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Netpulse Declares Chapter 7

SAN FRANCISCO — Could seven be the final chapter in the story of Netpulse Media Networks, the company formed from the merger of Netpulse, E-Zone and Xystos? At press time, it seemed that way. Although some efforts were being made to salvage the company, it's possible that, by the time you read this, chapter 7 bankruptcy has ended Netpulse Media Networks.

What went wrong?

People have opinions, but few are willing to go on the record. Some anonymous sources blame E-Zone, saying that the management-heavy company had a spendthrift mentality that drained the funds available to Netpulse Media Networks.

Others argue that Netpulse doomed everybody by being the first company to offer its equipment for free. One anonymous source even said that Netpulse was carrying too much debt at the time of the merger, adding that a lawsuit from Bally (which never received the Netpulse systems it had been promised) forced the merged company into chapter 7. (For its part, Bally denied that it has filed a lawsuit against Netpulse.)

In the hopes of uncovering the real story, Club Industry tried contacting members of the E-Zone camp, including Robert McKenzie (the former CEO of E-Zone who became co-executive chairman after the merger). Our calls were not returned.

We had better luck reaching former Netpulse CEO Tom Proulx, who shared the title of co-executive chairman with Mc-Kenzie. He told Club Industry that the company declared chapter 7 because the merger took too long, the capital ran out, and the market dried up.

Joe Cirulli, the owner of the Gainesville Health and Fitness Center and president of IHRSA, called the bankruptcy a “shame,” saying that both companies offered great products. He is hopeful that they will come up with a support mechanism for the systems that are already in place (such as those installed at Gainesville).

“Obviously, the biggest concern is what happens when the system goes down, and I'm not quite sure the answer to that,” Cirulli said.

This is a good point: Who is responsible for the installed Netpulse/E-Zone systems? Better yet: Who owns them? As one source pointed out, clubs never purchased the systems — even the ones installed before the free offer. Clubs leased the systems.

Does that mean the systems will be left to gather dust? Or will somebody show up one day to remove the equipment as part of a plan to satisfy creditors?

If Proulx has his way, none of that will happen. At press time, Proulx was optimistic that he could raise enough capital to buy back all (or at least part) of the company. His intention is to keep the merged company together, and he claimed that the people from E-Zone are working with him.

“The best outcome for the clubs as well as the new company going forward is to keep it all together,” Proulx said. “The merged company did make sense. There were complementary product lines, there were synergies, and for all those reasons, it still makes sense going forward.”

Industry News

  • Aphelion Inc. (Houston) and Inc. have announced a strategic technology and marketing partnership. Under the terms of the agreement the companies will seamlessly integrate Aphelion's club management software with TimeTrade's Web-based court-, class- and appointment-scheduling solution. In addition, Aphelion will resell TimeTrade's solution to both current and future Aphelion customers.

  • FitLinxx (Stamford, Conn.) recently announced that it has secured its latest round of financing, led by Canaan Partners, UBS Capital Americas, and Whitney & Co. This investment brings the total funds raised to date to more than $50 million. The new funding will be targeted at continued product expansion and health care integration.

  • Iron Grip (Costa Mesa, Calif.) has signed a unique cross license with York Barbell (York, Pa.). Under the agreement, York will obtain a license for Iron Grip's single grip weight plate patent. In exchange for this license, Iron Grip will obtain rights, under license, to York's patent for manipulatable weight plates with reduced flanges, a feature found in Iron Grip's IGX line of weight plates.

  • The Fitness Industry Suppliers Association N.A. (San Diego) recently announced the kickoff of a study to determine the volume of and purchasing trends for commercial fitness equipment. The first phase of the project will include sales by product line within the United States and Canada, and will eventually become a joint project with FISA-Europe. Phase two will define sales by product line and market segment. FISA members participating in the initial phase include companies that comprise a high percentage of the domestic, commerical equipment market. They include Life Fitness, Cybex, Schwinn, Star Trac, Nautilus, StairMaster, Precor, Technogym, Fitness Products International, Body Masters, Magnum, Hoist, Cateye, PowerJog and several newer companies such as Shuttle Systems Inc.

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