my position on the key issues

Some folks have attributed opinions to me that I do not hold. To clear matters up a bit, here is an outline of my opinion on the key issues:

(1) I do believe that the China National Gas Tank contract is 'real' for NBS in the sense that 30 mill cards 'really were' printed in June, and an invoice for this printing was sent to CITP. In other words, this contract, while highly problematic, is not a complete scam or an invention of the imagination.

(2) I do believe that NBS genuinely received $10mill last week from CITP (I estimate that NBS's current cash holding is now around $14mill). I think it is possible, and perhaps even likely, that NBS will receive some further late payments from China. However, I think it is unlikely that all of NBS's current and future receivables will be paid.

(3) I think there is a better than even chance that the way the China National Gas Tank contract was set up is illegal under new Chinese laws that came into effect late last year.

In my opinion, there is a better than even chance that Mackay/TPID was only able secure the no-bid contract in the first place because they promised AQSIQ insiders a share of the profit. The following article indicates that the Chinese govt has recently started cracking down on come AQSIQ contracts that involve AQSIQ owning a share of the company running the contract. http://www.allbusiness.com/legal/antitrust-trade-law-restraint/12022862-1.html

Because of the above, it is my opinion that the China National Gas Tank contract runs a high risk of being cancelled at any time. I should emphasize that I have no evidence that AQSIQ insiders are participating in this contract in an improper way. I just find it odd in the extreme that the AQSIQ would find the technology owned by Mackay/TPID/Saddington so compelling as to side step a competitive tender process for a large national contract.

Speaking more generally, no-bid contracts that rely on "high level govt connections", as NBS' Malaysia and China contracts do, should always be considered very high risk.

(4) NBS's patent application has already been rejected by the USPO once. I don't believe that NBS have patentable technology, and I believe that their re-submitted patent application will be rejected by the USPO in the coming months. I believe the main reason why NBS resubmitted their patent application without meaningfully changing it was to avoid receiving a final rejection before the AGM.

(5) I find it very hard to believe NBS management when they say that they have "no knowledge of the ownership structure of CITP". How can they maintain, on the one hand, that they are confident that their Chinese counterpart is the "safe" Chinese govt, and on the other hand plead ignorance on who controls CITP?

(6) There is evidence to suggest that the deal between TPID (Philadelphia) and Saddington has not closed, and also evidence to suggest that it has closed. My early posts claimed that the deal had closed, and more recently I suggested that deal hadn't closed (the June 1 SEC release can be read either way). However, given that some cash has started to flow, and given that TPID philadelphia looks like it is about to be delisted, I think the balance of probabilities favors the conclusion that the deal now has in fact closed.

(7) If the Saddington deal has closed, and if the SEC documents in CITP are accurate, then a British Virgin Islands front company now controls NBS's Chinese counterparty (CITP). I strongly suspect that James Mackay, Anthony Dunlop, and the resources of TDA tech are behind Saddington. (Mackay wouldn't allow TPID to be wound up unless he had transferred any upside potential from the China contract to another vehicle). It is also plausible that Dykes and Houston are involved with Saddington, although I have no compelling evidence to suggest that they are. All I note is the similar dates when the Saddington deal was announced and NBS china deal was announced. If it is true that Saddington now controls CITP (or the China JV), then it is my opinion that NBS have a duty to disclose this fact to the market. Otherwise, shareholders are likely to conclude on the basis of NBS statements thus far, that CITP is controlled by the Chinese govt.

(8) As I have said in earlier posts, I'm not in a position to state that anyone from NBS has ever contravened the corporations act in any way. Furthermore, I'm not aware of ASIC ever prosecuting anyone from NBS. However, as a company outsider, it looks to me that both ETC and NBS management have done and said certain things that warrant ASIC investigation. See this old post for more details:
http://hotcopper.com.au/post_single.asp?fid=1&tid=1027329&msgid=5724526

(9) I don't think NBS's auditor contravened standard auditing protocol in any way. However, I do think the auditor could have drawn some attention in the Statutory Report to (i) the ownership structure of CITP, and (ii) the proximity between the date of the report and the date that the China receivables would have become past due.

(10) I find it hard to believe that the Malaysia contract could come back on line anytime soon, since the next Malaysian govt budget is not due to be handed down until October next year. It is also significant that the minister through which NBS originally "negotiated" the contract is no longer in office. It is also significant that Sovereign Key (who were the original NBS vendors, and who had close ties to the Malaysian govt) sold out of NBS in May/June (around the time that the contract was being suspended indefinitely).

(10) I am not David Symons, although I did make a significant contribution to his article. I think it is highly significant that NBS management have not attempted to correct anything that was stated in Symon's article. If the contents of that nationally distributed Fairfax article were false, then a false market was created today, and NBS directors have a duty under listing rule 3.1 to correct a false market.