The chairman of Zylotech (ASX:ZYL) has moved to assure shareholders they are a top priority amid a business restructure strategy and the departure of the company's CEO for breaching terms of employment.
Zylotech chairman, Vice-Admiral Don Chalmers, told shareholders in a letter submitted to the ASX that while the company’s board had been pre-occupied with other matters, including downsizing, it continued to work “diligently in the interest of all shareholders”.
He said the IP-security vendor was negotiating a distribution agreement that would enable entry into the Indian market, and had signed an exclusive three-year distribution agreement with major supplier, Vivotek, to secure a supply chain for A/NZ “on better commercial terms”.
The company will also participate in a formal launch later this month of its Smart G IP security surveillance solution for critical infrastructure in conjunction with recently appointed distributor, Avnet Technology Solutions.
Zylotech had also completed a first draft of a strategic business plan, and implemented cost saving measures in the order of $1 million per annum as a result of the business restructure, Chalmers said.
As part of the downsizing effort, the role of CFO was cut and former CFO, Steven McKay, has been retained to serve as acting CEO while the company searches for a new leader. McKay will remain a director of the company.
The company’s former CEO, Nicholas Sikiotis, was terminated in December after irregularities were identified in transactions between Zylotech and a related party of Sikiotis.
In a letter to shareholders submitted to the ASX on January 22, acting CEO, McKay, said the irregularities had occurred in transactions between Zylotech and WNA Systems, a company in which he said Sikiotis’ wife is a 50 per cent shareholder.
McKay stated that during Sikiotis’ three calendar years as CEO, Zylotech saw before tax losses of $2.3m in 2006, $2.3m in 2007 and $2.8m in 2008. A $1.4m loss over the six months from July 1, 2008 to 31 December, 2008 is yet to be reviewed by auditors.
In the same January 22 letter, Sikiotis urged shareholders to vote against a resolution to remove him as a director of Zylotech. He denied the transactions with WNA were not at commercial rates, insisting that other directors and auditors had “signed off” on the transactions in question.
On January 29, Chalmers wrote to the ASX stating Sikiotis had resigned from the board of the company, effective February 1, and that the resolution to remove him was no longer required.