Digital and training company, iCreate, founded and run by Tyrone Wilson and listed on the Junior Market of the Jamaica Stock Exchange, has taken the decision to seek shareholders’ approval at an extraordinary general meeting (EGM) scheduled for May 27 to convert debt to equity (a convertible note) in an effort to remain viable.
Earlier this week, Our Today detailed that iCreate’s audited accounts reported a comprehensive loss of J$32.26 million, up from the comprehensive loss of J$21.99 million booked in 2020.
For the December 2021 quarter, the total comprehensive loss amounted to J$36.13 million versus a loss of J$26.80 million booked for the corresponding period.
The loss per share (LPS) for 2021 amounted to J$0.16 compared to a LPS of J$0.15 for 2020. The loss per share for the December 2021 quarter amounted to J$0.18 relative to J$0.14 reported in 2020. iCreate traded on Wednesday at J$3.24.
Operating loss for the year closed at J$22.37 million in contrast to a loss of J$13.65 million for 2020. Operating loss for the fourth quarter closed at J$31.94 million, relative to a loss of J$14 million booked in 2020.
Finance costs for the year amounted to J$9.89 million relative to J$15.42 million a year prior. Consequently, net loss for the year amounted to J$32.26 million versus a loss of J$29.06 million in 2020.
In spite of the poor results, the management is confident about the future and the company’s profitability prospects.
According to the management, “based on the plans and strategies being pursued and implemented, the directors and management believe that the company will generate adequate cash flows and profitability which would allow it to continue in operational existence for the foreseeable future. On this basis, the directors have maintained the going concern assumption in the preparation of these financial statements”.
iCreate management added that the company will be able to realise its assets and discharge its liabilities in the ordinary course of business. For the year ended December 31, 2021, iCreate eked out revenues of J$32.83 million, which is a 44 per cent decline from the J$58.38 million reported in 2020.
For the fourth quarter, iCreate posted J$1 million in revenue (2020: J$11.25 million).
During the year, the company received capital injection of J$50.5 million and J$18.3 million respectively.
These were convertible loans which are repayable in full, by way of cash or conversion to ordinary shares, subject to the approval of shareholders and regulatory bodies.
The company has not, to date, been able to realise its projected revenues.
Total direct costs amounted to J$8.34 million for the year compared to J$22.13 million for 2020. Other income for the year amounted to J$5.33 million relative to J$34,985 booked in 2020, while the other income for the fourth quarter totalled a mere J$428 (2020: loss of J$33,271).
Dequity Capital Management has come in as a white knight, providing a lifeline to the company that endured severe difficulties during the height of the COVID pandemic.
A convertible loan will allow iCreate to pay its expenses and in part honour some of its obligations.
The resolution, so noted by the Jamaica Stock Exchange (JSE), reads: “The Company wishes to pass several resolutions which will effect the rights of shareholders upon the conversion of the loans of Dequity Capital Management Limited and Kintyre Holdings Limited to equity, increase the authorised share capital and for the creation and issuance of a new class of shares, being Class A Redeemable Preference Shares.”
The EGM will make it clear that, “The shareholders have been duly apprised of the effects of the conversion of the loans of Dequity Capital Management Limited to equity and expressly waive their pre-emption rights to the further issue of participating voting shares and the creation and issuance of a new class of shares, being Class A Redeemable Preference Shares.”
In order to address iCreate’s debt position and to inject funds into the beleaguered business, Dequity Capital and Kintyre Holdings lent it J$50.5 million.
President and CEO of iCreate, Tyrone Wilson, is a connected party to Kintyre Holdings. This was revealed to the board of directors and he was excluded from all considerations in relation to the rate of conversion and the decision to convert the loan to stock units.
At its AGM held at the AC Marriott Hotel in Kingston at the beginning of this year, Wilson said: “Like all enterprises, we have been facing the challenges posed by the ongoing pandemic and the general slow growth that has been attendant to those conditions.”
“With fresh capital, we are better able to appropriately exploit the opportunities that yet exist in the market and therefore broaden our earnings base.”
iCreate has turned to real estate and its iCreate City concept to help change its fortunes. It has engaged the services of former Digicel sales guru, Declan Tully (who headed Trend Media’s sales division) to bring in more sales and so drive up revenue.
The aim now is to deliver US$2 million in revenue and US$1 million in profits at the end of the financial year.
Last month, iCreate announced it had acquired a majority stake in a new residential development in St Ann on Jamaica’s north coast.
iCreate’s auditors, Crichton Mullings & Associates have expressed concerns about its ability to continue as a going concern but Wilson has vowed to turn things around. The company has already posted a profit for the first quarter of this year, albeit a modest one.
For the three months ended March 31, 2022, the company posted a net profit of J$10.11 million compared to just J$1.91 million for the same period in 2021. Revenues jumped to J$46.39 million when compared with the paltry J$8.42 million reported in the prior year.
The resolution further reads: “The Company will be pursuing a number of mergers and acquisitions which may, from time to time, bring about changes in the ordinary shares and voting structure. The issuance of Class A Redeemable Preference Shares will allow the Company to recall same and there are no rights associated with them in relation to the return of capital, on the winding up of the Company etc; and the 51% allows for the ordinary resolutions to be passed and whether special resolutions are to be passed, it will allow for greater inclusion and consensus by the shareholders.”