TSX Venture Exchange: FGD
Frankfurt Stock Exchange: 1G5
OTCQB: FGDBF
TORONTO, May 31, 2018 /CNW/ - The Chairman and CEO of
First Global Data ("First Global" or the "Company") is pleased to
provide the following update and corporate perspective to our
shareholders.
Dear shareholders,
I would like to take this opportunity to provide you with a
corporate update on a number of key items. I do understand that you
may be concerned with the current status of the Company as you have
shared questions, concerns, and words of strong support with
me.
We have taken the time necessary to better understand each of
the below items and continue working toward a more comprehensive
understanding for some. I would like to thank you for your
patience, understanding and continued support.
I will separate this letter into the key areas that you have
asked us to clarify and/or explain.
Cease Trade Order, Revenue Recognition and Late Filing of
Financial Statements
In the process of conducting our 2017 year end financial audit
("2017 Audit"), the Company became aware of a matter related to the
recognition of revenue for its ISP licensing program ("ISPL
Program").
Regarding the ISPL Program: First Global had embarked on a
program whereby it sold licenses for use of its money remittance
software, the proceeds of which were to be primarily used for its
international mobile wallet deployments and business growth in key
areas and markets. The program included the sale of licenses to a
purchaser (the "licensee"), who would provide marketing and
promotional activities designed to increase key performance
indicators including: user base, active users, Annual Average
Revenue Per User also known as "AARPU"), number of transactions,
and revenues. The Company and its then-professional advisors,
including legal and accounting, worked closely with the Company's
auditors throughout the design and creation of ISPL Program.
In the later process of preparing for the Company's 2017 Audit,
auditors to the Company advised that the ISPL Program, in practice,
gave rise to concerns surrounding how revenues were recognized. In
light of this development, the Company set out to address such
concerns with the ISPL Program and consulted various advisors.
Ultimately, a special committee (the "Special Committee") of the
board was struck to investigate and subsequently, the Company
decided to voluntarily suspend the ISPL Program until it could be
amended and to halt the audit process so as to allow the Company to
assess the impact of the revenue recognition concerns on its 2017
year end financial statements. Instead of hastening to meet the
filing deadline of April 30, 2018,
the Company chose to have a comprehensive understanding of the
matter in order that the financial statements be accurate and that
any concerns of the auditor be addressed going forward. As a
result, we were not able to submit our year end 2017 financial
statements by the April 30, 2018,
deadline.
One of the recommendations of the Special Committee was that the
Company consider changing its auditor to a larger national firm
and, given the anticipated delay in filing, to apply for a
Management Cease Trade Order ("MCTO"). An MCTO is a voluntary
request from the Company to submit its financial statements late,
which can allow, depending on the precise terms of the order
granted, certain of a company's shares to remain trading while
financial disclosures remain outstanding. In our case, the MCTO
would have provided the Company two additional months to conclude
the 2017 Audit. Upon review, the Ontario Securities Commission
chose to exercise its discretion to not grant the MCTO in favour of
issuing a Failure-to-File Cease Trade Order ("FFCTO"). While the
Company considered transitioning to a national audit firm for its
2017 Audit, it became clear that the 2017 Audit would not be able
to be completed by a larger more instititional audit firm within a
reasonable timeframe. As a result, the Company decided that it was
best to finalize the Company's 2017 year end audit with its
existing audit firm and to move to a national audit firm for its
2018 year end audit.
Currently, a deeper analysis is being conducted to determine
what revenues from the ISPL Program can and should be recognized,
which may be booked into 2018, and which may have to be written
off. The Company expects that it will be in a position to finalize
its 2017 Audit within the next two months and is working diligently
with its auditor to accelerate this timeline where and if possible.
The ISPL Program will continue to be suspended until such time as
the parameters around key considerations such as revenue
recognition are more thoroughly understood and rectified to the
satisfaction of the Company's auditor.
Now that FFCTO has been implemented, the Company's stock price,
market cap and other statistics have been removed from the TSX-V
web site. Resumption of trading is expected to occur after the
Company has filed its 2017 audited annual financial statements,
which will only occur subsequent to the approval of the Ontario
Securities Commission as well as that of the TSX-V.
OTCQB Listing
First Global has concluded its listing on the OTCQB market in
the USA. This initiaive was taken
in order to improve access to trading by US investors. The
Company's trading symbol on this market is FGBDF. Once trading
resumes on the TSX-V, the Company will be eligible to apply for the
resumption of trading on the OTCQB. However, the Company's
shares are not currently DTC eligible, which is when a public
company's securities are able to be deposited through DTC, the
largest securities depository in the world. The Company plans to
pursue such DTC eligibility and to announce if and when such is
accomplished.
