TALK- According to you is this letter to shareholders Misleading???....
July 26, 2016 08:30 ET
iTalk, Inc. 2016 Letter to Shareholders
DELRAY BEACH, FL--(Marketwired - Jul 26, 2016) - iTalk, Inc. (OTC PINK: TALK) ("iTalk").
Dear Shareholders,
Management wishes to clarify and explain to the iTalk shareholders its decision to file Chapter 11 reorganization of its indirect subsidiary, United Mobile Solutions, LLC. I understand the concerns expressed by our shareholders regarding this action. I want to assure the Company's shareholders that this tactical maneuver, in this context, is a legitimate strategy to recapitalize debt. Chapter 11 is often inaccurately equated to Chapter 7, which administers the liquidation and demise of failed enterprises. On the contrary, Chapter 11 is a reorganization process that permits otherwise viable companies, overburdened with debt and other liabilities, to streamline their operations and continue forward. It is an efficient interim process that provides a period of time for the company to maintain normal operations and, with the assistance of creditors, guide management in decisions to maximize future value.
Our objective, from the outset, was to reinforce the infrastructure of the Company's master dealer business division. This initiative sets the stage for virtually unlimited growth potential and delivery of rapid and tangible results to our carrier partners on a long-term basis; a move that translates directly into value for the Company and investment appreciation for shareholders. To achieve this objective, two hurdles had to be cleared; first, a corporate restructuring to assure adequate and continuing financial resources needed to build our distribution network, and second, deleveraging of the Company's balance sheet by reducing or eliminating debt and liabilities to attract needed equity investment.
iTalk's situation is not unique. The telecommunications industry has experienced a dramatic shakeout within the last decade. Massive investments in network infrastructure, intended to meet a projected demand that never materialized, left many companies with crushing debt and insufficient operating revenues. A wave of bankruptcy reorganizations cleaned up the balance sheets of many companies in the industry, including some of its largest players. Among these are names like Charter Communications, Hawaiian Telecom, Integra Telecom, Teligent, and Cable & Wireless USA. Similar successes have occurred in other industries like manufacturing (General Motors and Chrysler Corporation), transportation (Delta Airlines and US Airways) and entertainment and publishing (Trump Entertainment Resorts and Tribune Group). Over the course of 5 years, a trillion dollars in debt was recapitalized into equity, cash or simply wiped out.
From its inception just a few years ago, United Mobile Solutions LLC ("UMS") experienced remarkable growth and clearly demonstrated its ability to successfully establish and build a thriving wireless distribution network. However, diversification into wholesale device distribution and cellular telephone refurbishment distracted the Company from the focus of doing what it does best. Subsequent closure of these unprofitable divisions refocused the Company in the right direction but left it burdened with debt; frustrating its ability to obtain needed financing to fund high margin retail distribution opportunities.
Unable to obtain adequate debt financing, management decided that it was in the best interest of iTalk's shareholders to pursue a course that would enable the Company to get back on track through equity financing; a far more efficient and economical stratagem. Earlier this year, the iTalk/UMS merger opened the door to access significant equity investment capital through the sale of stock to fund its new retail development strategy as a master dealer working in concert with its carrier partners.
Over the past several months, the merger has been implemented and the Company has constructed a corporate framework to achieve management's vision of building a successful national distribution network. A final step in setting the stage for the remodeled financial platform is the reorganization of the UMS subsidiary under Chapter 11. This exercise will deleverage the Company's balance sheet and secure capital investment to realize its aggressive growth plan. We are confident that this model will prove to be a win-win for all shareholders, partners and stakeholders.
Sincerely,
David F. Levy
Chief Executive Officer
iTalk, Inc.
AI
