FEDERAL COURT OF AUSTRALIA

CellOS Software Ltd v Huber [2018] FCA 2069

ORDERS

THE COURT ORDERS THAT:

1.    The proceedings as against the seventeenth to nineteenth respondents be dismissed with costs.

2.    The applicant and the first and fifteenth respondents within 28 days of the date of these orders file and serve short minutes of orders to give effect to these reasons and for the further conduct of these proceedings.

3.    Costs reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

BEACH J:

1    The applicant, CellOS Software Limited (CellOS), an Australian unlisted public company, is a software development company in the field of data analytics. CellOS has brought these proceedings against numerous respondents. Primarily it has brought these proceedings against its former chief executive officer and director, Mr Jason Huber, the first respondent. Mr Huber was CEO of CellOS from 19 December 2005 to 3 September 2015. He was a director from 19 December 2005 to 12 May 2010 and from 1 March 2012 to 3 September 2015.

2    CellOS alleges that Mr Huber carried out a scheme against it, and in carrying out this scheme breached various statutory and fiduciary duties owed to CellOS, particularly under ss 181, 182 and 183 of the Corporations Act 2001 (Cth). Broadly, CellOS alleges that the scheme carried out by Mr Huber consisted of the following steps.

3    At all relevant times CellOS was not generating sufficient revenue and was reliant upon new equity capital or debt funding to continue its operations and its business of software development. Mr Huber was personally responsible for securing this funding.

4    From late 2012, Mr Huber instructed a corporate secretarial services provider to establish a web of offshore companies registered in Belize, Panama, Anguilla, British Virgin Islands and Samoa, which Mr Huber was to control, and which were designed to disguise Mr Huber’s involvement in his planned scheme and in those vehicles. Mr Huber established a web of offshore companies to hold his CellOS shares (Huber controlled entities) with the corporate secretarial assistance of Mr Chua Min Wee and his company Grandeza Corporate Services Pte Ltd (Grandeza), a Singaporean company, and Mr Harveen Singh Narulla. The Huber controlled entities disguised Mr Huber’s involvement in what later occurred.

5    From at least late 2012, Mr Huber procured through these Huber controlled entities at least 47,872,063 CellOS shares from early investors in CellOS, without disclosing his involvement to the vendors or to CellOS; it is said that these transactions were entered into without CellOS’ knowledge. It is known that Huber controlled entities purchased 19,059,834 shares (out of 47,872,063 shares transferred from private investors) for AU$4,848,094. The price for the remainder is not known.

6    From at least late 2012, Mr Huber sought out potential investors for CellOS, ostensibly to raise funds for CellOS’ ongoing operations. But instead of CellOS issuing shares directly to new investors, Mr Huber procured investors to purchase shares from Huber controlled entities at prices between US$2 and US$10. Between late 2012 and mid-2015, the Huber controlled entities sold 51,945,132 shares in CellOS to 355 private investors. It is known that Huber controlled entities sold 22,832,921 shares out of 51,945,132 shares transferred to private investors for AU$50,353,076. The price for the remainder is not known.

7    Mr Huber directly or indirectly lent part of the proceeds from these share sales back to CellOS in order to fund its operations.

8    In or around May 2013, Mr Huber arranged for CellOS to enter into a loan agreement with one of his offshore companies, LGA Energy Investments Ltd based in Belize (LGA) to loan CellOS up to SG$25 million (LGA loan) without disclosing his interest in LGA or the LGA loan to either CellOS’ board or its shareholders, on terms that the loan could be converted to shares at SG$1.80. Mr Huber wearing his CellOS hat would call for loans from LGA and then convert those loans to shares. At the time, CellOS was able to issue new shares at US$5 per share and CellOS shares were on the secondary market at up to US$5 per share.

9    LGA is not a party to the proceedings. The LGA loan operated such that:

(a)    The loan operated retrospectively to cover money advanced since 1 March 2012, that is, over a year earlier and included advances by third parties nominated by LGA;

(b)    LGA or third parties would loan money to CellOS; and

(c)    LGA had an option to convert the loan amount into CellOS shares at the price of SG$1.80 per share, which was favourable to Mr Huber and LGA but disadvantageous to CellOS and the other shareholders.

10    The effect of the LGA loan allowed:

(a)    Mr Huber to immediately benefit from the funds he had been lending CellOS since March 2012 by converting them into new CellOS shares at the favourable strike price of SG$1.80 per share; and

(b)    Mr Huber to, first, prospectively sell CellOS shares held by the Huber controlled entities, second, then lend the funds to CellOS under the LGA loan and, third, obtain more shares at SG$1.80 per share by exercising the conversion option.

11    Significant proceeds from the sale of shares by the Huber controlled entities were paid to CellOS and attributed to the LGA loan. In all, Mr Huber procured payments into CellOS of SG$29,143,387.90 and AU$1,228,786.85, which were attributed to the LGA loan, and through LGA converted those loan funds into 17,477,204 shares in CellOS at SG$1.80 per share.

12    Mr Huber directed LGA to transfer 16,815,157 of those shares to Huber controlled entities for no consideration and then procured the on-sale of 4,265,157 of those shares, of which 2 million were sold at US$2 per share, 399,000 at US$10 per share, and the remainder at unknown prices.

13    As I say, between 28 June 2013 and 27 March 2014, LGA came to hold almost 17 million CellOS shares by way of its conversion option under the LGA loan. In May 2014, LGA transferred these shares to seven of the Huber controlled entities.

14    On 1 July 2014 Mr Huber arranged for CellOS to enter into another loan arrangement with another associated company, Pized Management Ltd (Pized) (Pized loan). Pized is the fourteenth respondent. The Pized loan was similar to the LGA loan, and Mr Huber again failed to disclose his interest. Significant proceeds from the sale of shares by the Huber controlled entities were advanced to CellOS and attributed to the Pized loan. When Mr Huber was removed from his position in September 2015, amounts under the Pized loan in the order of SG$2.5 million and US$8.3 million had not been converted and still remain a liability owing to Pized on CellOS’ books.

15    CellOS alleges that Mr Huber’s scheme, which it characterises as fraudulent, generated significant profits for him.

16    But Mr Huber’s response to CellOS’ claims is that Mr Min Wee and particularly Mr Narulla went rogue and set up and used the Huber controlled entities to buy and sell CellOS shares without Mr Huber’s knowledge and for their own profit. Further, in respect of the LGA loan and the Pized loan, Mr Huber says that both of these arrangements were entered into with proper disclosure being made to CellOS that he was the controller of both companies.

17    As I say, Mr Huber’s defence is that the fraud perpetrated against CellOS was not by him, but by his personal assistant Mr Narulla. Mr Huber says that he instructed Mr Narulla to sell off some of Mr Huber’s personal shares to raise funds for CellOS through the LGA loan and the Pized loan, but that Mr Narulla went rogue and bought and sold shares using the Huber controlled entities. But CellOS says that the contemporaneous record establishes that Mr Huber did carry out the fraudulent scheme. In any event it says that even if the evidentiary foundation of Mr Huber’s defence were to be accepted, nevertheless because Mr Narulla was his agent and Mr Narulla directed the profits from the fraudulent scheme to Mr Huber’s personal benefit both for the purchase of assets and for payment into the LGA loan and the Pized loan, Mr Huber is still liable for that conduct and required to account to CellOS for any profits.

18    Let me turn to the other respondents. The second to thirteenth and fifteenth respondents include some of the Huber controlled entities that it is said were involved in Mr Huber’s scheme. They are the following:

(a)    Birinc Centre Corp (Birinc) is the second respondent, although it has been incorrectly described as “Birinc Trade Corp” in CellOS’ originating process. Its alleged involvement is the receipt of CellOS shares from LGA as part of the LGA loan scheme.

(b)    Sky Wealth International Ltd (Sky Wealth) is the third respondent. Its alleged involvement is the receipt of CellOS shares from LGA as part of the LGA loan scheme.

(c)    Rex Investors Ltd (Rex Investors) is the fourth respondent. Its alleged involvement is the purchase of CellOS shares from early investors, the sale of those shares to private investors and the receipt of CellOS shares from LGA as part of Mr Huber’s scheme.

(d)    Sun Way Global Group Limited (Sun Way) is the fifth respondent. Its alleged involvement is the receipt of CellOS shares from LGA as part of the scheme.

(e)    Aura Finance Limited (Aura Finance) is the sixth respondent. Its alleged involvement is the receipt of CellOS shares from LGA as part of the scheme.

(f)    Harvest Sky Holdings Limited (Harvest Sky) is the seventh respondent. Its alleged involvement is the purchase of CellOS shares from early investors, the sale of those shares to private investors and the receipt of CellOS shares from LGA as part of the scheme.

(g)    Rich Max Investments Limited (Rich Max) is the eighth respondent. Its alleged involvement is the receipt of CellOS shares from LGA as part of the scheme.

(h)    Nesterland Services Ltd (Nesterland) is the ninth respondent. Its alleged involvement is the purchase of CellOS shares from early investors and the sale of those shares to private investors. There is a contest between the parties as to which of Mr Huber or Mr Narulla truly controlled Nesterland and the identity of its ultimate beneficial owner.

(i)    Willow Financial Limited (Willow) is the tenth respondent. Its alleged involvement is the sale of early investor shares to private investors, which it received by way of transfers from other Huber controlled entities.

(j)    Lighthouse Investments Limited (Lighthouse) is the eleventh respondent. Its alleged involvement is the sale of early investor shares to private investors, which it received by way of transfers from other Huber controlled entities.

(k)    Leario Overseas Corp (Leario) is the twelfth respondent. Its alleged involvement is the purchase of CellOS shares from early investors.

(l)    Stardust Financial Corporation (Stardust Financial) is the thirteenth respondent. Its alleged involvement is the purchase of CellOS shares from early investors and the sale of those shares to private investors.

(m)    Blue Delorite Investments Pty Ltd (Blue Delorite) is the fifteenth respondent; it has also been incorrectly described in CellOS’ originating process. Its alleged involvement is the purchase of CellOS shares from early investors and the sale of those shares to private investors.

19    Now defences have only been filed by the first and fifteenth respondents, that is, by Mr Huber and by Blue Delorite. The second to fourteenth respondents are variously registered in Belize, Anguilla, Samoa, Panama and the British Virgin Islands. Service out of the jurisdiction has been effected on some of these respondents, but they have otherwise taken no role in these proceedings.

20    The proceedings have been dismissed as against the sixteenth respondent. I need say nothing more about him.

21    Let me turn to a separate group of respondents, who are alleged to have been accessories to Mr Huber’s breaches of his statutory duties as a director of CellOS. Mrs Constance Peck and Mr Alan Peck are the seventeenth and eighteenth respondents, respectively. They purchased CellOS shares through the Huber controlled entities or through Mr Melvin Tan at US$2 per share and sold those shares to friends, associates and members of their church network, usually at the price of US$2 or US$5 per share. Mr Tan is the nineteenth respondent, and was a broker for CellOS at one point.

22    CellOS alleges against Mr and Mrs Peck and Mr Tan that they were knowingly involved in Mr Huber’s breaches of his statutory duties. CellOS at trial abandoned its case against them under the second limb of Barnes v Addy.

23    CellOS says that Mr Huber was assisted in his fraudulent scheme by Mrs Peck and Mr Peck, who were introduced to Mr Huber as potential investors in CellOS in or about March 2013. It is said that in order to sell around 50 million shares in CellOS, Mr Huber was helped by the Pecks. Mr Huber agreed to sell them shares at US$2 per share, at times when the market value of those shares was at least US$5, and in all sold them 18,842,000 shares on the understanding that they would assist Mr Huber to sell his shares to third parties and that they would also be able to sell their shares at a profit. Mrs Peck and Mr Peck sold around 9 million of their shares to investors, many of whom were members of their church community. CellOS says that by assisting Mr Huber, Mrs Peck and Mr Peck generated profits from the sale of the 9 million shares.

24    Further, CellOS says that in or about 2014, Mrs Peck and Mr Peck reached an agreement with Mr Tan to assist him in the sale of further CellOS shares purchased from Mr Huber at US$2 per share and to split the profit. Mrs Peck and Mr Peck generated further profit from these sales, which indirectly allowed Mr Huber to continue selling shares to Mr Tan.

25    In essence, the elements of the accessorial claims against them are the following.

26    First, each of the Pecks knew that between September 2013 and July 2014:

(a)    there were willing buyers of CellOS shares at US$5 per share and up to US$10 per share; and

(b)    CellOS could issue new shares to willing investors at more than US$2 per share and indeed did issue shares at US$5 per share.

27    Second, each of them procured from September 2013 to July 2014 the sale of shares in CellOS to investors at various prices and improperly diverted third party investors from taking up shares in CellOS under CellOS’ actual, contemplated or possible equity raisings.

28    Third, by doing so each of them:

(a)    benefited by procuring the sale to themselves of shares in CellOS at US$2 per share and on-selling at a profit; and

(b)    caused detriment to CellOS being the difference between the amount CellOS actually raised and the amount CellOS would have raised if the shares had been issued by CellOS to investors.

29    CellOS says that Mr Huber was also assisted in his scheme by Mr Tan, who was CellOS’ broker and who facilitated the sale of Mr Huber’s shares to investors. Further, in or about 2014, Mr Tan reached an agreement with Mrs Peck and Mr Peck in relation to selling further CellOS shares purchased from Mr Huber at US$2 per share, and sharing the profit. It is said that Mr Tan’s involvement generated a significant profit for himself.

30    Now the Pecks and Mr Tan raise similar matters in their defences. First, they submit that CellOS’ case against Mr Huber fails and therefore without any principal being liable their liability as accessories falls away. Second, they say that even if CellOS’ case against Mr Huber were to be made out, they are not liable as accessories because they did not have the requisite knowledge of Mr Huber’s scheme.

31    Further, not only is the Pecks’ defence that they did not know about Mr Huber’s scheme, but they say that they were carrying out another scheme whereby they, with Mr Tan, were fooling Mr Huber into selling them shares at US$2 per share, which they were then on-selling to their church community and others for a significant profit.

32    Now the present trial has proceeded on the basis of liability only at this stage. And it has been significantly fragmented for three reasons: (a) first, the parties significantly exceeded the initial two weeks allocated to the trial based upon counsels’ estimates; (b) second, the re-scheduling had to take into account the availability of overseas witnesses who the parties insisted could not be disposed of on a video link; and (c) third, counsels’ and the Court’s availability.

33    In summary and for the reasons which follow, CellOS’ principal claims against Mr Huber and the Huber controlled entities succeed. But the claims against the Pecks and Mr Tan fail. They did not hold the relevant knowledge to be liable as accessories to Mr Huber’s scheme and his statutory breaches. Before getting into the detail, let me make a few preliminary observations.

34    I should state at the outset that there is nothing wrong per se with a director entering into buy and sell transactions in relation to shares in the company of which he is a director, putting to one side for the moment insider trading questions or the take-over or change in control type scenarios. Moreover, such activity is usually undertaken by the director qua shareholder and has nothing to do with his statutory or fiduciary duties qua director. Further, there is no diversion of any business opportunity by the company by such activity as, of course, the company is usually not in the business of buying and selling shares in itself. It is not an opportunity that a company can or should avail itself of, putting to one side lawful reductions of capital including share buy-backs.

35    Now take a different scenario. What if the director is the CEO and is charged with raising equity funding for the company as its principal if not sole source of essential capital? And what is the situation where instead of discharging that duty the CEO goes off and creates a large secondary or grey market in the company’s shares by and for himself and through off-shore vehicles in exotic locations created for that purpose? And what happens if by doing so he diverts investors who otherwise would have participated in an equity raising by the company? And what happens if by that scheme there is a diversion of the company’s business opportunity to raise equity funds? And what happens if the CEO uses the profits he achieves from the sale to such investors through the secondary or grey market that he has created to make advances of such profits to the company as debt funds by entities related to him but which relationship is not disclosed to the board? So, instead of equity subscribed with dividends payable normally out of profits, the company is saddled with debt and an interest bill. But there is more. What happens if the loan agreement(s) allow the CEO related creditor to convert the debt into equity, but at a strike price per share well below what the company could have issued the shares for to the investors that were originally diverted by the CEO’s scheme? Does such conduct overall amount to a breach of the CEO’s statutory duties? And is this also an occasion where equity is useful to both impose a fiduciary duty and condemn the CEO for its breach?

36    I will answer all of these questions later, including explaining why my case is quite different to that dealt with by Chancellor Chandler in the Court of Chancery of Delaware in Beam v Stewart 833 A 2d 961 (Del Ch, 2003). But in doing so it will be necessary to embark upon a lengthy evidentiary odyssey. My case is rich in facts, including the application of Singaporean law proved as a foreign fact. Now brevity may be desirable where one is intellectualising on a legal issue stripped of the complexity of intricate commercial dealings over a lengthy period. But it is a luxury I cannot afford in the present case.

37    Let me make one other related point at this stage. A tricky feature of the present case has been that although on the one hand Mr Huber is said to have been the principal contravener with the Pecks and Mr Tan as his accessories, on the other hand the so called accessories were running their own agendas and making profits in tension at times with what Mr Huber knew or intended. So, although their objective conduct may have facilitated Mr Huber’s scheme, the so-called accessories’ intentions and knowledge did not have the same boundaries and content as Mr Huber’s intention and knowledge. And therein lies one important flaw in the foundations of CellOS’ case against the alleged accessories, which I will develop later.

38    For convenience, I have divided my reasons into the following sections:

(a)    The Huber controlled entities ([39] to [157]).

(b)    Chronology ([158] to [416]).

(c)    The witnesses ([417] to [495]).

(d)    Singaporean law on share issues ([496] to [526]).

(e)    Diversion of equity investment ([527] to [595]).

(f)    LGA and Pized loans ([596] to [717]).

(g)    The claims against Mr Huber and related entities ([718] to [842]).

(h)    The claims against the Pecks and Mr Tan ([843] to [1056]).

(i)    Conclusion ([1057] to [1058]).

THE HUBER CONTROLLED ENTITIES

39    Let me address a discrete issue that needs to be developed before proceeding further. There are a number of companies who bought, sold and transferred amongst themselves CellOS shares during the relevant period. In broad terms, CellOS submits that these entities were controlled by Mr Huber and used by him to cover his tracks. I would say now that I have little doubt that these entities were controlled by Mr Huber and, generally speaking, used to conceal his share dealings. Moreover, the opaque structures that he used, the denial of his control and his assertion that somehow Mr Narulla had gone rogue in relation to a large number of transactions did not instil me with great confidence as to the reliability of his evidence generally or the weight I should give to it. Indeed I would say at this point in relation to Mr Huber’s evidence that I have given it little weight except where it has been independently corroborated by other probative evidence or where it was adverse to his interest.

40    It is convenient to divide the following discussion into three parts: (a) first, those entities that received shares from early investors; (b) second, those entities used to on-sell early investor shares; and (c) third, those entities receiving CellOS shares as part of the LGA loan structure.

(a)    Huber controlled entities that received shares from CellOS early investors

41    One category of these Huber controlled entities are the offshore companies that between 20 September 2011 and 12 August 2015, received 47,872,063 CellOS shares from third party investors. These transactions are listed in schedule 1 to the Fifth Further Amended Statement of Claim (5FASOC) as follows and were summarised pursuant to s 50 of the Evidence Act 1995 (Cth) in the affidavit of Mr Matthew Critchley dated 22 September 2017, solicitor for CellOS.

42    These companies received the following number of CellOS shares from private investors:

43    I would also note that most of these entities also sold large numbers of CellOS shares to private investors.

Basalt Pte Ltd (Basalt)

44    Basalt is not a party to these proceedings. Basalt purchased 25,152,717 CellOS shares from early investors, over half the total shares purchased by the Huber controlled entities.

45    Mr Huber gave evidence that Basalt was one of Mr Narulla’s companies. Mr Narulla’s involvement is also shown from Basalt’s company address being the same as for Maitreya Mandala Pte Ltd.

46    Mr Wolfenden gave evidence regarding the circumstances in which Basalt purchased around 20 million CellOS shares. First, at CellOS’ AGM on 1 June 2012, Mr Narulla approached an early investor and said to him that he knew of a buyer and that he could connect him and then step out of the transaction. Mr Wolfenden acted for that early investor. Second, Mr Wolfenden also negotiated the sale of shares of other early investors. Some of those investors had bought in 2005 and 2006 for around AU$0.10 per share, and others in 2008 and 2009 for around AU$0.35. The known consideration paid by Basalt for these shares was between AU$0.11 and AU$0.74.

47    By 11 November 2012, Basalt went from a holding of 0 to a holding of 23,538,717 shares, and thereby became the registered holder of around 12% of the issued shares in CellOS.

48    Mr Wolfenden dealt only with an intermediary for the undisclosed principal, and that whilst he did not know the identity of the principal, he thought that it was Mr Huber.

49    Mr Huber’s denial that he directed Mr Narulla to purchase these shares on his behalf should be rejected for the following reasons.

50    First, Mr Narulla was undertaking consulting work relating to fundraising work for CellOS between June and December 2012, and Mr Narulla issued invoices to CellOS for this work. Mr Huber personally approved the payment of these invoices. CellOS was paying Mr Narulla to facilitate the purchase of shares from early investors on behalf of Mr Huber.

51    Second, the evidence indicates that Mr Narulla did not personally have the funds to purchase the shares. In relation to Mr Narulla’s invoices for the above consulting work, Mr Narulla’s covering emails twice stated that he was short of funds and asked that his fees be paid without delay. When asked how it was that Mr Narulla could purchase these shares, and yet be so short of funds, Mr Huber’s answer was only that it was a good way for Mr Narulla to hide the trading. I agree with CellOS that this answer should be rejected. The documentary evidence is contrary to any inference being drawn that Mr Narulla was hiding his involvement with Basalt from Mr Huber, and that when then pressed as to how Mr Narulla got the money in the first place to buy the shares from the early investors, Mr Huber had no explanation.

52    Third, Mr Huber personally signed the share statement for Basalt dated 30 November 2012 that showed these transactions. Mr Huber also accepted that he knew most of the sellers listed on Basalt’s share statement, and knew that they were early investors. Further, Mr Huber accepted that at that time he knew that these people had sold their shares to Basalt, that is, Mr Huber admitted that at this time he knew that Basalt had bought 12% of the issued shares in CellOS.

53    Fourth, on or around 21 November 2012 Mr Narulla effected a payment to the intermediary who negotiated the share purchase on behalf of Basalt in the sum of US$10,000. Mr Huber’s own evidence was that Mr Min Wee, independently of Mr Narulla, was administering his CellOS shares through offshore companies as his agent. But Mr Narulla forwarded this email to Mr Min Wee and there was no reason for Mr Narulla to forward this email to Mr Min Wee unless acting for and on behalf of Mr Huber in buying the shares for Basalt.

54    Fifth, Mr Huber personally gave instructions to Computershare to transfer shares from Basalt to Rex Investors and other companies that he controlled.

55    Sixth, Basalt transferred shares to offshore companies that Mr Huber admitted are his. Mr Huber said that the first three companies he set up to hold his shares were Prestongate Foundation, Palgrave Foundation, and Grand Maidstone Foundation. On or around 18 April 2013, transfers of 8,252,717 CellOS shares from Basalt to Prestongate Foundation (2,500,717 shares), Palgrave Foundation (2,252,000 shares) and Grand Maidstone (3,500,000 shares) were registered.

56    Seventh, significant payments to CellOS attributable to the LGA loan (and hence claimed by Mr Huber as his contributions) derived directly from the shares purchased by Basalt from these early investors, that is, the proceeds from the sale of Basalt shares were applied to Mr Huber’s benefit.

57    Eighth, Mr Huber admitted that shares Mr Narulla was selling on his behalf were not shares that he had transferred to Mr Narulla (or Mr Narulla’s controlled entities) for that purpose. The necessary inference is that Mr Huber knew where the shares were being sourced, namely from early investors.

Maitreya Mandala Pte Ltd (Maitreya Mandala)

58    Maitreya Mandala is not a party to these proceedings. Maitreya Mandala purchased 5,642,500 CellOS shares from early investors and sold 5,019,921 CellOS shares to private investors.

59    Mr Huber’s evidence was that Maitreya Mandala was a company controlled by Mr Narulla, and that to his knowledge as at early 2013 it was holding and selling his (i.e. Mr Huber’s) CellOS shares.

60    Mr Huber accepted that on 14 May 2013 he gave instructions to Computershare to approve the transfer of CellOS shares to Maitreya Mandala.

61    On or around 10 September 2012, when Basalt was purchasing shares from early investors, Maitreya Mandala purchased 400,000 from Mark and Sandra Evers, who were early investors personally known to Mr Huber. When it was put to Mr Huber that he had directed Mr Narulla to buy those shares at US$0.15 (the known sale price), Mr Huber denied it. Mr Huber also denied that he even knew that Maitreya Mandala had bought these shares from the Evers, but this denial should not be accepted. Aside from anything else, Mr Huber personally signed a Maitreya Mandala share statement form showing this purchase.

