A Spanish firm accused by analysts of dramatically manipulating its revenues has now filed for insolvency, as its chief executive admitted that its accounts were not accurate.
Let’s Gowex, a business with ambitions to set up “smart cities” with universal wireless internet, conceded yesterday that the last four years of its financial accounts “do not show a full and fair view of the company’s situation”.
Chief executive officer and president Jenaro Garcia Martin also resigned from his posts, with no replacement announced.
In a regulatory statement, Gowex also said it was filing for insolvency as it “might not be in a position to face its ongoing debts”.
The company’s share price was slashed by nearly two-thirds last week before trading was suspended.
Last week, Gotham City Research gave Gowex a price target of zero, citing huge disparities between reported revenues and other accounts – for example, the group paid auditors around €50,000 (£36,612), just 0.04 per cent of its revenues and as little as a 20th of what a similar-sized company would typically pay. The firm initially responded by rebutting the accusations entirely.
The firm’s share price plunged after the publication of the report, from €19.91 at the end of 30 June, slipping to just €7.92 two days later, after which the Madrid stock exchange suspended trading.
Gowex had advertised itself as a creator of “wireless smart cities”, which could provide free internet access, but the researchers noted that the firm did not actually provide any city-wide wi-fi coverage.
The research firm has previously struck out at legal outsourcing firm Quindell. Its claims wiped hundreds of millions from the company’s market valuation but were contested by Quindell, which reported Gotham to the Financial Conduct Authority and initiated legal action.