SPARTA COMMERCIAL Services, a New York-based company whose main business is powersports loans, may be closing shop some time in the next year unless it raises enough money to operate. On the other hand, if the company does stay in business and meets other financial goals, it may gain access to a $25 million credit facility for loans.
In its financial report for the nine months ended Jan. 31, Sparta reported a net loss (before preferred dividends) of $3.68 million on revenue of just $974,000. The company has a negative net worth of $5.25 million.
Sparta estimated that it needed about $2 million to remain in business for another year. “As of Jan. 31, 2009, we do not have sufficient operating capital to continue our planned business operations for the next 12 months and for our general operating expenses,” the company stated.
Sparta CEO Anthony Havens has declined to comment.
According to the report, since Sparta was founded in 2001, it has lost $25.9 million. About 17 percent of this loss can be accounted for by combining the loss recorded for the nine-month period under consideration with the loss recorded for the same period a year before.
Investors appear to be fleeing. Company shares are trading at about a nickel after a 52-week high of 17 cents.
In January, Dealernews reported that Sparta had entered into an agreement with a German lender for $25 million to finance vehicle contracts. But the lender required that Sparta meet certain financial requirements before accessing the funds. According to the quarterly report, Sparta had not met those requirements as of Jan. 31.
Sparta claimed in January that it did business with more than 2,100 dealers throughout the country. Over the years it has announced partnerships with various OEMs.