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Sherwood Park, Alberta / TheNewswire / February 24th, 2015 / Virtutone Networks Inc. ("Virtutone" or the "Company") (TSX Venture: VFX.V) is providing an update on the current financial condition and status of the business of the Company. As noted in Virtutone's January 16, 2015 press release, one of Virtutone's biggest clients, based in London, United Kingdom, has been unable to make payments of a total amount of US$13.8 million. Although Virtutone's management has taken all the necessary steps in order to collect the payment, as of yet it has not received payment.
At the time of this news release the Company has approximately $26 million USD in accounts receivables, including the amounts owing from the United Kingdom entity, and approximately $17 million USD in accounts payable. A total of approximately $14.5 million USD of the accounts receivables, including approximately $12 million USD of the amounts owing from the United Kingdom entity, is insured by Export Development Canada ("EDC"). The Company has filed an insurance claim with the EDC with respect to amounts owing by the United Kingdom entity. Based on EDC policy, it is estimated that a minimum of 4 to 6 months may pass from the average time of the due receivables for EDC to either collect the receivables or payout the insurance.
On January 23, 2015, the Company filed a Notice of Intention to Make a Proposal under the Bankruptcy and Insolvency Act (Canada) (the "BIA") and BDO Canada Limited ("BDO") consented to act as Trustee under the proposal (the "Proposal") to the Company's creditors. The filing of the Notice of Intention provided protection to the Company from its creditors in order to allow the Company time to make a formal Proposal to its creditors. During the process, BDO monitored the operations of the Company and was available to assist management in formulating its Proposal within the timeframes set out under the BIA and as determined by the courts. It was determined by management and BDO that the company did not have the required funds to collect the receivables as the collectability of the receivables are significantly more uncertain than originally anticipated, and management therefore allowed the date required for submitting the proposal to lapse causing the bankruptcy of the company.
Mr. Jason Allen President and CEO and Mr. Bill Woods CFO have relinquished control of the company to BDO as Bankruptcy Trustee and effective immediately are no longer officers of the company.
Mr. Harold Baxandall, Mr. Ron Long, and Mr. Jason Allen have resigned their positions as directors of the company effective immediately.
For further information please contact BDO.
Forward-Looking Statements: This document may contain certain forward-looking information or statements ("Forward-looking statements") as defined under applicable securities legislation, including among, other things, the Company's intent to make the Proposal, the expected terms of the Proposal, the expected timing to collect the receivables, the expected timing for the Company to collect on the insurance claim with EDC and the Company's intent to assess the Company's options following making of the Proposal. Such Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these Forward-looking statements. These risks include, without limitation, risks related to: the ability to collect on any and all accounts receivable, the ability of the Company to meet the conditions for making the Proposal under the BIA, the willingness of the Company's creditors to accept the Proposal, whether all conditions have and will be satisfied in order for the Company to collect any proceeds under the insurance claim with EDC on the accounts receivable and the risks associated with any future business of Virtutone. Forward-looking statements are any statements other than statements of historical fact. The use of any "plan" "expect" "project" "believe" "should" "anticipate" or other similar words or statements that certain events "may" or "will" occur are intended to identify Forward-looking statements. In addition to the assumptions set out herein, the Forward-looking-statements contained herein are based on certain assumptions including, without limitation, assumptions regarding: the ability to collect on any and all accounts receivable, the ability of the Company to meet the conditions for making the Proposal under the BIA, the willingness of the Company's creditors to accept the Proposal and that the conditions will be satisfied in order for the Company to collect any proceeds under the insurance claim with the EDC on the accounts receivable. Although management believes the expectations reflected in the Forward-looking statements contained herein are reasonable, no assurances can be given that any of the events anticipated in the Forward-looking statements will occur, or, if they do, what benefits Virtutone will derive therefrom. As such readers are cautioned not to place undue reliance on the Forward-looking statements, which are effective only as of the date of this document or as of the date otherwise specifically indicated herein. Virtutone assumes no obligation to update Forward-looking statements, except as required by applicable law.
Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
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