VoIP Inc. goes down owing Verizon $8 m.

Verizon is the biggest loser from the collapse of VoIP Inc., with the carrier owed $8 million and unlikely to see any of it. Verizon last year settled a long running claim by MCI World Com (now Verizon Business Services) for $8.35 million. VoIP Inc. agreed to pay a total of $2.2 million in equal monthly installments until November 2009, but with VoIP Inc. liable for $8 million if it defaulted on its payments. Unless Verizon believes in fairies, this money is as good as gone because the stock price is now at $0.008, creditors are already in the courts for big debts and VoIP Inc. is admitting it expects to have to write off its only real asset, its network business.

On Thursday we exclusively reported the company had filed an 8-k statement advising it was closing down its VoIP business and would concentrate on commercializing its pay-for-call ad technology. But VoIP Inc's demise should have come as no surprise to anyone. When a stock goes from $8.40 to a penny in just one year something is definitely wrong.

In its November Q3 earnings report, the Florida-based company said: "Since inception of business in 2004 we have never been profitable. We have experienced negative cash flows from operations, and have been dependent on the issuances of debt and common stock in private transactions to fund our operations and capital expenditures. Our independent auditors have added an explanatory paragraph to their opinion on our consolidated financial statements for the year ended December 31, 2006, based on substantial doubt about our ability to continue as a going concern."

At that time, the company had negative working capital of $26.3 million, and contractual obligations of approximately $31.7 million. It claimed assets of $31.7 million, of which $24 million, or 77 percent, was goodwill associated with its VoIP network business Caerus. It was this same $24 million the company told the SEC last week it was likely to have to write off.

Once a tea trading company, VoIP Inc. was founded by serial entrepreneur and convicted felon Steve Ivester. Ivester is long gone but it was only two years ago VoIP still had ambitions to take on Vonage in the retail space. Even as late as December last year, VoIP Inc. refinanced through a $2.5 million private placement. In a Dec. 27 statement, CEO Tony Cataldo, said: "We are pleased that the existing investor group recognized the significant progress we have made over the past year, and elected to provide additional capital to support our growth."

Investors are very unhappy and want the SEC to investigate the whole affair. For the VoIP brand it is not a good look.

For More:
- VoIP Inc. takes a $24 m hit, closes network and loses staff Article [1]
- Investors are not happy Investorhub Forum [2] and Yahoo Forum
[3]
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