# NBS - Nexbis Limted



## Kuri (19 August 2009)

Who would have thought a name change could have this kind of effect on a stock. Since changing from ETC - Entertainment Media and Telecoms the share price has rise nearly 25% without any announcement on the ASX. Any other holders out there and anyone have any idea for the new found energy in the SP? I am finally in the black after a year and looking at making a bigger profit now.

Kuri


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## Kipp (10 September 2009)

I only discovered Nexbis recently in the Fin Review (1st Sept I think).  And based on their performance in FY09, I think they could be an awesome opportunity.  EPS was 11c, so currently trading at 4x earnings, debt free, and a 65% profit margin (they are exempt from income tax in Malaysia).

& More positive coverage from the Australian



> "Nexbis's NexCode suite allows immigration authorities to verify documents via a mobile camera phone. Nexbis won a contract with Malaysia's immigration department to keep tabs on foreign workers, worth $60-80m annually.
> 
> Nexbis also has procured a $300m, five-year contract to keep track of LPG cylinders in China. Widely used in cooking, the bottles have a tendency to explode, with fatal results."




Therefore, I would be pretty confident of further increase in NPAT in coming years, as total revenue was only ~$65M.

However, I do not really know the history of the company so well (name change etc) and their annual report is really pretty watery when it comes to details like their current/future projects, key shareholders etc (all of which are standard on any other listed company a.r.)  And is there some dirty news surrounding the company or it's management that I am blissfully unaware of?

Any thought's would be appreciated.
[Disc: I hold NBS]


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## lizard (11 September 2009)

I'd be cautious of this one.  Not yet clear what the ongoing margins are on these contracts and how the business model can support 80% margins.  I'd also have questions about the lack of transparency in relation to other parties involved in some transactions.

The company has become increasingly unclear in its disclosure of late.  This is generally a sign of a company that is aware clarity of disclosure might be unfavourable.  Perhaps raise even more awkward questions than those they are already slow or reluctant to answer...


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## kenny (11 September 2009)

Yesterday's SMH had some unflattering news about Peter Dykes. I agree about the concern with lack of transparency in partners and earnings certainty. The management did make a comment recently about how their "naive" disclosures in the past may have cost them contracts eg. Driver's licences work. Check out recent announcements.

Cheers,

Kenny



> *Falling down on the town*
> 
> The chief beancounter of the listed IT security concern Nexbis Limited, Peter Dykes, had more than a hangover to deal with following a big night at the Cross.
> 
> ...


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## Kipp (12 September 2009)

Thanks kenny.
Yeah, I saw that article too... ouch!  However, it was back in April though... so hopefully he will have reformed his ways since then (on a Wed night too... )

Think I may trim down my holdings a bit, until I am convinced they are the real thing.


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## craigj (1 October 2009)

anyone give an explanation why this got smashed today down over 20%

it actually climbed a cent on opening then collapsed in first hour


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## Ozymandias (12 October 2009)

No explanations forthcoming...

NBS does seem super cheap now, especially considering the revenue potential of the projects it's already secured. Is anyone else considering buying in as a comeback bid? Why / why not?

Personally their lack of transparency and the apparently unexplained plunges in share price worry me somewhat, despite the tempting price.

Do any more experienced investors have thoughts on NBS at it's current price?


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## Kuri (12 October 2009)

Ozymandias said:


> No explanations forthcoming...
> 
> NBS does seem super cheap now, especially considering the revenue potential of the projects it's already secured. Is anyone else considering buying in as a comeback bid? Why / why not?
> 
> ...




It is very tempting to dollar cost average my price down at present but there are too many questions unanswered at the moment to risk more money. I hope that I am wrong. The last lot of figures did not match with their announcements concerning the Malaysian and Chinese contracts which look like an "accounting" trick. I am holding until the next quarter results are released to see if the Malaysian revenues are sorted out then. If it turns out to be a house of cards I could lose the lot.

Kuri


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## Ozymandias (13 October 2009)

Kuri said:


> The last lot of figures did not match with their announcements concerning the Malaysian and Chinese contracts which look like an "accounting" trick. I am holding until the next quarter results are released to see if the Malaysian revenues are sorted out then. If it turns out to be a house of cards I could lose the lot.
> Kuri




I've only been able to find announcements that give the total value of contracts - did they release something more specific that I've missed?

They've claimed delays in printing etc. on the Malaysian contract for some time now - but even without this contract their profits would be healthy. Though they would be relying very heavily on the Chinese contract for their revenue.

Something else of potential concern - p39 of the annual report lists 'Trade and Other Recievables' of $42M with no further explantion. I would like to know who owes them and why they haven't paid.

I'm not too familiar with strict accounting rules - am I right to say that this $42M _cannot _be included as part of their revenue for 08/09?


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## Ozymandias (13 October 2009)

Ozymandias said:


> I'm not too familiar with strict accounting rules - am I right to say that this $42M _cannot _be included as part of their revenue for 08/09?




Ok a quick check of the Cash Flow Statement Reconciliation - p65 answered that for me - they can and they have. That said, their cash flow was still >$5M positive. Also, it seems very unlikely to me that the central Chinese goverment would default...


