C2W nearly out of cash
In the quarter just ended in September, C2W Music Limited generated zero revenue and was virtually out of cash and in need of a new infusion less than two years in business.
It's one of the worst-performing quarters yet for the music company whose accumulated losses now amounts to US$1.1 million, while the value of its stock is down 73 per cent.
This week, in a move to reassure investors, the company acknowledged it was low on reserves but said it expected to start earning revenue by the second quarter of 2014 from two music publishing sources.
C2W also announced that it had began searching for new investors - ostensibly to inject fresh capital - and would be seeking a vote on the arrangement from existing owners of the company were it to tie down a partner. There was no indication, however, that actual negotiations were under way.
"As a way forward, and until revenues are recognised, we are in communication with various interested and strategic outside investors," said a statement from CEO Ivan Berry, dated December 2.
"Once we feel we have the right strategic partner, we will then go through the legal procedures in bringing a proposal to our current shareholders for consideration via an extraordinary general meeting."
C2W at last report had just US$1,688 in cash, while its short- term debts of US$182,000 were five times greater than its short-term assets. In one year, the company has lost US$720,000 of its equity, leaving it with a capital base of US$171,163. Essentially, C2W is left with one-seventh of the equity raised on the market as start-up capital.
The operation was kept going by a US$69,961 short-term loan from two unnamed 'third parties' for use as working capital. The loan, priced at 8.0 per cent, comes due in seven months, in July 2014.
Berry redirected the Financial Gleaner to the company's statement when asked to comment on the company's options.
C2W, a start-up company at its debut on the Jamaica Stock Exchange in May 2012, is in the business of creating copyrights in the music industry, earning from fees and royalties.
Stock market investors took a bet on the company, despite its untested business model, and acquired J$129 million (US$1.47m) worth of its shares in a public offering brokered by Stocks & Securities Limited.
SSL itself became a top shareholder with a 13 per cent stake and is custodian of another 15 per cent of the shares. CEO Mark Croskery redirected requests for comment on C2W's status to Berry.
Its second-largest shareholder, Derek Wilkie, is currently acting as chairman of the board after the September 12 resignation of Gerald Hadeed to take up political office.
Last year, C2W generated just $6,253 of revenue or US$521 per month. So far, this year, its turnover is down to US$1,803 or US$200 per month, with no revenue at all coming in for July, August and September. Its stock, which listed at J$1.29, is now worth only 35 cents per share.
Essentially, C2W investors have lost 73 per cent of their investments in the company.
However, the music company says its operating needs are lower than last year, amid disclosure that its operating cash was US$376,000 in deficit. It also advised that it expects to start earning from sub-publishing agreements with BMG Chrysalis and Warner Chappell, as well as exploitation of its own catalogue by the second quarter of 2014.
Both BMG and Warner Chappell are rights-management company representing music publishing and recording rights.
C2W says it now owns over 900 copyrights.