Danielle -- Can you help with that discrepancy?
Danielle -- I wonder at the discrepancy between
what Mr. Khoury (CEO) and Bleckman had to say about MagicMoney?
According to Bleckman MagicMoney "was creating a cash burn of over $1.2M per month"
but then we have Mr. Khoury "We expect to realize annual savings of about $1.3 million".
Telecommunications Developer GlobeTel Communications Corp. Sells MagicMoney Program
FORT LAUDERDALE, Fla.--(BUSINESS WIRE)--Nov. 8, 2006--GlobeTel Communications Corp. (OTC:GTEM) today announced that it has sold its MagicMoney stored value card division to Gotham Financial, LLC.
Under terms of the agreement, Gotham acquired substantially all of the assets, which include the stored value program, financial processing switch and contracts, and assumed the liabilities of MagicMoney. GlobeTel will receive a revenue share over a period of years as payment.
Peter Khoury, Chief Executive Officer, stated, "The sale of MagicMoney provides us with three distinct benefits: focus on our core business; lowering our expenses and the ability to continue to participate in the stored value business if we so desire. It is our intention to focus our attention on our core competencies in the wireless, VoIP and traditional long distance segments, as well as on the continued development of near-space solutions to deliver voice and data. We expect to realize annual savings of about $1.3 million, not including additional capital expenditures that were anticipated. As mentioned in Przemyslaw L. Kostro's November 2 letter to shareholders, our priorities are to reduce our burn rate and to use our resources efficiently for the delivery of telecommunications. The sale of MagicMoney is consistent with those priorities."
Mr. Khoury continued, "This transaction will provide us with the ability to realize future revenue of up to $4,000,000 from Gotham's operation of the platform. It also obligates Gotham to give us full access to all capabilities of the platform at the 'most favorable' rates."
In addition to reducing our burn rate, the transaction contemplates the Company's continuing participation in MagicMoney through revenue sharing over three years with a possible extension to six years, if certain minimum payments are not made during the initial term. Revenues earned by GlobeTel will be based on the successful rollout of the platform by Gotham and on user fees following a formula that considers the total number of transactions on a Stored Value card and use of the card at any ATM, POS or other transaction, under closed and committed contracts GlobeTel had at the time of sale, and the number of transactions utilizing the Financial Processing Switch.
AI
