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31 Aug 2010 16:31
31th August 2010 iPoint-media plc ("iPoint-media" or "the Company") Trading Update and Loan Note Holders Consent Solicitation
iPoint-media plc (AIM:IPNT) announces that it is seeking the consent of holders of its Loan Notes (the "Noteholders") to defer the next interest payment, due on 30 September 2010 in accordance with the Loan Note Instrument,until the Company has implemented a comprehensive restructuring of its business and debts. The Company is therefore calling a Noteholders' meeting which will be held on 21 September 2010 (the "Meeting"). Details of the proposed meeting and proposed resolution are being posted to holders of the Loan Notes.
The consent is being sought as a result of the adverse trading conditions the Company has experiences in recent months together with the cost cutting measures which it is implementing as announced by the Company on the 18 June.
During the first six months of 2010 the Company experienced significant slippage on all tenders submitted in conjunction with its strategic partner Ericsson, to telecoms companies that were anticipated to be signed and delivered prior to 30 June 2010. As a consequence the Company's revenues for the six months ending 30 June 2010 were substantially below market expectations and the Company's loss for that period is estimated to be in excess of £0.75 million.
This delay in revenues significantly impacted the Company's ability to meet its working capital requirements. The slowdown at Ericsson also impacted the Company's ability to exercise the approved grant from the chief scientist in Israel, as the Company did not receive introductions to the IMS based projects it had expected to receive from Ericsson.
The delay in revenues from customers in the Telecoms market and the need to invest resources to adapt the Company's products to the Chinese media market standards requires financial resources and a reduction of cash usage until revenues from China reach a level which will balance the Company's cash flow.
As a consequence of the above, the Company decided to implement an aggressive cost reduction scheme in order to extend its existing working capital. This cost reduction scheme has achieved a reduction in the monthly operating costs of approximately 50% which will mean a reduction in the Company's operating expenses of more than US$ 400,000 during second half of 2010.
This cost reduction scheme included a 40% decrease in the number of employees and a voluntary reduction of over 50% in the salaries of senior employees that remained with the Company. The Company's senior employees have expressed their support for the Company's vision and its ability to succeed and therefore voluntarily agreed to the salary reduction described above as a way of contributing to working capital.
However, even following implementation of these significant cost reductions and including the deferral of the interest payment, unless the Company is able to generate increased revenues in the short term it will require an additional injection of cash in order to continue operating as a going concern.
The Company will keep the market updated on both the Noteholders' vote and itsefforts to improve cash generation and secure additional financing to enable itto grow its business.Further enquiries:iPoint-media plc +972 (0) 544 450 667Muki Geller
Libertas Capital Corporate Finance Limited +44 (0) 207 569 9650Andrew McLennan/Thilo Hoffmann .
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