December 10th, 2013 - Sherwood Park, Alberta - Virtutone Networks Inc. ("Virtutone" or the "Company") (TSX Venture: VFX.V) is pleased to announce that it has acquired certain customers of its largest customer in an effort to diversify its customer base.
The Company has purchased five key underlying customers of its largest customer. Adding these key customers will ensure that no one customer represents more than 25% of the Company's total revenue.
In addition to the diversification, Virtutone will take over an additional $1.2 million in revenues per month at a gross margin of approximately 3% ($36,000 per month of additional margin) as a part of the acquisition.
Virtutone has agreed to issue one million shares for this transaction for a deemed value of $370,000, in two parts - 50% upon closing of the transaction and 50% 6 months after closing, provided that the gross margin from the addition revenue remains at $36,000 or more per month.
"This acquisition is a great achievement for Virtutone, as we are able to reduce our risks by diversifying the customer base and gain additional revenue and margin. We will not have to incur any additional overhead to manage this added revenue, which means the gross margin will flow directly to our bottom line," said Jason Allen, Chief Executive Officer of Virtutone. "The transition of accounts will start immediately and should be complete by the end of December."
This transaction is subject to approval by the TSX Venture Exchange.
For further information please contact Jason Allen at 780-702-5777.
About Virtutone Networks Inc.
Virtutone Networks Inc. is a technology company based in Sherwood Park, Alberta and is listed on the TSX Venture Exchange in Canada. The company is a leading supplier of wholesale telecommunication services. Additional information can be found on the company's website at http://www.virtutone.ca/.
This document may contain certain forward-looking information or statements ("Forward-looking statements") as defined under applicable securities legislation that involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. These risks include, without limitation, risks related to: the termination, non-renewal of or default under of any current or new wholesale contracts; changes in the global economy; a failure to negotiate new customer contracts; changes in legislation or the interpretation thereof, particularly in the telecommunications industry. Forward-looking statements are any statements other than statements of historical fact. The use of any "plan" "expect " "project" "believe" "should" "anticipate" or other similar words or statements that certain events "may" or "will" occur are intended to identify forward-looking statements. In particular, forward-looking statements included in the press release include, without limitation, statements regarding: the impact of the new voice traffic contracts; timing and completion of the transition of new voice traffic; the sustainability of the new revenue stream; increased leverage with suppliers; additional deals currently being worked on and the impact thereof; and negotiations relating to potential new customers. The forward-looking-statements contained herein are based on certain assumptions including, without limitation, assumptions regarding: global economic conditions; changes in laws and regulations; the impact of Virtutone's new contracts; the market for wholesale telephony services; the maintenance of new and current wholesale contracts; and the ability to add new wholesale clients. Although management believes the expectations reflected in the forward-looking statements contained herein are reasonable, no assurances can be given that any of the events anticipated in forward-looking statements will occur, or, if they do, what benefits Virtutone will derive therefrom. As such readers are cautioned not to place undue reliance on forward-looking statements, which are effective only as of the date of this document or as of the date otherwise specifically indicated herein. Virtutone assumes no obligation to update forward-looking statements, except as required by applicable law. The historical revenue numbers for the new wholesale contracts do not represent estimates of future revenues to be received by the Company. As these contracts do not contain any minimum traffic requirements, revenue generated on such contracts will vary from month to month, and such variations may be material. The Company cannot provide any assurances as to the revenues to be generated by such contracts once the transition is complete.
Neither the TSX Venture Exchange nor its Regulation Service Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.