LONDON (Alliance News) - Veltyco Group PLC on Wednesday said it raised funds via a share subscription in order to pursue legal action against companies which owe it significant outstanding balances.
The company raised GBP500,000 via the issue of 3.3 million shares at 15 pence each.
Veltyco shares were trading up 7.8% at 10.24 pence each on Wednesday.
The firm will use the subscription proceeds to provide general working capital to the company and to pursue the recovery of overdue receivable balances owed to the group.
Back in November, Veltyco said it might have to impair the bulk of its trade receivables.
The company, which provides online marketing for the gaming industry, decided to reduce marketing activities within a vertical covering marketing for other companies' online financial trading offerings.
"Following the group's decision to stop marketing activities in the online financial trading vertical and with no further payments having been received from either Celestial Trading Ltd or Altair Entertainment NV in the intervening period, the board has now resolved not to recognise further revenues, capping its receivable position in respect of this vertical," Veltyco said.
Of the entire balance owed to the company, EUR9.3 million remains outstanding in respect of the online financial trading vertical, with EUR6.8 million being overdue from Celestial and EUR2.5 million being overdue from Altair.
"Given the above, the board is taking appropriate legal action in respect of recovering these outstanding amounts. However, there can be no certainty that the group will be able to recover all, or any, of the monies due to it from Celestial and/or Altair," Veltyco said.
If the company fails to recover the outstanding balance, it will have to impair it, resulting in a "significant net loss for the year".
Furthermore, the company said it appointed Paul Duffen as non-executive chair with immediate effect. Current Non-Executive Chair Gilles Ohana has stepped down from the board.
"Paul brings 35 years in management experience in various industries and, being an entrepreneur, he is very much welcomed by the board," Veltyco said.
Duffen currently serves as a non-executive director of Animus Associates Ltd, a business intelligence consultancy, and has recently joined the board of eSports.com Group Ltd.
The company said it intends to appoint an additional independent non-executive director in due course, and also said it has started discussions with potential chief executive officer candidates to join the board.
