The Acting Chairman of troubled software firm Datalex has told shareholders that a PWC review of the financial controversy that led to the de-listing of its shares found that the board and shareholders had been misled.
Addressing shareholders at the AGM of the airline software company, Sean Corkery described last year's financial controversy as "unprecedented" and has pledged to shareholders that it will not happen again.
However, he said that the embattled company has a future after financial irregularities left it with a €50m loss, as its software was good, and e-commerce was growing rapidly.
Datalex is hoping that the shares will be re-listed on Euronext Dublin by Christmas.
Mr Corkery said that apart from financial issues, there had been a clear breakdown of controls on project management, as well as failures in delivering to customers on time, resulting in a cost base that was not sustainable.
He told shareholders that the cost base is being addressed, with staff numbers down from 265 to 180, while the leadership team had been reorganised and new robust controls are being introduced.
They have two new projects with Jetblue and SAS.
He expressed gratitude to the main shareholder, Dermot Desmond, who had been "steadfast" in his support.
CFO Niall O'Sullivan acknowledged that the results for 2018 showing a loss were very significant and damaging for shareholders, but told them an extensive programme of financial transformation was under way.
He said it was important to get access to funding and pledged to have the shares, which are currently suspended, relisted by Christmas.
He told the meeting that some customers had been approached for "pre-payment", which he described as "embarrassing", as if you are looking for pre-payments, you have a problem.
Asked about a current major deal with Lufthansa, Mr Corkery said Datalex had received a letter from the airline saying they are in breach of contract. He said Lufthansa had its "legal ducks in a row which includes notice of termination".
He described the original Datalex-Lufthansa contract as a bad contract. He confirmed he had told the airline that while Datalex wanted to continue, they would not continue to spend shareholder money on the wrong methodology and the wrong terms. The parties are still in talks.
Asked whether if the contract broke down, Lufthansa would look for some of its money back, Mr O'Sullivan said that was part of their ongoing discussions but no provision has been made for that.
Yesterday, Datalex said it expects to report earnings before interest, tax, depreciation and amortization (EBITDA) of between -$1m and +$1m for this year.
In its first prediction of its financial performance for 2019 since suspending guidance in August, the troubled travel software developer predicts revenues for the period will be flat at $45m.
Datalex had recently revealed that EY had declined to give an audit opinion on the firm's 2018 accounts.
The highly unusual development follows the company's reporting of a much bigger than expected loss of $50m for 2018, after what it described as the "most difficult year in the history of the group".
The company had reported profits of $7.1m the previous year.