The IT Nerd

In every story there’s a good guy and a bad guy. After all, that’s how the planet is used to having things work. When it comes to the ongoing dispute between netTALK and Iristel where consumers are being caught in the middle and the CRTC is now apparently involved, consumers who are in the middle are looking for a good guy and a bad guy. I decided to do some digging and found some interesting info that may begin to explain this situation. That same info also seems to cast a negative light on netTALK. One person who is upset with the loss of his phone service had this to say via Twitter:

@netTALK are you guys bankrupt or what???

— AI (@ismail_arif) January 16, 2016

According to this story from September of last year, that may not be far from the truth:

Struggling telecommunications business NetTalk.com Inc. is being sued by a lender that says the business failed to convert part of a note into company stock, and thus violated a contract and certain antifraud provisions.

And:

The business had liquidity problems before the lawsuit was levied, saying in a filing with the U.S. Securities and Exchange Commission that recurring losses from operations and a dependence on outside financing created substantial doubt about the company’s ability to continue as a going concern, or without the threat of liquidation. 

Finally:

NetTalk warns that its current cash resources combined with anticipated future cash flow may not be sufficient to fund operations, and that it is looking for additional capital, in the company’s latest quarterly filing with the SEC, filed Aug. 19.

You can read the SEC filing that is referenced above here. But I would also point you towards their most recent filing from November of last year. In it, the company does express the same concerns about staying afloat.

Suddenly the fact that Iristel says that it is owed money is beginning to sound plausible. In short, netTALK may not have the cash to pay up. Now after learning this, I put out a request to netTALK via Twitter to see if they had any comment about this:

@The_IT_Nerd Yes, someone will be contacting you shortly

— NT CONNECT (@ntconnect_) January 18, 2016

So assuming that this happens, I’ll be sure to ask them about this and I will let you know what they say.

For the record, I did the same search for Iristel. The only thing that I could come up with is a review on Yelp that is not flattering. But lets face facts. On the surface, one unflattering Yelp review really doesn’t mean much when the people on the other side of the fence are facing a lawsuit plus they have a bunch of SEC filings that they themselves have filed saying that they’re bleeding cash and may not be a going concern for much longer. It also will likely make netTALK customers look for other options for their VoIP needs as the optics for them aren’t good.

UPDATE: A closer examination of netTALK’s most recent filing from November of last year reveals some interesting details. First there’s the mention of the lawsuit that I linked to in my story:

On or about September 2, 2015, KBM Worldwide Inc. declared default under the convertible promissory note dated December 15, 2014 in the amount of $53,500. The default occurred because the Company failed to maintain sufficient shares of common stock reserved for issuance upon conversion of the note and failed to timely issue shares of common stock upon receipt of a conversion notice under the note. The Company failed to maintain sufficient shares of common stock reserved for issuance upon conversion due to a court order. 

Furthermore, there’s this that relates directly to the dispute between netTALK and Iristel:

On October 10, 2014, the Company received a termination letter from, Iristel, (owned by, and with its CEO being the previous President of netTALK), a previously primary vendor, which provided telecommunications service and phone numbers (“DID”), with respect to two contracts between Iristel and the Company, one dealing with carriage and one dealing with DIDs. Upon being informed of the termination, the Company ported its carriage to a new carrier, and informed Iristel that, pursuant to its rights under the DID contract, it would port the DIDs promptly to a new provider. On October 17, 2014, Samer Bishay, previous President of the Company and CEO of Iristel, purporting to act on behalf of both the Company and Iristel, without conflict waivers of any sort, attempted to agree to rescind the termination of the DID contract, which neither Iristel nor the Company had the power to do. The Company attempted to shift the DIDs to new carriers, but Iristel, through Samer Bishay, the previous President of the Company, refused to allow these customers to be moved to new DID vendors.

From this we learn two pieces of information. One is that the person who runs Iristel used to be the president of netTALK. Second, and most importantly is the fact that this fits what Iristel said to me in a statement last night. Keep in mind that I am quoting both of the above from the documents that netTALK has to file with the SEC in the US as they are a publicly traded company. In other words, they come from the keyboards of people who are in responsible positions at netTALK. Draw whatever conclusions you will from that.

This entry was posted on January 18, 2016 at 5:00 pm and is filed under Commentary with tags Iristel, netTALK. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.