Endace says accountants failed to forward company funds to US tax dept

Endace is claiming its former US accounting firm failed to forward US$370,000 of Endace funds to the US tax authorities, despite being instructed to do so.

Despite anticipating full repayment, Endace has made a provision in its results for the 2011 financial year for the sum.

The New Zealand-born network monitoring vendor has issued a notice to the London AIM Stock Exchange, on which it is listed, announcing that it made a $US2.9 million profit for the financial year ended March 31. Revenue for the year was US$38.4 million.

The statement notes: “The profit before tax, adjusted for share options, of US$2.9 million is stated after providing for US$370,000 of payments made to Endace’s prior US-based Accounting and Tax consultants and intended for forwarding to the US tax authorities.

“These payments were not forwarded and Endace is seeking full recovery.

“An agreement for repayment of these funds is in the process of being finalised, but at this stage Endace considers a full provision appropriate.”

The overall revenue and profit for the year were “materially above expectations”, Endace notes.

Revenues from Card and System sales increased by approximately 28 percent from the 2010 year to 2011, and recurring revenues increased by approximately 53 percent, the company says.

Endace was founded at Waikato University 15 years ago, arising out of a research project. It started selling DAG I/O cards in 2001, beginning its life as a commercial entity, and listed on the AIM Exchange in 2005.

In 2007 it launched the EndaceProbe and EndaceSensor network monitoring products.

On its website, it says three of the top five US telecommunications carriers, plus intelligence agencies in Europe and the US, are among its clients.