From...

From David:

http://www.smh.com.au/business/wrong-numbers-for-telco-tyro-tpg-20100921-15ld4.html

Yawn. Legal action overdue. The cogs must be turning very slowly at Orbis (I am assuming it is Orbis considering the legal action). I suspect it will be difficult to recover any monies lost as any capital raised by the company has been shipped to parties like CITP.

NOT SO SECURE

Legal action could be around the corner at Nexbis, the technology company that has raised more than $50 million from Australian institutions since 2008 in an effort to commercialise its vaunted security code technology.

At least one institutional investor - wounded by a share price collapse from 55? to 8? since the middle of last year - is wondering whether there's anyone with deep pockets who could be held to account.

Receiving close examination is Nexbis's less than transparent disclosure of a November 2008 technology licence agreement to supply security products to a big gas tank identification project in China.

Nexbis said the contract was with the Chinese government and worth $200 million, but it emerged months later that the counterparty was with the Hong Kong subsidiary of a US company with a market capitalisation of $2 million.

Also up for scrutiny will be the audit opinion when PKF signs off on Nexbis's 2010 accounts by the end of the month. During the course of the year the Chinese contract brought in cash inflows of about $37 million, but with Nexbis paying out $34.5 million in May for a (poorly explained) restructure of the gas tank deal, the cash position ended the year pretty close to neutral.

In order to sign off on both the gas tank revenue and the intangible asset arising from the contract restructure, PKF will need to be satisfied that the restructure payment was a separate, distinct transaction with no relationship to the revenue already booked.

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