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## Kuri (13 October 2009)

Ozymandias said:


> Ok a quick check of the Cash Flow Statement Reconciliation - p65 answered that for me - they can and they have. That said, their cash flow was still >$5M positive. Also, it seems very unlikely to me that the central Chinese goverment would default...




If you look at the note No. 5 it doesn't mention the $47m but it says that 
$3.7m is late but not impaired. For a company that has $9m in cash that is poor revenue collecting. 

In regards to the massive revenue if you look at note 2: $18.5m of the 65.5m revenue is from consulting (over 28%). All the presentations have been about the signed deals with the Chinese and Malaysian governments, not the conuslting side of the business. This leads me to believe they are not being executed as stated.

You mentioned the accountanting standards. I am no expert but one thing I look at is cash flow as oppsoed to revenue. You can't eat a profit. The revenue has been $65.5m but the cash flow receipts from customers has only been $20.8m. In my simple pessimism I don't know if they have actually suppplied all the services they have booked as revenue. It is easy to seal a deal and class it as revenue even though you have not received the money in the bank. You give the same set of books to 10 accoutnants you will gte 10 diferent reports. To me the reports leave many unanswered questions but I am happy to hear other views. 

I honestly believe this share won't hang around at this price for long. It will shoot up or tank. I hope it shoots up and the cash flow receipts start showing on the statements.

Any other thoughts?

Kuri


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## suhm (13 October 2009)

on an older announcement they said they were gonna recieve 30rm per card on the malaysian deal, the market seems to think that there is a very real possibility they won't get the cash as there is a very high amount of recievables outstanding.

If that were the case however I don't see why management would have bought shares on market twice, the second time being a co-ordinated buy after an asx price query. It won't be very pretty for me if im wrong though.


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## Kuri (13 October 2009)

That is the sort of mixed messages that are hurting this stock. The preliminary results showed $47m of revenue which finished up at $3.3m. Nearly the overdue amount in the receivables. They received $43.6m from the China LPG deal which was signed well after the Malaysian contract. Now the director spends $100,000 to buy more shares on market. 

As I said I am a holder and wish I was as brave as Peter Dykes to take advantage of this price and average my cost a bit better. 

Anybody buying and taking a punt?

Kuri


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## ROE (14 October 2009)

I have a look at this stock a while ago.. It was a puzzle..I couldnt figure out what
how they make the money ...lot of annoucement dont see it clearly how they make money 
and that bring me to another company called Firepower I look into many years ago ..

Lot of Photos taken with Minister and Head of state of some exotic countries
lot of contract announcement  show me the money that is the puzzle..

http://www.watoday.com.au/national/asic-let-firepower-warning-slide-20080721-3iec.html

Anyway I'm not suggesting this company going that way but for me I stay clear stuff that arent simple to understand


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## Ozymandias (14 October 2009)

I'll be giving this one punt shortly, since I'm selling my current speculative stock. Reasons why:


With the PE where it is now, earnings could be much lower than claimed and NBS would still be greatly undervalued
The future value of the contracts, if true and correct, are enough to sustain growth of NBS for a long long time
Buy ins from company insiders reflect their confidence in the contracts
With the cash they have available, late payments should not pose a big risk
Since they have no significant debt, the consequences of cashflow problems will be less severe

To my mind the major risk is that the company is exaggerating the certainty of the contracts - and as mentioned before, the recent buy ins from insiders seem to contradict this - but it's still a gamble.


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## melbournedee (15 October 2009)

I recently sold my Nexbis shares but still watching to see if this thing turns around.

For the first time, I had a look at their web site and I wasn't impressed. It is mainly filled with pages of "corporate speak" and there aren't even any contact phone numbers, e-mails or a bricks and mortar address.

Until that $42million receivable is collected, I'll stay on the sidelines. Looks like about 9 directors and key managers being paid around $3.75 million including guaranteed "bonus" payments before any significant cash flow has been generated.

Hope that this turns out to be a winner, but less confident as time passes with no update from management.


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## jayinoz (22 October 2009)

melbournedee said:


> I recently sold my Nexbis shares but still watching to see if this thing turns around.
> 
> For the first time, I had a look at their web site and I wasn't impressed. It is mainly filled with pages of "corporate speak" and there aren't even any contact phone numbers, e-mails or a bricks and mortar address.
> 
> ...




The 42mil has been received, apart from 3.7mil as updated in last fin report listed on their website www.nexbis.com.au . Peter Dykes can be contacted at their Sydney Office. However they do not have a direct Investor Relations person and the Directors do not wish to use their time on small investors.

I think that Peter Dykes as financial Controller\CO and another senior Director purchasing large 'On market' stakes in the company speaks volumes for their confidence in the future of the company. They have exciseable targets for Directors in 2010 between 75c to $1.50. A huge increase on the current price of 34c.

At a PE of less than 3 times current profit on current contracts it looks like a bargain. Naturally i agree that the company NEEDS a dedicated Investment Relations Officer and their mindset is currently to focus on sales, as opposed to investors.

They will pay a dividend of half their NAT from next year. Their revenues have increased 4-5 times from 2008 to 09. Due to primarily their Nexcode security solution for governments. In particular for Malay and Chinese governments. Nexcode being their primary revenue earner. Without the Nexcode solution (Government security, document ID, etc) and has just secured the sales with Malay and China. Yet their investment in the Nexcode solutions looks to have paid off bigtime. As this technology has already paid for itself 2 fold with what looks like a lot more opportunity for sales in the future.

