Fraud Costs Push IAM to Debt Raise Amid Cash Strain and Legal Uncertainty
Income Asset Management Group reveals a challenging Q2 FY2026 marked by a significant fraud event, resulting in losses and a strategic debt raise to shore up liquidity. Despite setbacks, client relationships remain intact as the group navigates legal and regulatory hurdles.
- Q2 operating revenue of $3.8 million excluding $1 million pending regulatory approval
- Negative EBITDA of $0.9 million excluding $1.5 million in fraud-related costs
- Total fraud-related losses and costs exceed $3.5 million
- Raised $2 million in debt to support operations amid cash outflows
- Cash and liquid assets total $4.1 million, providing 3.8 quarters of funding
A Quarter Marked by Fraud and Financial Strain
Income Asset Management Group Limited (IAM) has disclosed a turbulent second quarter for fiscal year 2026, grappling with the financial repercussions of a fraud incident first revealed in September 2025. The group reported operating revenue of $3.8 million for the quarter, notably excluding an additional $1 million in contracted revenue awaiting regulatory approval, expected to settle by the end of Q3 FY26.
Despite this revenue, IAM’s unaudited earnings before interest, tax, depreciation, and amortisation (EBITDA) stood at a negative $0.9 million when excluding extraordinary fraud-related losses and costs amounting to $1.5 million. The total direct losses and associated costs from the fraud event have now been estimated to exceed $3.5 million, underscoring the material impact on the group’s financial health.
Liquidity Management and Debt Raising
In response to the cash pressures, IAM raised $2 million in debt during December 2025, a move that followed a cash drain of $1.7 million prior to the debt injection. At quarter-end, the group held $3.7 million in cash plus $0.4 million in liquid assets, amounting to $4.1 million in readily available funds. This liquidity position translates to approximately 3.8 quarters of funding available, factoring in current cash flows and unused financing facilities.
The company’s cash outflows for the quarter totalled $7.2 million, including $5.8 million in normalised operating and finance costs and $1.4 million directly related to the fraud investigation and associated expenses. IAM continues to manage these costs carefully while pursuing legal proceedings and insurance claims to mitigate the financial damage.
Client Confidence and Operational Stability
Despite the internal challenges, IAM has maintained close communication with its clients throughout the fraud investigation. The group reports no client losses or complaints arising from the incident, reflecting a proactive approach to client management and operational continuity.
Looking ahead, IAM is preparing for potential restatements in its half-year interim report as it finalises the accounting impact of the fraud. The group’s strategy focuses on stabilising expenses, securing future receipts, and leveraging its debt facilities to sustain operations while navigating regulatory approvals and legal outcomes.
IAM’s leadership, including CEO Jon Lechte, remains committed to transparency and prudent financial management as the company works through this difficult period.
Bottom Line?
IAM’s next chapters hinge on legal outcomes and regulatory approvals that will test its resilience and liquidity management.
Questions in the middle?
- What is the timeline and likelihood of recovering losses through insurance claims?
- How will the pending $1 million revenue contract impact future quarters once regulatory approval is secured?
- What operational changes will IAM implement to prevent future fraud and reassure investors?
