Saying that “volatile economic and public market conditions hampered the company’s efforts to raise equity capital,” MerchantOnline.com Inc. filed for Chapter 11 bankruptcy protection while it attempts to reorganize.
The Boca Raton, Fla.-based company, trading on the OTC Bulletin Board at about 13 cents a share, provides real-time processing for e-commerce transactions by hosting a server that allows online processing of credit cards over the Internet.
Although the company has never made any money, CEO Jim Degracia said he thinks MerchantOnline.com still has strong technology and a viable business model for its products and services.
“We expect to be in a much stronger financial position going forward, with no debt and a much smaller cash requirement,” he said. “With the growth in revenue projected from our contracts and pending contracts, combined with the continued reduction of costs, we will be on a faster path to profitability. The demand for our NewCash technology provides a basis for future growth in a market that demands the next generation of secure transaction capabilities.”
Degracia said the company is currently finalizing arrangements with sources of debtor in possession financing.
Founded in December 1997, MerchantOnline.com provides a secure transaction network that enables businesses and consumers to use one payment system for both their real world and virtual world needs, utilizing credit cards, ATM/debit cards and other payment programs.
The company lost 71 cents a share for the first two quarters of this year. For the 6 months ended last April, revenues rose 48 percent to $145,000. Net loss totaled $44.8 million, up from $4.1 million in the same period a year earlier, according to Multex Investor data.
MerchantOnline’s last publicly announced business deal came in July of this year when wireless services firm QualcommTel, the Tiller Group, a privately held investment and technology firm, and MerchantOnline announced a strategic relationship to provide digital payment mechanisms to the global wireless marketplace. The relationship included the purchase of a long-term license for MerchantOnline’s NewCash technology. Financial details were not disclosed.