62    Further, there are the following transfers from Maitreya Mandala:

(a)    of 949,000 CellOS shares to Child and Family Education Foundation Pte Ltd, registered on 1 June 2012;

(b)    of 900,000 CellOS shares to Child and Family Education Foundation Pte Ltd, registered on 10 November 2012; and

(c)    of 342,579 CellOS shares to Rex Investors, registered on 13 April 2015.

Marsh Commercial Corp (Marsh Commercial)

63    Marsh Commercial is not a party to these proceedings. Marsh Commercial purchased 4,336,940 CellOS shares from early investors, and it sold 6,247,000 CellOS shares to private investors, including to the Pecks and to Mr Tan’s wife Ms Seah Chye Tin.

64    Mr Huber said that he did not recall this company, but it was used in the transfer and sale of his purchased CellOS shares.

65    Further, there are the following transfers from Marsh Commercial:

(a)    of 96,940 CellOS shares to Rex Investors, registered on 19 January 2015; and

(b)    of 2 million CellOS shares to the Pecks on 9 April 2014 (registered on 2 May 2014), sold for consideration of US$4 million.

Child and Family Education Foundation Pte Ltd (Child and Family Foundation)

66    Child and Family Foundation is not a party to these proceedings. Child and Family Foundation purchased 3,110,000 CellOS shares from early investors and it sold 9,125,755 CellOS shares to private investors.

67    Mr Huber accepted that Child and Family Foundation were selling shares on his behalf. It transferred 615,745 CellOS shares directly to his personal company, Swallow Limited (registered on 5 September 2013) (Swallow).

Swallow

68    Swallow is not a party to these proceedings, nor is it a company that purchased CellOS shares from early investors.

69    On 4 June 2013, Mr Huber entered into a service agreement with CS+ Services FZE (CS+) (a company registered in the United Arab Emirates) to arrange for the incorporation of Swallow in the UAE and for the provision of corporate services, and that under the terms of the agreement, CS+ would act on Mr Huber’s instructions in causing Swallow to take actions or enter into transactions. Mr Huber admitted that he controlled Swallow, that Swallow received, held and transferred CellOS shares, and that in December 2014, he instructed Grandeza to cause CellOS shares held by Swallow to be transferred.

Star Gazer Ventures Corp

70    Star Gazer Ventures Corp is not a party to these proceedings. It purchased 2,764,034 CellOS shares from early investors.

71    Mr Huber said that he did not recall this company, but that Star Gazer Ventures Corp was involved in the transfer of CellOS shares to Huber controlled entities. Star Gazer Ventures Corp transferred 675,000 CellOS shares to Harvest Sky, 764,034 CellOS shares to Willow and 1.1 million CellOS shares to Stardust Financial, which transfers were registered on 21 January 2014.

Stardust Financial

72    Stardust Financial as I have said is the thirteenth respondent in these proceedings. It purchased 1,588,181 CellOS shares from early investors and sold 477,181 CellOS shares to private investors.

73    Stardust Financial was incorporated in Belize on 19 April 2013, and at the time a certificate of incumbency was issued on 10 May 2013 its sole shareholder was Dinastia Limited and its sole director was Majestic Limited.

74    I would note that Dinastia Limited is not a party to these proceedings and was incorporated in the British Virgin Islands on 24 October 2012. Grandeza was its sole shareholder and director when a certificate of incumbency was issued on 29 October 2012.

75    I would note further that Majestic Limited is not a party to these proceedings and was incorporated in Belize on 29 October 2012. Grandeza was its sole shareholder and director when a certificate of incumbency was issued on 11 April 2013.

76    Mr Huber admitted that he controlled, and is the ultimate beneficial owner of, Stardust Financial, though Mr Huber says that he was not aware of this until July 2014. There was evidence that Stardust Financial was being administered to hold Mr Huber’s CellOS shares on his behalf.

77    Mr Huber also admitted that he directed Mr Min Wee in relation to Stardust Financial’s transactions.

78    In May 2013, Stardust Financial directly purchased 775,000 shares from Mark and Sandra Evers for US$0.15 per share. When it was put to Mr Huber that it had bought 775,000 shares from the Evers at US$0.15 in May 2013, Mr Huber denied any knowledge of the purchase. But Mr Huber’s affidavit in the Singapore proceeding expressly states that he bought the 775,000 shares because the Evers wanted to exit the company. When asked whether evidence that Mr Narulla bought these shares without his knowledge, or he bought them, was correct, Mr Huber said the former. As to how he then knew of the Evers’ motivation for selling, Mr Huber could not say.

79    The above is direct evidence of Mr Huber’s personal knowledge that his companies were buying CellOS’ shares at well below market price. Mr Huber’s denials should be rejected.

Harvest Sky

80    Harvest Sky as I have said is the seventh respondent in these proceedings. It purchased 1,234,000 CellOS shares from early investors, sold 2,573,000 CellOS shares to private investors, and received 2,583,641 CellOS shares from LGA in May 2014.

81    Mr Huber admitted that Harvest Sky was one of the offshore companies operated by Mr Narulla to handle his shares. Both Mr Narulla and Mr Min Wee stated in writing to Mr Huber that Harvest Sky was being administered to hold Mr Huber’s CellOS shares on his behalf.

82    Mr Huber directed the Pecks, as buyers of 4 million CellOS shares from Harvest Sky, to pay the purchase price to Swallow, Mr Huber’s personal Dubai company. In July 2014, Harvest Sky sold 70,000 CellOS shares for US$10 per share (transfers were registered on 1 July 2014 and 7 July 2014), and according to Mr Huber those proceeds were being directed by him through the Pized loan.

Rex Investors

83    Rex Investors as I have said is the fourth respondent in these proceedings. It purchased 1,025,319 CellOS shares from early investors, it sold numerous CellOS shares to private investors, and it received 1,681,516 CellOS shares from LGA in May 2014.

84    Mr Huber admitted that Rex Investors was associated with him, and was holding his shares.

85    Reference may be made to the following transfers involving Rex Investors:

(a)    Basalt transferred 1.5 million shares directly to Rex Investors (registered on 27 May 2013);

(b)    on 28 November 2013, Mr Huber sold the Pecks 250,000 CellOS shares that were transferred from Rex Investors (registered on 25 November 2013); and

(c)    Stardust Financial transferred 96,500 CellOS shares to Rex Investors (registered on 7 October 2014).

86    Mr Huber also personally approved transfers (see letters to Computershare) from Rex Investors and to Rex Investors, including from Nesterland, from Basalt and from Maitreya Mandala. On Mr Huber’s evidence, he was unconcerned by these transactions because they were his shares being transferred.

Schuller Investments Ltd (Schuller)

87    Schuller is not a party to these proceedings. It received 1 million CellOS shares from Mr Narulla (registered 22 May 2013). In around April 2014 those shares were transferred to Nesterland (registered 1 April 2014).

88    Mr Huber said that he did not know this company.

Money Max Foundation (Money Max)

89    Money Max is not a party to these proceedings. It purchased 600,000 CellOS shares from early investors and sold 2,978,500 CellOS shares to private investors, including the Pecks.

90    Mr Huber admitted that Money Max was transacting the sale of his shares, and that Mr Narulla was selling these shares to third parties on his behalf.

91    Basalt transferred shares both directly and indirectly to Money Max. The direct transfer was registered on 18 April 2013 of 5 million CellOS shares from Basalt to Money Max. The indirect transfer was first of 3.5 million CellOS shares from Basalt to Islington International Foundation (registered 18 April 2013) and then from Islington International Foundation to Money Max (registered 27 May 2013).

92    Money Max transferred shares to two known Huber controlled entities: Lighthouse (9 million CellOS shares) and Rex Investors (121,500 CellOS shares), which were registered on 25 February 2014.

93    Mr Huber sold shares to the Pecks that were transferred from Money Max, being a sale of 50,000 shares around 26 April 2013 (registered 27 May 2013), a sale of 800,000 shares on 22 May 2013 (registered 29 July 2013) and a sale of 700,000 shares around 17 June 2013 that was registered on 29 July 2013.

94    Mr Huber personally received legal advice in relation to Money Max making a large sale to an investor, Mr Steven Ng, and when Computershare refused to process the transfer of 9,121,500 in September 2013 because there was no certification for Money Max’s directors, Mr Huber personally directed Computershare to make the transfers.

Nesterland

95    Nesterland as I have said is the ninth respondent to these proceedings. It purchased 457,286 CellOS shares from early investors and sold 11,842,000 CellOS shares to private investors, including the Pecks.

96    Mr Huber admitted that Nesterland was one of the offshore companies operated by Mr Narulla to inter-alia hold and sell Mr Huber’s shares. Moreover, at one stage both Mr Narulla and Mr Min Wee stated in writing that Nesterland was being administered to hold Mr Huber’s CellOS shares on his behalf. However, Mr Huber stated in evidence that, although he did not realise at the time, the company was also being used as a conduit for Mr Narulla to buy other shares.

97    Mr Huber sold over 7 million CellOS shares to the Pecks that were transferred from Nesterland, and he gave instructions to Computershare to approve transfers from Nesterland. Further, Mr Huber knew that the proceeds from the sale of his shares were being paid to Nesterland, including by the Pecks.

98    Further, Mr Huber’s personal expenses were being paid out of a Nesterland bank account, into which the proceeds from the sale of CellOS shares were also being paid.

99    Further, Mr Huber had instructed his lawyers in the Singapore proceedings that he was the ultimate beneficial owner of Nesterland, although he now says that Mr Narulla was actually the ultimate beneficial owner of the corporate entity; see the letter dated 1 October 2015 from Oon & Bazul to Mr Narulla. But I would note at this point that in evidence was an email dated 6 October 2015 from Mr Narulla to Mr Huber asserting that Nesterland was Mr Narulla’s company.

100    In summary, there is conflicting evidence as to whether the ultimate beneficial owner of Nesterland was Mr Huber. But, on any view, Nesterland was used by Mr Huber as one of the conduits for the implementation of his scheme.

Blue Delorite

101    Blue Delorite as I have said is the fifteenth respondent in these proceedings. It purchased 400,000 CellOS shares from early investors and it sold 2,050,000 CellOS shares to private investors.

102    Mr Huber has admitted that he is the legal and beneficial owner of Blue Delorite. Mr Huber is its sole shareholder and director.

103    Both Mr Narulla and Mr Min Wee have also stated in writing that Blue Delorite was being administered on Mr Huber’s behalf.

Gambier Agency Ltd (Gambier Agency)

104    Gambier Agency is not a party to these proceedings. It purchased 245,000 CellOS shares from early investors and it sold 2,740,000 CellOS shares to private investors, including Mr Tan’s wife Ms Seah Chye Tin.

105    Mr Huber’s evidence was that Gambier Agency was Mr Narulla’s company.

106    Between 18 April 2013 and 17 December 2013, Basalt transferred 493,000 shares indirectly to Gambier Agency, via Prestongate Foundation and Nostrand Agency.

Leario

107    Leario as I have said is the twelfth respondent in these proceedings. It purchased 241,086 CellOS shares from early investors.

108    Leario was incorporated in Belize on 2 January 2014 and at the time a certificate of incumbency was issued on 4 February 2014 its sole shareholder and director was Autumn Harmony Corp.

109    I would note that Autumn Harmony Corp is not a party to these proceedings. It was incorporated in Belize on 21 January 2014, and at the time a certificate of incumbency was issued on 4 February 2014 its sole director and shareholder was Mr Min Wee.

110    Mr Huber admitted that he is the ultimate beneficial owner of Leario, though he says that he was not aware of this until July 2014. He also said that Mr Min Wee was administering it for his benefit.

Carreville Agents Ltd (Carreville)

111    Carreville is not a party to these proceedings. It purchased 75,000 CellOS shares from early investors.

112    Mr Huber’s evidence was that he did not know this company.

113    Between 18 April 2013 and 2 August 2013, Basalt indirectly transferred 700,000 CellOS shares to Carreville (via Prestongate Foundation). Carreville later transferred 700,000 CellOS shares to Marsh Commercial (registered on 6 November 2013).

(b)    Huber controlled entities used for on-selling early investor shares

114    Between 20 September 2011 and 8 May 2015, the Huber controlled entities transferred 51,945,132 CellOS shares into 12 companies that would be used to sell the shares to private investors. The transfers between Huber controlled entities are set out in schedule 2 to the 5FASOC and the transfers to individual purchasers are set out in schedule 3. That is, the same companies were not necessarily both buying and selling shares in the marketplace. And some companies were merely intermediaries.

115    I have already noted above where a company was involved in selling to private investors. But there were two additional companies, Lighthouse and Willow, that were solely involved in the sale of CellOS shares.

Lighthouse

116    Lighthouse as I have said is the eleventh respondent in these proceedings. It sold 5,150,000 CellOS shares to private investors, including 5 million shares to the Pecks.

117    Lighthouse was incorporated in Samoa on 19 July 2013 and at the time that a certificate of incumbency was issued on 30 July 2013 its sole shareholder and director was Dinastia Limited. I have addressed Dinastia Limited above.

118    Mr Huber admitted that he is the ultimate beneficial owner of Lighthouse though he says that he did not know this until July 2014. Both Mr Narulla and Mr Min Wee also stated in writing that Lighthouse was being administered to hold Mr Huber’s CellOS shares on his behalf.

Willow

119    Willow as I have said is the tenth respondent in these proceedings. It sold 320,000 CellOS shares to private investors.

120    Willow was incorporated in Belize on 30 April 2013 and when a certificate of incumbency was issued on 11 June 2013 its sole shareholder was Dinastia Limited. Its sole director is Enorme Ltd.

121    I would note that Enorme Ltd, which is not a party to these proceedings, was incorporated in Belize on 22 April 2013. Its sole shareholder and director is Grandeza.

122    Mr Huber admitted that he is the ultimate beneficial owner of Willow. Both Mr Narulla and Mr Min Wee stated in writing that this company was being administered to hold Mr Huber’s CellOS shares on his behalf.

(c)    Huber controlled entities receiving CellOS shares as part of the LGA loan structure

123    On 9 May 2014 LGA transferred shares to seven Huber controlled entities, as follows:

(a)    2,800,000 to Birinc;

(b)    2,300,000 to Sky Wealth;

(c)    1,681,516 to Rex Investors;

(d)    2,350,000 to Sun Way;

(e)    2,800,000 to Aura Finance;

(f)    2,583,641 to Harvest Sky; and

(g)    2,300,000 to Rich Max.

124    I have already discussed Rex Investors and Harvest Sky. Let me describe these other companies.

Birinc

125    Birinc as I have said is the second respondent to these proceedings. As noted above, it received 2.8 million CellOS shares from LGA.

126    Birinc was incorporated in Belize on 21 January 2014 and its sole shareholder and director is Autumn Harmony Corp.

127    Mr Huber admitted that he is the ultimate beneficial owner of Birinc though he says that he did not know this until July 2014. Both Mr Narulla and Mr Min Wee have stated in writing that Birinc was being administered to hold Mr Huber’s CellOS shares on his behalf.

Sky Wealth

128    Sky Wealth as I have said is the third respondent in these proceedings. As noted above, it received 2.3 million CellOS shares from LGA.

129    Sky Wealth was incorporated in Anguilla on 3 January 2014 and its sole shareholder and director at the time a certificate of incumbency was issued on 10 February 2014 was Autumn Harmony Corp.

130    Mr Huber admitted that he is the ultimate beneficial owner of Sky Wealth, though he says that he did not know this until July 2014. Both Mr Narulla and Mr Min Wee have stated in writing that Sky Wealth was being administered to hold Mr Huber’s CellOS shares on his behalf.

Sun Way

131    Sun Way as I have said is the fifth respondent to these proceedings. As noted above, it received 2.35 million CellOS shares from LGA.

132    Sun Way was incorporated in Anguilla on 3 January 2014 and its sole shareholder and director at the time a certificate of incumbency was issued on 10 February 2014 was Autumn Harmony Corp.

133    Mr Huber admitted that he is the ultimate beneficial owner of Sun Way, though he says that he did not know this until July 2014. Both Mr Narulla and Mr Min Wee have stated in writing that Sun Way was being administered to hold Mr Huber’s CellOS shares on his behalf.

Aura Finance

134    Aura Finance as I have said is the sixth respondent to these proceedings. As noted above, it received 2.8 million CellOS shares from LGA.

135    Aura Finance was incorporated in Belize on 21 January 2014 and its sole shareholder and director at the time a certificate of incumbency was issued on 4 February 2014 was Autumn Harmony Corp. I have already discussed Autumn Harmony Corp.

136    Mr Huber admitted that he is the ultimate beneficial owner of Aura Finance, though he says that he did not know this until July 2014. Both Mr Narulla and Mr Min Wee also stated in writing that Aura Finance was being administered to hold Mr Huber’s CellOS shares on his behalf.

Rich Max

137    Rich Max as I have said is the eighth respondent in these proceedings. As noted above, it received 2.3 million CellOS shares from LGA.

138    Rich Max was incorporated in Anguilla on 3 January 2014 and its sole shareholder and director at the time a certificate of incumbency was issued on 10 February 2014 was Autumn Harmony Corp.

139    Mr Huber admitted that he is the ultimate beneficial owner of Rich Max, though he says that he did not know this until July 2014. Both Mr Narulla and Mr Min Wee also stated in writing that Rich Max was being administered to hold Mr Huber’s CellOS shares on his behalf.

(d)    Mr Huber’s submissions concerning Mr Narulla

140    Mr Huber says that he did not instruct a corporate secretarial services provider to establish a web of offshore companies to disguise his involvement from CellOS’ shareholders and directors. The reason Mr Huber instructed Mr Narulla to meet with Heritage Fiduciary Services was based on advice given to him that if he was going to sell his personal shares to fund CellOS that he should do so via a corporate structure.

141    Mr Huber says that with the exception of the three companies that Mr Narulla told Mr Huber that Heritage Fiduciary Services had recommended he set up, the Huber controlled entities were established by Mr Narulla and Mr Min Wee without Mr Huber’s knowledge.

142    Mr Huber says that despite the assertions of CellOS, the procurement of some 30 million shares from early investors in CellOS was undertaken by the offshore companies established by Mr Narulla without Mr Huber’s knowledge. Mr Huber says that he did not become aware of what Mr Narulla was doing because the names of the purchasing shareholders were unknown to him. He therefore did not discover that these “new shareholders” were companies that Mr Narulla had established.

143    It is said that both Mr Huber’s lack of knowledge and Mr Narulla’s purchase and on-sale of early investor shares is evidenced in an email from Mr Narulla to Mr Min Wee dated 30 September 2016 in which he states “the lawyers in Melbourne seem to have assumed that whatever is held by these companies [Rex Investors and Nesterland] was Huber’s. This is not correct, but I can understand them making this mistake.” I would note that CellOS released Mr Narulla from any claims it may have had against him.

144    Further, Mr Huber says he was also unaware that the Pecks were purchasing shares from Mr Narulla which he had in turn purchased from early investors. Mr Huber was simply unaware of this having occurred. It is said that Mr Huber’s lack of knowledge or involvement in this scheme is supported by the evidence including his direction to Computershare to refuse to allow share transfers without his approval. But I would note that the direction in evidence dated 25 February 2015 was not general in nature, and appears to have concerned shares concerning three particular individuals.

145    Further, Mr Huber contends that Mr Huber’s lack of knowledge of the purchase and sale of early investor shares by Mr Narulla, the Pecks and Mr Tan is also supported by Mr Tan’s witness statement at paragraphs 26 to 28, which stated: “Harveen took the opportunity to tell me that he had a lot of shares to sell… Harveen then said that he would sell to me on one condition - I was never to let Jason or anyone else know that he was selling CellOS shares”. This evidence was uncontested. Mr Tan’s evidence was that he believed that from early June 2013 he was purchasing shares sourced from Mr Narulla, despite the fact that some payments were directed to Huber controlled entities.

146    Mr Tan’s evidence was that Mr Narulla hid the sale of his shares from Mr Huber and further that Mr Tan did not disclose to Mr Huber or the Pecks that Mr Narulla was selling shares to Mr Tan. Mr Tan’s evidence suggested that Mr Tan and the Pecks attempted to hide from Mr Huber the on-sale of Mr Tan’s shares.

147    Mr Huber referred to other evidence from Mr Tan which he contends supports the proposition that the share trading with Mr Narulla was covertly conducted without Mr Huber’s knowledge.

148    So, Mr Tan gave evidence under cross-examination (see also his amended witness statement at [28] to [32]) as follows:

(a)    “You know, from Constance because it – Jason Huber would know about it. So she would transfer to my wife’s name because my wife’s name is Sao Chat Ing in Chinese. Jason Huber would not be able to identify this name. Therefore, the name – the – the shares were transferred to my wife and for her to on-transfer to her buyers, and it’s true if it’s the amount that’s shown.”

(b)    “Narulla told me that he has a lot of shares in his name and his wife’s name, his family name and his friends’ name, and that if I’m interested he can sell it to me. Yes. But he says that on the one condition that I must never ever let Jason Huber know that he is selling sell-of shares. As a matter of fact, he has repeatedly sworn me to secrecy that this will be the only condition that he’s willing to sell the shares to me and to my clients. Thank you.”

(c)    “I was not given a copy of the engagement letter, at all. I’m not privy to the commercial terms, but what has been verbally put across to me is that it’s strictly meant for financial institution and PE funds. That’s it.

Who do you say told you that, Mr Tan?---Sorry?

Who do you say told you that?---Jason Huber, as well as – wait – Jessie Wong Mei Lee, who is the dealing director of UOB Kay Hian.

Now, during 2013 – after March 2013 when this letter was entered into, you’re aware, aren’t you, that there was a number of presentations that were given by Mr Huber and by you, in many cases, in respect of prospective investors in CellOS; that’s right, isn’t it?---Yes, sir.

And you understood that those presentations were being done for at least a purpose of people investing under the UOB offer; that’s right, isn’t it?---Are you talking about the meeting with UOB Kay Hian, or the meeting at his office?

I’m talking about presentations that were given during the course of 2013 either by your or Mr Huber or Mrs Peck; you understood a purpose of those presentations was for investors to invest in the UOB offer; that’s right, isn’t it?---Absolutely – absolutely no, because UOB Kay Hian is only strictly meant for financial institution and private equity funds. It’s not open to private individuals.”

(d)    “- - - you knew that UOB – through UOB, CellOS was offering people to subscribe for shares in CellOS at $5 a share in 2013; you knew that, didn’t you?---Yes. I know. But I would like to stress it is meant for financial institution and PE funds only.

Well, I want to put to you that that’s false, Mr Tan, and you know it to be false. That’s right, isn’t it? You knew - - -?---No, I - - - - - - the UOB offer was open to wealthy people?---I beg to differ. It is absolutely meant for financial institution as well as PE funds only.”

(e)    “MR CRUTCHFIELD: … What I want to suggest to you, Mr Tan, is that you well knew in 2013 that you introducing investors to CellOS and arranging for those investors to receive existing CellOS shares at $2 per share had the effect of diverting investors from CellOS and those investors might have invested at $5 a share. That’s right, isn’t it?---No, I – I disagree. Like what I say, I reiterate UOB Kay Hian PE fundraising is only meant for financial institution and PE funds. That’s it.”

(f)    “Mr Anthony Cooper, I do not know him. I don’t – I don’t talk to him during that time at all. When this letter came to me – this email was forwarded to me, I rang Jessie Wong Lee – Wong Lee Mei of UOB Kay Hian and Jessie Wong told me that Melvin – we would only accept PE funds as well as financial institution. So any private individuals we would not take.”

(g)    “And a company called Irrika Centre Corporation?---Yes. This I know. This company belongs to Harveen Narulla Singh. And a company called Apex - - -?---Yes. - - - Pte Ltd?---Yes, this is one of Harveen’s company. In fact, I also invested in this particular company. You did. Yes. That’s right?---Yes, sir.

Well, I want to suggest to you that Irrika Centre Corporation and Apex Pte Ltd, you don’t know one way or the other whether or not Mr Narulla was the ultimate beneficial owner of those companies, do you?---Mr – Harveen told me that, “Please invest in my company. I have a few companies.” And Apex Peak is one of the company, Gilcrux Holding, Click Central are his company. And also there’s one logistic company in Africa. In fact, time and again, he’s trying to ask me to bring clients, investors, to invest in his companies.”

