DGAP-News: Voltabox AG: Publication in Accordance With Section 109 (2)(1) of the German Securities Trading Act (WpHG)

Voltabox AG: Publication in Accordance With Section 109 (2)(1) of the German Securities Trading Act (WpHG)

Delbrück, Germany, May 6, 2019 - The German Financial Reporting Enforcement Panel (FREP) has determined that the consolidated financial statements as of the balance sheet date December 31, 2017 of Voltabox AG, Delbrück, are erroneous:

1. Consolidated income is reported EUR 9.9 million too high since the claim of Voltabox AG against the parent company paragon GmbH & Co. KGaA to the offsetting of the loss from the conclusion of a profit transfer agreement in the annual financial statements in accordance with German commercial law as of December 31, 2017, was recognized with effect on profit or loss. This violates IAS 1.109 sentence 2, which stipulates that transactions with owners acting in their capacity as owners are to be recognized with no effect on profit or loss.

2. Consolidated income is reported too high by an additional approximately EUR 1.6 million since transaction costs in connection with the stock market listing of already issued shares of the company in October 2017 were recognized directly in equity. Of all transaction costs totaling EUR 8.8 million, an estimated EUR 2.5 million relates both to the issuance of 5.825 million new shares as well as to the initial stock market listing of 10.0 million already issued shares. These not directly attributable costs were not allocated to the individual transactions on the basis of a rational allocation. This violates IAS 32.37 sentence 3 in conjunction with IAS 32.38 sentence 2.

3. Consolidated income is reported too high by an additional EUR 1.8 million since losses from the currency translation of loans denominated in foreign currency were not recognized with effect on profit or loss but in other comprehensive income. This violates IAS 21.28.

4. Consolidated income is reported too high by at least another EUR 0.8 million since deferred tax assets of the Voltabox of Texas Inc. subsidiary as of December 31, 2017, were increased with effect on profit or loss to EUR 2.9 million. The recognition of net deferred tax assets of EUR 2.9 million for the deferred taxes of the Voltabox of Texas Inc. subsidiary violates IAS 12.35 since this company had a history of tax losses and there were no conclusive substantive indications of the usability of the tax losses.

5. In the notes to the consolidated financial statements, it is disclosed that two companies have exceeded the threshold of a 10 % share of revenue. Actually, only one company accounts for more than 10 % of total revenue. For this company, the amount of revenue was not disclosed. The EUR 18.3 million of revenue with this company accounted for 67 % of Group sales in the 2017 fiscal year. This violates IFRS 8.34, which stipulates that for companies with a share of revenue greater than 10 %, the respective amount of the generated revenue is to be disclosed.

6. In calculating the average number of outstanding shares for the determination of earnings per share, the number of outstanding shares was recognized as 10,000,000 for the period from January to September 2017, although the number of outstanding shares first increased in September 2017 to 10,000,000 through the contribution in kind of a loan receivable of 100,000. This violates IAS 33.19 in conjunction with IAS 33.21(c), which stipulates that shares issued as a result of the conversion of a debt instrument into ordinary shares can be included in the calculation only after the date on which interest no longer accrues.

7. In the notes to the consolidated financial statements it is disclosed that paragon GmbH & Co. KGaA is the parent company of Voltabox AG, but no indication is made that Mr. Klaus Dieter Frers is in a position to control the parent company. This violates IAS 24.13 (2), which stipulates that not only the name of the parent company but also the name of the "ultimate controlling party" is to be disclosed.

8. Based on the disclosures in the consolidated financial statements, the change in financial liabilities - cash changes according to the cash flow statement and non-cash changes from the contribution in kind of loans - cannot be evaluated. This violates IAS 7.44A.

9. In the notes to the consolidated financial statements, reference is made only to the fact that a customer was granted extended payment terms. This disclosure does not make it clear that this has resulted in a material change in the default risk for trade receivables and will result in a material negative effect on operating cash flows in the following year. This violates IFRS 7.33(c).