Ethical Technologies founder Scott Samuel said the company is facing financial problems consisting of debt of more than $450,000, not counting the lease. Ethical has moved out of its offices in a cost-cutting move. Samuel blamed the financial crisis on an executive no longer with the firm who was authorized to take care of bills and never did.
Samuel said eBay last week threatened to pull Ethical Technologies' access to the eBay API for failure to pay its bills. He said at the time that the move could cost money for those customers who use the Ethical Extender tool if their listings end. Ethical had marketed its tools to PESA (Professional eBay Sellers Alliance) sellers, who are among eBay's highest volume sellers.
However, Samuel said yesterday, "After speaking with eBay late Monday, a payment plan is in the process of being worked out that will allow Ethical tools to continue to function and provide services to eBay sellers indefinitely."
Ethical's Extender tool is designed to extend the duration of auction listings that have no bids 12 hours before the listing ends. The advantage to a seller is that she pays only one listing fee, but the listing appears on eBay's highly-trafficked "Ending First" pages up to four times in a 7-day period instead of once.
eBay nearly pulled the Extender tool from its site in August saying the tool "violated the spirit of its search manipulation rules," but then reversed itself and continued to allow the tool to be used by sellers (http://www.auctionbytes.com/cab/abn/y05/m09/i26/s01).
Samuel had said over the weekend that if eBay pulled Ethical's access to the API, he had no way to efficiently inform his customers because documents, client lists and company contacts had been stolen, but said he could contact users through the PESA discussion boards and through individual emails. He said the company continues to collect payments from active customers through checks and PayPal payments.
eBay spokesperson Hani Durzy would not comment on Monday afternoon on whether eBay was in discussions with Ethical or not because it "would not be appropriate for us to comment on any discussions we may be having with another party."
Update: Scott Samuel called to clarify his statement about the amount of Ethical's debt. He said a significant portion of the $450,000 has been converted from debt to investment, the rest consists of the API and the office lease. Ethical is currently in negotiations to wipe out the office lease debt. Samuel said he could not go into further details because of legal, but said the company is not $450,000 in the hole.