In terms of bricks and mortar business you may drop into L40, 100 Miller St, Nth Sydney to view local operations. As an investor it looks to be a very undervalued stock. 

I hope they can be more transparent through an Investor Relations Officer in the future. Keep stock holders more up to date on contract sales and advancements. 

Even if they do not grow in sales from current levels (Which I doubt as they have only just got their foot in the door) they would be good value at anything below 10 times value for a small cap company. They are currently trading at under 3 times. More transparancy will accelerate this stock, even if no more sales were made from current levels. Combined with dividend payments may turbo boost this stock in my view. 

I totally agree that it can be annoying to try and contact them as an investor at times and this culture needs to change if they are to be priced at fair market value. Hopefully the NEW Directors will prove to change this culture. Peter Dykes, the Director and CFO in the Sydney office is a pain in the neck to offer transparency. I was hoping they were to replace him when he got into trouble with the police, as another Director did state if he was convicted. He was convicted yet I gather they feel it was not serious enough for him to lose his job. A new and more transparent in nature CFO would be great for investors. Some Directors just get set in their ways and the less transparent they are the lower the price of the stock.


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## Ozymandias (22 October 2009)

jayinoz said:


> The 42mil has been received, apart from 3.7mil as updated in last fin report listed on their website www.nexbis.com.au . Peter Dykes can be contacted at their Sydney Office. However they do not have a direct Investor Relations person and the Directors do not wish to use their time on small investors.




Can you provide a direct link to that finanical report, or the page that it can be downloaded from? I can't find it and the last financial info offered up through ASX was the annual report...

Disclosure: I am now a holder, in the red a bit.


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## melbournedee (22 October 2009)

Ozymandias said:


> Can you provide a direct link to that finanical report, or the page that it can be downloaded from? I can't find it and the last financial info offered up through ASX was the annual report...
> 
> Disclosure: I am now a holder, in the red a bit.




I think the annual report is the latest info available. The figure of $3.7 million that jayinoz is referring to is in Note 12 in the accounts. This refers to $3.7 million being overdue by up to 3 months but no impaired at balance date. However, the total receivable figure is still $42 million, there is no subsequent event mentioned in the Director's report relating to significant cash receipt since balance date.

On October 2nd, Nexbis responded to the ASX's question relating to share price movement and specifically said that they would not be providing cash updates. In this case, I can't see that no news is good news.

The earnings reported for 2008/2009 basically entirely depends on $42 million being collected in full. Its now nearly 4 months since balance date and if there are still issues in recouping this amount, I won't be buying back in at any price.


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## jayinoz (23 October 2009)

melbournedee said:


> The earnings reported for 2008/2009 basically entirely depends on $42 million being collected in full. Its now nearly 4 months since balance date and if there are still issues in recouping this amount, I won't be buying back in at any price.




Page 51 of the latest Financial Report states the following in terms of their financial position. Please note that the company must disclose to shareholders if their trade receiveable position becomes greatly impaired. If they do not disclose to shareholders in a timely manner any information that would greatly affect the stock price then DIrectors would be held liable. 

If the Trade receiveables did become overdue by more than 90 days then it is in Peter Dykes best interests to disclose to his shareholders. Some CFO's do not release cash positions until they are 100% sure and while most give a quarterly indication (Which should be law), some hold off due to other priorities.

Yet when Peter Dykes and another Director purchased another large chunk of shares this month 'On market' this made me more confident that they do not have a problem with impaired receiveables. I feel that in many small cap play's you must try read between the lines. The reason this stock has fallen is that the Directors will not release their cash in bank position on a regular basis. If they had a problem they would not purchase so many shares. There is a reason that Director 'On Market' trades outperform the market constantly over the long term.

Financial position as of 30th June 2009:

Cash in Bank= 9,207,000
Trade Receiveables= 42,009,000

If there is a problem in collecting the trade receiveables and they do not disclose it to the shareholders then the Directors will have a problem from our solicitors, ASIC and ASX. To me it would not make sense that Directors make large 'On market' purchases whilst having 42 million still owing to them. That is my view. 

Anyway I have left Peter Dykes a couple of messages for a direct statement and I will keep those interested updated. If he does not reply in a timely I will make a complaint to ASX for his non discloser and try force them to release a cash position statement to market. As it is all our best interests.


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## jayinoz (23 October 2009)

*Re: POTENTIAL BREAKOUT Alerts*

NBS- Nexbis Ltd

www.nexbis.com.au 

Running at a PE of under 3 times current earnings. I noted that the Directors of this company are holding off on giving a cash position statement to the market. As they had over 42 mil outstanding in Trade Receiveables 3-4 months ago.

Now 2 Directors have made several large 'On Market' purchases (Including their CFO), after the did not release their current cash position. So they were able to purchase the stock at a substancial discount to the near 50c it had been trading. They purchased at 38c, share price now 33.5c and we await their financial position.

As the Directors have made substancial out of pocket 'On Market' trades I gather that they have a very good financial position. And will relaease this information when they are good and ready, whilst they buy up at a discount in the meantime.

