VANCOUVER, BC – September 26, 2006 – IP Applications Corp. (TSX-Venture: IPX) today announced that the Pender Group has advanced a $411,144 bridge loan to the Company to provide it with additional working capital to continue to develop its business. It is anticipated that the loan will be converted into equity at the time of an equity offering to be undertaken by the Company when capital markets strengthen.
John Jacobson, President & CEO of IP Applications, said “The Company is nearly through the reorganization that began a year ago and until it is complete and the new strategic direction is generating visible results, we do not want to pursue an equity offering. As we’ve already reported, we’ve eliminated the payables overhang from 2005 and dealt with a number of one-time events that arose earlier this year. We needed a modest amount of money for working capital and the Pender Group, who understand the progress that we have made, were the logical people to help us along.â€
Kelly Edmison, President & CEO of the Pender Financial Group, said, “IP Applications is doing a great job transforming its business and operations are progressing towards cash-flow breakeven. This is the first new money invested into the company since the $500,000 debenture offering almost one year ago.â€
Pender Financial Group Corporation and Pender Growth Fund (VCC) Inc. (collectively, the “Investorsâ€) advanced cash proceeds of $411,144 of which $317,960 was loaned by Pender Growth Fund (VCC) and the balance by Pender Financial Group Corp.
The loans will be secured by new convertible secured debentures due 18 months from the date of issue, with an interest rate of 12% per annum calculated and paid quarterly in cash. At the holders’ option, the Investors may convert the principal amounts (or portions thereof) into units consisting of one common share and one-sixth common share purchase warrant anytime after April 1, 2007. The conversion price is at the lesser of: a) market price at the time of conversion (not less than $0.25); b) the price of the Qualifying Financing; or c) $0.40. Each full warrant is exercisable into one common share at a price of $0.50 for a period of 12 months from issuance and at a price of $0.55 for the period 13-24 months from issuance. Should the Company complete a financing in excess of net proceeds of $500,000 before June 30, 2007 (“Qualifying Financingâ€), each Investor will have the right to either convert its debentures on the same terms and conditions as the Qualifying Financing or have its debentures repaid in full by the Company. In addition, the Investors will rollover the sum of $548,986 owing under the debentures announced on November 29, 2005 as part of the new debentures. The 1,250,000 share purchase warrants associated with the November 2005 debenture will remain outstanding, with an expiry of December 19, 2007 and exercisable at $0.50 per share up to December 18, 2006 and $0.55 thereafter.
This financing is subject to regulatory approval.
About IP Applications
IP Applications Corp. is uniquely positioned to serve companies that are bringing online products, services, content, and internet access to market. IP Applications provides a flexible combination of technology, systems and expertise for customers who have identified channels and products but who lack the delivery and support capabilities. IP Applications’ integrated Operational Support System, Help Desk and Network Monitoring Systems dramatically reduce the cost, complexity and time to market for online products and services.
Forward-Looking Statements
This press release may contain forward-looking statements. Actual events or results may differ materially from those described in the forward-looking statements due to a number of risks and uncertainties. Forward-looking statements are based on management's estimates, beliefs, and opinions. The company assumes no obligation to update forward-looking statements.
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