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Virtutone Networks Inc. Announces Closing of Non-Brokered Private Placement

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By Bobwins

Posted: Saturday Sep 29 2:19:37PM 2012

Virtutone filed their Q3 P&L for the period ending 7/31/12.  They broke a string of a couple of years of profitable operations by losing 122,859 or .01eps for the qtr.  There was a large increase in SG&A with only a minimal increase in revenues.  Company says the extra SG&A was due to the rampup of the wholesale division combined with the delay in customers using their allocated minutes.  In the outlook section, they said they are now seeing increases in minutes and revs.  No mention of new contracts signed.  

Disappointed in loss.  Contrary to previous indications, it did cost VFX a lot of money to setup the wholesale division.

They say that the personnel expense capitalized during the setup of the wholesale division have been reassigned to operational maintenance roles.  I am not sure from this explanation whether qtr ending 10/31 SG&A will fall back or increase even more.  Typically capitalized expenses are not shown in the P&L.  Also concerning is that wholesale revs may not increase enough to offset this loss in the short term.  Will hae to wait until the end of the year to see Q3 results and any positive benefit from the wholesale division.  

New business units typically take longer to contribute than investors think.  VFX is no different.  They have a very good sales opportunity but it's going to take time for the revs to ramp up while the company has already geared up expense wise for the new business.  The result is a short term loss.  The stock will be held down until VFX can demonstrate positive financial results from the wholesale division.  


By Bobwins

Posted: Wednesday Sep 26 12:56:34PM 2012

added a few more VFX at .30 today.  Financials for qtr ending 7/31/12 are due out any day.  Expect usage during this period of wholesale minutes should be in the 20 million/month range and add about $60K to qtrly profits.  

Hoping for another addition to monthly minutes from previous 44million.  This will be the first qtr with any wholesale revs.  Financials are always going to lag reported minutes sold.  VFX report 17.7million minutes per month sold in April.  Then 44 million minutes sold in early August.  The 44 million should show up in the Qtr ending 10/31 reported around year end.  Then there will be a delay due to the annual report for period ending 1/31/13 which won't be reported until 4/13.  

By Bobwins

Posted: Friday Aug 31 11:54:09AM 2012

This could result in another quick rise and fall but I decided to buy a few more VFX today at .30.  There are very few sellers.  Hopefully higher prices will bring out a few more sellers and improve liquidity.  Still waiting for first full qtr of wholesale sales.  The latest announcement of 44 million minutes will show up in Q3 as a partial qtr.  VFX has lots of capacity left, since their announced limit for equipment and available minutes is 1.2billion minutes per month.  They could add 44million minutes a month in sales a month and still not reach capacity for 2+ years!  

The key is that they wouldn't have to add any equipment and not much staff to accomodate that level.  So expenses should remain relatively constant and profitability will be determined by how fast they can sell and close deals.  

I think I am about done buying.  Liquidity remains a big concern because if I ever decided to sell, I don't know who would be buying.  I've done this before, driving up the price of a microcap with my own buying and then finding out that I had nobody to sell to.  I am relying on VFX to produce good enough financials to attract brand new buyers as the word gets out.  


By Josh_Kier

Posted: Friday Aug 31 11:01:44AM 2012

August 31, 2012
Virtutone Networks Inc. Announces Closing of Non-Brokered Private Placement
SHERWOOD PARK, ALBERTA--(Marketwire - Aug. 31, 2012) -


Virtutone Networks Inc. ("Virtutone" or the "Corporation") (TSX VENTURE:VFX) is pleased to announce that it has closed its previously announced non-brokered private placement (the "Private Placement"). Pursuant to the Private Placement, the Corporation issued 1,500,000 common shares ("Common Shares") of the Corporation at a price of $0.20 per share for aggregate gross proceeds of $300,000.00.

The Common Shares issued pursuant to the Private Placement are subject to a hold period of four months and one day from the closing date as well as other restrictions with respect to sales from control positions.

The proceeds of the Private Placement will be used for general working capital and corporate purposes.

Cautionary Statements

This news release contains "forward-looking statements" within the meaning of applicable securities laws, including statements regarding the use of proceeds from the Private Placement. These forward-looking statements are based upon the opinions, expectations, estimates and assumptions of management as at the date the statements are made, including, without limitation, assumptions with respect to the receipt of regulatory approval for the Private Placement and general economic conditions in North America. Readers are cautioned not to place undue reliance on forward-looking statements. Actual results and developments may differ materially from those contemplated by these statements depending on, among other things, a failure to obtain necessary regulatory approvals. The statements in this news release are made as of the date of this release. We undertake no obligation to update such forward-looking information except as required by applicable securities laws.
Neither TSX Venture Exchange Inc. nor its Regulation Services Provider (as that term is defined in the policies of the TSXV) accepts responsibility for the adequacy or accuracy of this press release.

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