Singapore: Cellos Software Limited Collapsing as Scandal Deepens

Singapore: Cellos Software Limited Collapsing as Scandal Deepens

Singapore: Cellos Software Limited Collapsing as Scandal Deepens

Take a look at the Horror Story in the Financials

Check the details here

Well, we told you so, Cellos is now in a death spiral of debt and litigation.

This company will probably not survive:

1.       Cellos has released financial reports. However, auditors refused to sign off on the accounts (see attached 2016 financial statements p. 32 / 33)

o   In their Independent Auditors Report to the members of Cellos Software Limited for the 2016 financial the auditors wrote:

§  Disclaimer of Opinion

Because of the significance of the matters described in the basis for disclaimer of opinion paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion. Accordingly, we do not express an opinion as to whether the financial report of CellOS Software Limited is in accordance with the Corporations Act 2001,[…]”

o   Despite that, Management has sent the reports to all shareholders. Most shareholders won’t read and understand what message the auditors are putting across!!!!! As such, if Janifer is asking to be voted again as Chairman, this is a joke!!!!

2.       The Financial Statements confirm that Cellos has issued interest- bearing bonds and subsequently issued over 300 million shares in contravention of the Securities and Futures Act and without seeking existing shareholders approval

o   p. 28 in the Financial Report – “NOTE 24: RELATED PARTY TRANSACTIONS

(a) The terms of the agreement between ProV 356 Pte Ltd and Methuselah Pte Ltd with the company were on the following terms,

§  Funds were to be provided of $12 mil SGD

§  Interest rate of 5% to be incurred on monies outstanding to 2 May 2016, and 7% on monies outstanding after that date

§  Maturity date being 2 May 2016 unless otherwise agreed by both parties.

§  on 8 September 2016 a deed of termination and release was entered into with ProV 356 Pte Ltd and Methuselah Pte Ltd as part of the repayment of funds to them.    In conjunction with this, a number of investors subscribed to shares in the company.    The number of shares issued arising from this transaction at the date of signing this report is 350,246,260.”

o   In addition, this share issue has not been declared to the Australian Securities and Investments Commission (ASIC) as is required by Australian Corporations Law 2001.

§  We have insider information there has apparently only been some sort of promise made by CellOS to issue these 350,246,260 shares, but they have not actually been issued. It is surprising that the Auditors would allow such a disclosure to be made if it is not true. And if it is true, why is the share registry to reflecting these newly issued shares and ASIC has not be notified???

3.       The financial statements show on page 4 that Mr. Gim Hock THIO, joined the Cellos Board and was appointed as Director on 25 March 2016.

o   However, on 26 April 2016, just a month later, he already resigned!!

o   As a reminder, Gim Hock Thio is Chief Elder of Christian City Missions Kallang Church and a shareholder in Cellos.

§  Gim Hock was involved in the sale of about USD 28 million in 16c interest-bearing bonds to the common Singaporeans and parishioners of City Mission Church

§  Sales seminars took place at his home in at 69A Coronation Street, Singapore!

§  Gim Hock Thio is the Father of Shen Yi Thio, who is a Partner at TSMP Law Firm, the law firm that defends Min Wee CHUA’s in the Criminal Breach of Trust against Jason Huber.

4.       Legal Fees / AGM and EGM

–          Constance launches a clandestine EGM against Janifer – EGM notices were received by shareholders last week but was then annulled by Cellos’ lawyers. This is incurring legal fees and expenses to the expense of the shareholders and operations of the business for a fight between Chairman and a Board member!!

o   Regarding Legal Fees, the 2016 Cellos financial statements (p. 7) show that $4.93mill was spend on legal and other professional fees!

o   We are informed that a major portion are legal fees and nothing to do with the revenue generation of Cellos.

o   We have further information that Janifer discovers she was fooled by Constance Peck and launches legal proceedings against Constance in Australia, incurring further legal Fees for Cellos, which has nothing to do with the operations and income generation of Cellos; Much to the expense of existing shareholders!

 5.       Minimal revenues

o   Financial Statements show that highly paid Kamlesh Patel has not managed to deliver on the revenue promises

o   Personnel cost have reduced as a simple consequence that Management has fired many of the existing staff and not because of any other measures

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Shayne Heffernan Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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