ZipTel shares crash after founder resigns and ‘landmark’ deal retracted
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Junior telco ZipTel has sensationally retracted a “landmark” deal it announced last month and parted ways with controversial founder Keaton Wallace.
In a statement issued on Friday afternoon, ZipTel said it “retracts, without any admission of liability, its announcement dated 9 August 2017 entitled ‘ZipTel signs landmark Revenue Share Agreement for Zipt IP’.”
The company had also “accepted the resignation of Mr Keaton Wallace effective immediately”.
ZipTel’s shares plummeted by 45 per cent minutes after the stock resumed trading following the announcement.
The company was queried by the ASX over the August 9 announcement, which outlined a deal to license its Zipt communications software to an India-focused company for use in a smart phone messaging service called Convo.
The 10-year deal was to have earned ZipTel 10 to 20 per cent of royalties from the Convo app revenue.
At the time, ZipTel said the total Convo app revenue was expected to rise from £1.1 million in 2018 to £50.6 million in 2022, raising as much as £13.7 million ($22.67 million) in royalties for ZipTel.
The announcement saw ZipTel’s share price skyrocket.
Today ZipTel told investors they “should not be influenced” by the original announcement.
In response to ASX queries, ZipTel later said Mr Wallace had breached the company’s director’s code of conduct over a trade disclosed on August 16 in which he sold $31,400 worth of shares.
“Whilst Mr Wallace was not in receipt of any material information that had not been disclosed to the market, the trades were in breach of the company’s share trading policy as the trade was made during a closed period and was not approved by the chairman or the board,” it said.
Following a review, ZipTel said it had now adopted “a complete suite of new corporate governance policies”.
Stockhead has contacted ZipTel for comment.