Concerns raised over Trustev’s future prior to sale

Accounts show fears over company as losses doubled and net liabilites mounted

Pat Phelan told The Irish Times: “The going concern note is standard when you are loss making and funding the business.”

Pat Phelan told The Irish Times: “The going concern note is standard when you are loss making and funding the business.”

 

Directors of Cork-founded tech start-up Trustev expressed concern about the future viability of the firm just four months prior to it being sold last year.

Newly filed accounts show directors of the firm, founded by Pat Phelan and Chris Kennedy in early 2013, were worried about Trustev’s prospects after losses doubled and net liabilities soared.

Abridged accounts for Trustev Limited show it reported losses before tax of €3 million for the 12 months ending August 31st, 2015, up from €1.46 million a year earlier. It also had negative net assets of €4.29 million, as against €1.76 million in the preceding year.

In a note accompanying the financial statements, directors’ Stephen Fanning and Michael Forde noted the rise in losses and liabilities and said “this indicates the existence of circumstances which may cast doubt on the ability of the company to continue as a going concern.”

Trustev is a global provider of digital verification technology. The company verifies the identity of online shoppers by generating a digital fingerprint through various social media accounts.

It was acquired by the consumer credit-rating company TransUnion in December 2015, with the Chicago-based firm paying $21 million in cash up front and up to $23 million more if Trustev achieves specified targets through 2018.

Commenting on the accounts, Trustev co-founder Pat Phelan told The Irish Times: “The going concern note is standard when you are loss making and funding the business.”

In the company’s last accounts prior to its acquisition, Trustev said it had made progress with its research and development in a move which had led to a “significant improvement in sales.”

The company also noted that “significant investment “had been obtained from third parties in the form of equity and loan notes. “The directors are confident that the company has sufficient resources to fund continuous developments and to continue in operational existence for a period of at least twelve months,” the company said.

Trustev, which has assets amounting to €2.3 million and €947,489 in cash at hand at the end of August 2015, saw employee numbers more than double over the reporting period, from 8 to 18. Staff costs, including directors’ salaries, totalled €1.4 million, up from €678,502 a year earlier. Mr Phelan originally trained as a butcher and as a chef in his home city of Cork before founding Cubic Telecom and then Trustev.