Dear Shareholders,
Mr. Simmonds has asked us to post this message on the IR HUB:
We are putting out a press release in an attempt to further clarify the current situation at Wireless Age.
First and foremost, the Barron’s deal was made by our previous CEO. It was done in the context of receiving a large contract from a major customer that never lived up to our expectations. This had severe penalties which had to be dealt with so we could close the book on it and go forward. Yes the dilution was severe, but that was all predicted months ago.
We now go forward with a clean slate and a new controlling shareholder who is committed to rebuilding the remaining divisions into a profitable and growth oriented business.
We will book a non-cash special accounting charge to income from the Newlook settlement, in the order of $2M, very similar in nature to the charge we recorded for not achieving the Barron earnings per share covenant last year. However, due to the formal bankruptcy of mmwave prior to June 30th, there will be an offsetting gain resulting from “disposal” of the bankrupt entity. We believe that the disposal gain will exceed the amount of the non-cash special charge resulting in a net gain for the quarter. This in addition to a good operating profit should give us a positive EPS for the first half.
Under the Newlook settlement we didn’t confer any special benefit whatsoever on Newlook. All of the shares issued today would have been printed in the fullness of time, including the liquidated damages for the breach of the board composition. The Barron agreement provided that Newlook would receive cash or preferred stock, at their option, for the breach. The dollar amount of preferred stock issuable was $112,000 which was currently convertible into common at $0.07 per share (or 1,600,000 common shares). By agreeing we were unlikely to achieve the fiscal 2007 operating performance covenant the conversion rate dropped to $0.035 per and 3,200,0000 common shares were issuable.
Now it is time for our shareholders to do one of two things, take your loss and get out or sit and be patient until the market discovers this profitable company and starts investing.
This will happen eventually.
In the meantime, we believe this forum has outlived its usefulness and as of the end of this week we will be terminating our arrangement with Agoracom. This is the last time you will hear from us on this forum but will be having a Q2 conference call in August and as always I am available to talk one on one to anyone wishing to call me directly.
Thanks to all of you who have participated in this forum and thank you to Agoracom for hosting it.
