Auditors Not Optimistic Snowball.com can Survive
In its annual report, filed with the Securities and Exchange Commission last month, Snowball.com's auditor, Ernst & Young LLP, said the company's financial position is a concern and it is not optimistic things will turn around.
"[T]he company has sustained losses and negative cash flows from operations since its inception," Ernst & Young said. "These matters raise substantial doubt about the company's ability to continue as a going concern."
Snowball.com said since its inception in January 1997, it has never made a profit and as of Dec. 31, 2001, it had a deficit of nearly $134.9 million. The company also said its prospects for obtaining additional financing are uncertain.
"[F]ailure to obtain needed financing would limit our operations and might cause our business to fail," the company said in its annual report.
No one from the company was available for comment.
Also last month, the company closed its ChickClick.com portal for young women and girls, as part of its shift in focus on entertainment and gaming. Its IGN.com network, which specializes in content in this area, is Snowball.com's remaining property.
Snowball.com in late January sold its alumni Web site, Highschoolalumni.com, to Los Angeles-based Reunion.com for $1 million in cash. The company at the time said the alumni site did not fit into its plans to cater to a younger audience. It acquired the alumni site for a little more than $1 million in September 1999.
ChickClick.com was created in February 1998 as an outlet for "hip, progressive women's sites to establish themselves as a unified advertising and editorial force." In addition to content, ChickClick.com offered free e-mail, home pages, instant messaging and other services.