Fintechs under financial stress, pandemic-related or otherwise, won’t get any sympathy from the ASX if they try and cut corners in their financial reporting, as 9Spokes International has discovered.
New Zealand-based 9Spokes works with banks to offer small businesses performance and marketing analytics applications. Its clients include Bank of America, OCBC Bank (Singapore) and NAB subsidiary BNZ.
The company was reinstated to quotation on the ASX last week, almost a month after being suspended over the independent auditor’s report in company’s annual report for the financial year to the end of March.
The audit report in the original annual report, which was issued on June 29, noted the company’s loss of $4.9 million, net operating cash outflow of $2.6 million and available cash of $4.7 million.
“The group forecasts that it has sufficient funds available to continue operations for a five-month period from the date these consolidated financial statements are authorised,” it said.
It goes on the say the auditor was unable to obtain sufficient appropriate audit evidence to form an opinion as to whether the use of going concern assumptions in the preparation of the consolidated financial statements was appropriate.
This was not good enough for the ASX, which only reinstated the company to quotation when the annual report was reissued with an audit opinion.
In its correspondence with the company, the ASX queried whether the financial report complied with accounting standards and gave a true and fair view its financial performance and position.
The audit report in the reissued annual report said the company has sufficient cash for only four months. It said the auditor had been provided with additional audit evidence, enabling it to form an opinion.
“In order to generate sufficient cash for at least the next 12 months from the date of signing of these consolidated financial statements, the group needs to secure new revenue opportunities and raise additional capital,” the audit report said.
“These events or conditions, along with other matters, indicate that material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern.”
Some good news for the company is that it has entered into a five-year partnership with Visa Inc to offer the 9Spokes “dashboarding solution” to Visa clients and their small business customers.