direct data or data that have been correlated with other market statistics in CoolSavings’ database.
The company said it is reviewing offers for new investment from unnamed parties and is negotiating with banks to waive certain covenants it defaulted on. But because those efforts are ongoing, auditors expressed doubts about the company’s ability to remain a “going concern,”noting that additional capital is required to stay in business this year.
“Our cash position at December 31, 2000 was $7 million,” Steven M. Golden, chairman and chief executive officer of Coolsavings, said in a prepared staement. “While we understand why the auditors are required to qualify their report, based on our current revenue projections and planned cost-cutting measures, we believe that our cash position coupled with the anticipated proceeds from our private offering will be sufficient to give us adequate liquidity for the year.”
Coolsavings expects to report first-quarter revenue of $6 million, well below the company’s sales of $8.1 million in the year-earlier first quarter. Last month, Coolsavings lowered its revenue projections for the year to $60 to $70 million from a previous estimate of $70 million to $80 million.
Chicago-based Coolsavings, which laid off 33 people, or 10% of its work force last month in a bid to bolster its bottom line, reported a fourth-quarter net loss of $10.4 million, or 27 cents a share, compared with a loss of $7.1 million, or 22 cents a share, a year earlier. Revenue surged 73% to $11.5 million from $6.7 million a year earlier.
Coolsavings, which delayed releasing its fourth-quarter results because of a software glitch, increased its bad-debt reserves and deferred recognition of revenue from some customers in a bid to be more conservative in its financial reporting.
In late-morning Nasdaq Stock Market trading, Coolsavings (CSAV) fell 25 cents, or 32%, to 53 cents.
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