MWC voices suspicions over $16m software buy Author: John Davidson Date: 22/09/2004 Words: 450 Source: afr Publication: Financial Review Section: IT
Adam Clark, the originator of video compression technology he sold for $16 million to Media World Communications, may have used off-the-shelf, open-source compression algorithms as the basis of his controversial technology, Media World Communications has alleged.
Adams Platform, the software that Mr Clark claimed would offer DVD-quality video over startlingly modest internet connections, appears to use a freely available compression technology known as On2 VP3, MWC told the Australian Stock Exchange.
On2 Technologies, a US company, turned its VP3 compression software into an open-source project in 2001, after it had already been superseded by better compression algorithms. At the time, On2 promoted VP3 as delivering VHS quality video steams over 200 kbps internet links - impressive, but still a far cry from the DVD quality over 56 kbps links that Mr Clark promoted for his Adams Platform software.
Media World Communications, a former mining company that was seeking to re-list on the ASX, says it bought Adams Platform from Mr Clark and his associates in tranches over the past several years, giving Mr Clark $16 million in fees and costs for the technology.
Last year, before it had full access to the software, MWC had Adams Platform tested by an independent US tester, Kevin Tolly, who confirmed all of Mr Clark's claims.
Mr Tolly's report appeared in a prospectus issued by MWC in April, when it sought to raise $7.2 million to further develop the platform.
In an exchange of emails with the The Australian Financial Review last week, Mr Tolly confirmed that he had tested Adams Platform and found it performed just as Mr Clark claimed. He said that "aside from [Mr Clark] buying pizza and burgers during testing", he received no payment whatsoever from Mr Clark or his associates.
But MWC chairman Michael Ramsden warned that MWC had been unable to replicate the results reported by Mr Tolly. He told the AFR that the best results that MWC's own technicians had been able to obtain were around 100 times slower than the company had been expecting when it bought the software.
As a result of that internal testing by its own consultants, MWC informed the ASX on Monday evening that it had terminated its consulting agreement with Mr Clark, and was investigating legal redress to seek compensation for shareholders.
Mr Clark could not be reached for comment yesterday.