(h)    “Look, I will withdraw the question – I apologise, Mr Tan – in the interests of time. It’s in your defence. I will move on. So the last thing I wanted to – I think the last thing I wanted to ask you about is I just wanted to put it to you squarely that you understood, didn’t you, that the effect of Mr Huber making available shares by way of one of these vendor entities at $2 and then those shares being on-sold of between US$5 and US$10 was causing CellOS to be disadvantaged because investors were buying shares from you or from the Pecks that they might otherwise have subscribed for in CellOS. You understood that, didn’t you?---No, I – I think if the market is upbeat and there are people who are prepared to pay $10, $25 – I do not know who sold at $25, but if there is a market for that kind of price every shareholder would be very, very happy, and it’s also very good for the company because we are all very hopeful that the company would go IPO, even above US$25.

All right. When you sold shares with Mrs Peck or for Mrs Peck in 2013 and 2014, can you just explain to his Honour how the profits were split between you and the Pecks?---Okay. Your Honour, basically, the process is if Constance client were to purchase shares at $5 and I’m able to get shares below $5 the difference I would split with Constance.

Fifty/fifty?---Not quite 50/50 because some of the clients are Constance’s friend and they also want to have a cut of the commission. It is their friends, so we split in many ways.”

(i)    “I want to suggest to you that you knew that those shares were shares that were either owned by Mr Huber or shares that he could otherwise facilitate the sale of. That was right, isn’t it?---No, that’s incorrect. That’s incorrect, sir.

Well, some of the companies that you were – that were the vendors of the shares after June 2013 were the very same entities that you have already agreed were Huber-controlled entities – I withdraw that – were entities that were associated with Mr Huber, such as Nesterland?---Yes, sir.

Well, how do you explain the fact that magically Nesterland becomes – those shares become owned by Mr Narulla? How does that happen?---Okay. When I purchase shares from Harveen, Harveen told me that this are shares of his company, his friends, his family and himself, and my cheques are all issued to Harveen, to Harveen’s wife, just Nicole, to Click Central, Gilcrux and to Nesterland, and I believe that these are his company and he swore me to secrecy that Melvin – if you want to buy these shares, this – my shares and never ever to let Jason Huber know that I am selling CellOS shares.

And how many shares did you - - -?---So I believe that these - - -

I’m sorry, Mr Tan?---Yes, sir.

How many shares, roughly, did you - - -?---Yes, sir.

- - - did you acquire from, you say, Mr Narulla after June 2013?---I – I didn’t calculate because there’s a lot of shares. In fact, I have given some cheque butts to – to – as a - -

Okay. But millions of shares; you agree?---Sorry?

Millions of shares?---Millions. Yes. That’s right.

Yes. And you well knew, didn’t you, that Mr Narulla was not in a position to be owning millions of CellOS shares?---On the contrary, I think he should be able to, because he owns many companies. And I think he has a lot of money. He owns many company. And I – I believe that he – he has the money. And, also, he was telling me that he is able to – to go to the market to look for more shares if I want more.

Well, I suggest to you, you well knew that these shares were coming from a Jason Huber-controlled – or company, or companies associated with Jason Huber after June 2013?---No. Absolutely – I – I strongly believe there’s no inkling between Jason Huber and – and Harveen, because he swore me to secrecy time and time and again that, “Melvin, please, never, ever – if you want to buy my shares, never, ever to let Jason Huber know that I am selling CellOS shares.” So I strongly believe that it’s nothing to do with Jason Huber. He is completely out of the loop.”

149    Mr Huber contends that some of this evidence constitutes an admission that Mr Tan and Mrs Peck used Mr Tan’s wife to hide transactions from Mr Huber to prevent him from discovering and from blocking the share transfers.

150    Further, Mr Huber referred to Mr Douglas Reid’s affidavit dated 8 September 2017 attaching a number of emails from Mr Narulla to various parties that Mr Huber says shows that he regarded a number of the “Huber Controlled Entities” as his own companies and that he had used Grandeza for various services for his own companies. But I would note that many of these emails were well after the event and of doubtful veracity or probative value.

151    For example, in an email dated 30 September 2016, between Mr Narulla and Mr Min Wee, Mr Narulla writes to Mr Min Wee stating that Grandeza had “managed (Mr Narulla’s) CellOS assets” and that while the lawyers in Melbourne (i.e. the Applicant's present lawyers) “seem to have assumed that whatever is held by these companies was Huber’s”, “(t)his is not correct” and that should CellOS claim against Mr Huber, “any award now may overlap with the shares that were mine and do not belong to Huber”.

152    Mr Huber refers to another part of the same email:

Fast forward to 2015, and Huber and I had not been close for some time, it made sense for me to ensure that my shares were managed discretely, with no reference to him. Hence on one of my trips back from Africa, we went through an exercise where I took control of 2 entities, without reference to their previous transacting history, which I am not privy to.

Consequently, the shares in Rex Investors Ltd (‘RIL’) and Nesterland Services Ltd CNSL’) were mine. I accordingly instructed for them to be transferred respectively to be held by Kwik Vaish Ltd (C0000002l12) and by me (SRN C0000000715). Unfortunately, I note RIL and NSL have been named by the Melbourne lawyers as respondents in Cellos’ action against Huber.

153    Mr Huber submits these documents show that Mr Narulla has admitted he used the services of Mr Min Wee and Grandeza to set up and manage companies for himself. He then recruited the main CellOS share broker, Mr Tan, to stop raising capital for Mr Huber and CellOS and instead to join Mr Narulla in trading shares which evidently was a lot more profitable for Mr Tan than the commission he was earning as a broker for Mr Huber and CellOS.

154    Further, he says that Mr Narulla purchased many shares and mixed them with Mr Huber’s shares which Mr Huber had entrusted to Mr Narulla to manage for the benefit of CellOS. As a result Mr Narulla was able to clandestinely trade millions of shares he purchased on the side and accumulate sizeable wealth for himself.

155    Further, Mr Huber refers to an email that Mr Narulla sent to Mr Huber and his lawyers Oon & Bazul on 6 October 2015. The email refers to a further attached email addressed to Mr Min Wee which lists various Huber controlled entities. Mr Narulla admits to Mr Huber that Nesterland is his own entity and further states that “[t]o the extent that the other companies listed hold Cellos shares, these would be held for [Mr Huber].” The entities listed are:

Aura Finance Limited

Birinc Centre Corp

Blue Delorite

Harvest Sky Holdings Limited

Lighthouse Investments Ltd

Rich Max Investments Ltd

Sky Wealth International Ltd

Swallow Limited

Willow Financial Limited

Pized Management Ltd

Stardust Financial Corp

156    Further, Mr Huber refers to an email from Mrs Peck dated 8 October 2013 in which Mrs Peck says to Mr Huber in respect of vendors selling early investor shares in CellOS “no one knows who the sellers are, and Melvin is not at liberty to disclose who they are.” This document is more comprehensively extracted later in my reasons.

157    What should be made of all of this? I am prepared to accept in favour of Mr Huber that there were some dealings engaged in by Mr Narulla, which may also have involved Mr Tan, that were unknown to Mr Huber. I am also prepared to accept that some dealings between Mr Tan and Mrs Peck were kept from Mr Huber. But to so accept does not substantially detract from my finding that Mr Huber set up and engaged in the relevant scheme. And more generally, as I have said, Mr Huber set up and ultimately controlled the Huber controlled entities, subject to the qualification I have already made concerning Nesterland.

CHRONOLOGY

158    Having discussed the relevant Huber controlled entities, it is now convenient to set out a detailed chronology of the salient events.

(a)    Events prior to 2011

159    On 8 June 2005, CellOS was incorporated under the name “Indoaust Investments Pty Ltd”. Notwithstanding that the company retained the name Indoaust until 2013, I have used the name “CellOS” to describe the company throughout.

160    On 19 December 2005, Mr Huber became a director and CEO of CellOS.

161    On 20 February 2007, the company held its AGM, at which it was resolved that the status of the company be changed to a public company, known as “Indoaust Investment Ltd”.

162    Now, in evidence before me is an undated copy of the CellOS’ constitution, titled “Constitution of IndoAust Investments Ltd” and prepared by Middletons. Let me set out some relevant extracts:

2.    Capital

2.1.    Power of Directors to Issue Shares and other securities

(a)    The issue of Shares, options and other securities of the Company is under the control of the Directors.

(b)    Any Share, option or other security may be issued with preferred, deferred or other special rights or restrictions, whether with regard to dividends, voting, return of capital, payment of calls or otherwise, as the Directors decide.

(c)    Clause 7.1(a) has effect without prejudice to any special rights conferred on the holders of any issued Shares, options or other securities.

…

2.4.    Non-recognition of equitable or other interests

Except as otherwise provided in this Constitution, the Company must treat the registered holder of any Share as the absolute owner of the Share and must not, except as ordered by a court or as required by statute, recognise (even when having notice) any equitable or other claim to or interest in the Share on the part of any other person.

…

8.    Transfer of Shares

8.1.    Transferability of certificated Shares

(a)    Subject to this Constitution, the Act, the Listing Rules and ASTC Settlement Rules, a Member's Shares may be transferred by instrument in writing in any form authorised by the Act or in any other form that the Directors approve.

(b)    No fee may be charged by the Company on the transfer of any Shares.

(c)    A transferor of Shares remains the holder of the Shares until the transfer is registered.

8.2    Registration of transfers

(a)    Subject to this Constitution, the Act, the Listing Rules and ASTC Settlement Rules, where Shares are transferred, the following documents must be lodged for registration at the registered office of the Company or the location of the relevant Share register:

    (i)    the instrument of transfer;

    (ii)    the certificate (if any) for the Shares; and

   (iii)    any other information that the Directors may require to establish the transferor’s right to transfer the Shares.

(b)    On compliance with clause 8.2(a), the Company must, subject to any powers of the Company to refuse registration, register the transferee as a Member.

(c)    The Directors may waive compliance with clause 8.2(a)(ii) on receipt of satisfactory evidence of loss or destruction of the certificate.

…

8.6    Cases where registration may be refused

In any case here the Company is entitled to refuse registration of the transfer in accordance with the Act and this Constitution, the Company may do any or all things permitted by the Act.

…

11.    Alteration of capital

11.1.    Power to alter capital

The Company may, by resolution, do any one or more of the following:

(a)    increase its share capital by the creation of new Shares;

(b)    consolidate all or part of its share capital;

(c)    subdivide all or any of its share capital; and

(d)    cancel Shares that at the time of the resolution have not been taken or agreed to be taken by any person or that have been forfeited and reduce its share capital by the amount of the Shares so cancelled.

…

15.1.    Appointment and removal [of Directors]

(a)    There must be at least 4 Directors, or such greater number of Directors not exceeding 10 as the Directors think fit, in office at all times.

(b)    Subject to the Act, the Company may at any time by resolution passed in general meeting:

(i)    appoint any person to be a Director; or

(ii)    remove any Director from office.

(c)    Subject to the Act, the Directors may at any time appoint any person to be a Director. That person holds office until the end of the next following general meeting and is eligible for election at that meeting.

163    On 28 May 2007, there was a meeting of directors, at which it was resolved that Mr Narulla was to be employed by the company:

3.    Singapore

…

d.    It was resolved that appointment of Harveen Singh Narulla as General Counsel to manage all legal work of the company at a rate of AU$220K p.a. A job description will be required for this role of Legal Counsel and Business Development.

164    On 19 July 2007 there was a meeting of directors, which minutes record:

c.    CEO Position

•    Jason Huber provided his formal resignation as CEO to the Board which is accepted with thanks for the significant contribution he has made to the company

•    The Board hereby assumes the role of CEO and shall continue to do so until a replacement is found with the appropriate attributes and experience to take the company to a listing on the Nasdaq.

…

d.    Director appointments

…

•    Jason Huber was appointed Chairman of the Board until January 2008 subject to the affirmative resolution of Jesbir Narulla.

165    From March 2009 to mid-2011, as a consequence of the global financial crisis, CellOS effectively ceased operating due to lack of funds.

166    On 8 May 2009, Mr Ramchandra Hegde was appointed a director of CellOS. This appointment was ratified by a meeting of the directors on 7 October 2009.

167    As at 30 June 2009, CellOS had 179,220,714 ordinary shares on issue, with an increase of 12,855,595 shares since 30 June 2008 (taken from the financial statements dated 26 July 2011):

(a)    13,263,529 shares had been issued;

(b)    793,242 shares had been created by the conversion of debt into equity; and 1,201,176 shares had been cancelled.

168    On 7 October 2009 a board meeting was held, the minutes of which record as follows:

4. Fundraising

The Board of Directors noted the latest Information Memorandum that was tabled at the meeting. Mr Jason Huber gave the meeting an update on the current fundraising efforts:

a.    The present focus for short term funding was 3 investors that had shown serious interest in investing sums up to USD 250,000 each. Aside from this there was also a list of telecommunications investment funds provided by Merrill Lynch that would be studied to identify potential target investors.

b.    The Company had received industry endorsement from operators for CellOSTM and was planning its approach to Network Equipment Manufacturers.

169    From 2009 onwards, CellOS had a form of information memorandum for use in its fundraising activities. This document was continually being updated for this purpose: for example, in evidence before me was a copy of the information memorandum dated 26 April 2013, which KPMG Corporate Finance Pty Ltd had assisted with preparing (Information Memorandum). The Information Memorandum is extracted later in the chronology, in accordance with its date.

170    From 13 May 2010 to 29 February 2012, Mr Huber was subject to a sequestration order.

171    As at 30 June 2010, CellOS had 179,708,714 ordinary shares on issue, with an increase of 488,000 shares from 30 June 2009 (taken from the financial statements dated 8 March 2012):

(a)    433,000 shares issued by subscription;

(b)    5,000 shares created by the conversion of debt into equity; and

(c)    50,000 shares issued by allotment.

172    On 14 December 2010, there was a meeting of the directors, with the minutes recording:

Resignation – Mr Harveen Narulla

•    The Board of Directors noted the resignation by Harveen Narulla as Company Secretary. Mr Harveen Narulla is stepping down to pursue other interests. The Board of Directors accepted the resignation …

…

7.    Fund Raising and Commercial Development

•    The Board agreed that the Global Financial Crisis has made the fund raising effort more difficult, yet noted that the last 5 months from July 10 have seen more positive activity.

•    The Board agreed that major funding is dependent on Indoaust getting contract(s) and that the Indonesia project is currently the most realisable contract. The JV between Indoaust and Telemedia will have a 15% stake in the Indonesian public company of which Indoaust will have a 50% share. A CellOSTM demo is planned for Q1 2011 followed by a road show to demonstrate the technology to the operators.

•    The Board noted the other business opportunities being pursued, they are:

•    China Satcom

•    Boeing – to re ignite

•    Aeromobile – to re ignite

•    Nokia – to re ignite

•    CISCO

•    The Board noted that Public Equity (PE) firms have shown some interest in Indoaust but none of them have furnished Letters of Intent.

•    Mr. Daniel informed the board that he has had discussions with SF Funds who informed him that they are looking to invest between USD50M – USD100M which they need to invest by end of Q1, 2011 and are considering Indoaust. At this stage Daniel cannot verify if this is true or just talk.

•    Other PEs that have shown an interest in Indoaust are:

•    Torus

•    Bentleigh Capital

•    EQ Ventures

•    Swiss Funds Management

•    CK

…

Settlement of Jason Huber’s HSBC debt of $15,574.52

•    The Board of Directors by unanimous agreement passed a resolution that Indoaust will settle a debt of Jason Huber to HSBC of AUD15,574.52. The Board agreed to Company Secretary’s proposal to offset this amount against Jason’s loan in the Company accounts.

(b)    Events in 2011

173    From at least January 2011, Mr Huber was in the marketplace raising funds for CellOS in order to recapitalise the company.

174    According to the Information Memorandum, between 2011 and 2012, CellOS raised an amount of close to US$10 million at US$2 per share.

175    On 4 January 2011, CellOS engaged Mr Tan to act as CellOS’ broker selling shares to raise funds. Let me set out the terms of Mr Tan’s engagement, which was signed by him and by Mr Huber:

MANDATE AND ADVISORY AGREEMENT

This MANDATE AND ADVISORY AGREEMENT (“Agreement”), dated this 04 day of January 2011, is entered into by and between Tan Choon Huat, Melvin, (hereinafter referred to as “Advisor”), NRIC: S1296406D

and Indoaust Investments Ltd (hereinafter referred to as “Indoaust”), a corporation duly organized and existing under the laws of the Victoria, Australia, with office address at the Level 4, 43 Hardware Lane, Melbourne, Victoria 3000, Australia.

1.    Mandate Defined

INDOAUST hereby mandates the Advisor, on a non-exclusive basis and according to the terms and conditions set out below to seek and refer to INDOAUST one or several potential investors (hereinafter commonly referred to as “Investor”) for investment in its upcoming fundraising exercise.

Indoaust’s goals in connection with this mandate include, but are not limited to, securing an investment of up to USD 20 Million from Investors.

This mandate applies only to Indoaust’s upcoming round of fundraising and Investment accepted from referrals by the Advisor shall be limited to the aggregate investment amount of USD 20 million.

2.    Consultancy Services

The Advisor’s duties under this Agreement shall include, but not be limited to providing advice and assistance in raising equity as defined above.

3.    Compensation

Subject to the proviso below in this clause, with respect to any Investor introduction by Advisor and in recognition of any successful transaction taking place as a result of Advisor’s introductions, whether direct or indirect, INDOAUST shall pay to Advisor a commission which shall be earned upon a benefit (hereinafter commonly referred to as “Investment”) received by INDOAUST as follows:

For the total amount of equity, either by way of issue of fresh shares/sale of existing shares, the fee (all inclusive) shall be 5% (five percent) of the equity below USD 1mil; plus an additional 10% commission paid in shares for investment up to $5 mill [“1mill” has been crossed out and amended to “5mill”].

A 5% (five percent) of the equity above USD 1mil up to USD 20mil, which shall be the total fee paid out by INDOAUST for any funds raised by the Advisor. The Advisor will arrange compensation for any intermediaries connected with it whose assistance is used in the course of raising funds pursuant to this Agreement. INDOAUST shall not have any obligation to compensate such intermediaries.

…

6.    Term

Subject to the proviso below In this clause, this Agreement and the right to earn compensation on Investment as set out above shall be valid and enforceable until 28 February 2011, and may be extended upon mutual agreement, INDOAUST however reserves the right to terminate this Agreement without having any obligation to provide any reasons or explanation therefore, upon giving the Advisor 21 days’ written notice of the same. In the event of termination, any discussions in progress for the raising of funds for INDOAUST shall be allowed to continue and complete, with fees payable as agreed above, upon successful conclusion of the said discussion(s) irrespective of the time/date limitation.

Proviso:

Upon the completion of the Indoaust fundraising exercise to raise USD 20 million, the parties agree that INDOAUST shall have the option of terminating this Agreement irrespective of the stage of discussions with any proposed Investor referred by the Advisor. In the event that any discussions are ongoing between any proposed Investor referred by the Advisor and INDOAUST. INDOAUST may at its option continue with such discussions, with the result that if any Investment is received by INDOAUST the Advisor shall nonetheless be compensated as set out above.

7.    Investor Disclosure

In conjunction with each prospective Investor referral to INDOAUST by Advisor, Advisor will obtain in writing, signed by the prospective Investor a Non-Disclosure Agreement provided by INDOAUST or satisfactory to INDOAUST prior to release of any proprietary and confidential information of INDOAUST Upon receipt of a signed NDA from a prospective investor introduced by Melvin, Indoaust shall extend exclusive rights to Melvin to that prospective investor in relation to this Mandate.

Indemnification

Advisor hereby indemnifies and holds harmless INDOAUST its affiliates and its and/or their respective directors, officers, employees, agents and controlling persons from and against any and all losses, claims, damages, liabilities and expenses whatsoever, joint or several, as incurred, related to or arising out of or based upon any act or omission of Advisor in connection with any Investor referral by Advisor to INDOAUST.

8.    Governing Law and Jurisdiction

This Agreement shall be governed by and construed in accordance with the laws of Victoria, Australia, and the parties agree that the Courts of Victoria, Australia, shall have exclusive jurisdiction over any dispute arising in connection with this Agreement.

9.    Miscellaneous provisions

Any taxes or contributions levied by State or local authorities on a party shall be paid by and shall be the exclusive liability of that party and shall in no way be chargeable to the other party to this Agreement.

None of the parties hereto shall act or have the power to act for the other in any respect whatsoever, and the relationship between the parties hereto shall be deemed to be that of independent contractors (and not of agent and principal) and neither party has any authority to commit or bind the other party in any manner whatsoever. All persons employed or engaged by each of the parties hereto in connection with the performance of this Agreement shall in no way, either directly or indirectly, be considered employees or agents of the other party hereto.

This Agreement and any of the terms hereof may not be disclosed to or relied upon by any party other than the parties hereto. This Agreement, and the rights and obligations of Advisor, may not be assigned by Advisor without the prior written consent of INDOAUST.

This Agreement contains the entire agreement between the parties, and all prior agreements, whether oral or written, are merged herein. This Agreement may not be amended, altered or changed in any way except in writing executed by the parties hereto.

The invalidation or unenforceability in any particular circumstance of any of the provisions of this Agreement shall in no way affect any of the other provisions hereof, which shall remain in full force and effect.

176    On 1 June 2011, Mr Wolfenden was appointed a director of CellOS, which appointment was ratified by the board at a meeting on 25 and 26 July 2011.

177    As at 30 June 2011, CellOS had 197,834,286 ordinary shares on issue, an increase of 18,125,572 shares from 30 June 2010 (taken from the financial statements dated 5 April 2012):

(a)    3,139,297 shares had been issued by subscription;

(b)    55,025 shares had been created by the conversion of debt into equity; and

(c)    14,931,250 shares had been issued by allotment.

178    On 25 and 26 July 2011, there was a meeting of directors, which minutes record:

9.    Fund Raising

•    The Board noted that the company has received offers from some of the investors in Singapore and raised over S$ 5 million upto June 30, 2011. The Board directed the Company Secretary to get a confirmation that the offers to buy shares received in Singapore do not contravene Section 708 of the Corporation Act of Australia.

•    The Board noted the report from the CEO [Mr Huber] that some of the sophisticated investors based in Singapore, would be interested in subscribing to the shares in the company after the audit of financials of the company are completed.

•    The Board instructed the Company secretary to submit to the Board at every Board Meeting a statement of new shareholders approved since previous Board meeting for ratification and latest statement of shareholders.

179    On 26 July 2011, CellOS’ financial report for the year ended 30 June 2009 was finalised and signed off by HLB Mann Judd. Let me set out some relevant matters:

(a)    The company’s after tax loss was AU$3,489,160.

(b)    From July 2009 to 26 July 2011, CellOS had raised AU$6.2 million.

180    On 23 August 2011, Mr Hegde wrote to Mr Krishna Ramachandra, managing director of Duane Morris & Selvam lawyers, requesting an advice regarding the “the parameters of the current fund raising regime in Singapore (from a regulatory perspective) and if there are any particular steps we need to take in respect of a future IPO”.

181    On 20 September 2011, transfers of CellOS shares were registered from Melior Otzara Pte Ltd and Mr Narulla to Child and Family Foundation, totalling 1 million shares. This seems to be the earliest transfers to a Huber controlled entity. Now I should observe at this point that I am not going to list every single transfer of shares to, from or between the Huber controlled entities, but I have noted some particularly relevant or large transactions in this chronology. Further, I have already discussed these entities earlier in my reasons.

182    From around 20 September 2011 until around 13 June 2013, Child and Family Foundation was selling CellOS shares to individual purchasers. The total number of shares sold over this period was 9,125,755 CellOS shares. I note the long time frame of Child and Family Foundation’s sales because most other Huber controlled entities only began selling CellOS shares to individual purchasers from late 2012 or early 2013 (see schedule 3 of 5FASOC).

183    On 3 November 2011, Mr Huber presented a report on fundraising to a meeting of the CellOS board. The minutes of that meeting state:

9.    Fund Raising

•    The Board noted the report of the CEO that some of the sophisticated investors based in Singapore, would be interested in subscribing to the shares in the company after the audit of financials of the company are completed. It was decided to expedite the audit of financial statements for both 2009 and 2010.

10.    The Bankruptcy Proceedings of Jason Huber

•    Jason Huber, CEO submitted a letter and explained to the Board concerning the bankruptcy proceedings against him. It was noted that the proceedings were brought by one of the investors who lent money to Jason who in turn used the same to fund the company. Jason informed the Board the he has now arranged for funds to clear all the dues and he is advised by the Lawyers that after the payment the bankruptcy shall be declared null and void in about two to three months’ time.

•    The Board deliberated in detail on the issue and having considered the letter and facts of the case decided to allow time for Mr. Jason to clear the case and report to the Board. The Board requested Jason to obtain a letter from his Lawyers indicating time required for this settlement.

