No sooner had some good news appeared with regard Adwalker’s global competitor Pixman Nomadic Systems, than things have got slightly scary for the UK AIM listed company itself.
In the middle of last week Adwalker had to issue the following announcements…
LONDON, Sept 30 (Reuters) – Adwalker Plc:
# TO COMMENCE DISCUSSIONS WITH A NUMBER OF PARTIES WITH A VIEW TO SECURING
necessary working capital
# THE LEVEL OF INCOME GENERATED IN SEPTEMBER WAS SIGNIFICANTLY LOWER THAN MANAGEMENT EXPECTATIONS
The last line is the important one because it appears that without immediate funding the company will be in real trouble. It also announced…
30 September 2008
(“Adwalker” or “the company”)
As stated in the announcement on 29 August 2008, the Company is currently operating within its existing bank facilities and in order to continue to operate within these facilities the Company needs to grow its revenue base significantly. However, the level of income generated in September was significantly lower than management expectations. The expected near-term growth in income in the Company’s core business, the leasing of the Adwalker platform, is heavily dependent on the advertising budgets of its global media partners.
The uncertain economic environment and the potential adverse effect this may have on the timing and level of spending of Adwalker’s customer base makes it very difficult for the Directors to forecast the level of future income with any degree of accuracy.
While the Directors remain optimistic that the effect of these factors will be limited in the medium term and the shortfall in income experienced in September may be recovered in future months, the Directors intend to commence discussions with a number of parties, including the Company’s bankers, with a view to securing the necessary working capital so that the business can continue to meet its obligations as they fall due.
In the event that there is insufficient growth in near-term income and Adwalker is unsuccessful in securing additional bank facilities and/or raising the necessary finance then there will be a material adverse effect on the Company’s financial position and operations.
There are a number of AIM listed companies in our sector that have over-extended and / or raised money on the back of too aggressive revenue forecasts are going to fail in these tough times.