Introduction and background
The Annual Report and Accounts have been delayed following the discovery of the events outlined in the RNS announcements summarised below, which set out the background that is relevant for shareholders to review since the end of FY22.
On 9 March 2023, the Company released two RNS announcements collectively stating that:
- The Board had become aware of significant, sophisticated and potentially fraudulent irregularities which related to received purchase orders and related revenue and bookings, as represented by one senior sales employee (the “Irregularities”).
- As a result of the identification of the Irregularities, the Company had no confidence in its announced FY22 bookings expectations.
- The Company would conduct an investigation with external legal and professional advisers into the Irregularities and its true financial position.
- Following a request from the Company, AIM had suspended trading in the Company’s shares.
On 10 March 2023, the Company released an RNS announcement stating that:
- It had appointed FRP Advisory to lead an independent investigation into the Irregularities (the “Independent Investigation”).
- The Company had formed an investigation committee comprising independent non-executive directors to support and facilitate the investigation process.
On 3 April 2023 and 28 April 2023, the Company released RNS announcements collectively stating that the conclusions of the Independent Investigation concluded that:
- All of the purchase orders associated with one senior sales employee were illegitimate.
- All other purchase orders (i.e. those not associated with or secured by the senior sales employee in question) were legitimate.
- Accordingly, estimated revenue for FY22 referenced in the Trading Update dated 11 January 2023 should have been $9.7 million (unaudited) as compared with not less than $24m (unaudited) and estimated bookings should have been $11.4m (unaudited) compared with $127m (unaudited).
- An update on key initiatives following FRP Advisory’s continuing work to examine relevant processes and controls and other steps being taken to improve the Company’s internal processes would be provided in the Annual Report and Accounts for FY22.
On 20 April 2023, the Company released an RNS announcement stating that it had been notified by the Financial Conduct Authority (the “FCA”) of its commencement of an investigation into the Company (the “FCA Investigation”). The FCA Investigation relates to certain regulatory announcements released by the Company during the period 1 May 2021 to 9 March 2023, which may have materially mis-stated the Company’s financial position.
On 15 May 2023, the Company released an RNS announcement stating that:
- Having reviewed various options, the Board believed that the most appropriate strategy was to launch an equity fundraise towards the end of June 2023 of $30 million (the “Fundraising”).
- The Company had commenced a deep transformation recovery program.
On 6 June 2023, the Company released an RNS announcement stating that earlier that day at a general meeting of the Company, shareholders had authorised the Company to allot new ordinary shares in order to support the Fundraising with 97.8% of votes cast in favour of both resolutions.
On 3 July 2023, the Company launched the Fundraising to raise gross proceeds of $30 million at a price of 50 pence per share and, on 4 July the Company released an RNS announcement stating that it had successfully completed the Fundraising.
On 5 July 2023, the Company issued an RNS to update shareholders on the timetable associated with the Fundraising stating that “In working to complete the fundraise process, the Company has encountered the requirement under Jersey law to seek further shareholder approval to increase its authorised share capital in order to issue the Offer Shares pursuant to the Fundraise.” Completion of this step means settlement of the Fundraise and Admission are now expected to take place on 25 July 2023, subject to the passing of the necessary resolution by shareholders.
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