It all looks highly suspicious yet could be a good stock play if they are in a good financial position.

The NBS Nexbis Ltd thread is also an interesting read. As it shows the general attitude of shareholders being to sell out, as they are not being transparent about their financial position. Plus it is impossible to get any response from the NBS CFO in regards to the 42 million dollars that was owing.

My guess is that they have been paid. ASX queried a large drop in price from 46c to 33.5c and the CFO even told them that he advised shareholders that he will not be giving cash position updates in the future. Whilst stating this to ASX, he goes ahead and snaps up a huge amount of his own shares at a huge discount. To me, look for a rebound.

Even if the stock was $1 per share, that still only x9 current earnings and they look set to accelarate current growth. As they have their foot in the door with the Chinese government and selling a lot of contracts for their Nexcode security system. It is unlikely the Chinese government will be defaulting on them. Could be a good short term trade and long term value hold.

They will be paying their first lot of dividends early next year. All looks good to me, yet their non transparency needs to be dealt with to get fair market value for their share price.


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## Galba85 (24 October 2009)

Thanks for the timely update Jayinoz, sounds like you've been keeping a close eye on things.  I would imagine most people are in the red a little, but as you mentioned directors buying shares gave me confidence when I was getting a little worried

Cheers


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## ROE (25 October 2009)

Galba85 said:


> Thanks for the timely update Jayinoz, sounds like you've been keeping a close eye on things.  I would imagine most people are in the red a little, but as you mentioned directors buying shares gave me confidence when I was getting a little worried
> 
> Cheers




In recent history ABC Learning directors load it up like crazy 

Even Singapore Fund got suck into the confident and they lost many many million as the stock plunge they buy and buy only to see it going into trading halt and end in bankruptcy.

Just repeat recent event it bears no correlation to this event  

When a company book cash and they haven't got in the bank I count that as sloppy management and they walk the thin line between fraud and reporting errors.


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## Kuri (26 October 2009)

This stock is so hard to figure out. Orbis Investments has just increased their holdings so they must have faith in the stock. I think I am seeing resistance around the current levels but would love someone with a bit more charting experience to let me know their thoughts. Time to be bold maybe...


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## melbournedee (27 October 2009)

ROE said:


> When a company book cash and they haven't got in the bank I count that as sloppy management and they walk the thin line between fraud and reporting errors.




They haven't booked it as cash - it is reported as a receivable so there is no question of fraud or misrepresentation - only that there has been no update on the status of the cash collection. The longer it remains outstanding the greater the risk that it won't be collected and earnings will suffer. The outstanding amount represents about 65% of total revenue for the year and 90% of reported NPBT.


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## Ozymandias (29 October 2009)

The share price was hammered today after their announcement regarding the Malaysian contract. Personally I see this as a buying opportunity;

In note 4 of the annual report, you can see that only $3.3M of $65.5M worth of revenue came from Malaysia anyway. The majority of their income in fact came out of China.

This also means that the majority of the large outstanding receivables are from China, since they are much larger that the revenue booked against Malaysia and Sweden. 

This announcement does not mean that the full balance of the trade receivables is under threat, only that $3.3M is.

So not good news, but hardly enough to justify the incredible 35% drop. 

Any other opinions out there?


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## craigj (29 October 2009)

starting to lose faith in this company   big time
the instos sold out thru lack of disclosure last month
but after a day like this only the true believers will hold

because they have cash flow and money in bank i will hold but it is becoming more and more speculative and a punt that 1 of the jobs in the pipeline will come to fruition


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## skyQuake (29 October 2009)

craigj said:


> the instos sold out thru lack of disclosure last month
> but after a day like this only the true believers will hold




How so? They disclosed it to the asx after they sold didn't they? They've put out a fair few 604 forms


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## JungleMaster (30 October 2009)

craigj said:


> because they have cash flow and money in bank *i will hold *but it is becoming more and more speculative and a punt that 1 of the jobs in the pipeline will come to fruition




I have gone down the same path. I have some confidence that something will come out of it...but then again, I am so new at this, it is probably one of the biggest risks I will take 

But some say this is a learning process right


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## monkeyA (30 October 2009)

Ozymandias said:


> In note 4 of the annual report, you can see that only $3.3M of $65.5M worth of revenue came from Malaysia anyway. The majority of their income in fact came out of China.
> 
> This also means that the majority of the large outstanding receivables are from China,




I question if the outstading amount from the chinese will be paid. Do the chinese agree that they owe NBS this amount? If NBS can continue to generate the revenue & profit that they reported in FY09, mostly off the back of china, then they will do well even without the malaysia contract. But I'm worried their china contract could turn pear shaped too??


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## craigj (31 October 2009)

the instos selling out is from different firms on the sky business channel that in previous months were buiyng up th shares


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## jayinoz (2 November 2009)

Would have been nice to buy at 16.5c today... huge lift during the day to a high of 26...ending @ 24c. All eyes are on a cash position update to come out soon. Or the CFO will have some very unhappy shareholders demanding an instant update later this month at the AGM.

I look forward to personally hearing the explaination of the lack of transparency in relation to the current cash position on all the other projects (X Malay). As the Malay project could be a 3.3M impairment as of 30th June 2009. I expect they will be working hard now to collect as many outstanding debts as possible and release an update to the cash position before the meeting.

