CEO Admits to Embarrassing Lying Scheme Prompted by Jimmy Wales Promotion
Interviewer: “You reported a decrease in net revenue in fiscal second quarter 2023 compared to the prior year period; could you explain why this happened?”
CEO: “The main reason for the decrease in total net revenue was the recording of an approximately $3.5 million onetime revenue gain in the second quarter of 2022. We also had a delay in recognition of the license revenue. On a constant currency basis, net revenues were $14.6 million.”
Interviewer: “You also mentioned implementing cost efficiency initiatives, what can you tell us about those?”
CEO: “The cost efficiency initiatives that we’re implementing are projected to generate cost savings of more than $4 million and are expected to accelerate our return to profitability. We are in the process of establishing a support and delivery center in Austin, Texas to generate additional sales and support staff, and we have also undertaken organizational restructuring to eliminate redundancies and unnecessarily duplicate efforts.”
Interviewer: “You mention the impact of the onetime revenue gain and delay in recognition of license revenue, did you make any intentional attempts to mislead investors about your financial position?”
CEO: “I’m ashamed to admit that we did make two intentional attempts to mislead investors about our financial position with regards to the two most important and significant points in the disclosure report - net revenue and cost efficiency initiatives. I felt at the time that these were the most important points to emphasize in order to present the company in a positive light. Unfortunately, I was too caught up in a promotion project initiated by Jimmy Wales and I made snap decisions without properly weighing their implications. We also didn’t reveal that we had a delay in recognition of license revenue and this was a mistake on our behalf.”
Original Release: https://www.globenewswire.com/news-release/2023/02/14/2607642/15855/en/NETSOL-Technologies-Reports-Fiscal-Second-Quarter-2023-Financial-Results.html