VANCOUVER, Sept. 26 /CNW/ - 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."
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."
Pender Financial Group Corporation and Pender Growth Fund (VCC) Inc.
(collectively, the "Investors") 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 Financing"), 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.
The Company 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 operations
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.
The TSX Venture Exchange does not accept responsibility for the adequacy
or accuracy of this release.
