Venture cash imminent says IndraNet

By PETER GRIFFIN IT writer

Christchurch technology company IndraNet Technologies says it is on the verge of securing a huge injection of venture capital, but deals touted during previous capital-raising drives appear no closer to generating revenue.

Last month, after prodding from the Companies Office, IndraNet released its accounts for the year ended December 31, 2001, revealing a loss of $4.3 million and just $2000 in the bank.

Auditor Deloitte Touche Tohmatsu said fresh capital was needed for IndraNet to stay in business.

IndraNet claims its balance sheet is now looking a lot healthier, but has failed to give any concrete evidence of that - saying only that fresh funding from private, mainly overseas-based investors had been received this year and negotiations for millions of dollars of funding were well advanced.

The publicity-shy managing director, Dr Louis Arnoux, remains tight-lipped on the company's financial state, but continues to talk up the technology and its chances of success.

"IndraNet's financial position is stronger at June 30 than at the end of the last financial year," he said, declining to give a specific financial update for the half year to June 30.

Formed in 1998 by a group of highly qualified scientists, IndraNet has been developing wireless "mesh" network technology in conjunction with tech companies dotted around the globe.

So far, its technology has made for impressive slide-show presentations, but nothing in the way of demonstrations to the media or public.

IndraNet has become as well known for the mystery shrouding it as for the technology itself.

The company, which was listed on the secondary market, has around 2850 shareholders and has raised more than $7 million from the public in two capital raisings.

Efforts to raise a further A$5 million ($5.8 million) in Australia last year failed.

A big project the company was involved in last year in Nice was discontinued by the European Union administration because of "diverging views with a number of parties from the Virtuhalls Consortium", of which IndraNet was not a member.

The "Virtuhalls" project involved France Telecom and Sigma Technologies with a contract valued at €1 million ($2.1 million), allowing IndraNet to take a shareholding in Sigma. The project aimed to build a sophisticated web portal based on IndraNet's communications network.

"The €1 million equity payment is presently under negotiation and I am not at liberty to comment further on this point," said Arnoux.

Sigma head Jean-Michel Cardi had not responded to the Herald's questions by press time.

Other projects-in-progress touted to the public in IndraNet's prospectus are behind schedule.

A telemedicine project with Australian healthcare company Optum would have involved IndraNet deploying 10,000 of its "Minder" units, but is no further along.

"We are progressing matters more slowly than we would like, but progressing nonetheless towards setting up a first network for this venture," said Arnoux.

Likewise, development of a car that runs on compressed air, in conjunction with French partner MDI, had stalled.

Arnoux said that after a major automobile show to be held in Paris in October, MDI was likely to release demonstration vehicles globally and development of the technology would continue.

Arnoux responded angrily when the Herald contacted IndraNet's business partners in Moscow.

Despite the apparent delays in IndraNet's projects, the company still has its loyal supporters.

One shareholder, who lost $25,000 on failed wind turbine company Vortec Energy and has invested a similar amount in IndraNet, said New Zealand companies were in "dire straits" if investors were not prepared to take a bet on them from time to time.

The financial community, however, has never taken to IndraNet, which organised its public offerings without broker support.

A Christchurch-based broker contacted by the Herald said he had never had enough confidence in IndraNet to recommend it to clients.

Arnoux did not rule out going to the public in New Zealand again to raise money, but private placements were his priority.

"When the present negotiations are completed we do not expect to require raising further capital in New Zealand for quite some time," he said, adding that, if deals currently before the company were sewn up, IndraNet would be very close to break-even point.

Arnoux said IndraNet had customers and was billing them.

He pointed to a project under way with lines company Electricity Ashburton, where IndraNet's wireless base stations are being used to transfer data about the electricity network back to EA's headquarters.

IndraNet