21 Aug 2008 11:46
21 August 2008 Amteus plc ("Amteus" or the "Company") Trading update
Amteus announces that a placee who entered into a binding commitment to subscribe for 666,667 Amteus ordinary shares at 15p per share, in the placing announced by the Company on 23 April, has failed to honour the commitment. Amteus has now instigated legal proceedings against the defaulting subscriber.
In order to raise the working capital which this subscription would have generated, the Company has given notice to draw down a standby facility of ‚£ 100,000 from Jeffrey Morris, deputy chairman of the Company, in the form of an unsecured interest free loan. Under the AIM Rules, the independent directors consider, having consulted John East & Partners Limited, that the terms of the facility are fair and reasonable insofar as the shareholders of the Company are concerned.
The Company further announces that sales of the relationship product which it sells on behalf of its related company, The Media Buzz Limited, are now being generated at record levels and totalled ‚£169,000 in its first three months of sales of this product ended 30 June 2008 with a further ‚£100,000 in July 2008. Orders continue to grow.
As referred to in the Company's interim statement issued on 30 June 2008, the Company is working closely with its reseller partner in the education sector. This reseller has signed a memorandum of understanding ("MOU") with a Government sponsored schools trust ("the Trust") to provide the Amteus secure communications system for schools. The MOU also states that the reseller is required to develop a web 2.0 version of the product and the Company is currently developing this product. The Directors believe that the Trust and the schools see the potential of the school based closed community networking and collaboration tool developed by Amteus as a way to promote the interaction of schools and communities including parents, teachers and students in a safe and secure environment.
The Trust has identified an initial target market of 1,000 schools within the next 12 months which represents a potential estimated one million users, including parents, teachers and students. The product is intended to be sold at a price of ‚£4.80 per user per year to be financed partly by subscription and partly by sponsorship. The MOU, which has a 10 year term, requires the Trust to endorse and promote the Company's products on an exclusive basis during the term of the agreement. The revenue derived from each subscriber will be shared, in proportions to be determined, between the reseller and Amteus. The Trust will receive a royalty based on each qualifying subscriber.
The MOU also provides for the Company's reseller, with the assistance of Amteus, to identify and work with sponsors for the product at a national, regional or local level. Early stage discussions have commenced with a number of potential national sponsors who have expressed considerable enthusiasm for the opportunity to access such a large defined audience of users.
The cost of developing the educational product, combined with the fact that the Company has not yet achieved sufficient levels of sales in the past four months to achieve profits and cash breakeven, has resulted in continuing losses. The Company is currently exploring ways of raising additional capital both to provide working capital and to exploit fully this exciting opportunity in education. The Company is discussing with its major shareholder and Deputy Chairman the provision of immediate financial support for the Company which he has provided in the past. Should Amteus be unsuccessful in raising the necessary finance then this will have a material adverse effect on the Company's financial position and operations and it would be obliged to seek alternative financing solutions including an early sale of the business.
Enquiries:
Amteus plc 01653 618016 Michael Abrahams (Chairman) 020 7628 2200 John East & Partners Limited 01653 618016 John East/Simon Clements Rawlings Financial PR Limited Catriona Valentine
John East & Partners Limited, which is authorised and regulated by the Financial Services Authority, is acting exclusively for the Company and no one else in connection with the matters set out herein and will not be responsible to anyone other than the Company for providing the protections afforded to customers of John East & Partners Limited or for providing advice in relation to the matters set out herein or any transaction.
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