director buying- be careful..., page-8

Hi Acman,

I don't think anyone on this thread is in a position claim that any director has broken any law. For all we know, all of NBS' directors are outstanding corporate citizens. However, it is legitimate for posters to point out events or ASX releases that look 'dodgy' (even if appearances can be deceiving).

Regarding NBS directors selling on market (the initial topic of this thread), one extremely 'dodgy' episode concerns the old ETC (when Dykes was CEO). On July 12, 2005, Dykes put out a very positive-sounding announcement saying that ETC had signed a re-seller agreement that allowed the company to move into "a lucrative new market" in the Middle East. Following this announcement, the share price rose from 3.1c (on July 8) to 4.2c at the close of trade on July 12. The very next day, (i.e., following the sharp price spike), Dykes started to sell his stock, eventually dumping his entire holding between July 13-19, 2005 (see change of directors interest notice dated July 20, 2005). ETC stock closed sharply lower following Dykes' selling, and you have to feel for the poor souls who bought into the rally on July 12 that was created by the 'good news'. But things got much worse for shareholders. Dykes continued to release more 'good news' announcements to the market through August 2005 (as other directors sold). By September 20, 2005, the company was in receivership. I'm not speculating here. You can see hard facts backing all this up simply by going back through the old ASX releases as well as looking at a chart from July 2005.

Again, I'm saying that Dykes has done anything illegal. I am saying that his actions look dodgy to an outsider (again, keeping in mind that appearances can be deceiving).

Given this history, I think it is legitimate for shareholders to speculate what Dykes might do if he came to believe that NBS was again facing receivership. Would he release some 'good news' and then dump on market? Would other directors also dump??

While I expect NBS to shortly update the market with some 'great news' on the Malaysia and China contracts (promising $$millions), and sending the share price up sharply, I also think there is an even chance that over the long term, NBS will receive less cash from these contracts than they have paid out (and will pay out) in 'payments to suppliers', 'bond payments', 'acquisitions', etc. And if significant cash (i.e., $30mill+) from China and Malaysia is not forthcoming over the next 12 months, and assuming that the market is unlikely to be fooled into further capital raisings, then I think NBS faces a risk of receivership in around 18 months.

The full year result should make interesting reading.