The reverse merger by Earful of Books of American Absorbents Natural Products was completed recently when shareholders of American Absorbents approved changing the corporate name of the company to Earful of Books, and the company was assigned a new stock trading symbol, EARZ. The audiobooks chain will be trading on the over-the-counter bulletin board market. Its stock was selling at 51 cents on Sept. 10.
Earful began the takeover of American Absorbents in July as part of its startegy to become a public company. American Absorbents was a manufacturer of odor-control products (such as cat litter) and the owner of a zeolite mine, an ingredient in making litter. The company has been unprofitable for several years and was looking for a way to avoid bankruptcy.
Earful president Paul Rush is heading the company and his first objective is to sell American Absorbents' assets, which have a book value of $5.8 million, in order to raise capital to fund the chains' expansion. The sale of the zeolite mine is expected to be completed by year-end. Earful currently has 16 locations and leases for 32 more stores. The company has also "co-located" four stores with Blockbuster Video under an agreement with the video giant to co-locate up to 150 Earful outlets.
Earful had revenues of $1.7 million in 2000 and a net loss of $500,000, and is projecting sales of just over $2 million and a break-even year in 2001.