Provides the following corporate update to shareholders following completion of its strategic review period.
Vincent Browne, Chairman and CFO of Flint, stated, "2011 became much more challenging than was initially expected. The primary challenge was the Company's reliance on heavily discounted convertible debt to fund operations and the unexpected delay in the effectiveness of our Registration Statement on SEC Form S-1. This, coupled with the subsequent failure of the Kodiak funding process and the consistent stock price decline over the course of 2011, resulted in heavy dilution that ultimately made the Kodiak equity line unworkable. Management therefore did not complete any draws against this facility. As previously announced, management had anticipated that the funding available through the registration of shares for the $15 million Kodiak equity line would allow the Company to restructure its heavy debt burden over time, in a orderly fashion, and also to provide the capital required to deliver on its organic growth and acquisition plans as announced. On October 7, 2011 the Company determined to effect a termination of the registration of its common stock with the Securities and Exchange Commission (SEC) under Section 12(g) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and suspend its reporting obligations under Section 15(d) of the Exchange Act, by filing a Form 15 with the SEC. This was done to reduce the costs of compliance and accounting while this review was ongoing."
"The critical review of operations has been ongoing and focused on making the Company financially self-sufficient, even if that means lower revenues with a smaller organization, to prevent the need for additional capital in the short term, as it was assumed that future funding will be unavailable in the medium term until funding markets improve and would be heavily dilutive to shareholders in the meantime. We also engaged with the Company's secured lender, Thermo Credit, LLC, to seek agreement for any operating plan that emerged from this review, which was crucial for it to be viable." stated Mr. Bernard Fried, the Company's President and newly appointed CEO.
This review has now been completed with the support of the Company's secured lender and the Company has filed an Initial Issuer Statement and unaudited financial statements to March 31, 2012 through the OTC Markets Disclosure and News Service to provide necessary detail to stakeholders.
Management now also wishes to summarize recent events and outline the Company's plan of operation to all stakeholders as follows:
On March 23, 2012, Flint announced the successful negotiation and sale of the Prepaid Debit Cards, global payments and remittances businesses. Although these businesses have high future growth potential, they were capital-intensive and the Company could no longer support the level of investment required to keep them operating. Management believes that the agreement with Brankib will allow Flint to share in the future success of these businesses without requiring additional capital expenditure from Flint. Flint stands to receive between $2.4 million and $11 million from this agreement over the next five years depending on customer acquisition. All revenues received will be immediately profitable for Flint and used to pay down past debt as contained in the sale agreement.
In April 2011, Flint announced the launch of Flint Mobile, a full service MVNO (Mobile Virtual Network Operator) delivering prepaid wireless services including voice, text and data to address the migrant communities and smartphone users. Despite initial orders for 1,000 units, the Company was unable to make this business unit viable without the necessary funding and so it was decided to cease all activities in this area. It has come to management's attention in recent weeks that a separate and unrelated company located in California is also named Flint Mobile and operates in the mobile payments market. This is an unfortunate coincidence and there is no relationship between Flint Telecom and Flint Mobile in CA.
In August 2011, the Company announced that the previously planned acquisitions of three rural VoIP operators had been extended to allow Flint to progress its ongoing negotiations with potential debt providers in order to close these transactions. Since then, despite best efforts, Flint could not reach agreement on any financing to secure these acquisitions. Additionally, without the controlled restructuring of Flint's existing debt, and given the level of Flint's debt defaults, the owners of the targeted acquisitions were not willing to complete a transaction with Flint. As a result, Flint was forced to abandon these acquisitions and subsequently ceased all VoIP activities. In March 2012, the goodwill and intellectual property surrounding the VOIP strategy was sold to VOIP ACQ Inc, a private company controlled by Vincent Browne, which is focused on Cloud services including VoIP. Management believes that this transaction will allow Flint to benefit from any future growth in VOIP ACQ, through its beneficial shareholding of 69 million shares of Axiologix, Inc. (AXLX.PK) common stock.
On March 30, 2011 Flint sold Phone House, Inc, its prepaid distribution business, to the President of Phone House, Mr. Hiranandani, for the return of Flint shares owned by him. This business was not profitable despite large revenues, so Flint divested it to reduce cash burn.
The Company currently has two operating companies, Cable and Voice Corporation, that distributes cables and modem equipment primarily to cable operators and other operators in the U.S., and Flint Prepaid, Inc, that is planned to grow organically in the prepaid telecom services area without the need for additional capital. These businesses are operationally self sufficient on a day-to-day basis and primarily reflect the operating profit of $177,928 reported in the quarter ended March 31, 2012.
Given the smaller organization, and in order to minimize corporate overhead costs going forward, Mr. Browne resigned as Chief Executive Officer on April 30, 2012. He will remain with the Company as Chairman of the Board and Chief Financial Officer at an annual nominal salary of One Dollar ($1.00). Mr. Browne also waived his rights to unpaid past salaries of approximately $200,000 and there are no additional amounts due for the remainder of his contract term. He also waived any claims to unvested shares for the remainder of the contract term and returned all un-pledged shares held directly by him since becoming CEO in October 2008. He has never sold any shares of Flint. Mr. Browne also converted $72,000 of loans provided by him to Flint and a portion ($28,000) of his unpaid salary and in exchange, received 100,000 Series I Convertible Preferred shares that convert into Common Stock at $0.0008 per share and carry certain super-voting rights of 3,500 to 1 as outlined in the Company's Initial Issuer Statement filed on May 31, 2012 with the OTC Markets Group.
Mr. Bernard Fried has become Flint's Chief Executive Officer. In return for agreeing to extend his existing employment agreement by two years and waiving $40,000 of unpaid salary, he received 40,000 Series I Convertible Preferred Stock.
As of today, there are 769,703,190 shares issued. One of the Company's convertible debt holders holds a reserve of 120,290,560 million shares with our transfer agent, which puts the total number of common shares issued and reserved for issuance at 889,993,750. The Company's total authorized common stock is 900,000,000. Management currently has no plans to ask shareholders to increase the authorized shares or effect a reverse split of the shares.
Full details of the above items can be found in the unaudited financial statements for the three and nine months ended March 31, 2012, and the disclosures and exhibits to the Company's Initial Issuer Statement filed on May 31, 2012 through the OTC Markets Disclosure and News Service.