According to its Annual Report filed with the SEC for fiscal year 2013: "As disclosed in our Quarterly Report on Form 10-Q filed for our fiscal quarter ended January 31, 2013, certain employees of non-U.S. VeriFone subsidiaries provided technical support services to a third-party distributor based in Dubai, U.A.E., with reason to know that the services would assist the distributor in reselling certain VeriFone point of sale terminals out of its inventory to two Iranian entities, Bank Melli and Bank Mellat. Both of these banks are identified in Section 13(r)(1)(D) as entities with which transactions and dealings are subject to disclosure. These services related to sales to the Dubai-based third-party distributor from two non-U.S. VeriFone subsidiaries in the prior fiscal year, and net revenues from these sales were recognized in the prior fiscal year. No sales were made to this distributor during the current reporting period. This third-party distributor is not listed on any U.S. sanctions lists and is not, to our knowledge, an Iranian government-owned entity or otherwise acting on behalf of the Government of Iran. These activities by employees of our non-U.S. subsidiaries were conducted in contravention of VeriFone's export control and sanctions policies, which prohibit VeriFone and its affiliates from conducting any activities, transactions or dealings with Iran or Iranian counterparties.
The non-U.S. VeriFone subsidiaries did not charge the third-party distributor any fees for the technical support services provided by its employees. Accordingly, we recognized no net revenues or profit from this activity. VeriFone does not intend to continue this activity or to knowingly permit any activities with Iran or Iranian counterparties. In connection with our discovery of the above-described activities, we have terminated all business activities with this distributor because such activities constitute breaches of our contractual terms with such distributor (although one of the non-U.S. VeriFone subsidiaries has engaged and may continue to engage in efforts to collect and receive amounts due from the distributor with respect to the fiscal year 2012 sales). We have also adopted a number of additional compliance measures and controls designed to prevent such activity from recurring.
Separately, as disclosed in our Quarterly Report on Form 10-Q filed for our fiscal quarter ended January 31, 2013, we identified six POS terminals that were being leased to the Iranian embassy in Sweden by a Swedish subsidiary of Point, and two POS terminals that were being leased to the Iranian Embassy in Norway by Point's Norwegian subsidiary. We acquired Point, a former distributor of our system solutions, in December 2011. All of these leases had been in place prior to VeriFone's acquisition of Point. Of these leased terminals, one terminal is a VeriFone-branded terminal and is of U.S. origin. This VeriFone terminal was leased by the Point Swedish subsidiary in 2010 in apparent contravention of the distribution agreement we had in place with Point at the time which, among other provisions, prohibited distribution of our terminals in contravention of applicable U.S. export control laws. As part of these leases these Point subsidiaries also provided ancillary software, customer support services and supplies, such as paper rolls, for the leased terminals. Between November 1, 2012 and January 31, 2013, we recognized approximately $1,730 in total net revenues from these activities. We are unable to calculate net profits allocable to individual leases, but the net profits related to these leases would be at an amount less than the net revenues. These two Point subsidiaries terminated their respective lease agreements with the Iranian embassies and, as a result, no longer provide any products or services to the Iranian embassies in Sweden and Norway, nor do we intend to do so in the future.
We have made voluntary disclosure of the foregoing matters to OFAC and intend to cooperate fully with OFAC.
We have also identified that Wynid Technologies S.A. (“Wynid”), a French subsidiary that we acquired as part of our acquisition of Hypercom in August 2011, had leased one POS terminal to the Paris sales office of Iran Air, an Iranian airline with which transactions and dealings are subject to disclosure under Section 13(r)(1)(D). The lease to Iran Air commenced in October 2008, prior to our acquisition of Hypercom, and terminated without renewal on December 2, 2012. The leased terminal is an Artema-branded terminal, a non-U.S. origin product that Hypercom had assumed through its 2008 acquisition of the Europe-based e-Transactions business of Thales SA, a French company. The terminal leased to the Iran Air sales office in Paris was part of Wynid’s arrangement with one of its bank customers to lease terminals to the bank’s various end merchant locations. The lease arrangements, including order management, onboarding of lessees, terminal shipments, and customer invoicing, were administered by a third-party that Wynid had subcontracted to manage the leasing of POS devices to the bank’s end customers. The subcontracted third-party also handled all maintenance, repair, helpdesk, and other services for the bank’s end customers. Under this arrangement, Wynid received monthly rental fees for the leased terminals and paid management fees to the subcontractor for administering the leases and servicing the rental estate. During the fiscal quarter ended January 31, 2013, Wynid generated total revenues from this lease of approximately 22 euros. We are unable to calculate net profits allocable to this individual lease, but the costs associated with the lease include approximately 7 euros of fees paid to the subcontractor for the fiscal quarter ended January 31, 2013. The terminal and related documentation were returned at the termination of the lease in December 2012."