Vancouver, BC, November 30, 2005--IP Applications Corp. announced results for its second fiscal quarter ended September 30, 2005 and a Private Placement for $500,000.
Fiscal Q2 Results
Revenues for the quarter reached a record high of $2,274,439, an increase of 89% from $1,201,290 recorded in the same quarter in the previous year (ended September 30th, 2004), and a 32% increase over the $1,721,109 realized in the preceding fiscal quarter (ended June 30th, 2005).
Neil McDonnell, President and CEO said, "Our revenue growth is significant. Fiscal Q2 is the first quarter in which we have been able to realize a full quarter's results from our recent acquisition of the assets of PacificNet and a customer contract from SourceNet. We also continued to see growth with customers such as AOL Canada and Sage Telecom increasing their subscriber uptake of IP Applications' services."
Net loss for the fiscal quarter ended September 30, 2005 was $835,974 or $0.06 per share, which included amortization and non-cash expenditures totaling $353,812. The loss for the comparative quarter ended September 30, 2004 was $478,647 or $0.06 per share, which included amortization and non-cash expenditures totaling $96,808.
McDonnell continued, "Contributing to the quarterly loss was $495,000 worth of non-recurring operating expenses, including approximately $370,000 associated with integrating the PacificNet assets and the SourceNet customer contract and $125,000 pertaining to a bad debt specific to one customer. The integration costs are now behind us and our business has scaled to a point where we can generate operational savings by reducing our infrastructure and provisioning expenses and as a result, improve gross margins."
Operational highlights include:
- Successfully completed PacificNet and SourceNet integrations.
- A contract amendment with Sage Telecom for IP Applications' Network Management System (NMS), which provides real-time visibility into Sage's network infrastructure.
- An expansion to our AOL Canada Inc. agreement that provides Operational Support Systems (OSS) applications and support for its outsourced co-branded and white-labeled Internet services.
Private Placement
IP Applications has entered into an agreement for a non-brokered private placement offering with Pender Financial Group Corporation and Pender Growth Fund (VCC) Inc. (collectively, the "Investors") to raise gross proceeds of $500,000 of which $375,000 will be purchased by Pender Growth Fund (VCC) and the balance by Pender Financial Group Corp.
The securities issued will be in the form of 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. Should the Company complete a financing in excess of $1.5 million before February 28th, 2006 ("Qualifying Financing"), each Investor will have the right to either (a) convert their debentures on the same terms and conditions as the Qualifying Financing; or (b) have their debentures redeemed in full by the Company.
If a Qualifying Financing does not occur, each Investor may convert its debentures into units at $0.40 with each unit consisting of one common share and one-half common share purchase warrant with each full warrant exercisable into common shares 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.
Further, each Investor will be issued 2.5 bridge warrants for every $1 of debentures purchased. Each whole bridge warrant will entitle the holder to purchase one common share at $0.50 for a period of 12 months from closing and at a price of $0.55 for the period 13-24 months from closing.
The financing is subject to regulatory approval and net proceeds will be used for operating working capital.
About IP Applications
IP Applications partners with companies who offer IP services, providing the applications, systems, and support necessary to run their business. The combination of carrier-class facilities, mass provisioning capabilities, and dedicated technical and sales professionals makes IP Applications a trusted strategic partner to Telecoms, Enterprises, and BPL providers. The 24/7 multilingual Help Desk offers clients and their end users a value-added complement to a wide variety of web services.
Forward Looking Statements
The 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.
The TSX Venture Exchange does not accept responsibility for the accuracy of this release.
For further information
Brian Ellis, Investor Relations, TF 1-877-604-7277, D (604) 523-2284, bellis@ipapp.com