184    Let me set out the letter described in the minutes above, also dated 3 November 2011:

Clarification on personal Bankruptsy and status

My personal bankruptcy was the result of one of my creditor Mr. John Buhagiar from whom I borrowed money to fund Indoaust. I did this to protect the company in case of any claim in the future. However, Blue Deloroite had given 1,000,000 million shares held in Indoaust to him as security against this borrowing, the value of which was enough to cover fully the amount of the loan and interest. But he filed for my bankruptcy when I was unable to pay the amount when he demanded it back but he had not disclosed to the Court that he is holding the shares as security. At the same time, subsequent to the liquidation of Star Intellect, the liability regarding ATO of about $300,000/- also got included in my liability as I was the sole director of Star Intellect. As can be seen from above, both the dues were related to Indoaust and not my personal credit. I was unable to fight this as I was more focused on raising funds for Indoaust and protecting the interest of Indoaust shareholders.

As the Board is aware, in 2011 I have been able to raise enough funds to secure Indoaust business. I have also arranged for funds to clear the dues of both John Buhagiar and the ATO and initiated steps to annul my bankruptcy through solicitors. I expect the process to take about 2 to 3 months and this would clear my bankruptcy by annulment.

I would try to get in writing from my solicitor the reasonable time frame within which the bankruptcy could be annulled and inform you of the same.

In view of the above I request the Board to understand this unusual situation of bankruptcy which I got into in the process of protecting the company and its shareholders and the steps I have taken to get this wrongful bankruptcy annulled. I request the Board to give me a reasonable time to clear this issue based on the letter from the solicitors.

In the mean time, I would continue to my role as CEO under the guidance of the Board to make Indoaust strong and successful.

185    On 15 November 2011, legal advice from Duane Morris & Selvam was provided to the board of CellOS. Let me set out some salient conclusions. First, fundraising in Singapore had to comply with the requirements set out in the Securities and Futures Act (Singapore, cap 289), and the Securities and Futures (Offers of Investments) (Shares and Debentures) Regulations (Singapore). Second, the issue of a prospectus is necessary when there is an offer of shares that is not an excluded or exempt offer. Now there are number of categories of excluded or exempt offers that do not require the issue of a prospectus that I will address later in these reasons.

(c)    Events in 2012

186    In February 2012, Mr Patel joined CellOS as chief operating officer. From 1 March 2012 he was also a director of CellOS. From February 2012 to late 2013, Mr Patel attended around 20 potential investor presentations with Mr Huber. There were about 10 to 20 potential investors at each, and they were held in CellOS’ Singapore offices. The format of each of the investor presentations Mr Patel attended was as follows:

(a)    Mr Huber opened the presentation;

(b)    Mr Patel discussed the technology that CellOS was developing, for between 30 to 60 minutes; and

(c)    Mr Huber then presented on financial matters, projected revenue, listing on an exchange and share price projections.

187    On 1 March 2012, Mr Huber was appointed a director of CellOS once more and as Managing Director & CEO, and Mr Kamlesh Patel was appointed a director. This was done by a circular resolution and both appointments were ratified by a meeting of the board on 8 March 2012.

188    On 2 March 2012 Cellos Pte Ltd was incorporated in Singapore.

189    On 8 March 2012, CellOS’ financial report for the year ended 30 June 2010 was finalised and signed off by HLB Mann Judd. Let me set out some relevant matters:

(a)    The company’s loss after tax was AU$998,393.

(b)    From July 2010 to 8 March 2012, the company had raised AU$7.77 million.

190    On 5 April 2012, CellOS’ financial report for the year ended 30 June 2011 was finalised and signed off by HLB Mann Judd. Let me set out some relevant extracts:

Operating Results

The loss of the Company for the financial year after providing for income tax amounted to $1,817,897.

Review of Operations

A review of the operations of the Company during the financial year and results of those operations found that during the year, the company continued to engage in its principal activity, the results of which are disclosed in the attached financial statements.

Significant Changes in State of Affairs

Significant changes in the Company’s state of affairs that occurred during the financial year, other than those referred elsewhere in this report, are as follows:

On 1 September2010, an order was issued by the Supreme Court of Victoria for Star Intellect Pty Ltd, a subsidiary of the Company, to be wound up under the provisions of the Corporations Act 2011 and Liquidator be appointed for the purpose of the winding up. On 2 September 2010, due to the winding up of Star Intellect, the Company terminated the Intellectual Property Licence Agreement with Star Intellect, which was executed on 15 March 2006.

In December 2010, the company purchased Star Intellect’s assets for $25,000 from the Liquidator.

Principal Activity

The principal activity of the Company during the financial year was the development of base stations and leading edge Software Defined Radio technology.

No significant change in the nature of these activities occurred during the year.

After Balance Date Events

…

•    During the period July 2011 to the date of this report, the Company has raised A$1.799 million.

191    On 28 May 2012, Mr Tan wrote to Mr Kenneth Sam Coong Seng, a potential purchaser of CellOS shares. Mr Tan explained that he could source CellOS shares through Child and Family Foundation in the following terms:

We have already place out all the latest shares of Indoaust at USD2.00 per share.

Good news, I am still able to secure Indoaust Investments Ltd shares at USD2.00 through Child and Family Education Foundation Pte Ltd.

These are shares donated by the Founder of Indoaust, Jason Huber.

At present, Child and Family Education Foundation still have about 200,000 shares available.

Minimum purchase of shares is 5,000 shares@USD2.00 per share.

192    On 1 June 2012, CellOS held its annual general meeting. Let me set out some extracts from the minutes that illustrate the company’s position and direction at that time:

4.    Chairman’s speech

The Chairman welcomed the members to the AGM and thanked all the members for their patience and support due to which the company was able to come back strongly after the Global Financial Crisis. He expressed his sincere apology for the delay in holding the AGM due to circumstances beyond Management’s control, but he expressed confidence that the members would understand the circumstances and appreciate the concrete steps taken for the future of the Company. With sufficient resources in hand, a good Management Team in place and clear strategy for commercialisation, the Chairman expressed that the Board is confident of delivering on the promises made by the Company. Thereafter, the Chairman made a brief presentation taking members through the progress made in terms of technology, Management and future direction. The Chairman also drew the attention of the members to the Agenda Item 4 which is to authorise the Board to take steps for IPO in the next 12 months to provide exit to the shareholders. However, he cautioned the members that the timing, price and size etc would depend on the market conditions, getting contracts signed, and the advice of Bankers, Financial Advisors, Lawyers who are specialists in the field.

…

Item 3: Appointment of Auditors

“ Resolved that pursuant to the provisions of the Corporations Act, the Constitution of the company and subject to ASIC approval, Price Waterhouse Coopers be and are hereby appointed Auditors of the company to hold office from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting of the Company and the Board of Directors of the Company be and they are hereby authorised to fix their remuneration.

Item 4:    Authorisation for the listing of the Company’s American Depository Receipts and/or other securities on the NASDAQ Stock Market

“Resolved that the listing of the Company’s American Depository Receipts and/or other securities on the NASDAQ Stock Market, or such other stock exchange to be selected by the Board of Directors based on professional advice( the “invitation”), upon such terms and conditions and to such persons to be set out in the final prospectus be and is hereby approved, and further, that any Director be and is hereby authorised to issue the prospectus and other necessary documents to be issued and published under or in connection with the invitation, to sign and execute all such documents under or in connection with the invitation and to take all other such steps and to do all such things as he may deem necessary or desirable in connection with the invitation”

7.    Other Business: Questions from the Floor and Answers by the Chairman

Several shareholders raised questions on the dissemination of information to shareholders on a regular basis, company’s ability to sustain with limited resources upon recruitment of top management, IPO date and pricing, outlook for the future constitution of the Board of Directors, Type of development contracts expected, revenue stream for the company, exit options for the shareholders etc. There were certain questions raised by certain shareholders which were very personal in nature and were not objective. However, Chairman took all the questions and replied each of them. The Chairman’s reply in summary is as given below:

i.    The Chairman agreed that there was some lack of communication to shareholders as the company could not afford a professional to deal as Investor relations officer. However, as the CEO met from time to time the shareholders and updated them with the status of the company and developments. This also led to some shareholders using the information to the detriment of the company. However, now the company has appointed an Investor Relations Officer and the shareholders could look forward to receiving regular communication from him. He assured that all the shareholders shall be given the same information at the same time so that no one is deprived of the information.

ii.    The Chairman stated that he understood the anxiety of shareholders who have waited for a long time and supported the company. To provide them proper and rewarding exit, the Board has taken steps to go for IPO. He said that he could not commit an exact date or price for IPO as this would depend on the Advice of professionals and the market conditions. But he said the Board is doing its best to go for an IPO at the earliest possible time.

iii.    The Board keeps evolving and he said the constitution of the Board shall be based on the requirement of the company based on the time and nature of development at the time. The Board would also decide on C Level management taking into account the suitability of the candidates depending on the requirement of the company.

iv.    The Chairman stated that the resources are sufficient in the short term, the company needs to continue to raise funds before IPO as the company needs to incur expenses on top management, hiring of professional advisors, development of products to a stage to achieve contracts from major companies etc. But the Board is confident that with the current management team and the product, it could raise further funds required by the company.

v.    He replied to the question on delay in holding AGM and audit and said that these delays were due to paucity of funds after Global Financial Crises and that once the company raised enough funds it focussed on audit and other compliance and holding of the AGM as the Board was very keen to update the shareholders and provide information about the company. He assured that going forward, the Audit and AGM would be timely and that the shareholders are provided with additional comfort with PWC being recommended to be the Auditors.

vi.    The Chairman thanked the members for recognising his role and perseverance in getting the CellOS demonstration completed in January 2009 and protecting and maintaining the company during the Global Financial Crisis and bringing the company to the current stage. He thanked the Board for their collective support in this regard.

8.    Ramchandra Hegde, Director informed the shareholders that the company must be grateful to Mr. Jason Huber because but for his perseverance and commitment the company could not have survived the Global Financial Crisis. Mr. Jason Huber single handed raised funds needed by the company and has helped to get the top Management for the company. With the resources available to the Company, the highly qualified and experienced Management Team, he assured the shareholders that the charted goals could be accomplished.

193    Also on 1 June 2012, after the annual general meeting, CellOS held a meeting of its directors. The minutes of that meeting record, inter-alia, that Mr Wolfenden ceased to be a director on this date:

2.    Changes to Board of Directors

•    Mr. Mark Wolfenden – Cessation as Director of the Company

•    The Board of Directors noted the resignation dated 31 May 2012 by Mr Wolfenden as Director of the Company. However, the Board noted that his name was included for re-appointment in the notice of the AGM which was scheduled for 1 June 2012 and the Board could not act on the resignation before the AGM as only one day was left before the AGM.

•    The Board noted that shareholders overwhelmingly rejected the resolution re-appointing Mr. Mark Wolfenden as the Director of the Company and accordingly his cessation as Director of the company with effect from the date of the AGM …

…

9.    Share Register

The Board noted that there were lot of gaps, errors and delays in handling the share register by PKF and the process was not meeting the shareholders’ and company’s requirements. It was noted that Mr. Harveen Singh Narulla, former Company Secretary, was deployed to update the share register as well as prepare new share certificates for new subscriptions and transfers.

The Board noted that the company is evaluating proposals to outsource the handling of the share registry to third parties and authorised Managing Director and CEO [Mr Huber] to proceed with the appointment after evaluating the proposals.

…

11.    Issue of Equity Shares: Issue of Partly paid shares

Managing Director and CEO informed the Board that there are several proposals received from investors willing to invest in the shares of the company provided that they are allowed to make partial payment against their subscriptions and to pay the balance at a later date. The Board deliberated extensively on the issue and decided that the company may accept application for shares with partial payment as may be agreed by the Managing Director & CEO. It was decided to record the balance amount receivable as outstanding from the respective shareholders.

194    On 15 June 2012 the Melbourne development team of CellOS moved to larger premises in Melbourne which also comprised a software development laboratory.

195    As at 30 June 2012, CellOS had 203,784,186 ordinary shares on issue, an increase of 5,949,900 shares from 30 June 2011 (taken from the financial statements dated 27 March 2013):

(a)    1,987,400 shares had been issued by subscription; and

(b)    3,962,500 shares had been issued by allotment.

196    On 23 July 2012, Mr Huber wrote to Mr Shane Heffernan, a potential purchaser of CellOS shares. The subject line of the email is “Child and Family Transfer Form Indoaust Shares at US$2 per share” and it attached a share transfer form called “IA Child and Family Transfer form 2011-1”.

197    On 24 August 2012, CellOS held a meeting of its directors. The minutes of that meeting record:

2.    Share Register

The Board noted that pursuant to the decision taken by the Board, the company has evaluated proposals to outsource the handling of the share registry to third parties and decided to select Computershare. The Board noted that steps are taken for handover of the share registry and the board would be informed of the progress in the next meeting.

…

4.    Finance & Accounts

•    Fund raising, cash flow and strategy

Jason Huber reported that fund raising is slower than expected. However, he reported that the funds are enough to cover the expenses on month to month basis. He reported that keeping in view market situation, long holidays, he expected that the company would be funded by the end of first quarter of 2013.

198    On 10 September 2012, transfers were registered from Mark and Sandra Evers to Maitreya Mandala totalling 400,000 CellOS shares.

199    On 12 September 2012, Mr Jonathan Chan was appointed a director of CellOS, which appointment was ratified by the board at a meeting of directors on 4 and 25 February 2013.

200    In October 2012, CellOS signed its first contract with a major network equipment manufacturer.

201    On 24 October 2012, Dinastia Limited was incorporated in the British Virgin Islands. As noted earlier, the company’s sole director and shareholder was Mr Min Wee. Dinastia Limited acted as sole director and shareholder of the tenth and eleventh respondents and was the sole shareholder of the thirteenth respondent.

202    On 29 October 2012, Majestic Limited was incorporated in Belize. As noted earlier, the company’s sole director and shareholder was Mr Min Wee. Majestic Limited was the sole director of the thirteenth respondent.

203    On 11 November 2012, transfers were registered from a number of CellOS shareholders to Basalt, totalling almost 9 million CellOS shares.

204    On 27 November 2012, Mr Tan wrote an email to Mr Huber, telling him that “we should have quite a lot of potential clients who have the financial capability to take up the USD5 per share”.

205    On 30 November 2012, further transfers were registered from a number of CellOS shareholders to Basalt, totalling around 14 million CellOS shares.

206    In December 2012, Ms Sharon Tapner commenced at CellOS. She was CellOS’ office manager initially, but would become company secretary in December 2014 after Mr Douglas Reid resigned.

207    On 19 December 2012, Mr Huber wrote a letter to the Singapore National Service Reservist authority requesting deferment of Mr Narulla’s National Service. Relevant extracts of the letter include as follows:

1.    Harveen has informed me of his callup for National Service Reservist training that is upcoming in January 2012.

2.    I request that you defer his National Service liability until after 3rd quarter 2013. My reasons for this request are set out below.

3.    I am Managing Director of Indoaust Investments Ltd (‘Indoaust’), which is an Australian public unlisted corporation with over 700 shareholders. The company is managed out of Singapore with its management functions organized under a Singaporean subsidiary CELLOS PTE LTD (‘CellOS’) (based at #19‐02, 6 Battery Road, Singapore 049909).

4.    Indoaust is in the business of telecommunications technology R&D and has in 2012 secured contracts with among others, Nokia‐Siemens Networks (NSN’) to embed analytics software into its networks that it provides to telecommunications operators around the world. Its first contract with NSN is valued at between US$100 to 300 million. It is negotiating others like this with NSN and other parties. It has also secured a contract to roll out a telecommunications network in Indonesia.

5.    The company has 50 staff and consultants now, across Singapore, India and Australia. It will spend over SGD 5 million in personnel cost alone in 2013.

6.    At the price of the last capital received into the company, it is valued at approximately US$ 400 million.

7.    Indoaust is seeking a listing on the NASDAQ exchange in the USA in 2013.

8.    Harveen has been a key part of the management team of Indoaust since 2007, and is currently handling the transition of the company’s share registry to Computershare (Australian registry services provider), which is a necessary step before we apply for a public listing.

9.    After the share register transitions out, the next step is to transition all non‐ R&D functions to the Singapore office, and shift the business headquarters to Singapore under the Singapore subsidiary, which will then become the parent company in the group. This is expected to happen between January and June 2013 and I have last week instructed KPMG Singapore to advise us on this.

10.    Due to the needs of our business, the timing of the transition of the share register could not be finalized until recently, and Harveen is currently in Melbourne for meetings concerning this. This exercise will continue until late January and is expected to be completed by early February 2013.

11.    Harveen has also worked closely with me to keep the company funded via private fundraising as a precursor to large venture funding via placements with venture funds and sovereign wealth funds that is expected to be secured in H1 2013.

(d)    Events in 2013

208    From 2013 to 2015, Mr Huber admits that he engaged Mr Narulla to assist in managing CellOS shares in which, or in respect of which, Mr Huber had or held interests or rights, and making them available for CellOS’ short term fundraising needs.

209    At some point in 2013, Mr Huber engaged Grandeza, a business providing corporate secretarial services. Mr Huber’s primary contact at Grandeza was Mr Min Wee, and Grandeza provided these services until 2015. Mr Min Wee was the sole shareholder and director of Grandeza, and Mr Huber paid him directly. Mr Huber says in his defence that Grandeza and Mr Min Wee provided the following services:

(a)    assisting managing CellOS shares in which, or in respect of which, Mr Huber had or held interests or rights, and making them available for CellOS’ short term fundraising needs;

(b)    setting up and managing, in its discretion, external intermediary companies and structures to facilitate the provision of funding, approved by the CellOS board, through loan facilities;

(c)    regularly visiting CellOS’ offices and communicating with CellOS staff in relation to Grandeza’s involvement with fundraising activities being undertaken for CellOS; and

(d)    buying, selling and transferring CellOS shares in which, or in respect of which, Mr Huber had or held interests or rights; as to this last point, I would note that Mr Huber submits that relevant transfers were carried out without his knowledge, approval or authority.

210    On 21 January 2013, Computershare was engaged to manage and maintain CellOS’ share register.

211    On 4 February 2013, there was a meeting of the directors of CellOS that was continued on 25 February 2013. The minutes of that meeting record:

2.    Update by CEO

Jason Huber briefed the progress made by the company in recruiting world class staff, development of company’s product and marketing efforts. Kamlesh updated the Board on Technical Development, Delivery of version 1.1 of the product contracted to Nokia Siemens for evaluation, recruitment of engineers both in Melbourne and India. Jason informed that efforts to raise funds from bigger investors are still in process and discussion is ongoing with the Banks to act as advisors for the current fund raising.

…

4.    Share Register

The Board noted that pursuant to the decision taken by the Board, the company has completed the handover of the share registry to Computershare and they have issued the new share certificates to all the existing shareholders. The board noted that some of the addresses and contact details of shareholders are not available as they are not updated by the shareholders.

5.    Response to ASIC and PWC: Reporting by PWC under section 311 of the Corporation Act ASIC regarding issue of the Companies shares to the Directors, staff and Suppliers

The Board noted the letter written by the Company’s Auditors, Price Waterhouse Coopers to ASIC concerning the valuation of Share Issue to Employees, Directors and Suppliers in the Annual Reports for the financial years ended June 2007 to June 2011.

The Board also noted and considered the note submitted by Mr. Jason Huber, Chief Executive Officer of the Company with regard to grant of shares to Employees, Directors and the Suppliers.

The Board deliberated in detail on the above note and concluded that the methodology and the valuation of shares as disclosed in the Annual Reports for the financial years ended June 2007 to June 2011 and approved by the shareholders during the AGMs of the Company is reasonable and reflects the valuation of shares at that time. The Board also noted that the valuation reflected the Intrinsic value and the Book Value of Shares. The Board thereafter passed the following resolution:

RESOLUTION

Resolved that the methodology of issue of shares to the employees, directors and the suppliers and the valuation of these shares and the valuation method as detailed in the Note submitted by the Chief Executive Officer be hereby ratified and approved.

Further Resolved that the Chief Executive Officer be hereby authorised to write to Price Waterhouse Coopers and submit the copy of Minutes of the Board of Directors and the Note, and request the auditors to complete the Audit of Financial Reports for 2012 at the earliest as there has been delay in completing the audit. Indoaust has obtained an extension of time to file the audited financial report for 2012, on or before March 25, 2013.

Further Resolved that the Chief Executive Office be hereby authorised to submit the copies of the Board Resolution and the Note relating to the share issue and valuation to ASIC.

6.    Finance & Accounts

•    Fund raising, cash flow and strategy

Jason Huber reported that KPMG has completed the preparation of Information Memorandum it is helping in current tranche of fund raising. He reported that the company has been able to obtain sufficient funds to cover the burn rate on month to month basis thanks to an arrangement of short term loans personally from him and from a company.

•    Jason Huber submitted a draft loan agreement with the company which has agreed to provide loan to Indoaust and its subsidiaries at their request which is repayable immediately upon large/pre-IPO fund raising by Indoaust. The Board authorised Jason Huber to sign the Agreement on behalf of Indoaust.

212    Now the minutes record four directors attending these meetings on 4 and 25 February 2013: Mr Huber, Mr Hegde, Mr Patel and Mr Chan. This is important, because there is a dispute between CellOS and Mr Huber regarding whether Mr Huber disclosed that he controlled the company providing the loan. I will deal with this dispute later, but I would note now that the minutes of the meetings do not make explicit any disclosure of Mr Huber’s interest in the loan, the loan agreement or the lender, and nor do they record the name of the lender.

213    As at 11 February 2013, the holdings of CellOS shares and the distribution of shareholders had the following features:

(a)    There were approximately 212 million shares on issue.

(b)    There were 720 shareholders.

(c)    The top 10 shareholders held approximately 64% of the shares.

(d)    Mr Huber was the largest shareholder.

(e)    The distribution of the 720 shareholders by size of holding was:

(i)    1 to 10,000 shares: 323 shareholders;

(ii)    10,001 to 100,000 shares: 266 shareholders;

(iii)    100,001 to 5,000,000 shares: 125 shareholders; and

(iv)    5,000,001 or greater: 6 shareholders.

(f)    The distribution of the 720 shareholders by country was:

(i)    Singapore: 456 shareholders;

(ii)    Australia: 95 shareholders;

(iii)    Malaysia: 84 shareholders; and

(iv)    Others: 85 shareholders.

214    In early 2013, a “Loan and Option Agreement” was entered into between CellOS (signed on its behalf by Mr Huber and Mr Hegde) and LGA (signed on its behalf by Mr Min Wee) (the LGA loan described above). It is dated 1 March 2013, but CellOS submits that it was actually executed in or after May 2013. I will put that issue to one side for the moment and set out some relevant extracts:

Whereas:

A.    The Borrower is a technology company in active research and development (R&D) and commercialization phase, and required significant funding to complete this prior to a commercial outcome;

B.    The Borrower requires substantial funding of up to SGD 25 million (Singapore Dollars Twenty-Five Million Only) to achieve its goals, which was unavailable to through commercial loans from financial institutions and similar lenders;

C.    The Lender is prepared to allow the Borrower access to funds that it can draw down on from time to time, as needed to sustain its activities, in the way of an unsecured loan facility, on the conditions herein;

…

Facility

3.    The Lender grants the Borrower the right to request sums totaling up to the Facility Amount [S$25 million].

4.    Drawdown on the facility shall be by way of a Funds Request. Drawdown and advance of funds made with effect from 1st March 2012 shall form part of this agreement.

…

6.    The Borrower accepts that Drawdown Amounts advanced by the Lender pursuant to Funds Request may be advanced to it by third parties but nevertheless they shall be treated as having been advanced by the [Lender].

Interest

7.    Funds drawn under the Facility shall carry simple interest at the rate of 10% (ten per cent) per annum from the date they are advanced to the Borrower.

8.    The Lender may in its absolute discretion choose to waive the interest or any part of it.

Option to convert outstanding amounts to equity in the Borrower

9.    The Borrower grants the Lender an Option as follows.

10.    The Lender may at any time before 31 December 2013 at its election and in its absolute discretion exercise an option to convert any part or all of the Outstanding Loan into equity in the Borrower.

11.    Should the Lender so elect to exercise the Option:

a.    it should give written notice to the Borrower of the Option Amount, supported by a certificate showing the then Outstanding Loan.

b.    Within 7 days of receiving notice of such election, the Borrower shall cause the Lender (or such other party as it directs) to be issued the Shares.

c.    Shares shall be issued at the Option Price [defined as S$1.80 per fully paid ordinary share] and shall be for the Option Amount.

12.    Exercise of the Option at any time within the Option Exercise Period does not preclude subsequent exercises of the Option.

13.    Upon issuance of the Shares following on the exercise of the Option, the debt corresponding to the Option Amount shall be extinguished.

14.    Exercise of the Option is irrevocable and the amount corresponding to the Option Amount cannot subsequently be resurrected as a debt owing by the Borrower to the Lender.