I fear they continued working for free for the Malay government after this date. All up I guessimate they maybe looking at an approx 5 mil impairment over 2 financial periods.

On the plus side the company has enormous potential if it can sort out its collection of debt issues. Plus no further impairments are likely particularly from the Chinese project.

Their new Investor Relations team told me they will not be releasing another cash position in the near future. Not something we wish to hear just before the AGM. I would like to see who takes responsibility for the leniency of the companies policy in terms of terms of payment. I expect this to be the CFO, he is asking to be re-elected as a Director at the meeting. 

He has a lot of explaining to do before getting my vote. 

To me, it is easy for companies to say this company owes xyz. It is another matter if they actually agree. Let us hope the CFO has given us the correct figures, not fantasy figures they hope to bill.

Many months have passed with no further update. More shocking is that after the 29th Oct bad news in regards to Malay Immigration halt of services due to non payment. They never bothered to state that the other 90+ % of Trade Receiveables has been paid.

In my mind they are having issues with their terms of billing and terms of payment. Look forward to the AGM.


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## Ozymandias (2 November 2009)

jayinoz said:


> They never bothered to state that the other 90+ % of Trade Receiveables has been paid.




Has it been paid though? I've seen nothing to confirm that it has, and it seems like we'll have to wait until the half year financials to know for sure, unless they cave to pressure at or after the AGM.

Here's hoping that the CFO doesn't make re-election as director and the company takes it as a sign...


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## Kipp (2 November 2009)

Ozymandias said:


> The share price was hammered today after their announcement regarding the Malaysian contract. Personally I see this as a buying opportunity;
> 
> In note 4 of the annual report, you can see that only $3.3M of $65.5M worth of revenue came from Malaysia anyway. The majority of their income in fact came out of China.
> 
> ...





As you put it.... only 3.3 mill of revenue from Malaysia last year.  READ: the Malay contract was canned in FY09.  What wasn't this reported to market back then?  Management are dodgy, and their reports read like a Grade 10 powerpoint presentation (just take a look at their full annual report today, and you will see what I mean, I love the "for personal use only" printed down the side.

NBS are dodgy.


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## Ozymandias (3 November 2009)

Kipp said:


> As you put it.... only 3.3 mill of revenue from Malaysia last year.  READ: the Malay contract was canned in FY09.  What wasn't this reported to market back then?  Management are dodgy, and their reports read like a Grade 10 powerpoint presentation (just take a look at their full annual report today, and you will see what I mean, I love the "for personal use only" printed down the side.
> 
> NBS are dodgy.




Their disclosure hasn't been as complete as I'd like, but they _did_ disclose in FY09 that the Malaysian contract had been delayed.

Also, the 'for personal use only' watermark appears all sorts of reports and announcements released through ASX. I don't see how it's relevant in this case.


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## mastatrada (3 November 2009)

I have taken the liberty of copying a well researched and alarming post from another popular stock forum, compliments of poster 'ousia'. I believe its a vital read for anyone involved or thinking of getting involved with Nexbis, and goes some way to explain the recent sp hammering. It is obvious that there is a lot (or rather, not a lot) going on behind the scenes that the company is not telling us.

"The Malaysian FY10 budget was handed down on Oct 23, so, presumably, the earliest the Malaysia project could be reinstated will be Jan 2012 (Malaysian FY corresponds to the CY). But I think the company is probably putting some positive spin on this news. I have serious doubts the Malaysia contract will ever materialize now. It is evidently not a priority for this cash strapped Malaysian govt. In some early media releases from 2008, the then immigration minister spoke of a short term "trial" to showcase Nexcode (because it was a Malaysian technology), for a potential contract worth only around $4mill. This info contradicted the numbers and project scope that NBS was putting out at the time, but it now looks to have been fairly accurate. (It is becoming increasingly clear that virtually all of NBS' ASX releases over the last 12-18 months are misleading to a greater or lesser extent – see my old posts).

And you would have to assume that the Malaysia cancellation will make it difficult for NBS to sign new contracts (given that the Malaysian contract was the spearhead for Nexcode into the govt sector).

I think anyone considering trading NBS for a bounce should turn their attention to the significant China uncertainties.

As I've been saying for some time now, China receivables are well past due, and NBS' auditor probably does not have a sufficient handle on the nature of the China debtor. NBS' auditor, like most analysts, thinks this debtor (called CITP) is a Chinese govt entity. The reason the auditor and analysts think this is that NBS has told them so. On page 10 of NBS final FY09 results, it is claimed that CITP was "formally known as AQSIQ." Since AQSIQ is a Chinese govt entity, this statement clearly implies that CITP is one and the same as AQSIQ. And since AQSIQ is a Chinese govt entity it is at almost zero risk of default. Thus, we have been led to believe that NBS’s China debtor is at almost zero risk of default. Lodge partners, in particular, have emphasized this point in their recent reports.

