2TheMart.com said Tuesday that it will borrow up to $2 million from its chief executive after the fledgling company's effort to raise $10 million in a private stock sale netted just $530,000.
The Irvine-based Internet auction company owes International Business Machines Corp. $7.8 million of the $10.3-million cost of building a Web site to compete with online auction leader eBay.com. It said last week it had $2.1 million in cash remaining on June 30. The site won't be ready until the fourth quarter.
"This loan clearly shows my confidence in the 2TheMart.com team, concept and potential," Chief Executive Steven Rebeil said in a prepared statement.
A company spokesman said terms and collateral for the loan haven't been wrapped up. Rebeil owns 35% of the company.
2TheMart.com shares rocketed 25-fold in January, swept up by a wave of Internet investor euphoria that boosted almost any stock whose name ended in dot com. The shares have since tumbled as the company's Web site was delayed, the firm had difficulty raising capital and its first auditor departed.
Since the company began trying to sell 1 million shares at $10 each in a private placement July 12, its stock has fallen more than 60%. So far this year, the company has raised $6.4 million with private stock sales at prices as much as 95% below market.
On Tuesday, the stock closed at $6.25 a share, down 41 cents, in trading over the counter.
In documents filed with the Securities and Exchange Commission last week, the Web site's projected completion date was listed as Oct. 8.
2TheMart lost $1.9 million from Jan. 8, when it began business, to June 30.
Since June 30, it raised $530,000 from its latest private placement and obtained a $500,000 loan from an unidentified shareholder.