Shares of Sitebrand Inc. (TSX-V:SIB) plunged 80 per cent Thursday as the company declared it is entering creditor protection, and that chief executive Chris Corman would be leaving the firm.
The Gatineau-based online marketing solutions firm has been struggling with losses for the past year. Shares were standing at one cent each by late Thursday morning.
In its most recent release of financial results for the second quarter, it posted a net loss of $29,161 in the three months ending May 31, a slight improvement from a $112,164 loss in Q2 2009.
"In Q2, Sitebrand … demonstrated improvements in revenues as well as earnings, as our past efforts to improve the business become apparent," said Sitebrand president and CEO Chris Corman in a statement at the time.
Now, the decade-old firm says it is in debt to secured creditors to the tune of hundreds of thousands of dollars.
It owes $510,000 to the Business Development Bank of Canada and Caisse Desjardins de Hull, with $350,000 of that due Dec. 23.
With the notice of intention to make a proposal to creditors, Sitebrand now has a 30-day extension on loans, which could be drawn out further in future court rulings, the company said in a statement.
"Sitebrand.com's day-to-day operations will continue uninterrupted throughout the NOI process while the Company considers the restructuring and implements a plan of reorganization," the company said.
"Sitebrand.com's main focus is maintaining the high level of customer service that it has always delivered, and to provide no disruption to its services."
The firm did not disclose why Mr. Corman left the firm, or any plans for finding a replacement.
Sitebrand has made several attempts to raise its revenue in recent months, including issuing a $400,000 non-brokered private placement. In two tranches, the company pulled up short with total proceeds of $320,000.
The 2008-09 downturn hammered the company hard, giving it a net loss of $754,208 or four cents a share in fiscal 2009 – down from $2.32 million or 13 cents a share in 2008.
At the time, Sitebrand blamed declining United States spending and a strengthening Canadian dollar for the shift, adding that cost conservation measures, new customers and fundraising would bolster it in 2010.
Sitebrand's main customers include Smashbox Cosmetics, Kiyonna, James Allen Jewelers, Roots Canada, and BMO Financial.
Founder Justin Shimoon garnered an OBJ Forty Under 40 award when he was chief executive in 2008; he currently serves as a director for Sitebrand.