C2W Music willing to sell under right condition
C2W Music Limited, a listed company that publishes music and manages artistes, says it would consider selling the company after another bad quarter in which it made no income.
C2W launched as a start-up in late 2011 and listed on the junior market in early 2012, but has struggled ever since, leading to an accumulation of US$1.23 million of deficits.
Asked outright about a possible sale of the business via a reverse takeover, chairman and third-largest shareholder Derek Wilkie said: "This may be a possibility, if it will benefit the shareholders, which is a major concern for the board."
C2W generated no revenues for its first quarter ending March 2017, which represents a new low for the company. Income in the comparative year-prior quarter was barely better at US$239.
The absence of revenues stems from the timing of the release of artistes' singles, said Wilke, who is also the company's director of operations.
"We continue to develop our artistes, and the timing in which revenue-earning initiatives occur has everything to do with releases of new singles, which also activate other revenue streams, like touring, etc," he said.
Without any revenues to offset expenses, C2W posted a US$8,000 net loss. Its expenses were dominated by fees to accountants, auditors and payment to its registrar. These fees arose as a consequence of maintaining its corporate and governance structure, which the company could leverage in a sale.
Equity in the company now stands at US$60,000. Its operations have been bolstered by director loans.
The company's greatest asset remains its advances to songwriters at some US$270,000 up from US$251,000 a year earlier. These advances are to be recouped from earnings in future periods. In the review period, none of these advances were treated as current assets in the financials, which means the funds are not expected to be recouped in the next 12 months.
C2W remains one of the most consistent loss-makers on the junior market. Still, its stock price has been climbing, hitting a year-to-date high of 55 cents per share in February. The price has fallen since then to 43 cents, but is still trading well above its one-year low of 17 cents.
Investors pumped over US$1 million into the music publishing company's IPO back in April 2012. That money, however, got expensed, partially due to songwriting workshops held in various parts of the Caribbean.
On Thursday, Wilkie defended the company's "360" business model as "developing but profitable".
"The 360 model is extremely new to the company as the development process of recording artistes and getting them ready for the market takes time," he said.
The company adopted the 360 business model in 2015, shifting solely from music publishing to include artiste management.
"We had a profitable year in 2016 and we continue to work hard to repeat this for 2017. In this new model, and until our artistes are fully developed and established, we cannot allow weak quarters to deter us from the task at hand," Wilke said.
C2W reported a fivefold rise in fees and royalties last year, and a profit of more than US$16,000.