HOUSTON--(BUSINESS WIRE)--GlobalNet Corporation (Pink Sheets:GLBT) announced today that its
wholesale Internet Protocol (IP), long distance sales division has seen
preliminary improvement in margins in the fourth quarter of 2006 over
the third quarter of 2006.
The company stated recent sales and business development appointments
and subsequent strategy changes prompted initiatives that are believed
by management to have positively impacted margins so far in the fourth
quarter of 2006 over the third quarter of 2006.
In a recently filed current report on Form 8-K, the company indicated
revenue for the third quarter of 2006 is expected to approximate $1.6
million, with the excess of revenue over direct costs of transmitting
traffic approximating 2 to 3 percent. Revenues for the fourth quarter of
2006 are expected to increase over the third quarter, and the percentage
of revenue over direct costs of transmitting traffic is also expected to
increase. In the month of October, the company has noted an increase of
revenue over direct costs of transmitting traffic, with the percentage
in the wholesale IP product lines exceeding 6 percent for the month of
October.
Currently, the company said it is reviewing its product offerings and
intends to devote additional resources to wholesale IP offerings, while
refining and reviewing its retail offerings. Such actions are
anticipated to help support new initiatives in Voice over Internet
Protocol (VoIP). The wholesale IP long distance business should
strengthen GlobalNet’s future offerings in
VoIP products by leveraging the strengths of wholesale rates and carrier
class infrastructure to compete in the higher margin IP and business IP
product segments.
GlobalNet is presently reviewing discontinuation of some of its retail
products to dedicate resources to the company’s
new area of focus, business VoIP or more specifically business data and
voice convergence. The company is currently pursuing beta customers in
the IP trunking and IP/PBX product categories. It expects to sign
agreements with Beta customers in their respective product categories
during the first quarter of 2007.
Funding Update
The company announced that it had entered into a Securities Purchase
Agreement with its existing secured creditors on November 3, 2006 for
the sale of (i) $160,000 in callable secured convertible notes (the “Notes”)
and (ii) stock purchase warrants to buy 10,000,000 shares of its common
stock.
The Notes bear interest at 10%, mature three years from the date of
issuance, and are convertible into GlobalNet’s
common stock, at the investors' option, at a conversion price, equal to
the lower of (i) $0.03 or (ii) 15% of the average of the three lowest
intraday trading prices for GlobalNet’s common
stock during the 20 trading days before, but not including, the
conversion date (the “Variable Conversion Price”).
Additionally, the company agreed to amend all previous notes to the
existing secured lenders, aggregating to approximately $11.7 million of
face value, to the same Variable Conversion Price from the previous
variable conversion percentage of 20%.
GlobalNet Corporation will file a current report on Form 8-K with the
Securities and Exchange Commission regarding other aspects of the Notes.
The company has filed a current report on Form 8-K on November 1, 2006
that contains important additional disclosures regarding liquidity,
capital structure, certain defaults and an update on the status of its
audits. The reader is strongly encouraged to read both documents for
this important information. GlobalNet’s
current reports on Form 8-K are available for free on the SEC’s
website at http://www.sec.gov.
About GlobalNet Corporation
GlobalNet Corporation, a Voice over Internet Protocol (VoIP) services
company, provides outbound telecommunications traffic to Latin America
and counts among its customers both Tier 1 and Tier 2 carriers.
GlobalNet provides international voice, data, fax and Internet services
on a wholesale basis over a private IP network to international carriers
and other communication service providers in the U.S. and
internationally. GlobalNet's state-of-the-art IP network, utilizing the
convergence of voice and data networking, offers customers economical
pricing, global reach and an intelligent platform that guarantees fast
delivery of value-added services and applications. More information may
be obtained from the company’s website at www.gbne.net.
Safe Harbor for Forward-Looking Statements
From time to time, the company may issue news releases that contain
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934, and is subject to the safe harbor created by those sections. This
material may contain statements about expected future events and/or
financial results that are forward-looking in nature and subject to
risks and uncertainties. For those statements, the company claims the
protection of the safe harbor for forward-looking statement provisions
contained in the Private Securities Litigation Reform Act of 1995 and
any amendments thereto. The financial data provided in this press
release represent actual results. Any statements that express or involve
discussions with respect to predictions, expectations, beliefs, plans,
projections, objectives, goals, assumptions, or future events or
performance are not statements of historical fact and may be
"forward-looking statements." "Forward-looking statements" are based
upon expectations, estimates and projections at the time the statements
are made that involve a number of risks and uncertainties that could
cause actual results or events to differ materially from those
anticipated. These risks and uncertainties include, among other things,
product price, volatility, product demand, market competition, risk
inherent in the company's domestic and international operations,
imprecision in estimating product reserves and the company's ability to
replace and expand its holdings.
