BROSSARD, QUEBEC--(CCNMatthews - May 19, 2006) - Over the past year, Simsmart Inc. (Simsmart) (TSX VENTURE:SII) has been negotiating a major contract with a potential customer for which Simsmart expected an award in early fall 2005. For reasons outside the control of Simsmart, the contract award has been delayed week after week and is still not awarded today.
While waiting for this contract award and in order to fulfill the cash flow requirement for the company operations, Simsmart has obtained several short term and longer term loans from its Directors including a secured debenture in favour of a company controlled by one of the Directors. Due to the considerable size of the debenture and the related risks, Simsmart had to give all of its assets as a guarantee. This debenture was approved by the company directors, the disinterested shareholders at the 2005 annual shareholders meeting and by the TSX Venture Exchange.
Notwithstanding these loans, Simsmart is presently unable to maintain its operations without the immediate injection of additional funds. Despite of all the efforts deployed by the Company to finalize this major contract and to secure additional financing, Simsmart is no longer able to continue its normal operations.
On May 6, 2006, the debenture holder gave Simsmart a notice informing it that if the outstanding interests on the loan were not immediately paid, the lender would exercise its security. Simsmart has been unable to find the required funds within the 10 days notice period to fulfill its obligations. It is therefore extremely likely that the lender will now exercise its rights as per the debenture and that all the assets of the company will be seized within a matter of days.
In view of all of the above, the Board of Directors has decided to suspend the activities of the Company until further notice with immediate effect. As a result, the TSX Venture listing will be transferred to the NEX Market. The Board of Directors will seek opportunities to re-launch the Company.
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