Subsequent events
Convertible loan
To secure its short to medium term cash requirements, AND entered into a convertible loan of € 1,150,000 on 4 February 2020. This convertible loan, provided by a group of investors, bears an interest of 9% p.a. (of which 3% in cash and 6% payment in kind (PIK)) and is secured by a.o. a pledge on the IP owned by AND as well as a pledge on the shares of AND Products BV. The loan has a duration of 2 years and is convertible during this period into ordinary AND shares at a conversion price of €1.85 per share.
Liquidation of AND Data India Pvt. Ltd.
In May 2018, AND management decided to stop the operating activities of its Indian subsidiary AND Data India Pvt. Ltd. No operating activities were performed since, nor does management have tangible plans to re-establish operating activities in India. Therefore, in March 2020, AND management decided to liquidate this entity legally. In accordance with applicable Indian legislation and procedures, such a liquidation process will require approximately 6 months to complete. At the end of this liquidation process, the cash that is currently “trapped” in AND Data India Pvt. Ltd. (2019: €293,000), will be repatriated to AND in the Netherlands (after deduction of local Indian costs related to the orderly liquidation of AND Data India PvT. Ltd.).
Replacement of auditor
On 5 March 2020, AND announced that in spite of extensive efforts, it had been unable to find a PIE/OOB-licensed auditor for the audit of its 2019 Consolidated Financial Statements. As announced previously in the mid-year trading update of 12 September 2019, the Company’s former auditor, Grant Thornton Accountants en Adviseurs B.V., chose to surrender its PIE/OOB-license in 2019. As a result, AND was forced to look at all (six) remaining PIE/OOB-licensed audit firms.
One of these six audit firms still is -as predecessor of Grant Thornton as auditor of AND- in its so-called “cooling off”-period, and as such not legally allowed to service AND as auditor. The other (five) audit firms all have decided not to offer their services to AND, primarily for (a combination of) reasons of limited staff capacity, commercial considerations and significance of the anticipated audit fee relative to the (limited) size of AND.
Unfortunately, AND therefore is forced to publish its 2019 Consolidated Financial Statements without an auditor’s opinion. AND regrets this outcome, and wants to stress that the considerations for aforementioned audit firms not to serve AND are outside the sphere of influence of the company, and find its origin in the strict application of the legislation for PIEs/OOBs, as well as in the apparent scarce resources with PIE/OOB-licensed audit firms. Furthermore, the company wishes to stress that it has been in transparent communication with AFM, Euronext and auditors’ association NBA throughout this process, starting June 2019. Meanwhile, AND continues to do its utmost to secure a PIE/OOB-licensed auditor for fiscal year 2020.
In the aspiration to provide reasonable assurance to its stakeholders, AND commissioned an independent valuator to conduct an assessment of the digital map database, This is the key asset on the balance sheet of AND (presented in the financial statements as intangible fixed asset). AND is aware that this independent valuation is not a substitute for an audit performed by a certified public auditor. However, the Management Board and Supervisory Board have decided to have this assessment carried out in the interest of the users of the 2019 consolidated financial statements.
The outcome of the independent valuation gave the Board no reasons to doubt the outcome of the impairment test and the results included in the 2019 annual accounts.
COVID-19 / global “Corona”-virus outbreak
At the moment of the report, we are experiencing the initial impact of lockdowns and retail stores closing in Europe and in North America. This will inevitably cause an economic slowdown in these regions, which are our key markets. Management cannot currently quantify the impact of this expected economic slowdown. If global lockdowns continue, the impact will be more significant. AND is currently fully operational, with employees working remotely. This is facilitated by a solid IT infrastructure and proper use of remote working and collaboration technology. A good share of our customers either belong to large industrial groups or governmental bodies and management expects them to honour their commercial commitments. The bigger impact will be on AND’s growth strategy as management is focusing on sales and marketing campaigns to attract new customers and gain market share. Those targeted companies that are either closed or dealing with remote working are not expected to take decisions quickly. This may delay our growth expectations.