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Pahth chases $1m

WA technology junior Pahth Telecommunications is seeking about $1 million in fresh equity in a bid to fund future growth for its reselling operations after being investigated and chastised by regulators for its disclosure procedures.

Pahth managing director Peter Hanley said the company was looking for a “benefactor” in a business which would allow both parties to benefit from a strategic alliance, but he was not offering a controlling stake in the company which has a market capitalisation of about $6 million.

“We are looking around the market for someone who will help us with what we do,” Mr Hanley said.

“That might be marketing or carrier support.

“If you had someone with 50,000 small business customers that would make an ideal partner, but we don’t want to lose control.”

If such an investor did not appear, Pahth will go to the market to raise the money.

The news coincided with an announcement by the Australian Securities and Investments Commission that compliance problems had been found at Pahth, one of 53 technology companies the regulator was investigating.

ASIC said Pahth had failed to issue a profit downgrade when two sets of major negotiations with third parties broke down in June last year.

Instead, Pahth waited until September to reveal a big shortfall in revenue and a big jump in losses in its preliminary final report, compared to projections released in its prospectus a year earlier.

In 1999, Pahth had anticipated turnover of $19.6 million and a loss of $5000. Instead, its revenue was only $11.5 million and the Telstra and Optus reseller recorded a loss of $1.2 million.

Pahth is reviewing its compliance procedures under the terms of an enforecable undertaking it has given ASIC.

Last week, Mr Hanley said he expected turnover to reach $20 million this year, after jumping from about $3.7 million to $4.3 million between the first and second quarters.

Mr Hanley said the company had a number of new projects, including a carrier licence, coming up which would benefit from a cash injection.

And he pointed out that Pahth was the only WA technology company to grow both revenue and cash reserves between the September and December quarters.

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