Growing OptiMark Losses Threaten Survival, Auditors Say
OptiMark Technologies Inc., a computer-based stock trading system once seen as a New York Stock Exchange rival, faces growing losses that could put it out of business, auditors said Monday.
“The company’s recurring losses from operations raise substantial doubt about its ability to continue as a going concern,” said Deloitte & Touche, the company’s auditor.
The 5-year-old company, whose owners include Japanese electronic commerce investor Softbank Corp. and financial data provider Dow Jones & Co., lost $229 million as of the end of last year and has enough cash to fund operations through September.
“Losses are expected to continue for the foreseeable future,” the company said in a Securities and Exchange Commission filing that also contained the auditors’ report.
OptiMark’s system lets brokers use a computer to express preferences for trades of Nasdaq stocks at different prices and quantities.
It’s designed to let investors buy and sell large blocks of stocks without concern that news of a transaction will be leaked into the market, causing price swings before the sale is completed.
Jersey City, N.J.-based OptiMark must sell more stock this year to meet expenses, but “there is a risk that we will not be successful in raising this money on acceptable terms,” the company said.
Trading agreements with the Pacific Exchange and the Nasdaq Stock Market have failed to generate enough revenue to cover its costs. OptiMark is cutting its expenses, according to the filing.
The filing was required because OptiMark, although not publicly traded, has more than 500 shareholders.
“We have plenty of cash and our shareholders are very supportive of what we are trying to do,” a spokesman said.
Softbank, which has an undisclosed stake in the company through its venture capital fund, would not comment until it read the auditors’ report, said a spokeswoman, who did not want to be named.
In July last year, a Softbank unit, Softbank Capital Partners, led a placement to invest $100 million in OptiMark.
