a note of caution, page-20

My reading of the subtext of the business update today is that very little (or perhaps even no) additional revenue from China was booked during the Dec half.

If true, this would confirm the warning I gave in October that, in light of the cancellation of the Malaysia contract in June, NBS had 'brought forward' China receivables from FY10 in order to boost the result for FY09 and meet its FY09 profit forecast.

NBD probably did this at the time because NBS thought that Malaysia would come back on line again in FY10 and make up the shortfall created by bringing forward FY10 work from China into FY09.

My guess is that the cash that is dripping in is just the remainder of the China FY09 receivables; this cash is probably not related to any new work done in FY10.

It is possible that China work has started up again in this June half, however, my reading of recent TPID announcements is that the TPID/Saddington side of the China deal is in trouble. And if the Chinese authorities are having trouble with the TPID scanners, they will have little use for further NBS ID cards. So China maybe trying to sort out the scanner problem before giving NBS more ID cards to print. If this is the case, there may be very little (or no) China revenue booked in the June half also.

So, at the present time, it seems to me that both Malaysia and China are now effectively on hold and are not generating new revenue for NBS.

NBS keep telling the market that Malaysia is about to come back on line, but given the company's track record, I wouldn't hold my breath for a Malaysia announcement any time soon.

If both Malaysia and China stay on hold for more than another 2 or 3 months, then I see NBS posting a full year loss in the region of $25mill.

I place little faith in the Singapore patent; it is the US patent that counts. If the USPO rejects NBS's application, then there will be no further patents granted.

As always, NBS will provide short term trading opportunities, but due to poor quality management, and poor continuous disclosure, NBS remains a long term sell.

Cash backing for NBS is presently around 4.5 cents per share. Given the complete absence of management credibility, and uncertainty as to whether the company has any significant revenue generating contracts at present, could 5c represent fair value for NBS at the present time?