PricewaterhouseCoopers has completed its review of Brocker Technology Group and found the reported accounting irregularities to be fewer than expected.
Brocker Technology Group will resume trading on the Nasdaq tomorrow, New Zealand time (March 9, North American time) after the Nasdaq was satisfied with the result.
PwC’s review of the technology company’s group accounts found the irregularities were confined to Brocker’s Australian distribution business, and “affect only the current fiscal year”, a statement says.
There also turned out to be fewer financial problems than anticipated, with PwC establishing Australia’s revenues in the first and second quarters (six months ended September 30, 2000) were overstated by $CD2 million, not $CD4.5 million as first thought.
Brocker's Australian distribution arm’s irregularities “consisted primarily of false invoices and improper capitalisation of expenditures”, Brocker says – that is, it had forward-booked sales invoices, including to its bank.
Brocker says the finding also means its net loss before income-tax provision for those two combined quarters, previously reported as $CD1.2 million, was understated by $CD214,000.
The bulk of the irregularities happened in the second quarter.
Brocker says the announcement of its now-overdue third quarter (three months ending December 31, 2000) results will occur by March 15.
Brocker’s CEO Richard Justice, formerly the chief finance officer and one of two that discovered the accounting problems, told Computerworld last week he would “ be truly dead astounded” if the review found such irregularities in other parts of the group.
Justice indicated Brocker was moving away from “speculative IP [intellectual property] investments” and concentrating on four key areas as part of a group-wide restructuring – wireless services, telecommunications services, professional services and technology provider, Datec.
Brocker has quit the computer distribution business except for the Autodesk product in New Zealand – a move accelerated by the accounting problems – and other products are in the process of being sold.
Staff are being culled from a high of 250 last year to around 90, which Brocker estimates will save it $CD6.8 million annually.
Brocker must now look towards remedying its low Nasdaq share price, which, when suspended on February 15, was trading at $US0.48 cents a share. The Nasdaq requires a minimum bid price of $US1.
On February 7 Brocker said it had scheduled a shareholder meeting to discuss a one-for-four share consolidation (reverse split) for April 11, but Justice told Computerworld this move would depend on what happened to the company’s share price and trading activity when it restarted on the Nasdaq.