Happy Transfer Service Interruption
The Company would like to advise that the Happy Transfer service
deployed in partnership with Lianlian has been temporarily
suspended. As noted in previous news releases, this service is
innovative in that it provides a cross border money transfer
service in a social messaging platform for persons in the
USA to persons in China. Our partner in China, Lianlian is in the process of securing
new banking relationships and as a result have suspended service
until such time. First Global is working with Lianlian to better
understand the timing for service resumption. The Company will
consider sourcing alternate partners licensed in China to provide similar services to this very
large market should service resumption timelines be unknown or
lengthy.
Money Transmitter Licenses
We believe that having Money Transmitter Licenses ("MTL") is a
major differentiator for First Global, especially given the
increased scrutiny on compliance by banks and regulators, and the
evolution of alternate currencies. The Company continues to be
engaged with the various regulators toward obtaining the balance of
US State licenses. Since January of 2017, the Company successfully
obtained approximately 20 new licenses and now has 40 in total,
making it one of the more broadly licensed money transmittors in
the USA. Since achieving this
major milestone, the Company has received much positive attention
from potential strategic partners and others. The Company continues
to work through the process of obtaining the balance of its US
State licenses and we are actively exploring obtaining licenses in
Europe and other key markets
around the world.
Investor Relations
I do sincerely enjoy interacting with our shareholders,
listening to your feedback and implementing some of your ideas.
Even when things are not going as anticipated—and these situations
can become challenging—this continues to be one of the most
enjoyable elements of my overall responsiblities. As we have
evolved, and especially in light of the historical downward trend
in our share price, it has become clear that perhaps we need to
improve our messaging and the clarity of the information we share.
As a result, we are actively sourcing professional Investor
Relations ("IR") support. We believe that this will improve overall
communications with our shareholders and the markets. Professional
IR can also assist the Company to gain more exposure in the
industry, and to convey clear messaging to potential analysts,
institutional investors, and other interested parties.
CFO Position
The Company is actively working to retain a full-time CFO since
the Company's current interim CFO will no longer be with the
Company once the 2017 Audit has been concluded. The Company is
committed to strengthening our finance team in a significant way
and we have already begun taken measures toward meeting these
objectives.
Please accept my sincere gratitude for your ongoing support and
I hope that this update has been helpful.
Andre Itwaru
Chairman and CEO
First Global Data Limited
About First Global: (www.firstglobaldata.com)
First Global is an international financial services technology
("FINTECH") company. The Company's two main lines of business are
mobile payments and cross border payments. First Global's
proprietary leading edge technology enables the convergence of
compliant domestic and cross border payments, shopping, Peer to
Peer ("P2P"), Business to Consumer ("B2C"), and Business to
Business ("B2B") payments. First Global enables its strategic
partners and clients around the world with our leading edge
financial services technology platform.
Caution:
Neither TSX Venture Exchange Inc.
("TSXV") nor its Regulation Services Provider (as that term is
defined in the policies of the TSXV) accepts responsibility for the
adequacy or accuracy of this release.
The securities offered have not been registered under the
U.S. Securities Act of 1933, as amended, and may not be offered or
sold in the United States absent
registration or an applicable exemption from the registration
requirements. This press release shall not constitute an offer to
sell or a solicitation of an offer to buy nor shall there be any
sale of the securities offered in any jurisdiction in which such
offer, solicitation or sale would be unlawful.
Forward Looking Information:
This news release
contains "forward-looking information" within the meaning of
applicable securities laws. In particular, this press release
contains forward-looking statements with respect to the Company's
ability to finalize its 2017 Audit within the next two months, have
trading resume once 2017 Audit has been filed, pursue DTC
eligibility, and improve overall shareholder and market
communications via sourcing professional IR support. There can be
no assurance with respect to a favourable outcome with respect to
any of the foregoing matters. Investors are advised that absent a
favourable outcome with all of the foregoing matters, the business
and market value of the Company, including the value of its common
shares, may be adversely and materially affected. Although First
Global believes in light of the experience of its officers and
directors, current conditions and expected future developments and
other factors that have been considered appropriate, that the
expectations reflected in this forward looking information are
reasonable, undue reliance should not be placed on them because
First Global can give no assurance that they will prove to be
correct. Readers are cautioned to not place undue reliance on
forward-looking information. Actual results and developments may
differ materially from those contemplated by these statements. The
statements in this press release are made as of the date of this
release. First Global undertakes no obligation to comment on
analyses, expectations or statements made by third-parties in
respect of First Global, its securities, or financial or operating
results (as applicable). First Global disclaims any intent or
obligation to update publicly any forward-looking information,
whether as a result of new information, future events or results or
otherwise, other than as required by applicable securities
laws.
SOURCE First Global Data Limited