…

Termination and extension of this Agreement

17.    Subject to the following clauses this Agreement shall terminate on 31 December 2013.

18.    The Parties may however choose to extend this Agreement on terms and for a period that they see fit.

19.    The Agreement shall automatically terminate on the occurrence of an Insolvency Event as set out below.

215    Let me draw particular attention to cl 4 of this LGA loan. It operated retrospectively to cover any funds lent by LGA to CellOS since 1 March 2012.

216    In early March 2013, Mr Daniel Tan, Mr Tan’s brother, arranged for members of CellOS’ management to present to Mr and Mrs Peck about investing in CellOS. The Pecks were introduced to Mr Tan, to Mr Huber and to Mr Patel.

217    The day after this initial meeting, the Pecks attended a further meeting at the office of CellOS’ lawyers, Duane Morris & Selvam. Mrs Peck recalls that the meeting was attended by Mr Huber, Ms Irene Chan (CellOS’ vice president) and Ms Ng (CellOS’ group financial controller).

218    At this meeting, the Pecks agreed to purchase 600,000 shares in CellOS at a price of US$2 per share for a total price of US$1.2 million. A share transfer was entered into, with the date of purchase listed as 6 March 2013, with the transferees as Mr and Mrs Peck and the transferor as Child and Family Foundation. The transfer was registered on 18 April 2013.

219    This was the first of 17 purchases of CellOS shares by the Pecks from one of the Huber controlled entities. The final purchase would be on 1 July 2014. I am going to set out each occasion where the Pecks received or sold CellOS shares for several reasons. First, an understanding of their transactions is necessary in order to make an assessment regarding their knowledge at various times. Second, the pattern of their transactions is relevant to the Pecks’ assertions regarding “backfilling” and “piggybacking”. For this purpose, I have relied upon the supplement to exhibit A2 provided by senior counsel for the Pecks, Mr Daniel Crennan QC that was particularly useful to me.

220    Before proceeding further in the chronology let me say something on “backfilling” and “piggy-backing”.

221    The “back-filling” of shares involved Mrs Peck transferring her own shares to investors who wanted to purchase CellOS shares. Mrs Peck then back-filled her shareholding by acquiring shares originating from Mr Tan’s vendors, which Mr Tan arranged to transfer to Mrs Peck via his wife Ms Seah Chye Tin. The back-filling was driven by Mrs Peck’s desire to maintain the Pecks’ own shareholding in CellOS.

222    Mrs Peck also often acted as an “intermediary” seller to purchasers in circumstances where the purchaser did not feel comfortable buying shares through Mr Tan, or Mr Tan was not able to source the full volume of shares required for purchase at that time.

223    In either case, Mrs Peck would transfer her own shares to the purchaser and the purchaser would make a payment to the Pecks directly. The Pecks would immediately forward the money to Mr Tan, who would then locate vendor shares in the market to provide to Mrs Peck by way of back-filling. Accordingly, not all of the money received from purchasers within this ‘category’ of back-filling was profit, but Mrs Peck does not deny that some profit may have been made on those transfers.

224    As to “piggy-backing”, at various times between July 2013 and July 2014, Mrs Peck allowed certain friends to, as she described it, “piggy back” on her further purchases of US$2 shares through Mr Huber. This involved friends of the Pecks who wanted to acquire a quantity of CellOS shares at US$2 agreeing to provide funds to the Pecks which the Pecks would use to increase the quantity of US$2 shares they were themselves purchasing through Mr Huber. The additional shares acquired on behalf of those friends at US$2 (and for which those friends had already paid or would subsequently pay) were then transferred into their names. No profit was made on these transactions. The piggy-backing of shares sometimes took place with Mr Huber’s agreement and sometimes without.

225    One example of piggy-backing was the transfer of shares by Mrs Peck to Mr Anthony Cooper and his relatives for US$2 per share. A further example of piggy-backing was the transfer of shares at US$2 per share to Yong Weng Kong (also known as Mr Albert Yong), Mr Yong’s wife Heng Mui Kheng (also known as Ms Lillian Heng), KA Chang and Thio Gim Hock as a “reward” for their efforts in introducing high net-worth investors to CellOS.

226    Let me return to the chronology.

227    On 11 March 2013 there was a meeting of directors. The minutes of that meeting record:

2.    The deliberation & decision of the Board

•    The Board considered the communication from PWC and deliberated the consequences stated in the communication. The Board understood that the audit of financials 2012 has to be completed for filing with ASIC before March 25, 2013. The Board also noted that any qualification of the Financial Report by the Auditors would jeopardise the IPO process of the company.

•    The Board noted that it stands by its decision on the valuation of shares as reflected in the Financial Reports already audited and filed with ASIC. The Board is of the opinion that the audited financial statements for the period 2007 to 2011 complied with the Accounting Standards. The Board also noted the opinion of PWC, the new Auditors engaged to do the Audit of 2012 financial statements of the Company and the need to modify the valuation method based on PWC advice.

•    The Board decided that even though it has complied with the accounting standards, the Company must engage with PWC on Valuation of shares and come to a common understanding with PWC as it does not wish to jeopardise the IPO prospects. The Board authorised Mr. Ramchandra Hegde to communicate with PWC for this purpose and revert to the Board on final decision.

•    The Board places on record that going forward it is willing to consider the advice of PWC on the new method of valuation of shares issued for other than cash, if required by PWC.

228    On 12 March 2013 there was a further meeting of directors held by conference call. The minutes of that meeting record:

1.    The discussion with PWC

Mr. Ramchandra Hegde informed the Board that pursuant to the directive of the Board he had a discussion with Mr. Andrew Barlow, Partner of PWC in charge of Audit of Indoaust, concerning the issue of valuation of shares issued to directors, employees and suppliers. According to Mr. Andrew’s opinion if the valuation of shares is not changed it would have serious implications and the matter which is very complex, must be resolved before the audit. The summary of PWC position as told by Mr. Andrew is given below:

•    Mr. Andrew informed that upon receiving the letter from Indoaust which enumerated Indoaust position on the issue, PWC had conducted a high level review and had concluded that the valuation of shares cannot be nil.

•    He stated that the share price paid the new investors (which was at $2/- in 2012) must be taken into consideration. Perhaps some discount could be considered to this price while doing valuation if certain premium is assumed in the price paid by the new investors.

•    In case of shares issued to the employees in lieu of wages, the shares could be valued at the cost of wages or services rendered.

•    The shares issued to the suppliers in lieu of payment could be valued at the value of service provided or equivalent to the payment due.

•    All other shares issued for other than cash must be valued at $2/-.

229    On 12 March 2013, Mrs Peck sent a WhatsApp message to Shiou Hee Ko regarding the Pecks’ recent investment:

Hi Shiou Hee – I can understand your “insecurity” and lack of confidence. We have more knowledge than you. Alan n I had the luxury of going to the Indoaust office in Spore to meet the management team as well as to the lawyers office the next day to sight the signed contracts n the company P&L n balance sheets n other relevant documents. As u know, AP [Mr Peck] is v cautious but he is satisfied that this is a bona fide investment n we are committing another 500k by mid/end April when some monies come back from sale of a commercial property.

230    On 15 March 2013, Mr Jonathan Chan sent an email to Mr Huber which stated, inter-alia:

I understand the efficacy of using UOB as the carrot for roping-in the investors for the current fund raise. But I believe we are going past that phase now.

231    Mr Huber replied on the same day, stating:

Thanks Jon,

Let’s discuss tomorrow .

My concern is that the business prospects are advancing much quicker than expected such that we may have already outgrown the proposed UOB relationship. Originally we were planning to raise the 100m by the end of last month at the $5 price .

That need has passed .

We were so blessed that We were able to fund the business without the need of UOB or any other mid sized bank And in the last two weeks the major customers have commenced discussion with us for the full business offering. From the developments this week I am very confident that the major banks will take us seriously come July August . We just need to hold out and deliver the planned milestones by then and we should be able to get into the drivers seat to negotiate a deal with the big three Banks.

232    On 16 March 2013, Mr Chan concurred with the above email and copied in the email chain to fellow directors.

233    On 18 March 2013, CellOS had a meeting of its directors concerning, inter-alia, a private equity mandate with brokerage and funds management company UOB Kay Hian (UOB). The minutes record:

1.    Private Equity (PE) Mandate: UOB Kay Hian Pte Ltd

The Board noted that the Company was in discussion with UOB Kay Hian Pte Ltd (UOBKH), a leading Brokerage and Private Fund Management Company to be considered for appointment as Placement Agent for the proposed PE fund raising of upto US$100 million. The Board considered and reviewed the draft Letter of Engagement received from UOBKH and agreed with the recommendation of the CEO to appoint UOBKH and accept the Letter of Engagement. After discussion, the Board:

Resolved that –

•    The Company appoint UOB Kay Hian Pte Ltd as the Placement Agent for the Proposed Fund Raising of up to US$100 million;

•    The CEO be and is hereby authorised to accept the Letter of Engagement issued by UOBKH for the above fund raising do all other things and acts to give effect to this Letter of Mandate.

234    On 19 March 2013, CellOS and UOB entered into the letter of engagement signed by Mr Huber. Let me set out some relevant excerpts:

This Letter of Engagement is made with reference to the proposed fund raising of up to US$100 million in private equity fundraising (“PE fundraising”) to certain private investors on a best efforts basis. References to the Company and the Shares include references to any company which is to be listed pursuant to a restructuring of Indoaust Investments Limited and/or its group of companies and/or its business and assets and the shares of such company, respectively.

1.    SCOPE OF SERVICES (the “Engagement”)

1.1    UOB Kay Hian Private Limited (“UOBKH”) is offering the services as the placement agent for the Company’s PE fund raising for an amount of up to US$100 million on a best effort basis on the following terms and conditions.

1.2    The issue price of the PE shares for the PE fundraising will be subject to mutual agreement between the Company and the PE investors and market condition nearer to the signing of definitive agreements.

1.3    For the avoidance of doubt, UOBKH shall not be responsible for providing or reviewing specialist advice or services of third parties involved in the PE fundraising, including without limitation legal, regulatory, auditing, accounting or taxation matters, due diligence or any other investigative services.

2.    TERM OF ENGAGEMENT

2.1    UOBKH’s appointment will commence upon the acceptance of this Letter of Engagement by the Company and will expire at the end of six (6) months thereafter or upon completion of the PE fundraising, whichever is the earlier. UOBKH and the Company reserve the right to extend the term of the Engagement beyond such date and they both reserve the right to re-negotiate the terms of the Engagement.

3.    FEE ARRANGEMENT

3.1    PE fundraising Commission and Praecipium

In the event that UOBKH secures PE investors for the Company’s PE fundraising, the Company agrees to pay UOBKH a commission based on 4% of the value of the PE investment (“PE Commission”) made by the PE investors introduced by UOBKH (“PE Investors”).

For the avoidance of doubt, there is no minimum aggregate value of PE investment made by PE Investors introduced by UOBKH before the PE Commission of 4% is payable. In the event the aggregate value of PE investment made by PE Investors introduced by UOBKH is less than US$100 million, the Company agrees to pay UOBKH the PE Commission of 4% due to UOBKH on any quantum of funds raised by UOBKH.

The Company agrees that it will not itself attempt to solicit for or negotiate with PE Investors introduced by UOBKH (and its affiliates) to conclude any sale agreement directly but if the Company does, then for the purposes of this Letter of Engagement, UOBKH shall be entitled to the PE Commission as if UOBKH had earned it, in accordance with the paragraph above. For the avoidance of doubt, any such introduction by UOBKH of a PE Investor to the Company must be clearly stated and made in writing and accordingly, acknowledged by the Company as being a UOBKH introduction.

In the event that the Company secures PE investors for the Company’s PE fundraising through their own contacts, the Company agrees to pay UOBKH a praecipium of 1% of the value of the PE investment made by the PE investors sourced by the Company (“PE Praecipium”). This PE Praecipium does not apply to the list of potential PE investors who are in the process of closing their commitment as set out in Appendix 1. For the avoidance of doubt, these potential PE investors have been introduced to the Company by various placement agents and advisers.

The PE Commission and PE Praecipium will be deducted from the proceeds of the PE fundraising.

For the avoidance of doubt, in the event that this Engagement is terminated by either parties in accordance with Clause 9 below, the Company shall, for a period of twelve (12) months from termination, remain liable to pay UOBKH the PE Commission for any PE Investors successfully introduced by it, but UOBKH shall not be entitled for any PE Praecipium from the date of termination of this Engagement.

4.    EXCLUSIVITY

UOBKH’s Engagement in relation to the provision of its services is on an exclusive basis in relation to the investors introduced by UOBKH unless aborted by mutual agreement. Notwithstanding the above, nothing herein shall prohibit UOBKH from performing the same I similar services for other parties.

The Company shall not solicit, appoint, authorize or retain other persons or institutions as a placement agent for the PE fundraising from the date hereof up to the completion of the proposed PE fundraising or the termination of UOBKH’s Engagement hereunder (whichever is the case). For the avoidance of doubt, this Clause shall only apply to the PE fundraising contemplated under this Letter of Engagement and shall not apply to any other or future fundraising exercises of the Company.

235    On 27 March 2013, CellOS finalised its financial report for the year ending 30 June 2012, signed off by PWC. Let me set out some relevant extracts:

Operating Results

The loss of the group and Company for the financial year after providing for income tax is $11,113,223.

…

After balance date events

…

A master agreement has been signed between Nokia Siemens Networks Oy and Indoaust Investments Limited for the delivery of Licenced product and Professional services on 1st October 2012.

Computershare Investor Services Pty Limited, Australia was engaged to manage and maintain the company’s share register on 21st January 2013.

An engagement letter was signed with UOB Kay Hian Private Limited, a securities trading and investment company for Asian financial markets, headquartered in Singapore, on 19th March 2013 for a future private equity fundraising exercise up to the amount of US$100 million.

Since 30 June 2012 250,000 shares have been issued for aggregate consideration of US$650,000.

…

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 30 JUNE 2012

…

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

…

(i) Going concern basis of preparation

For the year ended 30 June 2012, the Company incurred a loss before tax of $11,113,223 (2011: Loss: $16,252,165) and an operating cash outflow of $4,345,230 (2011: $1,426,432). As at year end the net assets of the Company stood at $3,348,163 (2011: $3,619,014) and the cash position has decreased to $1,223,165 from $4,384,098 at 30 June 2011.

The continuing viability of the Company and its ability to continue as a going concern and meets [sic] its debts and commitments as they fall due are dependent on the Company being successful in the following matters within 3 – 6 months at the current rate of expenditure:

•    The Company will continue to seek fundraising sources through its normal sources, principally though [sic] continued private equity investment.

•    On 19th March 2013 the Company signed an engagement letter with UOB Kay Hian Private Limited (‘UOB’), a securities and investment company for Asian financial markets, for a private equity fundraising exercise. UOB will use commercially reasonable efforts to sell new shares in the Company. At the date of approval of the financial statements no shares had been issued through UOB. However, the Directors expect to raise approximately $20 million through UOB in the 6 months ahead.

•    The company continues to be in the research and development phase in respect of development of the core CellOS products. A master agreement was signed on 1st October 2012 between Nokia Siemens Networks Oy and the Company for the delivery of licenced products and professional services. This agreement outlines the terms under which the parties will engage. As at the date of the approval of the financial statements no orders for licenses [sic] or services had been made under the agreement. However, the Director’s [sic] expect that orders generating a net cash inflow will begin to be received within the next 3 – 6 months.

•    In the event the Company cannot raise the required funding, the Company has the ability to further reduce expenses around certain current commitments. The Company retains the ability to curtail other planned, but not committed expenditure, in order to ensure the Company continues to have adequate funds to pay all liabilities as and when they fall due.

As a result of these matters there is a material uncertainty related to events or conditions that may cast significant doubt about the company’s ability to continue as a going concern and whether it will realise its assets and settle its liabilities in the normal course of business and at the amounts stated in the financial report. The Directors remain confident that they will be successful in raising the additional funding required to complete planned research and development activities to bring additional products to market and accordingly have prepared the financial statements on a going concern basis.

…

NOTE 26: SHARE BASED PAYMENTS

…

As part of the remuneration package of certain key employees shares are allotted for nil consideration upon approval by the remuneration committee. The allotted shares rank equally with other ordinary shares and there are no restrictions once the shares have been allotted. Share awards are generally only contingent on employees achieving a set time period of employment.

The fair value of each share allotted was determined by reference to the average price of shares issued for consideration to 3rd party investors in arms length transactions prior to the allotment of shares.

236    In around April 2013, Mrs Peck decided upon a profit “pledge” whereby an investor would tithe or donate 10% of the net profit of their CellOS investment (after the IPO) to “Kingdom Work”, i.e. Christian charity work. Let me set out a form of the pledge dated 3 April 2013:

Pledge: Purchase of Shares in IndoAust Limited at USD2.00 per share

Investor acknowledges the preferential circumstances under which Shares are offered and has expressed a desire to apply a measured portion of Any Gain on Investment to further the purposes of the Kingdom of God in the manner stated below. Investor also affirms that in arriving at the decision to purchase Shares, Investor was not relying on any inducements or representations (including the illustration below) made by anyone in relation to IndoAust or Shares.

Investor pledges to tithe (give 10%) of Any Gain on Investment.

For this purpose, Any Gain on Investment means the difference between the sum invested and

Either

(1)    If Shares are sold within Calculation Period, the net value of Shares sold

Or

(2)    if Shares are not sold by the end of the Calculation Period, the net value of Shares based on the last traded price of Shares at the end of the Calculation Period.

Calculation Period means the 28-day period following the start of trading of Shares following the IPO.

If only part of Shares are sold within Calculation Period, Any Gain on Investment on the Shares sold shall be determined according to (1) above and Any Gain on Investment on Shares remaining unsold as at the end of the Calculation period shall be determined according to (2) above.

*** Please see Illustration next page [the illustration shows an example of calculating the pledged amount]

The sum pledged shall be paid as soon as reasonably possible but no longer than one months following the end of the Calculation Period to an account to be nominated and administered for Kingdom use by Canon Derek Hong, Alan Peck and/or anyone else nominated by them jointly.

This pledge is not intended to be legally binding.

237    On 19 April 2013, the thirteenth respondent Stardust Financial was incorporated in Belize.

238    On 22 April 2013, Enorme Ltd was incorporated in Belize. As noted above, the company’s sole director and shareholder was Grandeza, and it was the sole director of the tenth respondent.

239    On or around 25 April 2013, there was a share transfer with a registration date of 22 May 2013 between Mr and Mrs Peck as the purchasers and Child and Family Foundation as the vendor. The Pecks purchased 400,000 shares at a price of US$2 per share, for a total price of US$800,000. The Pecks now had 1 million CellOS shares

240    On or around 26 April 2013, there was a share transfer with a registration date of 27 May 2013 between Mr and Mrs Peck as the purchasers and Money Max Foundation as the vendor. The Pecks purchased 50,000 shares at a price of US$2 per share, for a total price of US$100,000. The Pecks now had 1,050,000 CellOS shares.

241    On 26 April 2013 a version of the ‘confidential’ Information Memorandum was prepared to be used for fundraising, extracts of which are set out below:

This confidential information memorandum (“Memorandum”) has been prepared by Indoaust Investments Limited and its subsidiaries and associated companies (collectively known as “Indoaust” or the “Company”) with the assistance of KPMG Corporate Finance Pte Ltd (“KPMG”) for delivery to a limited number of parties (the “Recipient” or “Recipients” as the case may be) who may be interested in understanding the business of the Company (the “Purpose”).

…

EXECUTIVE SUMMARY

…

Key highlights

As of the date of this Memorandum, the Directors believe the key highlights of the Company are as follows:

•    Enormous growth potential in the US$250 billion communications infrastructure and telecom data analytics market;

•    The Company began commercializing its intellectual property with its first contract signed in October 2012 where revenue generation is expected to follow in the first half of 2013;

•    Strong management team comprising individuals possessing extensive industry experience (Alcatel-Lucent, Bell Labs, Ericsson, NEC, Nokia Siemens Networks, Reliance Communications and Telstra); and,

•    Clear development roadmap for the CellOSTM platform and applications.

…

Historical use of proceeds

To date, Indoaust has raised US$22 million in seed capital and private equity. Of this, US$2 million was incurred in acquiring intellectual property from Advanced Communications Technologies Pty Ltd and Global SDR Capital Technologies Pty Ltd in 2006. Further, US$20 million has been incurred in research and development of CellOSTM technology and demonstrating the viability of the technology.

…

RISK FACTORS

Any potential investor should understand that an investment into the Company should be considered speculative because of the nature of the commercial activities of the Company. Potential investors should be aware that an investment in the Company involves risks, which may be higher than the risks associated with an investment in other companies.

There is a range of specific risks associated with the Company’s activities and its involvement in this field of R&D work. There is also a broad range of risk factors largely beyond the control of the Company. Prospective investors should consider whether the Company is a suitable investment opportunity for them having regard to their own investment objectives and financial circumstances and the risk factors set out below.

Investment in Indoaust is speculative and involves risk.

Investors should note that any investment in the Company would be at a stage of development of the Company in which it has not yet achieved significant earnings or profit. Commercial success will depend largely on acceptance by the telecommunications industry of Indoaust’s technology and its products incorporating this, which cannot be reliably predicted.

Neither Indoaust, nor its Directors, nor any other party associated with the preparation of this Memorandum warrants that any specific objective or particular target of Indoaust will be achieved.

There is no guarantee that the value of the Company’s Shares will go up and they may go down in value, or the entire investment may be lost.

242    The Information Memorandum also indicates that there was proposed fundraising to take place in the second quarter of 2013.

243    From 27 April to 10 May 2013, Mr Min Wee was in communications with Mr Andreas Karasamanis, CEO of KappaTrust, a Cyprus-based company. The chain of emails in evidence before me shows Mr Min Wee negotiating the purchase of a “matured Belize company that is incorporated before June 2012”. By email on 4 May 2013, Mr Andreas gave Mr Min Wee the details of LGA, which Mr Min Wee selected. The minutes of meeting approving the transfer of LGA’s shares to Twenty-five Intertrade Inc. (Mr Min Wee’s company) is dated 8 August 2011.

244    I will address the significance of these emails and documents later in my reasons. It is enough to say here that these emails support a finding that the LGA loan was executed at some time in May 2013 onwards rather than 1 March 2013.

245    On 30 April 2013, the tenth respondent Willow was incorporated in Belize.

246    On 14 May 2013, CellOS sent a letter to Computershare instructing them to process a number of share transfers. This letter was signed by Mr Patel and Mr Huber. The transfers described included transfers from Nesterland and Child and Family Foundation to a number of individual purchasers. Mr Huber and Mr Patel wrote:

Indoaust Investments Ltd is aware that processing the form(s) is outside of CIS’s standard policies and procedures as certified identification documents for the seller(s) have not been provided and agrees to indemnify and keep indemnified CIS against all liabilities, losses, expenses, damages and costs that CIS may incur in connection with any demand, claim, action or proceeding made or brought by a third party against either Indoaust Investments Ltd or CIS (or both) by reason of compliance with this instruction.

We also authorise that in all cases of the above transfers the security checking fee should be charged to Indoaust Investments Ltd, to appear upon our next invoice.

247    There was a further share transfer with a registration date of 22 May 2013 between Mrs Peck as the purchaser and Child and Family Foundation as the vendor. Mrs Peck purchased 5,000 shares at a price of US$2 per share, for a total price of US$10,000. The Pecks now had 1,055,000 CellOS shares.

248    On 22 May 2013, there was a share transfer that was subsequently registered on 29 July 2013 with Mr and Mrs Peck as the purchasers and Money Max as the vendor. The Pecks purchased 800,000 shares at a price of US$2 per share, for a total price of US$1.6 million. The Pecks now had 1,855,000 CellOS shares.

249    On 31 May 2013, Mr Peck sent an email to Mr Eugene Tan, attaching a photograph of the front page of the UOB letter of engagement. He wrote that “[a]t a presentation we zapped a page of the UOB Kay Hian set of documents that we were given the privilege to sight”.

250    In late May 2013, the materials for CellOS’ 2013 AGM were circulated to shareholders. These materials included a copy of the financial report for the financial year ending 30 June 2012, which I have described above.

251    On 11 June 2013, Mr Mark Rodrigues, a CellOS employee, circulated a draft question and answer sheet to Mr Huber, Mr Hegde, Mr Patel and Ms Ng, for use at the upcoming AGM. Let me set out some relevant extracts:

4. How has the company been financed over the last 12 months?

The company has loaned funds from an ‘Angel Investor’ … a company in the Middle East. The loan is secured against Jason Huber’s own shares.

5. Does the Company have enough funds to continue?

The Company plans to attract additional investor funding (Angel investors as well as through UOB Kay Hian) to continue operations. In addition, we expect to become revenue generating later this year.

