Exclusive: VoIP Inc. to take $24 m. hit as it closes network and loses staff
VoIP Inc. has closed down its call termination and network operations laying off 25 engineering staff and has told the SEC it is expecting to have to write off $24 million in losses associated with the network. The Florida based company said it would focus on its patented pay-per-call ad software. The announcement comes only a day after the company announced deals with Google and eBay for its pay-per-call ad software.
In its 8-k statement to the SEC filed today VoIP Inc. said: On February 5, 2008 VoIP, Inc. (the â€œCompanyâ€) decided to reorganize its operations to focus primarily on business opportunities associated with its patented technology including â€œclick-to-callâ€ and â€œpay-per-clickâ€ applications."
"Associated with that decision, on February 5, 2008 the Company suspended all of its telecommunications network operations including all current revenue generating operations. The Company also reduced its workforce by 25 persons, eliminating most of its network operations and software engineering staff."
"The Company is currently entertaining offers on the sale of its network, and has not yet evaluated the potential financial statement impact of related impairments of its tangible and intangible assets. However, a material non-cash asset impairment charge ranging up to $23.9 million to the Companyâ€™s consolidated 2007 results of operations is likely. "
VoIP Inc. has a colourful history and was previously known as Millennia Tea Masters Inc.. The company was formed by Steven Ivester aÂ serial entrepreneur from Florida who according to Light Reading is a convicted felon. VoIP Inc. had ambitions to take on VoIP retail giant Vonage and in 2004 launched a service known as eGlobalphone. It said at the time its goal was to sign up 2.3 million business and consumer customers by 2007.
The shut down of its network operations follows the closure of VoIP provider Sunrocket.Â It comes as Vonage continues to be under scrutinyÂ ahead of its Â Q4 earnings next week. Vonage has paid out $240 million in patent settlements and has sought to stabilise its costs ahead of a critical bond refinancing due later this year.Â
VoIP is listed on the OTC market andÂ only recently refinanced through a $2.5 million private placement . In a statement December 27 CEO Tony Cataldo, said: â€œWe 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.â€
Â â€œDuring the past year, we have expanded our network, increasing the minutes carried over it substantially. This has resulted in improved operating results, a trend we expect will continue throughout 2008. This financing will allow us to support higher levels of activity over our network and to continue to invest in maintaining and expanding it.â€
VoIP Inc. was trading at a high of $8.40 only a year ago, but its stock price has collapsed and yesterday its stock price had bottomed to one penny.
On Wednesday there was a posting to a Google forum claiming VoIP Inc's VoiceOneÂ web site had been hacked. An attached screen shot showed the site had been tampered with and text written into the home page. The text saidÂ "The VoiceOne incorporates a keen ability to run out of funding and an unusual desire to line the pockets of only certain people." Underneath the Features Products/Services the following text was also written, "Our suite of services is complemented by a lack of funding."