Disclosure an issue for technology firm

PLANS by listed tech company Natural Intelligence to reinvent itself as a telco have raised the hackles of investors concerned about less-than-fulsome disclosure.

While the directors of NI have met their legal requirements, the quality of disclosure in NI’s prospectus and notice of meeting have failed to satisfy some investors.

The main bone of contention is incoming director David Kiggins’ business history and association with the vendors of Allgrove Holdings, a start-up telco business to be acquired by NI.

The prospectus states that Mr Kiggins left accounting firm Andersen in 2000 “to join a technology start up, successfully raising seed capital and listing the operation on the ASX”.

It does not mention the name of the start up, Thin Technologies, or his role as chief commercial officer of Thin, which lost nearly $17 million over the three years to June 2003. Nor does it disclose Mr Kiggins’ links with the vendors of Allgrove, who include Perth entrepreneur Chris Singleton.

Mr Singleton was the founding chief executive of Thin Technologies, one of several loss making ventures he has founded in recent years.

Others include mobile telco B Digital and mBox.com.

As well as joining the board of NI, Mr Kiggins will be chief operating officer of Allgrove.

NI’s planned acquisition of Allgrove is effectively a reverse takeover.

If Allgrove is able to sign up 60,000 new customers, the All-grove vendors will end up with a 70 per cent shareholding in NI, via the exercising of options, incentive shares and incentive options.

To help fund the new business as well as its existing technology business, NI is raising $1.9 million through a placement at five cents per share.

NI chairman David Rieke, an executive director of West Perth firm Grange Consulting, said he would review the level of disclosure.

“I’ll raise that with the board,” he said.

“It might be that it does require some elaboration.”

Mr Rieke said he was optimistic about the prospects for Allgrove, which plans to offer low cost pre-paid telephone services.

Allgrove has signed a reseller agreement with Vodafone, which Mr Rieke said would enable it to avoid heavy capital expenditure on a switching or prepaid network platform.

Mr Rieke added that the pre-paid service offered strong cash flow advantages as the company would be paid by its customers prior to Allgrove having to pay Vodafone.

Allgrove would also avoid the costly provision of subsidised handsets to its customers.