WANdisco, which yesterday suspended trading shares on AIM, has appointed FRP Advisory to lead the independent investigation into the disclosed discovery of “potential” sales irregularities, and independent non-exec directors will help the process.
The company said that significant, sophisticated and “potentially fraudulent” irregularities concerning purchase orders, revenue and bookings had been discovered. A company statement said the irregularities were “represented by one senior sales employee” and “give rise to a potential material mis-statement of the Company’s financial position.”
“The Board now expects that anticipated fy22 revenue could be as low as $9 million and not $24 million as previously reported. In addition, the Company has no confidence in its announced fy22 bookings expectations.”
This revelation comes after a period of a strongly rising share prices for WANdisco:
It now appears that the revenue and booking numbers that supported the share price rise this year, and thoughts of a dual US-UK listing, may not bear out.
A $15 million revenue shortfall means WANdisco could conceivably run out of cash. Sales irregularities potentially causing a change in full year revenues from $24 million to $9 million – a $15 million drop – must have involved major accounts.
WANdisco has not named the “senior sales employee.”
The two non-exec directors helping the investigation are global equity expert Peter Lees and corporate financier Karl Monaghan, and they will support and facilitate the investigation process, the company said. Existing WANdisco external legal and professional advisers will also support the process as necessary.
FRP Advisory is a UK-based firm supplying forensic accounting, financial advice, restructuring, corporate finance, and debt advisory services. Its people will now have to ask WANdisco’s fy2022 customers what exactly they ordered and tally that with internal records so that an incoming cash position can be calculated and a basis for moving forward established.