|By Marketwired .||
|July 31, 2014 06:21 AM EDT||
VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 07/31/14 -- Webtech Wireless Inc. (TSX:WEW), a leading provider of vehicle fleet location-based services (LBS) and telematics technology, announces initiation of an internal investigation into its former UK operations and the receipt of $2.1 million USD in holdback proceeds from the disposition of its NextBus division.
Webtech Wireless Initiates Investigation in Respect of Former UK Operations
In the course of conducting forensic work while winding up its UK operations, the Company has detected an instance of fraudulent redirection of funds by a former employee in the UK.
The Company has discovered discrepancies in the periodic payments made to and received from the UK tax authorities. The Company has engaged a third party forensic investigator to examine the discrepancies which occurred over a period from 2010 until the UK office was closed in 2012. The Company has identified $550,000 in diverted payments. An additional $200,000 in payments are under investigation, however the extent of the exposure and cash impact cannot be determined until the investigation is completed. The Company will attempt to recover the diverted funds through the Company's crime insurance policy, from the perpetrator or other avenues.
To date the Company has calculated that it has a liability of $425,000 related to the fraudulently diverted funds. While the ultimate amount of this liability is yet unknown, it will be included in the Company's financial statements for the quarter ended June 30, 2014, currently scheduled for release in August. The liability will result in the Company taking a charge either on the statement of operations for the quarter ended June 30, 2014, or as an adjustment against retained earnings for prior periods. The Company is working with its external auditors to determine the correct treatment of such a charge and will provide a further update prior to the deadline for filing its June 30, 2014 financial statements.
Webtech Wireless Receives $2.1 Million USD Holdback from Sale of NextBus
On July 29, 2014, the Company obtained the release of 100% of the $2.1 million USD holdback related to the sale of Webtech Wireless' NextBus division to Cubic Transportation Systems, Inc., a division of Cubic Corporation.
On January 24, 2013, the Company completed a transaction with Cubic to sell all the contracts, assets and rights to the NextBus division, including the shares of NextBus Inc., a wholly owned subsidiary of Webtech Wireless, for gross proceeds of $20.8 million USD, subject to a holdback of $2.1 million USD. The receipt of the holdback marks the completion of the disposition of the NextBus division to Cubic.
The transaction with Cubic included agreements under which Webtech Wireless provides ongoing hardware and application service provider services to NextBus. These arrangements remain in effect and the provision of hardware and services continues under these agreements.
As of today, including the receipt of the escrow funds from the NextBus transaction, Webtech Wireless' cash balance is approximately $24.6 million CAD.
About Webtech Wireless®
Webtech Wireless (TSX:WEW) is a leader in providing fleet management telematics, GPS and automatic vehicle location (AVL) solutions that improve efficiency, accountability and reduce costs. Our end-to-end solutions automate record keeping and regulatory compliance, reduce fuel burn and idling, mitigate risk, and keep drivers safe. Managers trust us to ensure people are accountable and vehicles are visible. Through the cloud, in the office, or straight to mobile devices, we deliver Fleet Intelligence Anywhere(TM). Our products are InterFleet®, for government winter maintenance, public works and waste management fleets; and Quadrant®, for commercial fleet operations and compliance (HOS, ELD). Please visit www.webtechwireless.com
All amounts in Canadian dollars (CAD$) unless otherwise noted. - The Toronto Stock Exchange does not accept responsibility for the adequacy or accuracy of this release. - Trademarks are the property of their owners.
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