However, the following document outlines the true owners of CITP:
http://www.hoovers.com/free/co/secdoc.xhtml?ID=115393&ipage=5740614-1087-7606

This document shows that CITP is only 12% owned by AQSIQ. The other owners of NBS' China debtor is Philadelphia based TPID (70%) (market cap of only $700k) and some private Chinese company that doesn't have website (18%). Now TPID is 95% owned by the well known pornographer James Mackay (who had some uncomfortable dealings with ERG in Perth in a similar looking deal a few years ago). The Mackay group of companies have a long and sorry history of making major contract announcements in relation to distant Asian govts, which do not become actual revenue generating contracts. See http://www.australianit.news.com.au/story/0,24897,21017138-15316,00.html

The key point here is that it is not strictly true that NBS' Chinese debtor is the Chinese govt. The debtor is in fact basically 70% owned by James Mackay (via Mackay's TPID vehicle). It is difficult to avoid the conclusion that NBS' auditor and all of its analysts and major shareholders have been intentionally misled by NBS into thinking that the Chinese debtor is the 'safe' Chinese govt.

(For those interested in detail, TPID’s interest in the China contract was transferred to a British Virgin Islands front company called Saddington in exchange for a 5% share of the China revenue. The China contract supposedly started around 7 months ago, and TPID are still yet to receive a cent from Saddington. It is possible that James Mackay also controls Saddington, although I can’t confirm this).

When a possible Mackay connection to NBS’ china contract first arose a this thread a few months back, I asked a couple of analysts if they could explicitly put the question about NBS involvement with James Mackay to NBS management. John Houston fired back an email to these analysts saying that (1) NBS had no relationship to James Mackay or to Saddington whatsoever, (2) NBS had done an incredible amount of due diligence on the China contract, and (3) the contract was going to be great for the company. NBS also organized for a few fund managers to go to China and actually see some cards being printed in June 09. Safe to say that all the big investors as well as the analysts had very good reasons to believe that the China contract was/is genuine, and that the Chinese debtor is very low risk. I reported some of this info (in a positive light) on this thread at the time.

However, the 8-k report cited above from TPID indicates that Houston’s email was misleading. As noted, NBS’ counter party in the China contract is 70% owned by TPID/Saddington/Mackay, and only 12% owned by the Chinese govt. So, contrary to Houston’s claim, NBS’ Chinese counter party is majority controlled by Mackay. And it is possible that even this 12% figure of govt ownership is false; it may be part of an elaborate scam by Mackay to raise funds for a 'govt contract' that may not be what it appears to be. After all, NBS paid CITP $5mill supposedly as a “bond” just to participate in the China deal. And this $5mill has effectively gone to a James Mackay controlled vehicle. Furthermore, Mackay seems to have raised some $50mill from other sources to get this China contract off the ground. It is possible that Mackay raised these funds (including the $5mill from NBS) under false pretenses.

At the very least, it is difficult to avoid the conclusion that CITP is a much higher risk debtor than what NBS management (and its auditor) have led us all to believe.

I'm not explicitly saying NBS has been defrauded by Mackay, nor am I explicitly saying that Mackay has defrauded anyone in relation to this particular China deal. I'm only speculating on these possibilities and drawing attention to inconsistencies between what NBS management and auditor have lead the market to believe (i.e., that they have no financial connection with Mackay or Mackay controlled entities) and the from 8-K cited above.

It is still quite possible that China is a legitimate govt contract and the China cash will come in soon (as recently as last week NBS management was still telling at least one fund manger that China was going gangbusters and the cash was "immanent"). But as each day passes, the likelihood that NBS has been caught up in a larger $50mill scam by James Mackay grows. In light of the default risks of CITP, I personally rate the probability that NBS will receive all of the cash owed to it from China at no more than 50%."


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## jayinoz (4 November 2009)

mastatrada said:


> "The Malaysian FY10 budget was handed down on Oct 23, so, presumably, the earliest the Malaysia project could be reinstated will be Jan 2012 (Malaysian FY corresponds to the CY). But I think the company is probably putting some positive spin on this news. I have serious doubts the Malaysia contract will ever materialize now. It is evidently not a priority for this cash strapped Malaysian govt. In some early media releases from 2008, the then immigration minister spoke of a short term "trial" to showcase Nexcode (because it was a Malaysian technology), for a potential contract worth only around $4mill. This info contradicted the numbers and project scope that NBS was putting out at the time, but it now looks to have been fairly accurate. (It is becoming increasingly clear that virtually all of NBS' ASX releases over the last 12-18 months are misleading to a greater or lesser extent – see my old posts).
> 
> As I've been saying for some time now, China receivables are well past due, and NBS' auditor probably does not have a sufficient handle on the nature of the China debtor. NBS' auditor, like most analysts, thinks this debtor (called CITP) is a Chinese govt entity. The reason the auditor and analysts think this is that NBS has told them so. On page 10 of NBS final FY09 results, it is claimed that CITP was "formally known as AQSIQ." Since AQSIQ is a Chinese govt entity, this statement clearly implies that CITP is one and the same as AQSIQ. And since AQSIQ is a Chinese govt entity it is at almost zero risk of default. Thus, we have been led to believe that NBS’s China debtor is at almost zero risk of default. Lodge partners, in particular, have emphasized this point in their recent reports.
> 
> ...




Yep this report and evidence attached I stubbled across in the other forum, made me get out of the company at a substantial loss. Better a loss of 35% than find out that the Chinese project is a con job as well. Sounds like the Management are either corrupt or stupid. 

