Net Talk.com Inc., a telephone company that has expressed doubts about future operations, has reached a restructuring agreement with its lender and an agreement to raise more capital.
The Miami Gardens, Fla.-based company provides commercial and residential telecommunications services, advertising plans that start as low as $29.95 per year. Net Talk.com offers voice-over-Internet services.
In March, Net Talk.com reached an agreement with Telestrata LLC. Telestrata agreed to buy about 25.4 million shares of common stock and a common stock purchase warrant for about $4.6 million. The transaction should help Net Talk.com reach financial, operational and patent litigation goals, according to the SEC filing.
Net Talk.com announced in January that it executed a redemption and debt restructuring agreement with Vicis Capital Master Fund. The agreement extends the terms of the company's loan until June 30, 2014, contains two additional one-year extensions and reduces the amount of the overall loan from $17 million to $3 million. The loan accrues interest at 6 percent.
Before that, the company raised doubts about the ability to continue as a going concern, or without the threat of liquidation, in part because it has depended on funds raised from stock sales and warrants to sustain operating activities, according to a Nov. 12 filing with the U.S. Securities and Exchange Commission.
During the three and nine months ended Sept. 30, 2013, the company experienced losses of $884,879 and about $3.7 million, respectively. As of Sept. 30, Net Talk.com owed $16.1 million in senior debentures, $1.1 million in demand notes, $500,000 in a 5 percent secured convertible promissory notes and $1.4 million in mortgage debt.
In order to repay the debt, the company will need to raise additional capital by refinancing debt, raising equity capital or selling assets, the company said in the Nov. 12 SEC filing. Aside from the debt restructuring, Net Talk.com has raised capital through a stock deal.
For last week's edition of Turnaround Tuesday, see "After Refocusing, EnGlobal Increases Profit Margins."
For more struggling companies, see Mergers & Acquisitions Distressed Company Watch List.