The New York-based company acknowledged the suspension of its Web site and the merger talks in an e-mail to its partners, and said it would update them as soon as possible.
"As most of you know, Flooz.com has suspended its Web site operations and is in discussions regarding a possible merger," the company said in the e-mail. "We are working very hard to complete those discussions and resume the Flooz.com Web site operations. Thanks for your patience."
In a statement released Friday, the company blamed its problems on the slowing economy.
"The downturn in the economy has impacted spending on corporate incentive programs by many of the company's Fortune 500 clients," Flooz said in the statement. "In addition, capital market conditions have proved challenging for the company."
Mitchell Lubin, Flooz's vice president of marketing, confirmed the e-mail Friday but declined to provide more details. Lubin said Flooz is not going out of business and declined to say whether the company has run out of funding. He also said the company has no timetable for resuming operations.
Flooz did not indicate who it is holding merger talks with. An executive at Beenz.com, another player in the online currency market, denied that it was a suitor.
"I heard the rumors and I thought it was laughable," the executive said. "My suspicion is that if they are talking to someone, it's probably an offline company. They are the only ones who have the money and might have the need for this kind of technology."
Flooz suspended access to its Web site Wednesday and in recent days has asked partners such as Ashford.com to remove links to Flooz currency. Barnes&Noble.com, Tower Records and Outpost.com have also removed links to Flooz.
Other partners, such as Cisco Systems and Delta Air Lines, used Flooz for corporate gifts and employee recognition awards. Additionally, consumers could purchase Flooz's currency through its Web site.
The company is one of a number of alternative online currencies that have struggled to gain acceptance by customers and merchants. Its customers have been caught in limbo since the company put its Web site on hold, unable to use the currency or access their accounts.
Flooz is perhaps best known for an advertising campaign involving actress Whoopi Goldberg. Goldberg became a business partner in Flooz and the company's TV and Web personality as part of a deal announced in 1999.