252    On 12 June 2013, Mrs Peck forwarded to Mr Huber an email that she had received from a potential CellOS investor, requesting some answers from Mr Huber to her questions. Mrs Peck’s annotations to the investor’s email are in capitals:

HI JASON

HOPE IT IS NOT TOO MUCH TROUBLE FOR YOU TO GIVE ME QUICK ANSWERS TO THE QUESTIONS BELOW.

TKS

CONSTANCE

----------------------------------

Hello Constance

Just thought I will pen down my concerns about IndoAust investments, since we never had time to actually sit down and talk for some time.

1. Initial Markets - During the presentation, (ON SAT, 1 JUNE) they stated that their initial markets were India, Indonesia, Middle East and Africa. My personal thoughts are that while it is true that India and Indonesia are huge markets just by virtue of its population, the money is in the US and Europe. Europe and the US are more technologically placed to accept an advanced technology like what CellOS has.

2. In any case, if their products are really good and they sign up hardware manufacturers like IBM and CISCO and Telcom integrators like Nokia and Ericsson, they cannot choose the market. The market will choose them.

3. Jason Huber says Cellos could be the next Google. In comparing with such companies, there are a few things that come to mind:

a. In companies like Microsoft, Apple, Facebook, Google, they all have a product that is already accepted by the public before IPO.

b. These companies all have a technological wonderkid behind them so that their ideas and intellectual property cannot be stolen. Jason is not a technology person. (I THINK HAVE THE ANSWER TO THIS BUT GOOD TO HEAR FROM YOU IF NOT TOO MUCH TROUBLE)

4. A technology company will not choose a name like IndoAust Investments. I know he did mention changing. (I HAVE THE ANSWER TO THIS)

5. For the wonderful product he preaches, he is asking for very little money and he is coming to Constance Peck when he should be going to the many Angel Investors. (I THINK HAVE THE ANSWER TO THIS BUT GOOD TO HEAR FROM YOU IF NOT TOO MUCH TROUBLE)

6. A technology company will not have an office in Robinson Road. He will probably have his office in Chai Chee technopark. Imagine the cash he is already burning by having an office there. The only reason to have an office there … to impress people who do not know. He should only have his office there if he is already listed and money is not an issue. (I HAVE THE ANSWER TO THIS)

253    On or around 17 June 2013, there was a share transfer with a registration date of 29 July 2013 between Mr and Mrs Peck as the purchasers and Money Max Foundation as the vendor. The Pecks purchased 700,000 shares at a price of US$2 per share, for a total price of US$1.4 million. The Pecks now had 2,555,000 CellOS shares.

254    On 18 June 2013, Mrs Peck sent Mr Huber a WhatsApp message:

…It was good to hear direct from you as up until yesterday, all info was relayed via Daniel everything

(sorry incomplete message) … all info relayed via Daniel n some things began not to make sense. That’s why i felt i needed to catch u at this juncture b4 u go away. Please don’t misunderstand – Dan n Mel have been v helpful to me and I know to you as well. They are good n earnest brothers in Christ. Just needed that one session with u to clear up matters directly. For one, I couldn’t understand why the USD2.00 share continued to be so freely available as Dan kept telling me they were. That was one thing that did not make sense to me. As for ourselves, bcos of that session yesterday, I know where we stand n made it v clear to Alan last night …

It is not clear what occurred at the meeting that Mrs Peck is referring to.

255    On 27 June 2013, CellOS held its 2013 AGM. At this meeting the company formally changed its name from “Indoaust Investments Ltd” to “CellOS Software Ltd”. The minutes of this meeting also record the following:

The company as noted in the financial statements have appointed an investment bank UOB Kay Hian Private Limited, for the purposes of raising capital. UOB requires the company to be earning revenue in order to be able to raise the required capital so the company is focused on completing product to commence sales.

The company is still developing product, but still expects to earn sales in the short term, and expects that the financial statements for the 2014 financial year will reflect the commencement of sales.

…

Other Business: Questions from the Floor

A number of shareholders raised questions on the effect of the change in company name for shareholders and why the change, when the company expected to make sales, the number of employees and monthly churn rate, where the company is at in the development phase of the company, what the raised funds are being used for, if future funding will be required, whether Head Office was being relocated to Singapore, the current price of shares, the likely priced of an IPO listing, the shares issued to management and the timing of the AGM.

The Chairman responded as follows:

The name change for the company has no implications for shareholders. It is the same entity and shareholders still have shares in the same entity. The new name if passed reflects a more appropriate name, and is relevant to the industry. The company received favourable feedback from the industry before resolving to change the company name.

In respect of sales, the company has obtained a frame contract only and until [Nokia Siemens Networks] produces an order sales will not commence. The product is not yet completed, but the company expects the completion soon and sales will then follow. The company is also seeking contracts from similar companies.

The company has reached agreement with UOB who will commence raising capital after the company has commenced receiving sales.

The company remains hopeful about an IPO, but this may only occur when revenue streams have been established from [Nokia Siemens Networks] and other parties. The revenue stream will increase the valuation of the business for the IPO. The company is therefore focussed on further development of the products and the securing of income.

The company’s updated website has been updated and communications will be provided via the website.

In order to bridge the gap in raising funds through the sale of shares in the last 12 months, short term loan funds have been arranged.

256    Also on 27 June 2013, Mr Narulla sent Mr Huber an email attaching the following items that I will discuss. Mr Narulla told Mr Huber:

Hi Jason

Here is the doc to get signed by the Directors.

Minutes of the meeting authorising the entry into the agreement are also here:

Please have both signed by yourself and Kamlesh and bring back to Singapore.

best,

Harveen

Mr Huber then forwarded this email to Ms Mei Lan Ng.

257    First, he attached unsigned minutes of a meeting of the directors of CellOS, dated 1 March 2012. It is unclear who is said to have attended this meeting, though I note there is space for the signatures of Mr Huber and Mr Patel. The minutes record:

Proposed funding

3.    The Board considered the offer before the Company of unsecured financing of up to SGD 25 million from LGA Energy Investments Ltd. The Board noted the proposed cost of funds at 10% per annum simple interest, and the proposal for conversion of outstanding amounts at the election of the lender into fully paid ordinary shares at the price of SGD 1.80 per share.

Resolution adopted

4.    The Board adopted the following resolution unanimously

RESOLVED THAT:

A.    Indoaust Investments Ltd (“the Company”) accept the proposed unsecured financing arrangement of up to SGD 25 million (Singapore Dollard Twenty-Five Million).

B.    The Company execute a Loan and Option Agreement setting out the terms of the financing.

C.    Any 2 Directors of the Company be authorised to execute this agreement.

258    Second, he attached a version of the LGA loan, dated 1 March 2012 and signed by Mr Min Wee for LGA. This version of the LGA loan did not include a cl 4 that covered amounts advanced retrospectively from 1 March 2012.

259    Also on 27 June 2013, Mr Narulla sent an email to Mr Mark Rodrigues, a CellOS employee, writing:

Heads up:

All the funds that have been loaned to Indoaust over the past couple of years to keep the business funded will be converted on Friday 28 June 2013 into shares.

Mei Lan is finalising the amount of the loan (she’s using SGD for this). It will be about SGD 12 million.

The Option Price is SGD 1.80 per share. The amount of shares will be determined once Mei Lan finalises the amount.

Docs will be signed off today by the directors. (I have sent Jason the resolutions necessary for this).

The docs are dated 28 June.

…

The details are below:

Name of shareholder: LGA Energy Investments Ltd

…

260    On 28 June 2013, there was a conversion event under the LGA loan, where an amount of SG$11,616,791 was converted into 6,453,773 CellOS shares. This was the first of six conversion events.

261    Also on 28 June 2013, Mrs Peck sent an email to Mr Huber regarding the opportunity to sell CellOS shares to Mr Anthony Cooper, a friend of hers. Mrs Peck had previously written to Mr Cooper regarding the opportunity on 25 June 2013.

262    On 29 June 2013, Mr Huber forwarded Mrs Peck’s correspondence regarding Mr Cooper to Mr Tan, telling him:

I told Constance that he would need to work through Jessie at UOB.

Can you please manage the relationship and have Jessie work with him and Constance. This is a $5ps investment .he would have to apply and basically we will consider all applications in early August with UOB advising us on who and what to accept.

The same procedure applies to all other applications.

263    On 9 July 2013, Ms Sandra Dierstein, a broker, sent Mr Huber an email, asking inter-alia:

How did the AGM go and how is everything else?

I had a call from Ben asking me about some Middle East investors who backed Indoaust with a loan and I had no clue what he was talking about…. He mentioned that he had a one-on-one with you in Melbourne and you told him that. Seems like he believes I am still working with you… Whats this all about?

Mr Huber replied:

At the AGM I told the shareholders that I funded the company through a loan from the Middle East. I did not discuss this with ben. I also did not discuss anything about our work together or that you had any influence.

264    As at 30 June 2013, CellOS had 209,200,912 ordinary shares on issue, an increase of 5,416,726 shares from 30 June 2012 (taken from the financial statements dated 27 November 2013):

(a)    250,000 shares had been issued by subscription;

(b)    5,791,726 shares had been created by the conversion of debt into equity; and

(c)    there was a downwards adjustment of 625,000 to account for a prior period error.

265    On 19 July 2013, the eleventh respondent in these proceedings Lighthouse was incorporated in Samoa.

266    On 20 July 2013, there was a share transfer of 10,000 shares with Ms Seah Chye Tin (Mr Tan’s wife) as transferor and Mrs Peck as transferee. This transfer was registered on 15 October 2013. This was the first purchase of shares by Mrs Peck from Ms Tin, which dealings would continue until 22 January 2014. The Pecks now had 2,565,000 CellOS shares.

267    Also on 20 July 2013, Mrs Peck sold 106,000 CellOS shares to a number of purchasers, which transfers were registered on 16 October 2013. The Pecks now had 2,459,000 CellOS shares.

268    On 23 July 2013, Mrs Peck sold 15,000 CellOS shares to a single purchaser, which transfer was registered on 16 October 2013. The Pecks now had 2,444,000 CellOS shares.

269    On 24 July 2013, Mrs Peck sold 134,000 CellOS shares to a number of purchasers, which transfers were registered on 16 October 2013. The Pecks now had 2,310,000 CellOS shares.

270    On 26 July 2013, Mrs Peck sent a WhatsApp Message to Cher Hung Seet, regarding a CellOS presentation on 27 July. Mrs Peck wrote:

This presentation is for a last batch of investors and they are all buying in at SGD5.00 per share. UOBKayHian has sold all their 20 million shares at USD5.00 per share. After 31 July, no more shares to be bought till Nasdaq listing date which will be btwn end 2013 n first half 2014. Opening price is expected to climb above USD100.00 per share. IBM signed up as global partner this week to integrate CellOS Software into IBM system.

271    Also on 26 July 2013, there was a share transfer of 236,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 15 October 2013. The Pecks now had 2,546,000 CellOS shares.

272    On 30 July 2013, Mrs Peck sold 147,500 CellOS shares to a number of purchasers, which transfers were registered on 16 October 2013. The Pecks now had 2,398,500 CellOS shares.

273    On 31 July 2013, there was a share transfer of 153,500 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 15 October 2013. The Pecks now had 2,552,000 CellOS shares.

274    On 1 August 2013, Mrs Peck sold 5,000 CellOS shares to a single purchaser, which transfer was registered on 16 October 2013. The Pecks now had 2,547,000 CellOS shares.

275    On 2 August 2013, there was a share transfer of 232,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 15 October 2013. The Pecks now had 2,779,000 CellOS shares.

276    Also on 2 August 2013, Mrs Peck sold 224,000 CellOS shares to a number of purchasers, which transfers were registered on 16 October 2013. The Pecks now had 2,555,000 CellOS shares.

277    On 6 August 2013, Mrs Peck sold 50,000 CellOS Shares to a single purchaser, which transfer was registered on 16 October 2013. The Pecks now had 2,505,000 CellOS shares.

278    On 7 August 2013, Mrs Peck sold 80,000 CellOS shares to a number of purchasers, which transfers were registered on 16 October 2013. The Pecks now had 2,425,000 CellOS shares.

279    On 12 August 2013, there was a share transfer of 332,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 15 October 2013. The Pecks now had 2,757,000 CellOS shares.

280    Also on 12 August 2013, Mrs Peck sold 27,000 CellOS shares (registered on 16 October 2013) and Mr and Mrs Peck sold 150,000 CellOS shares (registered on 25 November 2013) to a number of purchasers, a total of 177,000 CellOS shares. The Pecks now had 2,580,000 CellOS shares.

281    On 15 August 2013, Mrs Peck sold 200,000 CellOS shares to a single purchaser, which transfer was registered on 18 December 2013. The Pecks now had 2,380,000 CellOS shares.

282    On 21 August 2013, Mr Cooper wrote to Mrs Peck, confirming that he was prepared to purchase a further 100,000 CellOS shares at US$2 per share. Mrs Peck responded to Mr Cooper, copying in Mr Tan, writing:

I informed Melvin/Daniel Tan yesterday that our (the Pecks’) funds for the balance of the shares reserved for us will be in on Friday this week or Monday/Tuesday next week. At the same time, I asked if you and another friend who bought USD1 million worth of shares at USD5.00 per share last week could “piggy back” on my purchase of the USD2.00 shares to buy additional shares? Melvin is very supportive of the idea as both of you are greatly involved in missions/charity work.

…

As I mentioned, Melvin will take care of the paperwork - the forms, the registering of the shares and the handing of the monies/cheques to CellOS. Which account our monies go into will be told to us. Jason hires a man full time to take care of the registering of the shares and in approximately 2 months from the time we put our application in, we get our share certificates from Computer Share in Australia. Basically, and as you know and I discovered, we do not deal with Jason Huber directly in regard to any transaction of shares. Conversely, Jason Huber does not talk directly to us about how any shares we wish to buy, at how much and when is our money available. He deals with Melvin (and Daniel) only. If Melvin is informed, and he says this is okay, we will just proceed. That is the protocol - and that became clear to me when you came on the scene in June/July. Jason NEVER EVER enquired of me about you. From Day One he handed your case to Melvin (and Daniel) and has never “interfered”. Melvin told Jason that “Constance is taking care of her friends” and Jason is happy and satisfied with that.

Melvin, please confirm that this is the case.

Mr Tan responded to Mr Cooper and Mrs Peck, confirming: “Yes indeed, the protocol in handling of the transfer of shares are correct”.

283    Also on 21 August 2013, Mrs Peck sold 126,000 CellOS shares to a single purchaser, which transfer was registered on 18 December 2013. The Pecks now had a total of 2,254,000 CellOS shares.

284    On 22 August 2013, there was a share transfer of 326,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 6 December 2013. The Pecks now had 2,580,000 shares.

285    On 26 August 2013, Mr and Mrs Peck sold 169,000 to Mr Cooper and members of his family, which transfers were registered on 25 November 2013 and 9 December 2013. The Pecks now had 2,411,000 CellOS shares.

286    On 27 August 2013, there was a share transfer of 244,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 6 December 2013. The Pecks now had 2,655,000 CellOS shares.

287    On 29 August 2013, there was a transfer of shares with Nesterland Services as vendor and Mr and Mrs Peck as purchasers. Mr and Mrs Peck purchased 2,500,000 shares at a price of US$2 per share for a total price of US$5 million (although the share transfer form does not list any consideration). The transfer was registered on 1 October 2013. The Pecks now had 5,155,000 CellOS shares.

288    Also on 29 August 2013, Mr and Mrs Peck sold 31,000 CellOS shares to a number of purchasers, including members of the Cooper family. The transfers were registered on 25 November 2013 and 9 December 2013. The Pecks now had 5,124,000 CellOS shares.

289    On 3 September 2013, there was a share transfer of 71,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 6 December 2013. The Pecks now had 5,195,000 CellOS shares.

290    Also on 3 September 2013, Mrs Peck sold 41,000 CellOS shares to a number of buyers, which transfers were registered on 18 December 2013. The Pecks now had 5,154,000 CellOS shares.

291    On 5 September 2013, Mrs Peck sold 50,000 CellOS shares to a single purchaser, which transfer was registered on 18 December 2013. The Pecks now had 5,104,000 CellOS shares.

292    On 9 September 2013, Mrs Peck sold 80,000 CellOS shares to a number of purchasers, which transfers were registered on 18 December 2013. The Pecks now had 5,024,000 CellOS shares.

293    On 10 September 2013, Mrs Peck sold 4,000 CellOS shares to a single purchaser, which transfer was registered on 18 December 2013. The Pecks now had 5,020,000 CellOS shares.

294    On 11 September 2013, there was a share transfer of 227,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 6 December 2013. The Pecks now had 5,247,000 CellOS shares.

295    Also on 11 September 2013, Mrs Peck sold 57,000 CellOS shares to a number of purchasers, which transfers were registered on 18 December 2013. The Pecks now had 5,190,000 CellOS shares.

296    On 16 September 2013, an adjustment was processed for 662,047 CellOS shares incorrectly allocated to LGA under its conversion on 28 June 2013. LGA now held 5,791,726 CellOS shares.

297    On 19 September 2013, Mrs Peck sold 79,000 CellOS shares to a number of purchasers, which transfers were registered on 18 December 2013. The Pecks now had 5,111,000 CellOS shares.

298    Also on 19 September 2013, there was a transfer of shares with Nesterland Services as vendor and Mr and Mrs Peck as purchasers. Mr and Mrs Peck purchased 500,000 shares at a price of US$2 per share for a total price of US$1 million. The transfer was registered on 29 October 2013. The Pecks now had 5,611,000 CellOS shares.

299    On 20 September 2013, there was a share transfer of 121,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 6 December 2013. The Pecks now had 5,732,000 CellOS shares.

300    Also on 20 September 2013, Mrs Peck sold 40,000 CellOS shares to a single purchaser, which transfer was registered on 20 September 2013. The Pecks now had 5,692,000 CellOS shares.

301    On 24 September 2013, there was a share transfer of 53,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 6 December 2013. The Pecks now had 5,745,000 CellOS shares.

302    Also on 24 September 2013, Mrs Peck sold 53,000 CellOS shares to a number of purchasers, which transfers were registered on 18 December 2013. The Pecks now had 5,692,000 CellOS shares.

303    On 29 September 2013, Mrs Peck sold 39,000 CellOS shares to a number of purchasers, which transfers were registered on 18 December 2013. The Pecks now had 5,653,000 CellOS shares.

304    Mr Huber gave evidence that in late September or early October 2013, he was approached by Mr Eric Lee, who told him that he had purchased shares from Mrs Peck for US$5 per share from a seminar that she was running. In early October 2013, Mr Huber spoke with Mrs Peck about this matter, although the content of their discussion is disputed.

305    On 2 October 2013, there was a conversion event under the LGA loan, converting SG$6,242,179 into 3,467,877 CellOS shares. LGA now held 9,259,603 CellOS shares. This was the second of six conversion events.

306    On 3 October 2013, Mrs Peck sold 13,000 CellOS shares to a number of purchasers, which transfers were registered on 20 December 2013. The Pecks now had 5,640,000 CellOS shares.

307    On 4 October 2013, Mrs Peck sold 118,000 CellOS shares to a number of purchasers, which transfers were registered on 20 December 2013 and 27 December 2013. The Pecks now had 5,522,000 CellOS shares.

308    On 7 October 2013, there was a share transfer of 13,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 17 December 2013. The Pecks now had 5,535,000 CellOS shares.

309    On 8 October 2013, Mrs Peck sent an email to Mr Huber, copying in Mr Peck. This seems to have been prompted by the discussion that Mr Huber and Mrs Peck had had in early October. The subject line was “I have done wrong and an injustice and I need to set the record straight”. Let me set out what it said:

Sorry this took longer to get written - hence the delay.

-------------------------------------------------------------------------------------------------------

PRIVATE & CONFIDENTIAL

Dear Jason

I have done a great wrong and an injustice to Melvin Tan (and Daniel) and I need to set things right.

I know a lot of time has been spent on this - and it has been my fault. I don’t wish to take up more of anyone’s time - but it is necessary for me to write this - I will keep this as short as possible. After many hours of questioning Melvin (and Daniel) on Friday afternoon and over the last weekend, the conclusions I have arrived at are:

1.    MELVIN TAN (and DANIEL)

Melvin is your best friend and ally. He loves the company and you, and has your best interest and the best interest of CellOS in his heart and mind all the time. He is a man of integrity and a God-fearing man. God has dealt with him and allowed him to go through many years of pain and he has come out of it loving God more, and more determined to bless people and extend God’s kingdom. He knows his work as a broker well and I (we) need to learn from him the ground rules in Singapore.

Jason - please accept this conclusion about Melvin from me and may I suggest you keep an open mind and have a heart-to-heart talk with Melvin at some stage - I hope soon. I know you said that you do not like “confrontation” - but honest communication is necessary so as to establish a healthy (business) relationship with your best broker - for the sake of Christ and for the sake of CellOS.

What I heard from you last week about what you think of Melvin - and what you’ve always thought of Melvin - that things at CellOS really changed and took off when the Chinese Christians came - troubles me. A common trick the devil always plays is to divide from within - sow seeds of discord and suspicion - and hence destroy the organisation.

I am sorry that I contributed to you having a poor opinion of Melvin (and Daniel). What I did was not fair. By going to you with bits of information without the full facts, and without understanding the USD5.00 transactions caused you to conclude that they were cheats. I should have waited to get clarification from Melvin rather than “squeal on them” with my inadequate and partial understanding and put them in bad light and upset you.

I will take my place behind Melvin (and Daniel assisting him) as an investor in CellOS and observe the protocol. Systems and ground rules are set up so that things work - I should not have “short circuited the system” by going to you with information which resulted in you getting unnecessarily upset. Please accept my deep and sincere apologies.

2    “VENDOR” SHARES

Absolutely NONE (zero) of the shares that were sold at USD5.00 were yours or from the “Stephen” shares. And Melvin has not submitted any claim for commission – and you have not paid any commission for these shares. These are facts that you can verify easily.

3    THE USD5.00 SHARE TRANSACTIONS - ARE THEY ETHICAL?

These are shares that belong to investors who bought many shares in the past but expected the listing on Nasdaq to take place this year. Since it is not likely to happen in 2013, they need to offload some to realise the cash tied up for other pressing needs. They still hold many CellOS shares. They are/were willing to recover their money (at USD2.00 per share) and we are/were in a position to buy and then sell to our investors at prices ranging from USD2.00 to USD5.00 (not always USD5.00).

Melvin didn’t think it was right to sell shares below USD5.00 (because of UOBKH and because the shares are worth more than USD2.00 now). And you also instructed that there are no more USD2.00 shares available - though you made an exception in my case “because of Chua Hock Lin”.

No one knows who these sellers (vendors) are - only Melvin does and he is not at liberty to disclose who they are and we have to respect that. That is one of the conditions for him to handle the transaction.

The 4 “benefits” that arose from these transactions are:

a)    The sellers could cash out and they are relieved. Otherwise they go to loan sharks. (BTW they still have CellOS shares).

b)    The new buyers get a chance to buy CellOS shares. They are grateful and really happy to be able to get CellOS shares. (They can’t buy from UOBKH - they are small investors and private individuals - not PE funds and institutional clients.)

c)    They are also happy to participate in the Pledge for funds for Christian missions, humanitarian projects and Christian education - hence they fulfil my requirement.

d)    The “profit” went back to CellOS, to Christian work, to charity and to the same of the people who bought at USD5.00.

Melvin gave away all and more than the money that he made from these transactions - to Anthony Cooper and Andrea’s charities, to Thio Gim Hock’s missionary outreaches, and to many needy people and church needs - I can absolutely vouch for that. He has kept nothing of the profit - and the Lord has just been blessing him immeasurably. Let him tell you his stories of the goodness of God to him. The new BMW that Melvin now drives are indeed a gift from a grateful investor in stocks that have already made them a lot of money,

As for Daniel, I know that Daniel is serious about his walk with the Lord and has also given away a lot of his “profit” (to Pastor Samuel for his work in India, to other pastors and church workers - including buying a watch for you - : ) because he does care a lot for you.

In my case, because of this unexpected “profit”, I have been able to coax Alan to buy more CellOS shares. I have never worked so hard in my life - selling USD2.00 CellOS shares to raise funds directly for CellOS and then selling USD5.00 shares to raise funds indirectly for CellOS. (Of course for me, the Pledge - and therefore raising funds for the church is a great motivation).

As I mentioned, none of us have gone out to “splurge”. The money has gone back to CellOS (in my case) and to Christian work and the poor and needy (Melvin) and Daniel - in part to CellOS shares, and to Christian work and the poor and needy.