Surely you would think they would investigate who is behind the wheelings and dealings of companies they are to give credit too. James Mackay being involved in the deal was too much for me to take. Not for his past\current porno work but his business ethics have done over many a company. He has become very sophisticated in his persuasive craft with the ability to setup very complex schemes involving huge numbers of plays all over the world.

I believe NBS Management know they have been dealing with James Mackay- even with their public denial. This story will probably end becoming a pass the buck story with no one ever taking responsibility for the manipulation.  

No news is bad news from this company... I credit the author of the above from giving such a thorough review. She could be wrong but she is very thorough in her reporting on hc. Giving articles of evidence along the way.

Although it did cross my mind that she could be trying to drive the price lower with negative speculation, yet it is more compelling than anything NBS Management has been able to supply me. Their Investor Relations and CFO simply will not return my calls and emails. Suck up the loss...


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## Galba85 (4 November 2009)

This is some serious analysis.  Thanks go to the poster and original credit to ousia.  However I'm wondering Jayinoz if you have some info you can share with us about James Mackay, I confess in ignorance to know nothing about him


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## jayinoz (5 November 2009)

Galba85 said:


> This is some serious analysis.  Thanks go to the poster and original credit to ousia.  However I'm wondering Jayinoz if you have some info you can share with us about James Mackay, I confess in ignorance to know nothing about him




THE long-suffering ERG Group struck its latest smartcard deal with hardcore gay-pr0n website entrepreneur James Mackay, who has been under investigation by US authorities.

The link should give you a start in getting to know Mr Mackay....and his wheeling and dealings. His link to Nexbis is via the Chinese deal with CIPT... you can search over his company and name for more details. He is a colourful character with a colourful biz history.

Nexbis Directorshas publically denied having anything to do with him. Although he owns a good share of the company they work for in China. Naturally it is possible that they do not know him, not probable.

Links as supplied;

However, the following document outlines the true owners of CITP:
http://www.hoovers.com/free/co/secdo...0614-1087-7606

This document shows that CITP is only 12% owned by AQSIQ. The other owners of NBS' China debtor is Philadelphia based TPID (70%) (market cap of only $700k) and some private Chinese company that doesn't have website (18%). Now TPID is 95% owned by the well known pornographer James Mackay (who had some uncomfortable dealings with ERG in Perth in a similar looking deal a few years ago). The Mackay group of companies have a long and sorry history of making major contract announcements in relation to distant Asian govts, which do not become actual revenue generating contracts. See http://www.australianit.news.com.au/...-15316,00.html


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## Kuri (19 November 2009)

A new presentation was added to the ASX today. It looks like NBS took a few select investors (not me by the looks of it) over to be wined and dines in Malaysia. They apparently met withe the Malaysian PM which is hopefully good news for the continuation of the program there. They also mention the problems with the receivables so far.

An interesting section is that they say they wish to improve communications with investors and be more transaparent. This is a big step as a lot of people have sold because they cannot get enough information regarding the company. It will be interesting if they are true to their word over the next few months.

The link is below for the presentation on the ASX website.

http://www.asx.com.au/asx/research/companyInfo.do?by=asxCode&asxCode=NBS


Kuri


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## Dugai (12 December 2009)

A list of James Mackay failures I reckon could fill an encyclopedia. A list of James Mackay successes is best summarised with a blank piece of paper. If you would like to experience James Mackay, then have a look at the stock charts of Sure Trace (SSTY), True Product ID (TPID), Biofield (BZEC), Versacard (IGLB), Net Command (NCDT), and many more, "ALL" have ended the same way. His companies are imo are no more than pump and dump schemes and scams touting products that do not exist, prospects that are built on fantasy and contracts that never earn a cent. His latest offering via. Filligent Ltd, is a biomask that kills swine flu upon contact... absolutely crazy. 
filligent.com/public/index.php

The histories of SSTY and TPID are especially important for Nexbis, given that they created the venture company, China Inspection True Product (CITP), that Nexbis has partnered for the purported China contract (see SEC filings from TPID, SSTY). 

I'd really like to know if anyone has been able to verify this claim by Nexbis/ETC, because I haven't (interestingly TPID made a similar claim with their alleged S-DNA anti-counterfeiting technology, except I cannot verify their claim through AQSIQ either):

"December 05 , 2008 
Technology Licence Agreement for China National Gas Tank Project 
Entertainment Media & Telecoms Corporation Limited (ETC) is pleased to announce the Technology Licence Agreement (TLA) to supply the NexCode Security Suite for the China National Gas Tank Project for the General Administration of Quality Supervision, Inspection and Quarantine [AQSIQ] of the People's Republic of China is now unconditional. 

Under the terms of the TLA, ETC will provide its unique award winning technology for the purpose of customer authentication for the China National Gas Tank Project for an initial five-year period, with an option for an additional five-year extension. 

It is estimated that there will be 150 to 220 million individual purchasers of gas cylinders in the People's Republic of China over the next five years and every customer will be required to have an identification card which bears the NexCode technology." 

I can't find a single release from AQSIQ of such an intention or any dealing with Nexbis/ETC/CITP or any word of a China National Gas Tank Project or the issue of a licence for the use of NexCode.

