SINGAPORE - LionGold Corp said on Thursday night (June 27) that its independent auditor Baker Tilly TFW has issued a disclaimer of opinion on the group's financial statements for the year ended March 31, 2019.
In response to the disclaimer, the group's board said it believes LionGold Corp would be able to raise the necessary funds and working capital for the next 12 months, and pay its debts when due.
This is through an $3.5 million unsecured interest-free loan from group chief executive Raymond Tan Soo Khoon and a subscription of shares by Yaoo Capital.
According to a debt restructuring agreement entered in June 29, 2017, Yaoo Capital was to acquire an approximate $21.6 million debt owed to creditor Premier Equity Fund Sub Fund D and manager Value Capital Asset Management.
The amount owed to Yaoo Capital will be paid in the subscription of 21.81 billion new LionGold shares for 0.1 cent apiece, amounting to $21.81 million. The move will see the company's issued and paid up capital more than triple from 8.70 billion shares as at Dec 28, 2018, to 30.51 billion shares.
The group said that it would convene a special general meeting to seek shareholder approval on the issuing of the subscription shares; and the whitewash waiver over the requirement for the subscriber to make a mandatory general offer for shares not already owned.
In its independent auditor's report, Baker Tilly TFW said it was not expressing an opinion on the company's financial statements. Due to the significance of the matters described in its disclaimer, it has not been able to obtain "sufficient appropriate audit evidence" to provide an audit opinion on LionGold's financial statements.
LionGold Corp had posted a total comprehensive loss of $2.5 million for the financial year ended March 31, 2019. As at the same date, the group and company's current liabilities exceeded its current assets by $580,000 and $43.6 million respectively. In addition, the company has a restructured loan due in June 2020 of $15.8 million.
Moreover, the company and one of its subsidiaries were served notices by the Commercial Affairs Department (CAD) of the Singapore Police Force in April 2014 of an investigation.
Because the CAD has not provided details of its investigation, the auditor said it is unable to determine whether the investigation would have an impact on the group and company's ongoing business operations, as well as the significance of any adjustments to the financial statements arising from the investigation.
"These factors indicate the existence of material uncertainties which may cast significant doubt about the ability of the group and the company to continue as going concerns," Baker Tilly TFW added.
In a separate announcement on Thursday night, the group disclosed material variance between its unaudited financial statements for fiscal 2019 and its published financial statements.
Under the group's balance sheet, the difference in investments in subsidiaries and other reserves was due to a $3.3 million write-back of allowance in the investment in Castlemaine Goldfields.
This was after the valuation report of the property, plant and equipment was finalised and thus the estimated recoverable amount of the investment was found.
Another variance addressed was made due to the repayment of finance lease liabilities previously included in the purchase of property, plant and equipment section, LionGold said.
There was a variance of $32,000 under the changes in operating assets and liabilities section of the consolidated statement of cash flows, from $864,000 in the preliminary results to $896,000 in the published financial statements.
Under purchase of property, plant and equipment, there was a variance of $569,000 from $4.5 million in the preliminary results, to $4.0 million in the published financial statements.
For the repayment of finance lease liabilities, there was a variance of $537,000, from $130,000 in the preliminary results, to $667,000 in the published financial statements.
The Catalist-lised group was one of the firms involved in the penny stock crash of 2013.