Reston Online Banking Company Admits It's Not So Good With the Books

By Ellen McCarthy
Thursday, July 14, 2005

It seems like every publicly traded tech company around the Beltway has spent the past year diligently preparing to meet the requirements of the new Sarbanes-Oxley financial regulations.

Well, maybe not every company.

Last week Intelidata Technologies Corp. , a Reston online banking company, told investors that its accounting procedures aren't exactly airtight. In fact, the firm said its internal controls were lacking because it didn't have the resources or expertise to deal with complex accounting matters, that its process for preparing financial statements was inadequate, that it didn't properly segregate financial duties and that there is "more than a remote likelihood that a material misstatement in our . . . financial statements could occur and would not be prevented or detected."

So Intelidata executives are probably snapping into action to get those issues straightened out, right? Actually, "at this time Intelidata has not devised a plan to address its material weakness," it said in a filing with the Securities and Exchange Commission .

The company is in the process of being acquired by Corillian Corp. , a Hillsboro, Ore., firm that also provides online banking services. Only if the $20 million deal doesn't go through, Intelidata said in its SEC filing, will it devise a plan to deal with the accounting problems.

Intelidata didn't respond to repeated phone calls, but Corillian officials said the revelations shouldn't quash the deal.

"The due diligence we've done would have uncovered that, and we're moving forward with the merger," said Steve Shaw , a Corillian spokesman. "We hope the Intelidata shareholders approve the deal in August."

Landing nearly $30 million in venture financing is no small feat when most funds still have a few portfolio companies on life support, but Vienna-based RaySat Inc. didn't seem to have much trouble. The start-up company plans to announce today that it received a $27 million capital infusion led by Apax Partners . The round follows a $10 million investment by Benchmark and Seed Partners in November 2003.

RaySat makes satellites that provide high-speed communication services on moving vehicles. Passengers on 70 trains zipping across Europe can tap into wireless Internet connections powered by the company's satellites. And this summer the firm launched a satellite that can bring live television to the back seats of SUVs across the nation. The new product -- a five-inch-tall satellite antenna at sits on the roof of the vehicle -- extends a consumer's traditional satellite TV service to the car.

The company was co-founded by Samer F. Salameh , former chief executive of Prodigy Communications Corp. , and Yoel Gat , who previously led Gilat Satellite Networks Ltd . The company's television product is now being sold at electronics stores through Audiov ox , and the firm is working on installation deals with automakers. Next spring, Salameh said, it will introduce a version of the satellite that also extends high-speed Internet service to cars.

RaySat now has about 140 employees, many of them working to shrink the antenna so that it won't be restricted to SUVs. "Within a year or two, it will become small enough and cheap enough to fit on any car," Salameh said. "Eventually [it] will disappear into the roof of the car itself."

Improving Franco-American relations isn't Gad Tobaly's main focus, exactly, but if his company can help bridge the divide, then so be it. Tobaly, chief executive of InfoVista Corp ., a communication software company with headquarters in Herndon, France and Singapore, will ring the Nasdaq Stock Market's closing bell this afternoon, marking the company's 10th anniversary and France's independence.

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