When reached, Friend Finder Networks confirmed the site vulnerability, but would not outright confirm the breach."Over the past several weeks, Friend Finder has received a number of reports regarding potential security vulnerabilities from a variety of sources.
Immediately upon learning this information, we took several steps to review the situation and bring in the right external partners to support our investigation," said Diana Ballou, vice president and senior counsel, in an email on Friday."While a number of these claims proved to be false extortion attempts, we did identify and fix a vulnerability that was related to the ability to access source code through an injection vulnerability," she said."Friend Finder takes the security of its customer information seriously and will provide further updates as our investigation continues," she added.
Ezra Shashoua, the company's chief financial officer, blamed the lower revenue on a drop in membership and increased advertising costs for affiliates, according to court documents.
Shashoua also said credit card companies had refused to process transactions for the company's Internet businesses.
As of January 17, 2010, Friend Finder Networks had a negative net worth equal to 8 million, million in cash on hand and 0 million in liabilities.
Friend Finder was launched in 1996 by Andrew Conru.
After discovering that users had been using the service to seek sexual partners, he launched Adult Friend Finder as a spin-off, followed later by other spin-offs dealing with different regions and niches.
The company had also indicated that it lacked existing cash or cash from operations to repay a .5 million debt that was due July 31.
It has cautioned that, unless it can repay or restructure its obligation, it will face “a material deficiency in our short term liquidity.” With these shortfalls in mind, the company again announced an intention to make an initial public offering of stock, representing a 49% stake in the company, with plans to use the proceeds to pay down its debt and become listed on the New York Stock Exchange.