Financially-stricken telecoms company Stentor saw its share price collapse yesterday following publication of its annual results which confirmed that it lost £6.65 million last year and is now £14 million in debt.

The shares were suspended on the Alternative Investment Market (AIM) in London on Monday pending an announcement, and when trading resumed yesterday they promptly fell through the floor. At one stage the shares traded down as low as 3.5p sterling, before closing at 10p, a fall of 16.5p on the day. The all-time high price for the shares was 195p. The company is now valued at £1 million, although any buyer would have to assume Stentor's debts which are now approaching £14 million. Two shortterm loans for £6 million which the company obtained from "private sources" during the summer, to help it continue trading, were due for repayment on Wednesday.

A spokesman for the company said he was not aware if the loans had been repaid.

The company admitted that its pre-tax loss - to March last - was "significantly higher than expected" and despite its best efforts at planning it had taken longer to switch live traffic on to its network than anticipated. It said it had taken the approach that "it would be better to delay going live with customers than to go live prematurely and risk losing customers forever".

Stentor's revenues in its first year of operation were £126,000, increasing to £1.3 million in the year to March last. In its accounts it claims its revenues are now running at £400,000 per month. Some of this is understood to be call centre traffic which industry sources say often generates considerable revenue, but very little profit.

The company's financial statement says the group does not have sufficient facilities to finance its current, short-term and medium-term working capital and capital expenditure requirements. "Continued operating losses and the need to finance additional expenditure increase the need for extra funds."

The figures show that in the unaudited accounts for the five months to the end of August there is a deficiency of almost £4 million in shareholders' funds.

The spokesman said Stentor had been in negotiations with a number of people "with a view to forming an alliance which could possibly end up with the company being bought out by a larger entity". It is understood that the only company in the frame is US cable group NTL, and a deal would need to be completed very quickly if Stentor is to continue trading.

Stentor's perilous position will be discussed at the company's a.g.m., which will be held in a Dublin hotel on October 27th.