4.    RAISING FUNDS FOR CELLOS

If you wish to raise funds again for CellOS because UOBKH is slower in coming through than expected, please tell Melvin that you need to raise funds and I have no doubt that he will “swing into action” again - and support you as he did in the past. Up until now, the signal to raise funds has not come. In fact, the contrary is true. You have declared for the past few months that CellOS has enough funds to get to IPO.)=

As for me, I humbly offer you my services and will work with Melvin to bring in heavy weight investors. I do not want any commission nor should I receive any as I am not a licensed broker. I am just very grateful that you are still letting me buy USD2.00 shares every time I gather more money. I am a CellOS shares fanatic! I have two tag lines - “Redeemed and eternally grateful” AND the latest is “Jesus and CellOS shares are all I want!! : )

The difference is that Jesus gave Himself freely to me (my salvation is free - I did not/do not have to work for it. Jesus paid for my redemption) …… BUT for CellOS shares, I have had to work very hard indeed!! Ha, ha, ha!!

I WOULD LIKE TO REQUEST THAT THE ABOVE INFORMATION BE PASSED TO KAMLESH AND JONATHAN CHAN TO SET THE RECORD STRAIGHT.

[5]    YOUR MOVING TO “MARINA COLLECTION.”

I am committed and standing by to help. But I don’t want to be intrusive - I will act only when you let me know what, when and how you want me to help.

310    Also on 8 October 2013, Mrs Peck sold 5,000 CellOS shares to a single purchaser, which transfer was registered on 20 December 2013. The Pecks now had 5,530,000 CellOS shares.

311    On 10 October 2013, there was a share transfer of 147,500 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 17 December 2013. The Pecks now had 5,677,500 CellOS shares.

312    Also on 10 October 2013, Mrs Peck sold 24,500 shares to a number of purchasers, which transfers were registered on 20 December 2013. The Pecks now had 5,653,000 CellOS shares.

313    On 11 October 2013, there was a transfer of shares with Nesterland Services as vendor and Mrs Peck as purchaser. Mrs Peck purchased 200,000 shares at a price of US$2 per share for a total price of US$400,000. The transfer was registered on 5 December 2013. The Pecks now had 5,853,000 CellOS shares.

314    Also on 11 October 2013, Mrs Peck sold 249,000 CellOS shares to a number of purchasers, which transfers were registered on 20 December 2013 and 27 December 2013. The Pecks now had 5,604,000 CellOS shares.

315    On 14 October 2013, there was a meeting of the directors of CellOS. The minutes of that meeting record the following:

•    Share Registry: The Board noted that the share reconciliation has been completed and all changes implemented with Computershare. All existing transfers in the Computershare system are expected to be processed by 18 October 2013. There are however a large number of transfers outside the system (estimate 60) which are still awaiting supporting documentation or for shares to come in so that sufficient units are available for transfer. Several complaints have been received regarding delay in processing the transfer of shares due to internal processing procedure adopted by Computershare. Computershare will be asked review the process and expedite the transfers.

•    Information Memorandum: Latest update was completed in August 2013 to reflect the company name change from Indoaust Investments Ltd to CellOS Software Ltd. New company branding including the CellOS logo and brand colours were also incorporated. Revenue and financial forecasts were revised to reflect the latest developments in the sales pipeline resulting in a slight upward revision to the company valuation.

…

4.    Report on Fund Raising

•    Jason Huber reported that agreement with a private investor helped the company to raise sufficient funds to meet the current requirement. There is still a balance of about US$5 million which could be drawn upon.

•    The Board noted that Shares have been issued based on the Agreement upon the exercise of the option.

•    The Board noted that no further funds may be raised once the company starts generating revenue.

316    On 21 October 2013, Mrs Peck wrote a WhatsApp message, apparently sent to a certain “Chang” in which she relayed that:

Jason mentioned that he will be quite happy if we sell min USD5 million n max USd10 million at USD5.00. Goldman Sachs told him USD5.00 is too cheap. But he wants this comfort (USD5 million to 10 million in the kitty) to tide him over till march 2014.

317    On 23 October 2013, Mrs Peck wrote a WhatsApp message to Mr Huber, which message suggests that Mr Huber had told Mrs Peck that she must sell CellOS shares at US$5:

Jason – my meeting is still on but I can’t help but feel we need to talk. I want to help you n CellOS n I m upset because suddenly I m made to look dishonest n disloyal n ungrateful n maybe scheming. I m a v loyal n grateful person n i don’t take advantage of any situation for self gain. I don’t want to be associated or be involved in anything that is not fair n not honest. But as I explained to u, I m caught n the solution u suggested will not work. As I said, I have been v troubled n disturbed since having been told that we must sell at USD5.00 etc etc, etc. I m also confused hearing from Melvin n Daniel n then hearing u say that u don’t need money n that u can raise money anytime. But on Saturday (as i dropped u off) u said “Constance, why don’t u get Gim Hock’s boss to buy CellOS shares?” I said i could but why do we need to go through UOBKH? You said these guys will never buy without a big name like UOBKH. HERE’S THE PROBLEM. I want you (Jason Huber) AND CellOS to benefit.

318    On 28 October 2013, there was a transfer of shares with Rex Investors as vendor and Mr and Mrs Peck as purchasers. Mr and Mrs Peck purchased 250,000 shares at a price of US$2 per share for a total price of US$500,000 (although there is no consideration listed on the share transfer form). The transfer was registered on 25 November 2013. The Pecks now had 5,854,000 CellOS shares.

319    On 30 October 2013, Mrs Peck sold 337,000 CellOS shares (registered 27 December 2013) and Mr and Mrs Peck sold 80,000 CellOS shares (registered 9 December 2013) to a number of purchasers, being a total of 417,000 shares. The Pecks now had 5,437,000 CellOS shares.

320    On 6 November 2013, there was a transfer of shares with Nesterland Services as vendor and Mrs Peck as purchaser. Mrs Peck purchased 337,000 shares at a price of US$2 per share for a total price of US$674,000 (although there is no consideration listed on the share transfer form). The transfer was registered on 5 December 2013. The Pecks now had 5,774,000 CellOS shares.

321    Also on 6 November 2013, Mrs Peck sold 10,000 CellOS shares to a single purchaser, which transfer was registered on 7 January 2014. The Pecks now had 5,764,000 CellOS shares.

322    On 8 November 2013, Mr Huber sent an email to Mrs Peck, Mr Tan and Mr Daniel Tan, writing:

Dear Constance, Melvin and Daniel,

I wish to thank you for the big job in getting the supporters to come to our presentations this week. I know you have worked really hard to gather and interest them and also to follow up with them after the meetings

We are so blessed to have your support!!

323    On 10 November 2013, Mrs Peck sent Mr Tan and Mr Daniel Tan a copy of her text messages with Mr Huber, copying in Mr Peck. The messages themselves are undated. In the first message, Mrs Peck describes to Mr Huber the status of several potential purchasers of CellOS shares. She later tells Mr Huber:

…

BTW Melvin Tan is helping me a lot. Without Melvin, I don’t know enough n i m not licensed n have no credibility. Melvin is still your best n most capable supporter n we both work v long hours n odd hours - early morning n late at night n weekends n we do a lot of “entertainment” of customers. Always at “customers” disposal. Always patient n polite. Also, Melvin is doing a lot to manage the many existing investors who can “turn nasty” n we cannot afford that. That’s why I see the critical importance of you keeping those who have helped you v much on your side. Furthermore, Melvin also has A LOT of high net worth investors - I met them - we need to discuss this.

Melvin does not know how to sell himself to you nor defend himself. Please let me speak up for him for your sake n for the sake of CellOS. I may have caused problems. Please let me make amends.

Regards, Constance.

Mr Huber responded:

Sure thank you :-)

Thank you Constance. I appreciate and know how hard you and melvin are working for cellos. We are all very grateful. I look forward to catching up with you and melvin next week. We will have more time for each other then. In between the investor meetings I have also had many admin and operational matters to attend to this week as I was away for two weeks. But all is settled now and we are really blessed with a clear path to success. Praise The Lord!!

324    Also on 10 November 2013, Mrs Peck sold 30,000 CellOS shares to a number of purchasers, which transfers were registered on 7 January 2014. The Pecks now had 5,734,000 CellOS shares.

325    On 17 November 2013, Mr Huber told Mrs Peck that he had almost raised enough funds for CellOS from private individuals so that he did not need the UOB capital raising any more, which he said was being hampered by onerous due diligence requests by the private equity potential investors.

326    On 18 and 20 November 2013, Mrs Peck sent emails to Mr Huber and Mr Patel, copying in Mr Peck and Mr Tan, regarding the status of potential purchasers of CellOS shares. One of the potential investors was Mr Tang Wee Loke, a director of UOB:

9 Tang Wee Loke – Director of UOBKH. Not obliged to invest through UOBKH – will invest directly with CellOS if he decides to invest. But I received an SMS from him last night. I had this text exchange with him last night.

TWL -Hi Constance, thk u for the opp to invest in cellos. I hv decided not to invest bcos I think the valuation of USD1.1b is too rich as a pre ipo co without any contracts or track record. I sincerely hope for ur sake that I will regret this decision. I hope u will make multiple times on ur investment. God bless, weeloke

CP - Why don’t you come. Tomorrow the company will be sharing on the many contracts in the pipeline, the value of the contracts, how they arrive at the valuation, what the international bankers say who want to do the IPO, the milestones they have achieved in the development of the product, the roadmap to IPO n so on. Please give it a chance n ask your questions. It is probably a different ball game to the “traditional” type stock? Really hope u will come n take a look.

327    On 20 November 2013, Mrs Peck sold 2,000 CellOS shares to a single purchaser, which transfer was registered on 7 January 2014. The Pecks now had 5,732,000 CellOS shares.

328    Also on 20 November 2013, there was a share transfer of 42,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 19 February 2014. The Pecks now had 5,774,000 CellOS shares.

329    On 27 November 2013, Ms Mei Lan Ng sent Mr Simon Zannis (of Deloitte) an email attaching a representation letter dated 28 November 2013 and addressed to Mr Roche. That letter stated inter-alia:

10.    We have disclosed to you the identity of the entity’s related parties and all the related party relationships and transactions of which we are aware.

11.    Related party relationships and transactions have been appropriately accounted for and disclosed in accordance with the requirements of Australian Accounting Standards.

330    On 28 November 2013, CellOS’ financial report for the year ended 30 June 2013 was signed off by Mr Huber and Mr Hegde for the company and by Mr Roche for Deloitte. The company’s revenue from continuing operations was only AU$2,767, and its loss after tax was AU$11,800,914. Let me set out the following relevant extracts:

After balance date events

On 13 November 2013, 2,100,000 ordinary shares to the value of $3,190,320 (SGD $1.80 per share) were allotted to management personnel under the terms of their employment contracts for meeting certain performance criteria as approved by the Board.

During the September 2013 quarter, the company drewdown $5,386,238 in two tranches under its loan facility with LGA Energy Investments Ltd. These borrowings were subsequently converted to 3,467,877 ordinary shares on 2 October 2013.

Aside from the above, there has not been any matter or circumstance occurring subsequent to the end of the financial year that has significantly affected, or may significantly affect, the operations of CellOS Software Ltd.

…

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2013

…

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2013

…

NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

…

(i)    Going concern basis of preparation

For the year ended 30 June 2013, the Company incurred a loss after tax of $11,800,914 (2012: Loss: $11,113,223) and an operating cash outflow of $8,296,620 (2012: $4,368,773). As at year end the net assets of the Company stood at $2,401,976 (2012: $3,348,163) and the cash position has increased to $1,960,461 from $1,199,622 at 30 June 2013.

The ability of the Company to continue as a going concern, and meets its debts and commitments as they fall due, is dependent on the Company being successful in the following matters within 3 - 6 months of the date of this report, at the current rate of expenditure:

•    The Company will continue to seek funding from its loan facility arranged with LGA Energy Investments Ltd. Further drawdowns under this facility are at the election of the Company.

•    On 19th March 2013 the Company signed an engagement letter with UOB Kay Hian Private Limited (‘UOB Kay Hian’), a securities trading and investment company for Asian Financial markets, for a private equity fundraising exercise. UOB Kay Hian will use commercially reasonable efforts to sell new shares in the Company. At the date of approval of the financial statements no shares had been issued through UOB Kay Hian.

•    The company continues to be in the research and development phase in respect of development of the core CellOS products. The company needs to commercialise and raise cash via revenue from its research and development spend, in order to be able to service any future debt funding and/or pay debts as and when they fall due.

In the event the Company cannot raise the required funding, the Company has the ability to further reduce expenses around certain current commitments. The Company retains the ability to curtail other planned, but not committed expenditure, in order to ensure the Company continues to have adequate funds to pay all liabilities as and when they fall due.

As a result of these matters there is significant uncertainty related to events or conditions that may cast doubt about the company’s ability to continue as a going concern and whether it will realise its assets and settle its liabilities in the normal course of business and at the amounts stated in the financial report. The Directors remain confident that they will be successful in raising the additional funding required to complete planned research and development activities to bring additional products to market and accordingly have prepared the financial statements on a going concern basis.

…

(n)    Share-based payment transactions

Share-based payment arrangements in which the Company receives goods or services as consideration for its own equity instruments are accounted for as equity-settled share-based payment transactions, regardless of how the equity instruments are obtained by the Company. In prior year, the Company has issued shares to some of its advisers who have provided services valued at $26,546, and have received shares in the Company in lieu of cash at an issue price agreed to by both parties with reference to the fair value of the services rendered. Shares issued to employees and directors are recognised at fair value by reference to shares issued in the most recent arms length transaction to 3rd parties. The credit entry is recognised within the Share Based Payment reserve.

…

(o)    Critical accounting estimate and judgements

Estimated fair value of share based payments

The Company is required to estimate the fair value of shares allotted to employees and contractors who provide services or goods to the Company. As there is no active market for the shares, the company uses recent issue of shares to 3rd party investors in arms length transactions as a proxy for fair value of the shares allotted. This estimate of fair value and the determination of appropriate share issues to use, require the use of material assumptions.

…

NOTE 24: RELATED PARTY TRANSACTIONS

(a)    The loans provided to and by entities within the Company are made under a resolution of the directors, and are interest-free and repayable within 12 months [sic] notice. All other loans between related parties are on commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. Refer to Note 10 for details of loans with related parties.

331    On 9 December 2013, Mrs Peck exchanged emails with Mr Justin Lau, a potential purchaser of CellOS shares. Mrs Peck wrote, copying in Mr Huber:

Jason confirms that he would like to raise between USD5 million to USD10 million before the end of 2013 and hence he is offering CellOS shares at USD5.00 per share and it is really on a first-come-first served basis. He reiterated that any time soon, the purchase order from a major operator will come in, followed closely by purchase orders from several other major operators. Hence the revenues will come in and CellOS will not need these funds. Also, other investors (apart from the prospects that have been introduced to Jason by us and who have been doing their due diligence) may come in with their investments. Jason is likely to have more funds than he needs in the next few weeks.

…

Jason conveyed that he would be pleased also to meet with your cornerstone investors in the new year but it will definitely be at a new price (to be determined) and he will be looking at those investors around March 2013 even if he presents the opportunity to them in January.

With the foregoing information, please decide what you wish to do. Jason has asked me (a CellOS investor and friend of CellOS) together with Melvin Tan (CellOS’ official licensed broker) to assist you in any way we can while he is on leave should you decide to go forward with this investment opportunity before 31 December 2013.

332    On 10 December 2013, there was a conversion event under the LGA loan, converting SG$600,000 into 333,333 CellOS shares. LGA now held 9,592,936 CellOS shares. This was the third of six conversion events.

333    Also on 10 December 2013, Mrs Peck exchanged further emails with Mr Lau. Mr Lau asked Mrs Peck about how to access the “grey market” in CellOS shares. Mrs Peck replied:

Regarding a grey market, the company is aware there is a grey market but is not involved. We understand that the sellers look for their own buyers and transactions are on a willing buyer/willing seller basis. Also, we believe transaction amounts are small.

334    Also on 10 December 2013, there was a share transfer of 25,000 shares with Ms Tin as transferor and Mr and Mrs Peck as transferee. This transfer was registered on 5 February 2014. The Pecks now had 5,799,000 CellOS shares.

335    On 16 December 2013, there was a meeting of the directors of CellOS. The minutes of that meeting record:

4.    Share Registry

The Board noted that going forward the share certificates will be signed by one Director (Currently Chairman and CEO) and Company Secretary which is in line with standard corporate practice when digital signature is being used. As per Articles of Association any two directors or one director and company secretary must sign the share certificate.

5.    Matters Arising of past decisions

…

•    Information Memorandum: Further update is ongoing as per the request of UOB Kay Hian to reflect most recent developments.

…

6.    Finance & Accounts

a.    The Cash flow v/s budget for the Q 1 and 2 for the FY ending June 30, 2014 - The Board noted the statements presented at the meeting.

b.    The Board noted that the company’s cash position will reduce to $90,000 at the end of Dec. 31, 2013.

…

7.    Report on Fund Raising

•    CEO reported to the Board that the company is still a non-revenue company and hopes to generate revenue in first quarter of 2014.

•    Latest fund raising through issue of shares is at $5/- per share.

•    Efforts still on to raise funds by issue of shares.

336    On 18 December 2013, Mrs Peck wrote again to Mr Lau, stating:

Just to give you an update on the CellOS fund raising status - at this point in time, CellOS does not need to raise any more funds (i.e. at USD5.00 per share). What the company has and what has come in from investors leave CellOS in a very comfortable position. And as mentioned, the next price per share will definitely be above USD5.00. The cut off date for USD5.00 per share is 31 December and CellOS will let that remain unchanged for you as you already indicated your interest earlier.

337    On 21 December 2013, Mr Huber and Mr Patel (for CellOS) and Mr Min Wee (on behalf of LGA) executed a “Variation Agreement” in respect of the LGA loan. The variations were to:

(a)    extend the term of the LGA loan from 31 December 2013 to 30 June 2014; and

(b)    increase the loan amount to SG$40 million.

(e)    Events in 2014

338    On 2 January 2014, the twelfth respondent in these proceedings Leario was incorporated in Belize.

339    On 3 January 2014, the third, fifth and eighth respondents in these proceedings, Sky Wealth, Sun Way and Rich Max, were each incorporated in Anguilla.

340    On 5 January 2014, Mrs Peck sold 76,000 CellOS shares to a number of purchasers, which transfers were registered on 5 February 2014. The Pecks now had 5,723,000 CellOS shares.

341    Also on 5 January 2014, there was a share transfer of 76,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 7 March 2014. The Pecks now had 5,799,000 CellOS shares.

342    On 14 January 2014, Mrs Peck wrote to Ms Soo Khiang Bey, a potential purchaser of CellOS shares, telling her that “some off-market shares still available (at US$5 per share) – though I expect that it will not be for long”.

343    On 15 January 2014, there was a transfer of shares with Nesterland Services as vendor and Mr and Mrs Peck as purchasers. The Pecks purchased 1 million shares at a price of US$2 per share for a total price of US$2 million (although there is no consideration listed on the share transfer form). The transfer was registered on 26 February 2014. The Pecks now had 6,799,000 CellOS shares.

344    On 21 January 2014, the second and sixth respondents in these proceedings, Birinc and Aura Finance, were each incorporated in Belize.

345    Also on 21 January 2014, Autumn Harmony Corp was incorporated in Belize. As noted earlier, Mr Min Wee was that company’s sole director and shareholder. Autumn Harmony Corp was the sole director and shareholder of the second, third, fifth, sixth, eighth and twelfth respondents.

346    Also on 21 January 2014, Mr and Mrs Peck sold 496,000 CellOS shares to a number of purchasers, which transfers were registered on 12 March 2014. The Pecks now had 6,303,000 CellOS shares.

347    On 22 January 2014, Mrs Peck sold 14,000 CellOS shares to a number of purchasers, which transfers were registered on 28 February 2014. The Pecks now had 6,289,000 CellOS shares.

348    Also on 22 January 2014, there was a share transfer of 14,000 shares with Ms Tin as transferor and Mrs Peck as transferee. This transfer was registered on 2 April 2014. This was the final purchase of CellOS shares by Mrs Peck from Ms Tin. The Pecks now had 6,303,000 CellOS shares.

349    On 27 January 2014, Mr Reid became a director of CellOS.

350    On 5 February 2014, there was a transfer of shares with Nesterland Services as vendor and Mr and Mrs Peck as purchasers. The Pecks purchased 2.5 million shares at a price of US$2 per share for a total price of US$5 million (although there is no consideration listed on the share transfer form). The transfer was registered on 14 April 2014. The Pecks now had 8,803,000 CellOS shares.

351    On 6 February 2014, there was a conversion event under the LGA loan, converting SG$3 million into 1,666,666 shares. LGA now held 11,259,602 CellOS shares. This was the fourth of six conversion events.

352    On 16 February 2014, Mrs Peck sold 2,500,000 CellOS shares to Ms Tin, which transfer was registered on 12 March 2014. The Pecks now had 6,303,000 CellOS shares. This transfer is relevant to the later transfer of 1.5 million shares by Ms Tin to Ms Janifer Yeo-Tan.

353    On 19 February 2014, there was a conversion event under the LGA loan, converting SG$2.5 million into 1,388,888 CellOS shares. LGA now held 12,648,490 CellOS shares. This was the fifth of six conversion events.

354    On or about 21 February 2014, there was a transfer of shares with Lighthouse as vendor and Mr and Mrs Peck as purchasers. The Pecks purchased 5 million shares at a price of US$2 per share for a total price of US$10 million (although there is no consideration listed on the share transfer form). The transfer was registered on 8 April 2014. The Pecks now had 11,303,000 CellOS shares.

355    On 24 February 2014, Mr and Mrs Peck sold 930,000 CellOS shares to a number of purchasers, which transfers were registered on 12 March 2014. The Pecks now had 10,373,000 CellOS shares.

356    On 25 February 2014, Mr and Mrs Peck sold 500,000 CellOS shares to a single purchaser, Ms Janifer Yeo-Tan, which transfer was registered on 12 March 2014. The Pecks now had 9,873,000 CellOS shares.

357    On 25 February 2014, Mrs Peck sent an email to Mr Peck with the subject line “The Albert Yong CellOS shares Saga – a post mortem”. It is addressed to “Derek” and on 28 February 2014 Mrs Peck forwarded this email to Mr Cooper and Mr Vince. Let me set out some relevant extracts, which seems to be information provided to Derek by disgruntled CellOS share purchasers:

“information” that they gave you and/or statements they made

…

Vendor sales are wrong

Melvin has a criminal record

Melvin does not have a licence

We should not be doing presentations

We are unethical – they cannot trust us

…

I was teaching them how to “flip” CellOS shares and to stockpile

Janifer Yeo-Tan should buy straight from Jason Huber

The above are points I recall – there may have been more that they told you and which either you did no tell us – or I cannot recall.

358    On 28 February 2014, the Pecks entered into a “Deed of Undertaking, Guarantee and Indemnity” with Ms Janifer Yeo-Tan in relation to the purchase of more than 2 million CellOS shares for more than SG$13 million. The agreement obliged the Pecks to ensure the transfer of the purchased shares by 31 May 2014. They also indemnified Ms Yeo-Tan against any loss.

359    On 9 March 2014, Mr and Mrs Peck sold 706,000 CellOS shares to a number of purchasers, including members of the Cooper family, which transfers were registered on 22 April 2014. The Pecks now had 9,167,000 CellOS shares.

360    On 27 March 2014, there was a conversion event under the LGA loan, converting SG$7.5 million into 4,166,666 CellOS shares. LGA now held 16,815,156 CellOS shares. This was the final of six conversion events.

361    On 8 April 2014, there was a meeting of the directors of CellOS. The minutes of that meeting record:

7.    Fund Raising

CEO informed the Board that company continued to raise funds to meet expenses as the company has yet to generate revenue.

LGA Energy Investments Ltd:

•    CEO informed that the agreement with LGA Energy Investments L[t]d was renewed until June 30, 2014 and requested the Board to ratify the extension of the Agreement.

•    The Board considered the request and noted that the company still needed to borrow funds temporarily from LGA. The Board agreed to ratify the extension of the agreement upto June 30, 2014 to enable the company to raise funds from the LGA Energy Investments Ltd as short term unsecured loan. However, the Board decided that the Conversion Option granted to LGA to convert the loan into shares be terminated with effect from April 1, 2014.

…

9.    IPO Initiatives

•    Corporate Finance Advisor: The Board noted that Cellos Software Ltd has signed the Engagement Letter to engage Evercore Asia (Singapore) Pte Ltd as Corporate Finance Advisor. The Board ratified the terms an conditions stipulated in the Confirmation of the Engagement.

•    Legal Advisor: The Board noted that Duane Morris & Selvam LLP has been appointed to Legal Counsel for Cellos to provide advice with respect a public offering and listing of shares on the NASDAQ Market. The Board ratified the terms of the Engagement as per the Engagement Letter.

362    Now the minutes record that the meeting on 8 April 2014 was attended by Mr Huber, Mr Chan, Mr Patel, Mr Hegde and the company secretary, Mr Reid. But again, there was no explicit disclosure of Mr Huber’s connection with LGA at this meeting. I will deal with this matter later.