Catalogue of Industrial Products Subject to Production Licensing Management:
No.61 - Anti-counterfeit technical products 
Enterprises Granted National Production License of Industrial Products:
68,867 licences issued and current.  

aqsiq.gov.cn/search/gyxkz/

english.aqsiq.gov.cn/NewsRelease/

english.aqsiq.gov.cn/SpecialTopics/GeographicalIndicationProductProtection/ProductsunderGIProtection/

...etc.
The system appears transparent and you'd think it'd be no trouble to identify a relationship between AQSIQ and Nexbis, but alas...

The whole thing to me smells of a scam and Nexbis is either wittingly or unwittingly is part of it. If this is the case, then Nexbis shares are worthless and currently trading 20c too high and with a market cap $100mil too much.  

Here's a nice news feature story detailing one such scam, if you're not sure how stock market scams work then definitely read:

"It was all a big lie, expert says he knew then"
"Invention was too good to be true"

news.google.com/newspapers?nid=888&dat=20070701&id=VMYNAAAAIBAJ&sjid=knQDAAAAIBAJ&pg=6841,44797


And if you dig deep enough into this mess, you'll find that the Kovar family were also business partners to the same people Nexbis has partnered for the alleged China contract. (Check press releases/SEC filings of Satellite Access Systems/Corsaire inc/Net Command)

disclosure: I do not own Nexbis shares nor am I short on this stock. Just keen to see how this story (aka scam) unfolds.


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## ectoplasm (8 January 2010)

The bad wrap for NBS over many stock forums appears legendary!

It is an early call, but I think company fortunes must be turning around ~ at least the daily chart appears to be soon ready for a bounce

Daily chart:


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## luckycanuck (5 March 2010)

And now it looks as though there has been a capital raising at 15 cents with the proceeds going towards acquiring stakes in TrustDefender and UKI.

I'll be keeping my eye on this one to see how the market reacts.  Their statement said the instituitonal capital raising was over subscribed.

Is this a masterstroke?  Is this piling on more problems to a problematic company?  Is it something in between?

And yes, I do hold shares in Nexbis.  I've not been able to work out whether their drops have been realistic or an overreaction.


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## Kuri (5 March 2010)

This company's management continue to frustrate me. There are questions being asked left, right and centre regardin the validity of their Chinese contracts, the market leaked the collapse of the Malaysian contract before mgt admitted it and now they go and aquire another company and implement a capital raising after saying how much cash they have. In my opinion this has to be a distraction from the problems the company faces. I am a holder still mainly because the price has dropped so much it is not worth my time to sell. 

Also the SPP will not raise them any more money as the SP is the same as the offer price and if people do take it up there will be so many new shares on offer that the SP will tank the day they are able to be sold. 

I hope this company amazes us all and turns out to be a winner. 

 Kuri


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## lizard (6 March 2010)

Kuri said:


> I hope this company amazes us all and turns out to be a winner.




You have to be kidding?!  I hope ASIC amazes us all and actually does something about them.  

If you're stuck holding these things, best just hope they plan another pump contract win and forecasts when they recirculate the money raised and let their institutional investors out.  (Just my opinion).


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## Kuri (6 March 2010)

lizard said:


> You have to be kidding?!  I hope ASIC amazes us all and actually does something about them.
> 
> If you're stuck holding these things, best just hope they plan another pump contract win and forecasts when they recirculate the money raised and let their institutional investors out.  (Just my opinion).




One of the things that gives me hope is that large companies with smarter people than me working for them such as Orbis keep buying into this company. Thay must do due dilligence and see something. Also they have just secured near 10 million dollars of funding in what is still pretty tough credit conditions.

If anybody has any thoughts on why that would be very helpful.


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## Dugai (19 March 2010)

well, there ya go Kuri, Orbis have started selling their stake and didn't participate in the institutional raising.


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## ROE (19 March 2010)

Kuri said:


> One of the things that gives me hope is that large companies with smarter people than me working for them such as Orbis keep buying into this company. Thay must do due dilligence and see something. Also they have just secured near 10 million dollars of funding in what is still pretty tough credit conditions.
> 
> If anybody has any thoughts on why that would be very helpful.




Follow the herd you get the herd return , why do you think Orbis is better than you or some more knowledgeable person on this thread ? just because they are a fund and has people working for them?

they could have some real stupid fund manager who splashing money around without much consideration and after all it's not their money it's fund investors money so they can gamble and has very little to lose apart
from their bonus fee


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## User Name (29 March 2010)

its going to be interesting to see how much money nbs raised with regular shareholders under their SPP and if they proceed with purchase of UKI?


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## craigj (30 March 2010)

could the directors run this co any worse
seriously the co has cash and cash flow
now the capital raisnig will have tofall flat
what price the shares when they get mass off loaded ?


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## FredNerk2 (13 April 2010)

IS UKI Deal Dead? 

I would appear that this easy handball and 90M Valuation from NBS is stale or dead or both 

In my opinion I agree with prior concerns posted by mastatrader, 

Have had company dealings with Anthony Dunlop previously, Due Dil was not fun nor easy, still recovering from it

Any news here?  thanks

reply privately to me at this forum or post a reply on this thread

For record I Do Not have any shares in any mentioned entities ... 
Do not rely on this posting for any financial decisions


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