Apollo Enterprise Solutions, Ltd. (AES) is to list a 10 percent convertible loan note on the Bermuda Stock Exchange (BSX).

The convertible loan note, which is being managed by Clarien BSX Services Ltd, comes as AES states it has reached some “important new milestones”.

However, the California-based company has suffered losses from operations, reported in an independent auditor’s report to December 31, 2013. It states that financial statements were prepared “assuming that the company will continue as a going concern”. It added: “the company has suffered recurring losses from operations and as of December 31, 2013 has a working capital deficiency and a stockholders’ deficiency.

“These factors raise doubt about the company’s ability to continue as a going concern.”

The independent auditor also stated: “The operations of the company have been primarily supported by a line of credit from one of the company’s stockholders and both loans and equity proceeds received from stockholders.”

The report includes a statement in regard to AES’s management plans. “Management believes that 2014 will be a breakout year for sales due to its strategic partnerships that were established in 2013 with various new large financial service organisations and other providers of origination and collection of consumer credit portfolios for United States and international banks. While the company will continue to minimise operating expenses, the company expects to incur another loss in 2014 and to become profitable in 2015.

“If the company is successful in raising sufficient capital on the Frankfurt or London AIM stock exchanges, the company intends to accelerate sales efforts to exceed its existing 2014 forecast.”

AES, which has already been listed on the BSX for two years, as well as Frankfurt Stock Exchange Quotation Board and the Xetra Trading System platform, provides organisation-wide software for the management of consumer credit portfolios, and has patented a system that allows a company’s customers to “interact on a self-serve basis to resolve situations on any device, at any time.”

According to the company’s profile posted on the BSX website: “The company offers the TRUE System, a comprehensive suite of enterprise class software products that seek to provide superior economic returns in credit portfolio management by increasing efficiency in debt collection.”

AES’s customers are large banks and other financial institutions, and it has the ability to apply the bank’s business rules (for example, how much of a discount to apply to a customer group) to the bank’s own data and without disrupting the bank’s existing systems.

AES says the TRUE System should increase collections, enable the replacement of manual systems, and reduce administration and staffing. It is “estimated to produce approximately $50 million in additional gross margin on a $10 billion loan portfolio”.

“AES entered into a multiyear licensing agreement to provide software and data processing services with New England Funding Technologies, LLC (NEFT), an innovative consumer-facing online technology company. NEFT has created the first-of-its-kind ‘interactive credit report’ which enables consumers to manage their personal credit via any mobile device from anywhere.”

Joseph Konowiecki, AES’ chairman and chief executive officer said that while the business world has been effective at setting up automated payment options, “we are not well serviced when it comes to payment of arrears”.

There is a staggering $25 trillion in consumer debt worldwide, said Mr Konowiecki, who spoke to The Royal Gazette while he was in Bermuda this week.

The NEFT system offers the consumer automated choices — “in all the ways a young person uses,” he said, explaining it is because arrears is primarily a young person’s issue. “Young people use mobile devices and they are the ones who may have a job issue, or buy too much too soon,” he explained.

The system allows the consumer to know where they stand as early as possible. It works because: “Some 90 percent of people want to, and will, settle their obligations. It allows consumers self service and empowerment.

“We feel this is the last bastion where banks can really make money.”

AES says about the software: “Most importantly, customers are treated with a kinder and gentler ‘tone of voice’ than is customary in the financial services industry, thus fostering an environment of goodwill and trust between them and the creditors.”

AES plans to implement the system in Europe first.

The company expects to receive more than $20 million during the first five-year term of the contract with NEFT. Additionally, the AES team recently returned from Spain and Italy where it had meetings with top banks. “AES already has been asked to commence work on a plan to implement licence arrangements in the coming months with at least four banks from these two countries and expects more such opportunities to unfold further in 2015,” a press release from the company stated.

AES says the BSX-listed convertible note will give precedence over equity holders only, the conversion price is set at 45 euro cents and it pays 10 percent interest. Interest is paid quarterly in cash or stock at 45 euro cents and the noteholder can convert into equity at any time; and the company can impose conversion any time after six months — if the stock is above 45 euro cents for ten trading days.

However, the investor will be paid 12 months of interest if he or she chooses to be paid in equity.

In addition, last month, AES received a patent for ‘Dynamic Score Alteration’ from the United States Patents & Trademarks Office, one of its 23 patents issued, or to-be-issued around the world.

The new system enables delinquent credit customers to determine what their credit score increase would be if they selected a debt settlement offer. “This empowering technology allows consumers to instantly determine the net result of their action when they make a payment towards a debt,” said Mr Konowiecki.

AES explains: “Customers who are in financial distress and have no assistance for improving their creditworthiness need an empowering self-service solution to, a, help them understand and receive the best choices for resolving a debt, b, education on the affect to their creditworthiness based on the choice they select, and c, positive psychological reinforcement that they are a valued customer.”