363    On 9 April 2014, there was a transfer of shares with Marsh Commercial as vendor and Mr and Mrs Peck as purchaser. The Pecks purchased 2 million shares at a price of US$2 per share for a total price of US$4 million (although there is no consideration listed on the share transfer form). The transfer was registered on 2 May 2014. The Pecks now had 11,167,000 CellOS Shares

364    On 24 April 2014, Mrs Peck and Mr and Mrs Peck sold 50,000 shares to a single purchaser in two transfers, which transfers were registered on 14 July 2014 and 22 July 2014. The Pecks now had 11,117,000 CellOS shares.

365    On 5 May 2014, Mrs Peck sent a WhatsApp message to Mei Chan Wong, Allan Wong, Mr Tan and Mr Peck, saying about CellOS:

… Very serious interest from overseas corporate investors via leading investment bank who obviously now hasto work with Evercore. Most important thing now is the revenue – once that comes, everything will become v upbeat I m told.

366    On or around 9 May 2014, and as I have said earlier, LGA transferred 16,815,157 shares to seven Huber controlled entities for no consideration (the transfers were registered on 9 May 2014), being:

(a)    2,800,000 to Birinc;

(b)    2,300,000 to Sky Wealth;

(c)    1,681,516 to Rex;

(d)    2,350,000 to Sun Way;

(e)    2,800,000 to Aura;

(f)    2,583,641 to Harvest Sky; and

(g)    2,300,000 to Rich Max.

367    On 13 May 2014, Mrs Peck purchased 2,500 CellOS shares from Ms Sylvia Besa Pacina. It is unclear what consideration if any was paid for these shares. The transfer was registered on 28 May 2014. The basis for this transfer comes from the aide memoire presented by Mr Crennan QC. The Pecks now had 11,119,500 CellOS shares.

368    On 16 May 2014, a transfer of 1.5 million CellOS shares from Ms Tin to Ms Janifer Yeo-Tan was registered. Apparently, this transfer was for the balance of shares that the Pecks were obliged to transfer to Ms Yeo Tan by 31 May 2014.

369    On 19 June 2014, Mrs Peck exchanged WhatsApp messages with an investor who was seeking US$2 CellOS shares:

Gim Hock – from where am I going to get USD 2.00 shares for you??? Right now, we are ourselves fighting hard to get money to buy the 2 million USD5.00 shares that Melvin’s vendors need to sell to get money to pay the bank on 23 June … At USD5.00, it is a v good deal. Can get at that price bcos of Melvin’s connections – we get first right of refusal. Market has moved up since u n I bought. Jason clearly said to Alan n me yesterday he is NOT selling anymore shares – n definitely not at USD2.00!!

Mrs Peck later wrote in the same exchange:

To buy n (later) sell shares or sell part of it at a higher price is NOT WRONG. When I kept buying shares from Jason at USD2.00 when Jason needed the money, he was very grateful and said to Alan n me that if we needed money b4 IPO, he will help us sell at USD25.00!! He didn’t see it as wrong.

Of course we never sold out shares bcos we are in this for the long haul – definitely want to wait for the IPO.

We had the money n Jason had the shares. He needed the money so he sold shares at USD2.00. We had the money n the GUTS. We saw the business opportunity.

370    On 21 June 2014, Mrs Peck exchanged WhatsApp messages with Ms Teo Ly Seng. She wrote:

Melvin has 2 million shares at USD5.00 to sell. Early investors pressed by the bank bcos lost money in stock market recently. I cannot buy anymore - fully invested. I m asking all my friends if they have capacity to take more? Short runway.

She wrote later in the exchange:

… I know so many people who want to buy at USD5.00 - I just haven’t the time to ask them. And many will buy at USD10.00. If I m not going for the long haul, (talking about BILLIONS) I can make many MILLIONS now.

371    On 24 June 2014, there was a transfer of shares with Harvest Sky as vendor and Mr and Mrs Peck as purchasers. The Pecks purchased 1 million shares at a price of US$2 per share for a total price of US$2 million (although there is no consideration listed on the share transfer form). The transfer was registered on 11 July 2014. The Pecks now had 12,119,500 CellOS shares.

372    Mrs Peck said in her evidence before me that in or around mid-2014 she approached Mr Huber to seek permission to sell the shares she had purchased at US$2 per share through him. She says that she did this because Mr Huber had previously told her that he did not want her to sell the shares she had purchased through him. She says that Mr Huber agreed to this request, but said that she should not sell the shares for less than US$10 per share. Mrs Peck admits, however, that she sold shares at US$5 per share instead at that time as the shares were easier to sell at that price.

373    On 26 June 2014, CellOS held its AGM. The minutes of the AGM record the following:

The board remains optimistic about a future IPO, but as indicated at the last AGM, this can only happen after the Company has established positive revenue streams, and action will be taken in line with advice received from the Company’s professional advisors. Any IPO timing will also depend upon market conditions …

…

The Company has built and is in the process of building new software products. Some products are in field trials with key potential customers; no revenue-generating contracts have yet to be signed.

374    On 30 June 2014, the LGA loan terminated under the terms of the variation agreement.

375    As at 30 June 2014, CellOS had 224,455,843 ordinary shares on issue, an increase of 15,254,931 since 30 June 2013 (from the financial statements for that financial year dated, surprisingly, 22 December 2016):

(a)    575,000 shares issued by subscription;

(b)    11,029,931 shares created by conversion of debt into equity; and

(c)    3,650,000 shares issued by allotment.

376    On 1 July 2014, there was a transfer of shares with Harvest Sky as vendor and Mr and Mrs Peck as purchasers. The Pecks purchased 1 million shares at a price of US$2 per share for a total price of US$2 million (although there is no consideration listed on the share transfer form). The transfer was registered on 11 July 2014. This was the final purchase of CellOS shares by the Pecks from one of the Huber controlled entities. The Pecks now had 13,119,500 CellOS shares.

377    In summary, the Pecks purchased 18,842,000 CellOS shares from Huber controlled entities over the relevant period that I have just described, paying US$37,684,000.

378    In respect of this final purchase, on 11 July 2014 The Pecks exchanged emails with Mr Huber regarding finalisation of the purchase. In a first email, Mr Huber wrote:

Hi Constance and Alan

…

The principal of Harvest Sky Holdings Limited wishes to receive the payment by TT to the following account:

Account details:

USD Account Details

Account name: Swallow Limited

Mr Peck responded:

…

(Are we correct that although the beneficiary is mentioned to be Harvest Sky Holdings Limited, that the TT be addressed to just Swallow Limited, as indicated below ? Just wished to ascertain).

Also from past experiences with TT’ing , we found from point of sending as conveyed via email and point of acknowledgement from the recipient, it could take 2 or 3 days - could you also kindly provide a contact no. or email address at the recipient end just to help in tracking and it would also be useful should either side be awaiting for the other’s acknowledgement or the transmission go unexpectedly awry ? Will also ensure that all correspondence is copied to you too.

To which Mr Huber replied:

Dear Alan

I have checked with the vendor. There is no problem with sending the funds to Swallow. I will make sure the vendor gives you a written confirmation of receipt of funds.

379    Also on 1 July 2014, CellOS entered into a “Loan Agreement” with Pized, a company registered in Belize. Mr Huber and Mr Patel signed this agreement on behalf of CellOS as “Borrower” and Mr Min Wee signed on behalf of Pized as “Lender”. Let me set out some relevant excerpts:

Whereas

1.    The Borrower is a technology company in active research and development (R&D) and commercialization phase, and required significant funding to complete this prior to a commercial outcome;

2.    The Borrower requires funding of up to SGD20,000,000 (Singapore Dollars Twenty Million Only); and

3.    The Lender is prepared to allow the Borrower access to funds that it can draw down on from time to time, as needed to sustain its activities, in the way of an unsecured loan facility, on the terms and conditions herein.

…

b.    “Conversion Price” of each Share shall be the price amounting to eighty percent (80%) of the price per Share as reported in the last audited financial statements of the Borrower.

…

3.    Facility

3.1    The Borrower may request the Lender for funds totaling up to the Facility Amount [S$20 million]. The Lender may elect, at its sole discretion, to advance any amount of funds up to the Facility Amount.

…

3.4    The Borrower accepts that Drawdown Amounts advanced by the Lender pursuant to Funds Request may be advanced to it by third parties but nevertheless they shall be treated as having been advanced by the Borrower.

4.    Option Grant

4.1    The Borrower grants the Lender an Option as follows:

4.1.1    The Lender may at any time during the Option Exercise Period at its election and in its absolute discretion elect to either:

a)    convert any part or all of the Outstanding Loan into equity in the Borrower (“Option 1”); or

b)    obtain repayment from the Borrower of any part or all of the Outstanding Loan (“Option 2”).

4.2    Should the Lender elect to exercise Option 1:

4.2.1    it shall give written notice to the Borrower of its election to convert the Option Amount, supported by a certificate showing the Outstanding Loan as of the date thereof and the Option Amount to be converted (if different from the Outstanding Loan);

4.2.2    within 14 days of receiving such notice, the Borrower shall cause the Lender (or such other party as it directs) to be issued the Shares;

4.2.3    Shares shall be issued at the Conversion Price [80% of the share price in CellOS’ last audited financial statement] and shall be for the Option Amount; and

4.2.4    upon issuance of the Shares following the exercise of Option 1, the debt corresponding to the Option Amount shall be extinguished.

4.3    Should the Lender elect to exercise Option 2:

4.3.1    it shall receive simple interest at the rate of 5% (five per cent) per annum on each Drawdown Amount from the date the Drawdown Amount is advanced to the Borrower to the date of repayment. The Lender may in its absolute discretion choose to waive interest on any or all of the Drawdown Amounts;

4.3.2    it shall give written notice to the Borrower of its election to be repaid the Option Amount, and provide therein its bank account details into which repayments should be made. The written notice shall be supported by a certificate showing the Outstanding Loan as of the date thereof plus interest payable thereon and the Option Amount to be converted (if different from the Outstanding Loan);

4.3.3    within 14 days of receiving such notice, the Borrower shall repay the Option Amount to the bank account designated by Lender in the said notice;

4.3.4    repayments shall be made in Singapore Dollars; and

4.3.5    upon full repayment of the Option Amount following the exercise of Option 2, the debt corresponding to the Option Amount shall be extinguished.

4.4    Subject to the provisions of this Clause 4, the Lender may exercise its Option one or more times within the Option Exercise Period [1 July 2014 to 30 June 2015] so long as there is an Outstanding Loan under this Agreement.

4.5    Exercise of the Option is irrevocable and the amount corresponding to the Option Amount cannot subsequently be resurrected as a debt owing by the Borrower to the Lender.

…

6.    Termination and extension of this Agreement

6.1    Subject to the following clauses, this Agreement shall terminate on 30 June 2015:

6.1.1    the Parties may choose to extend this Agreement on terms and for a period to be mutually agreed in writing; and

6.1.2    this Agreement shall automatically terminate on the occurrence of an Insolvency Event as set out in Clause 7.

380    Between 9 July 2014 and 23 March 2015 SG$2,570,707 and US$8.3 million was advanced to CellOS and attributed to the Pized loan. There was no exercise of the option under the Pized loan to convert into CellOS shares.

381    On 14 July 2014, Mrs Peck sold 200,000 CellOS shares to a single purchaser, which transfer was registered on 28 August 2014. The Pecks now had 12,919,500 CellOS shares.

382    On 17 July 2014, Mrs Peck exchanged WhatsApp messages with Mr Chris Ho, who was a potential purchaser of CellOS shares. Apparently Mr Ho wished to bring a friend to an investor presentation, although the friend was not a Christian. Mrs Peck replied:

The preferential price of USD5.00 per share is a friendly price for Christians n we will require them to do a pledge. Tithe on profit at listing. Non-believers – it’s an arm’s length commercial deal. We open at USD 10.00. Some brokers quote higher. I leave it to the brokers.

Tomorrow we don’t talk price. Jason will do the presentation. Melvin and/or I will do the signing up. Outsiders – USD10.00 minimum.

383    On 21 August 2014, Mrs Peck and Mr and Mrs Peck sold 299,000 CellOS shares to a number of purchasers. These transfers were registered on 2 September 2014, 13 October 2014 and 15 October 2014. The Pecks now had 12,620,500 CellOS shares.

384    There was a final undated purchase of shares registered on 1 September 2014. Mrs Peck purchased 10,000 CellOS shares from Mr Ho Weng Wah. It is unclear what consideration if any was paid for these shares. The basis for this transfer comes from the aide memoire presented by Mr Crennan QC. The Pecks now had 12,630,500 CellOS shares.

385    On 2 September 2014, there was a meeting of the directors of CellOS, at which the resignation of Mr Patel was accepted. The minutes of that meeting, which are unsigned, record:

1.3    Disclosure of Conflicts: the Board noted that there were no conflicts of interest.

…

2.3    Loan Agreement

The Board was advised that the company had signed a loan agreement with Pized [M]anagement Ltd on 1 July 2014 on the following terms:

•    Finance to be provided for upto S$20,000,000

•    Interest charge is 5% simple interest per annum, calculated from the date of each draw down to the date of repayment

•    Term is from 1 July 2014 to 30 June 2015

•    The lender has an option to convert any outstanding debt to shares based on 80% of the price per share of the last audited financial statement of the company.

The Board ratified the signing of the loan agreement.

…

3.    Matters for Discussion

3.1    CEO’s Report

The CEO, Mr Jason Huber, appraised the Board of the current financial and business situation. The CEO advised that the Board had ratified the terms of agreement with Evercore Asia at the previous Board meeting and subsequent meetings and discussions with Evercore Asia remained positive. Evercore Asia remain committed to raising funds for the company and upto and including the IPO. Additionally the company had been approached by Morgan Stanley Asia, and they had asked that they be part of this process of raising the capital.

It was necessary that the business plan be updated and this process had commenced. The business plan would provide the information necessary for the completion of a new Information Memorandum that would be required for Evercore Asia and Morgan Stanley Asia.

…

3.2    Financial Report

•    Mei Lan Ng, Group Financial Controller, presented the March 2014 Financial Statements, and the Board ratified the signing of the Directors statement by Jason Huber and Jonathan Chan.

•    The Board was presented with the Budget papers for the 2015 financial year. The Board discussed the detail of the Budget and requested that the Budget be reviewed further particularly in regard to revenue. The Budget would be represented at the next Board meeting for sign off.

•    The current burn rate and cash position was advised to the Board, and the CEO advised that since the revenue forecasts were behind schedule that he will need to obtain further funding from shareholders. The CEO noted that he did not foresee a problem in raising additional funds.

386    On 17 September 2014, Mr Huber and Ms Mei Lan Ng signed a letter on behalf of CellOS which was addressed to Mr Roche of Deloitte. Let me set out some extracts of the letter:

Dear Stephen,

This representation letter is provided in connection with your audit of the financial report of CellOS Software Limited for the period ended 31 March 2014, for the purpose of expressing an opinion as to whether the financial report gives a true and fair view in accordance with the basis of preparation as set out in Note 2.

We confirm that:

1.    We have fulfilled our responsibilities, as set out in the terms of the audit engagement dated 17 February 2014, for the preparation of the financial report in accordance with the basis of preparation as set out in Note 2; in particular the financial report gives a true and fair view in accordance therewith.

2.    We have provided you with:

•    Access to all information of which we are aware that is relevant to the preparation of the financial report such as records, documentation and other matters;

•    Additional information that you have requested from us for the purpose of the audit;

•    Unrestricted access to the persons within the entity from whom you determined it necessary to obtain audit evidence; and

•    All information required by you and all requested information, explanations and assistance for the purposes of the audit.

3.    All transactions have been recorded in the accounting records and are reflected in the financial report.

…

11.    Related party relationships and transactions have been appropriately accounted for and disclosed in accordance with the requirements of Australian Accounting Standards.

…

We understand that your audit was conducted in accordance with Australian Auditing Standards and was, therefore, designed primarily for the purpose of expressing an opinion on the financial report of the entity taken as a whole, and that your test of the financial records and other auditing procedures were limited to those which you considered necessary for that purpose.

Yours faithfully

[Mr Jason Huber, Chief Executive Officer]

[Ms Mei Lan Ng, Group Financial Controller]

387    On 23 September 2014, Mr and Mrs Peck sold 5,000 CellOS shares to a single purchaser, which transfer was registered on 2 October 2014. The Pecks now had 12,625,500 CellOS shares.

388    On 24 September 2014, Mr and Mrs Peck sold 225,500 CellOS shares to a number of purchasers, which transfers were registered on 2 October 2014. The Pecks now had 12,400,000 CellOS shares.

389    On 10 October 2014, Mr Reid resigned as a director of CellOS.

390    On 19 October 2014, Mr and Mrs Peck sold 345,500 CellOS shares to a number of purchasers, which transfers were registered on 19 November 2014 and 22 January 2015. The Pecks now had 12,054,500 CellOS shares.

391    On 29 October 2014, Mrs Peck sold 10,000 CellOS shares to a single purchaser, which transfer was registered on 2 January 2015. The Pecks now had 12,044,500 CellOS shares.

392    On 9 November 2014, Mrs Peck exchanged WhatsApp messages with Mr Patrick Loh. In her message Mrs Peck explained that she would not be selling CellOS shares to a certain Estee at US$5:

Please understand that I will not be extending the same “scheme” to her as I have to you n Simon Tan n Vincent Sum n Li Wen where my price to you guys is USD5.00 n whatever you sell above USD5.00 is yours. I’m doing this to help you guys. It was a scheme I thought of to “motivate” Jonathan Shek AND he “opened it up” to his “little disciples”. SO DO NOT TELL ESTEE OF THIS DEAL. If she knows n asks me about it, I will say that it is not something I want to do anymore.

The price to “insiders” FOR NOW is USD5.00 n for “outsiders” is USD10.00. I say “for now” because if I do not need to help raise funds for Jason Huber, I do not intend to sell anymore shares until IPO.

For example if Estee introduces anyone to me (eg the lady who owns 3A Leedon Park) it will be at USD10.00 n Estee does not get a cut. As a sales person, I will find a way to go direct to Jennifer - I do not need to use Estee. Hope this is clear. Please ring me if you want to discuss anything. But I will be w Melvin n Jason huber to see Goldman Sachs this morning until 2.30 pm.

393    On 17 November 2014, Mrs Peck sold 6,000 CellOS shares to a single purchaser, which transfer was registered on 2 January 2015. The Pecks now had 12,038,500 CellOS shares.

394    On 21 November 2014, Mrs Peck sold 30,000 CellOS shares to a single purchaser, which transfer was registered on 2 January 2015. The Pecks now had 12,008,500 CellOS shares.

395    On 24 November 2014, Mrs Peck sold 3,000 CellOS shares to a single purchaser, which transfer was registered on 2 January 2015. The Pecks now had 12,005,500 CellOS shares.

396    In December 2014, Mr Reid resigned as company secretary of CellOS and was replaced by Ms Tapner. Mr Reid would later resume as company secretary on 9 December 2015.

397    On 4 December 2014, CellOS sent a letter signed by Mr Huber to Mr Tan with the subject line “Notice to Cease and Desist”:

It has come to our attention that you are representing yourself as an advisor at or to CELLOS Software Limited (the “Company”) to various third parties.

We have also been informed that, despite several oral requests to you to stop, you have continued to hand out old business namecards of the Company representing yourself as an employee or advisor of the Company.

Kindly take note that with immediate effect, you are not authorized to act for and/or on behalf of the Company or represent yourself in any manner whatsoever and/or howsoever as being related to or connected with the Company and/or any of its subsidiaries.

Accordingly, take note that you must cease and desist immediately from:

(i)    acting for and/or on behalf of the Company;

(ii)    representing yourself in any manner whatsoever and/or howsoever as being related to or connected with the Company and/or any of its subsidiaries; and

(iii)    handing out, displaying or in any way utilizing the old business namecards or the Company. In this regard, please return all business namecards in your possession to us without delay.

Furthermore, we note that you have represented yourself on www.linkedin.com as “Advisor at Indoaust Investments Ltd”. As you know, “Indoaust Investments Ltd” is the former name of CELLOS Software Limited. Please delete this title and any other similar references from your webpage on www.linkedin.com within five (5) days from the date of this notice.

Failure to do any of the above will result in the Company taking legal action to protect its rights, including, without limitation, civil proceedings against you.

398    On 5 December 2014, Mr Tan wrote the following letter addressed to Mr Huber:

RESPONSE TO YOUR LETTER “NOTICE TO CEASE AND DESIST” DATED 4 DEC 2014

I was shocked to receive the above said letter.

I need to respond to the following assertions in your letter in order to set the record straight.

1.    YOUR PARAGRAPH 1

You have officially appointed me as Advisor to Indoaust Investments Ltd from December 2010.

2.    YOUR PARAGRAPH 2

At no time did you inform me orally or in any written form that I was to stop handing out old business name cards and to stop representing the company as an Advisor. At Mrs Constance Peck’s request to you, you have orally said in her presence as well as mine, that you would not be printing any more business name cards for me under CellOS Software Limited because “the company is no longer raising funds”. THIS IS VERY DIFFERENT FROM STATING THAT YOU HAVE “DESPITE SEVERAL ORAL REQUESTS” to me to stop representing myself as an Advisor of the Company.

a)    On two other occasions recently- Wednesday, 5 November and Friday, 7 November 2014- there were at least 30 shareholders and prospective investors per date in your office where you gave an update and presentation on CellOS. I did the opening introduction as a CellOS representative in your presence. You did not stop me nor inform me that I was not to do so anymore as I was not to represent CellOS Software.

b)    Up until Monday, 24 November 2014, I was in your office as CellOS’s representative with visitors from Korea and Hong Kong.

3.    YOUR PARAGRAPH 4 (iii)

I do not have any more Indoaust Investments Ltd business name cards in my possession.

4.    YOUR PARAGRAPH 5

For the record, the Profile on my LinkedIn Web page says that I am “Advisor, Financial Services”. (See attached copy of screen shot).

As you can see, the company Indoaust Investments IS NOT NAMED.

I have NEVER mentioned in Linkedln that I am “Advisor at Indoaust Investments Ltd”. If you type in “Melvin Tan” there will be at least 25 Melvin Tan’s that will appear. One of the Melvin Tans indeed claims that he is “Advisor Indoaust Investments Ltd.” I am unable to delete that as it was not set up by me.

I have gone as far as to delete my whole LinkedIn account. However the “Melvin Tan” that asserts himself to be Advisor, Indoaust Investments Ltd is still there. Please take the liberty to remove that “Melvin Tan Advisor Indoaust Investments Ltd” if you can do so. It will not affect me as I have deleted my entire Linkedln account.

Finally, as requested in your said letter, I step down as Advisor to your company with immediate effect.

I wish you and CellOS Software Ltd every success.

399    Mrs Peck recounts that in late December 2014, she received a call from Mr Tan in which he described a call that he had received from Mr Min Wee who he said had expressed concerns that Mr Huber was trying to acquire a 51% shareholding in CellOS so that he could control the business and oust the other shareholders.

(f)    Events in 2015 onwards

400    On 5 January 2015, Mr and Mrs Peck sold 30,000 CellOS shares to a number of purchasers. The Pecks now had 11,975,500 CellOS shares.

401    On 6 February 2015, Mrs Peck exchanged WhatsApp messages with Ong Benny Eng Leong, describing the current manner in which she was marketing CellOS shares:

Wrt sharing the markup, bcos shares now cost USD6.00, selling at usd12.00 gives us a markup of usd6.00. We propose markup of usd6.00 to be shared equally by 4 pax - Melvin, me, Siew Yong n yourself. So that means Usd1.50 each. And you can buy shares w the profit money at usd6.00 per share.

When asked why Siew Yong was receiving a portion of the sale proceeds, Mrs Peck explained:

Bcos she is now working w Melvin n me in the new scheme that started in Jan 2015. And she introduced you. But never mind, let’s do it this way - Melvin n I will give to her from our share. So we split the USD6.00 three ways? USD2.00 each for Melvin, me and you. Is this a deal?

402    On 27 March 2015, there was a meeting of Mr Huber and three individuals from Deloitte: Mr Stephen Roche (Audit Partner), Mr Simon Zannis (Audit Director) and Mr David McGuigan (Tax Director). The minutes of this meeting seem to have been prepared much later. The minutes record that Mr Roche questioned Mr Huber about the Pized loan. Let me set out extracts of the minutes:

Funding

Jason explained the funding situation of Cellos as follows:

•    Jason commenced by stating that he had no outstanding creditors and he had managed to keep the business going.

•    He does this on a month to month basis.

•    He has been raising $1m a month in equity funding to keep the business going

•    Jason advised that he found difficulty raising cash in the Jan/Feb period as a number of people go away or take leave during Chinese New Year

•    The cash burn rate has decreased from $2.3m a month to $1.3m a month due to a restructuring of the business: