the truth about ebix, robin raina, and the robin raina foundation
DESCRIPTION
This exposé explains why investors should immediately sell Ebix shares and stay away until more information is provided by the company. We believe the reported financial statements are not reliable, accurate, or complete. We also believe the shares deserve to be halted until the issues we address are remedied.TRANSCRIPT
GOTHAM CITY RESEARCH LLC www.gothamcityresearch.com [email protected]
GOTHAM CITY RESEARCHGOTHAM CITY RESEARCHGOTHAM CITY RESEARCHGOTHAM CITY RESEARCH LLCLLCLLCLLC
THE TRUTH ABOUT EBIX,
ROBIN RAINA,
AND THE
ROBIN RAINA
FOUNDATION
"We're more Catholic than the Pope." –
(Former) co-Chairman Jo Lernout, of Lernout & Hauspie, September, 25 2000
"Ebix stands for integrity, in every form and fashion." –
CEO & Chairman Robin Raina, of Ebix, Inc., April 1, 2011
Page 2 of 46
Disclaimer:
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In no event will you hold GOTHAM CITY RESEARCH LLC or any affiliated party liable for any direct or
indirect trading losses caused by any information in this report. This report is not investment advice or a
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unless that person has agreed to be bound by these same terms of service.
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profit in the event the issuer’s stock declines. We may buy, sell, cover or otherwise change the form or
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Our research and report includes forward-looking statements, estimates, projections, and opinions
prepared with respect to, among other things, certain accounting, legal, and regulatory issues the issuer
faces and the potential impact of those issues on its future business, financial condition and results of
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markets, market conditions, assets and liabilities. Such statements, estimates, projections and opinions
may prove to be substantially inaccurate and are inherently subject to significant risks and uncertainties
beyond GOTHAM CITY RESEARCH LLC’s control.
Our research and report expresses our opinions, which we have based upon generally available
information, field research, inferences and deductions through our due diligence and analytical
process. GOTHAM CITY RESEARCH LLC believes all information contained herein is accurate and
reliable, and has been obtained from public sources we believe to be accurate and reliable.
However, such information is presented “as is,” without warranty of any kind, whether express or
implied. GOTHAM CITY RESEARCH LLC, makes no representation, express or implied, as to the accuracy,
timeliness, or completeness of any such information or with regard to the results to be obtained from its
use. All expressions of opinion are subject to change without notice, and GOTHAM CITY RESEARCH LLC
is not obligated to update or supplement any reports or any of the information, analysis and opinion
contained in them.
GOTHAM CITY RESEARCH LLC has filed as a whistleblower with the Internal Revenue Service and the
Securities Exchange Commission.
Page 3 of 46
Table of Contents
I. Disclaimer
II. Summary
III. Introduction
IV. Ebix’s Accounting: Unreliable, Inaccurate, and Incomplete
V. The Tax Strategy: Sham in Fact or Sham in Substance
VI. Ebix’s Stock Deserves to be Halted
VII. Shares are Worth No More Than $5
VIII. Robin Raina Foundation: a Crumbling Wall of False Integrity
IX. End Notes
Page 4 of 46
GOTHAM GOTHAM GOTHAM GOTHAM CITY RESEARCHCITY RESEARCHCITY RESEARCHCITY RESEARCH LLCLLCLLCLLC
a
SUMMARY OF FACTS
• There is a $66 million undisclosed related party loan
between Ebix Singapore and an unnamed related party.
• Australian revenues are only 32% of the amounts stated in
the SEC filings, according to Australian filings.
• 2010 Singapore intangible assets are misstated by $67
million. 2011 long-lived assets do not add up.
• The 2010 & 2011 10K filings were filed before the
Singapore 2010 financial statements were signed off.
• The Confirmnet acquisition cost 30% more according to
the India filings than it did according to the SEC filings.
• Ebix could not have paid for Planetsoft, without moving
cash from India, unless the cash never left the US.
• Less than 5% of Singapore’s intangible assets are IP-
related, i.e. most of the assets lack economic substance.
• EZ-Data’s IP was transferred to Singapore yet Raina says
“No US IP has been transferred to any other country.”
• Ebix’s Singapore and India subsidiaries’ financial
statements for 2011 remain unavailable.
• Core business is declining, tax rate is rising, and goodwill
write-offs and debt maturities are looming.
• The Robin Raina Foundation’s IRS filings are full of material
accounting irregularities.
• Raina misrepresented his foundation’s spending by 300+%.
GOTHAM CITY RESEARCH’S OPINIONS
• Ebix will restate historical results – likely significantly – as a
result of the issues covered in this report & elsewhere.
• Ebix stock should be halted until the financial statements
are reliable, accurate, and complete.
• Cherry Bekaert Holland should not sign off on Ebix’s 2012
financials, without Ebix Singapore’s 2011 and 2012 filings.
• Ebix’s stated tax strategy is supported by sham in fact
and/or sham in substance transactions.
• Ebix shares are worth no more than $5.00/share, &
approach $0.00 as the IRS, debt, & other risks unfold.
Company: EBIX
Ticker: EBIX
Share price: $18.34
Market cap: $711M
Enterprise value: $764M
52-week high: $26.28
52-week low: $15.26
Shares outstanding:
37.28M
Float: 34.86M
Avg. Daily Vol: 447K
% float short (1/15):
42.2%
TTM Revenue: $189M
TTM Net income: $69M
2012 YTD FCF: -$5M
Net debt: -$53M
Tangible book: -$67M
Dividend yield: 2%
FYE: Dec. 31
Auditor: Cherry Bekaert
Holland
Page 5 of 46
INTRODUCTION
GOTHAM CITY RESEARCH first heard about Ebix last October, when we saw an Ebix-related lawsuit hit
our inboxes. These kinds of lawsuits are normally thrown out in federal court, but this one did not get
thrown out. Our interest in the Ebix story increased as we read through the complaint.
Given the alarming accusations in the lawsuit, we soon decided to investigate for ourselves, and take a
fresh look into the company. We read over 10,000 pages of documents from Sweden, Singapore, India,
Australia, New Zealand, & the United States pertaining to the company. We consulted with professionals
from the disciplines of forensic accounting, law, transfer pricing, background investigations, finance, and
software. We found assets not adding, cash disappearing, and management misrepresenting. The more
we looked, the more we found reality to be far worse than the prior critics had made it out to be.
For example, we discovered a $66 million undisclosed related party loan1, $67 million accounting
irregularity in long-lived assets2, and Australian revenues at a fraction of what the SEC filings disclosed,
per the Australian filings3. We concluded that (i) Ebix’s financial statements are unreliable, inaccurate,
and incomplete, (ii) their tax strategy is a sham, and (iii) the stock should be halted.
We decided it was important to go public with our findings after we found out that Robin Raina’s
misrepresentations did not end with Ebix. For starters, he recently exaggerated to the South Asia Times
(who named him man of the year) how much Robin Raina Foundation (“RRF”) typically gives every year4:
South Asia Times: How much you give to the foundation? What is its annual outlay?
Robin Raina: I hate to talk about it. But yes, a majority of the money that comes in for the
foundation comes from me. In a given year, RRF will typically spend about $2 million.
In fact, RRF has spent at most $3.7 million combined since inception, as the IRS Form 990s reveal5:
Raina’s bogus claims to the South Asia Times are morally reprehensible, but not illegal. We do wonder,
though, about his declarations that RRF’s form 990s are “true, correct, and complete”, made under
penalties of perjury.6 As it turns out, there are, in fact, accounting irregularities found in the Robin
Raina Foundation’s form 990s, as we discuss later in this report.
As Autonomy, Lernout & Hauspie, AremisSoft, Network Associates, and other epic software frauds
remind us: when you put together a bunch of bushes, you don’t get a tree – you get a bunch of scraggly,
old bushes. We believe Ebix is no different, having grown largely due to its improper tax strategy, luck,
dodgy acquisitions, and Raina’s ability to fool some of the people, all of the time. We believe that the
chickens are about to come home to roost for Ebix and Raina.
“Somebody once said that in looking for people to hire, you look for three qualities: integrity, intelligence,
and energy. And if you don’t have the first, the other two will kill you”. – Warren Buffett
thousands $ 2004 2005 2006 2007 2008 2009 2010 2011 TOTAL
Total expenses ($56) ($326) ($598) ($441) ($471) ($704) ($1,054) ($86) ($3,735)
Page 6 of 46
Ebix’s Accounting: Unreliable, Inaccurate, and Incomplete
What Ebix and CEO Robin Raina Have Said Regarding the Integrity of the Company and its Filings
On April 1st, 2011 (April Fool’s Day), a week after a negative report was published on Seeking Alpha1,
CEO Robin Raina hosted an Investor Conference. The below slide is from said conference2:
On November 5th, 2012, a Bloomberg story titled Ebix Accounting Practices Said to Be Probed by SEC3
claimed that Ebix “is being investigated by the U.S. Securities and Exchange Commission for its
accounting practices, four people with direct knowledge of the probe said.”
Ebix swiftly issued a press release4, in which Robin Raina, Chairman, CEO and President of Ebix, said:
“We stand behind the accuracy of our public filings.“
Is Robin Raina, Chairman, CEO and President of Ebix telling the Truth, the Whole Truth, and Nothing
But the Truth?
Page 7 of 46
Gotham City Research Believes Ebix’s Financial Statements are Unreliable, Inaccurate, & Incomplete
We believe Ebix’s financial statements are unreliable, inaccurate, and incomplete and that the company
will have to restate historical results for the following reasons:
I. Undisclosed Related Party Transactions and Assets That Don’t Add
• There is a $66 million undisclosed related party loan between Ebix Singapore and an unnamed
related company.
• Ebix’s 2010 long-lived assets don’t add up. The Singapore irregularity alone is $67 million. That’s
equal to 94% of Ebix’s 2011 GAAP net income and just under 10% of the company’s market cap.
• 2011 long-lived assets on the balance sheet do not add up to the long-lived assets in note 16.
• The total cost of Confirmnet is off by 30+% between the Indian filings and SEC filings.
II. Evidence that Reported Revenues and Accounts Receivable are Not Accurate or Reliable
• Ebix’s Australia revenues, as disclosed in ASIC filings, are only a fraction of what SEC filings show.
• 20%-40% of accounts receivable seem of dubious quality, given the growth in unbilled
receivables and odd inclusion of deferred revenue within accounts receivable.
• Ex-employees have raised doubts on the accuracy and reliability of Ebix’s account receivables.
III. Other Critics have Voiced an Entirely Different set of Concerns about Ebix’s Reported Figures:
• Organic growth misrepresentation5 – Ebix's most recent 10Q (Q3'12) implies they
misrepresented organic growth in the 10Q's filed for Q1'12 and Q2'12, and organic growth has
gone negative. Past organic growth (prior to 2012) rates are suspect, likely misrepresented as
well – Raina says that 11 percentage points of last year's revenue growth were organic.
• Weak, non-existent, & inadequate internal controls – Ebix has had 4 auditors in the last 8 years,
and “As Ebix has gotten larger, its audit firms have gotten smaller.”6
While the concerns we’ve identified are the most serious to date, the combination of what we’ve
uncovered and what’s already out there leave us with no doubt that Ebix’s financial statements are not
accurate, reliable, or complete.
Once revenues are suspect, everything else in the income statement is suspect, as every line-item flows
through the P&L. Small changes in reported revenue have an amplified effect on EPS (the exact
multiplier depending on financial and operating leverage).
And once a company is not disclosing a material related party loan (in an amount roughly equal to Ebix’s
2009 and 2010 tangible assets), who knows what else they’re hiding?
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The $65.8 Million Undisclosed Related Party Loan between Ebix Singapore and a Related Party
One of the biggest concerns that some market participants have voiced is that they just can’t seem to
get around trusting Ebix. Others, such as Jeff Van Rhee of Craig Hallum, seem to trust (without verifying)
Robin Raina’s claims and Ebix’s financial statements.7
We believe that it is actually much worse than even the skeptics think: for starters, the company has
never disclosed a $65.8 million loan between its Singapore subsidiary and an undisclosed related party.
From the Singapore filings8:
The loan to Singapore is outstanding as of the 2010 financial statements. We don’t know of its status
beyond 2010 as Ebix has yet to even file its 2011 filings9, as of the writing of this report. Both the 2009
and 2010 filings indicate that the loan “is not expected to be repaid within the next 12 months”:
It would seem that the loan is, by definition, a loan of indefinite duration. A loan with such lax terms
does not seem remotely consistent with an arm’s length transaction (more on this later).
The Singapore financial statements make it very clear that Ebix Singapore purchased intangible assets
with the proceeds from said loan, as shown in the statement of cash flows:
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Strangely, Ebix’s Australian filings Do Not Reflect any Corresponding Inflow or Outflow of Cash
The following footnote reveals that most of the intangible assets were purchased from Telstra
(subsidiary of Ebix Australia):
So where did the money flow? The Singapore filings imply it flowed to Australia. The Australian filings,
then, should reflect the sale of intangible assets to Singapore10:
Page 10 of 46
The ‘Investments’ account clearly reflects a major decline (of just under 50 million aussie dollars). That
looks about right, and appears to correspond to the sale of intangible assets to Singapore.
Where things get very strange: there is no corresponding increase in cash on the balance sheet; equally
disturbing is that the decline in the ‘investments’ account is not reflected at all in the statement of cash
flows:
The liabilities section of the balance sheet shows an account with a similar decline in the same period:
Page 11 of 46
Specifically, there is a decline in ‘Trade and Other Payables’ in an amount that seems on the same order
of magnitude as the decline in investments account. The specific sub line-item is called ‘amounts
payable to related parties’. Mathematically, the decline in the investment account mirrors the decline in
amounts payable to related entities. They appear to cancel each other out to balance the balance sheet.
Here’s the problem: neither the decline in the investments account (as mentioned), nor the decline in
payables is found in the statement of cash flows. Nor is there a footnote that explains these declines.
Gotham City Research believes in three possible explanations (and none of them bode well for Ebix):
1. The undisclosed related party loan and (corresponding IP purchase transactions) are “sham in
fact” transactions, i.e. they never actually occurred;
2. Ebix Singapore did receive said loan from an undisclosed related party, but the money is
unaccounted for;
3. Ebix Singapore did receive said loan from an undisclosed related party, and sent proceeds off to
some completely unmentioned entity, let’s call party X, who then forgave the Ebix Australia’s
payables.
In either 3 scenarios, the simple question is “why”? We can’t think of any good reasons, but we can
think of plenty bad reasons.
The best case scenario we can think of is scenario number 3. But in that case, the (I) absence of any
disclosures to US investors, (II) lack of any disclosures regarding this hypothetical ‘party X’ in the
Singapore filings, and (III) no inflow of cash or explanation in the footnotes of Australian filings lead us to
believe that these lies of omission were motivated by some (economically) rational reason: namely, to
improperly minimize taxes. For more, see the tax section.
Ebix’s Australian Revenues and Profits are only a Fraction of What SEC filings Show, per ASIC filings
We examined the financial statements of Ebix Australia (VIC) Pty Ltd, made available by the Australian
Securities and Investment Commission (“ASIC”) & found that Ebix’s revenues & pre-tax profits, according
to the ASIC filings, are only a tiny fraction of what’s stated in Ebix’s SEC 10Ks11:
SEC vs. ASIC FILINGS - 2011 Financial Statements
thousands $ SEC ASIC VARIANCE
Cash $7,605 $8,467 -10.2%
Long-lived assets $1,286 $1,040 23.7%
Revenue $31,991 $10,161 214.8%
pre-tax income $2,734 $1,127 142.6%
Notes:
Cash for Australia from the SEC filings is as of
3/12/2012, not 12/31/2012, for unknown reasons.
I assume for simplifying purposes 1 Aussie dollar
equals 1 US dollar. US AUD in fact did vary around
1:1 in 2011, so it's a reasonable assumption.
Page 12 of 46
The revenue and pre-tax income irregularities are particularly odd given that the long-lived assets, cash
balances, and employee count look far more similar, between the SEC and ASIC filings.
For example the 2011 Australian filing claims 74 employees (they mysteriously did not fill out and reveal
employee count in the 2010 ASIC filing), while the 10K 2010 claims 77 employees (Ebix stopped
reporting employees by geographic segment in 2011 10K).12
Also, while Ebix does disclose having 3 total subsidiaries in Australia, Ebix Australia Pty,. Ltd., Ebix
Australia (VIC) Pty. Ltd., and Ebix Exchange-Australia PTY LTD, Ebix Australia (VIC) Pty Ltd’s financial
statements clearly show that it fully owns Ebix Australia Pty,. Ltd. and Ebix Exchange-Australia PTY LTD:
Recall, Australia is the only country where Ebix has any significant revenues outside of the US:
Ex-employee Statements and the Composition + Quality of Accounts Receivables Cast Doubt on the
Reliability and Accuracy of Ebix’s Reported Revenues
Ex-employees have questioned the reliability and accuracy of Ebix’s receivables13:
• “Unable to determine which customers had made payment for which projects.”‖
• “A former Ebix account manager, who had worked for E-Z Data prior to the acquisition
and continued to work for Ebix until early 2011, confirmed declining growth.”
• “As of last quarter, our accounts receivable area became a major concern to senior
management and to our stockholders.”
• “A former senior executive of Connective Technologies, Inc., confirmed not only the
experience of Peak with respect to Ebix‘s inability to provide accurate financials on
which to base his earn out…”
• "Constant errors" in "billing and administrative processes" left Ebix's employees "unable
to properly produce invoices to customers in a timely manner."
• "Ebix's accounting procedures were plagued by errors. Ebix was consistently unable to
properly bill customers, tie customer payments to invoices issued by Ebix…provide basic
financial data, or calculate Peak's revenue."
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• "As a result of the significant billing problems caused by Ebix, Peak did not properly
allocate sales and revenue into the appropriate accounting periods. As a result, upon
information and belief Peak overstated its accounts receivable."
• "Ebix was consistently unable to tie customer payments to specific invoices. As a result
of Ebix's failure to account for customer payments, Ebix was unable to manage accounts
receivable for Peak, & Ebix is unable to create & maintain accurate books and records."
20%-40% of Accounts Receivables Seem of Dubious Quality, per Close Examination of the SEC filings
GOTHAM CITY RESEARCH believes at least 20-40% accounts receivables are of dubious quality. We
believe Ebix is utilizing a toxic combination of aggressive accounting – rising unbilled receivables, a
shrinking reserve for doubtful accounts, and unusual inclusion of deferred revenue within receivables.
Unbilled Receivables
Unbilled receivables have been used as a classic financial shenanigan to aggressively recognize revenue,
especially when its growth has outpaced overall A/R growth and revenue growth14. Ironically (or
perhaps not), Ebix’s auditor authored a white paper on unearned receivables15. The below table shows
how unbilled receivables growth outpaced total receivables growth recently16:
Despite all the issues that employees have identified regarding Ebix’s receivables, allowance for doubt
accounts has actually been trending down, as a percentage of receivables, even as unbilled receivables
as a percentage of receivables has been rising.
Deferred Revenue as a Component of Accounts Receivable
Ebix started including deferred revenue into its accounts receivable account (even though it reports a
separate deferred revenue account as a liability) as soon as Cherry Bekaert Holland became its auditor in
Unbilled Receivables Growth Outpaced Total Accounts Receivables Growth
thousands $s 2011 Q4 2012 Q1 2012 Q2 2012 Q3
Revenue $44,050 $43,827 $47,716 $53,804
Gross accounts receivable $32,852 $30,572 $34,291 $38,519
Unbilled receivables $5,200 $6,100 $7,700 $9,100
Revenue % growth (0.5%) 8.9% 12.8%
Gross accounts receivable % growth (6.9%) 12.2% 12.3%
Unbilled receivables % growth 17.3% 26.2% 18.2%
Allowance for Doubtful Accounts is Trending Down, even as Unbilled Receivables Trends Up
thousands $s 2011 Q4 2012 Q1 2012 Q2 2012 Q3
Gross accounts receivable $32,852 $30,572 $34,291 $38,519
Allowance for doubtful accounts $1,719 $1,221 $1,195 $1,316
Allowance for doubtful accounts as % of A/R 3.9% 2.8% 2.5% 2.4%
Unbilled receivables as % of A/R 15.8% 20.0% 22.5% 23.6%
Page 14 of 46
200817. The amount of deferred revenue Ebix includes within accounts receivable is buried in the notes,
making it difficult for most investors who don’t read the notes. The below table shows how the deferred
revenue included within accounts receivable has grown at a faster clip than accounts receivable:
The inclusion of deferred revenue within the accounts receivable account is exceedingly rare, based on
our experience.
Rather than relying on our judgment, however, we consulted a few accounting experts, who have been
studying these issues for decades. We asked Dr. Edward Ketz, Professor of Accounting at Penn State
University, and author of Hidden Financial Risk and Accounting Ethics: “Have you ever seen a company
include a portion of their deferred revenue in accounts receivable?”
He said18:
“Never. Deferred revenue means you have received cash but have not provided the product or
the service to the customer, so you recognize the liability—the fact that you owe them a product
or a service.
If you have a receivable instead, I think this falls into the category of executory contracts. The
customer is promising to pay you and you are promising them something in exchange. The
profession has a bias against recognizing such mutual promises, as the profession seems not to
recognize most executory contracts.”
According to another accounting expert we spoke with, he stated that it is exceedingly rare and unusual
for a company to include deferred revenue in A/R. He added that it does occur in cases where a
company nets it out of accounts receivable. However, the same accounting expert said he’s never seen
deferred revenue included within accounts receivable in the event there is a separate deferred revenue
account (which Ebix has).
Based on our independent research, the evidence seems to support Professor Ketz and the other expert
we spoke to: we found less than 5 cases where deferred revenue is included within accounts receivable;
in most of the cases, it was netted out due to an absence of a deferred revenue account.
Deferred Revenue Included Within A/R Has Grown Faster than Total A/R
thousands $s 2011 Q4 2012 Q1 2012 Q2 2012 Q3
Revenue $44,050 $43,827 $47,716 $53,804
Deferred Revenue $16,460 $16,211 $18,060 $17,845
Deferred rev included in A/R $5,200 $6,100 $7,700 $9,100
Revenue % growth (0.5%) 8.9% 12.8%
Deferred Revenue % growth (1.5%) 11.4% (1.2%)
Deferred rev included in A/R % growth 17.3% 26.2% 18.2%
Page 15 of 46
Ebix’s 2010 Long-Lived Assets Don’t Add Up. The Singapore Irregularity Alone is $67 Million (94% of
GAAP 2011 Net Income and Just Under 10% of the Market Cap)
Contrary to Mr. Raina’s claims suggesting that all Ebix’s public filings are accurate, we subsequently
found material irregularities in the reporting of 2010’s long-lived assets. The irregularity in the Singapore
long-lived assets alone is $67 million, which is roughly equal to Ebix’s entire 2011 GAAP earnings. The
table below shows the irregularities, that is the 2010's long-lived assets as reported in the 2010 10K vs
2011 10K19:
We highly doubt that these accounting irregularities were made by accident; Ebix has had plenty of time,
and has filed 5 amended 10Ks just in the last 2 years. In fact, none of the amended 10Ks correct these
irregularities, nor has there been an amended filing been released for 2010’s 10K. If they wanted to get
this right, we believe they would’ve done so by now, especially given all the extra public scrutiny the
company has received in the last 2 years.
Three Different Numbers for the 2010 Singapore Long-Lived Assets
A superficial examination of the 2011 10K would lead many to believe that Ebix and/or Cherry Bekaert
Holland corrected the 2010 long-lived asset numbers in the 2011 10K. We believe the 2010 long-lived
assets numbers from both the 2010 and 2011 10Ks remain unreliable and inaccurate, for the simple
reason that the 2010 Singapore long-lived assets number does not agree with the figures provided in the
2010 and 2011 10Ks20:
2010's Long-Lived Assets - As reported in the 2010 10K vs 2011 10K
thousands $ 2010 10K 2011 10K VARIANCE
The Americas $98,190 $169,833 $71,643
Australia $545 $1,525 $980
Singapore $134,993 $67,781 ($67,212)
New Zealand $0 $40 $40
India $0 $3,339 $3,339
TOTAL $233,728 $242,518 $8,790
Note 1: EBIX previously reported "goodwill and intangible assets" in note 16
by geographic segment in the 2010 10K. In the 2011 10K , EBIX reported
"long-lived assets" in lieu of "goodwill and intangible assets". Despite
the name change, they are substantially equivalent, as there are no
material long-lived assets beyond goodwill and intangible assets.
Note 2: In the 2010 10K, EBIX reported 'The Americas' whereas in the 2011 10K
started to break out by specific region, i.e. US, Canada, & Latin America.
Page 16 of 46
No matter which exchange rates you use to convert from USD to SGD and visa versa (within the range
that the SGD USD actually traded in 2010), the 2010 Singapore long-lived assets number reported in the
2011 10K does not equal that found in the Singapore 2010 filings.
We believe these irregularities point to a much more serious problem: Ebix’s reported financials are
unreliable and inaccurate. If the goodwill and intangible assets are materially unreliable, then Ebix’s
profits by segment are materially unreliable, as they directly impact amortization expense, which
materially and directly impact segment profits.
If the Singapore intangible Asset Numbers are Suspect, so is the Alleged Singapore Tax Scheme
The company claims21:
The Company also has a relatively low income tax rate is in Singapore in which our operations
are taxed at a 10% marginal tax rate as a result of concessions granted by the local Singapore
Economic Development Board for the benefit of in-country intellectual property owners.
The irregularities shown above cast a shadow over Ebix’s stated tax strategy in Singapore. After all, if
there are three different numbers for the 2010 Singapore long-lived assets (and most of the long-lived
assets are intangible assets), is not the stated tax strategy suspect as well? The basis of said tax scheme
is intellectual property (which is included in the intangible assets), according to Ebix.
As we discuss in greater depth, it turns out this is only the tip of the iceberg, as there are bigger
problems with Ebix’s claimed tax strategy.
2011 Long-lived Assets on the Balance Sheet Show One Number, while Note 16 Shows Another
After uncovering the 2010 long-lived asset irregularities discussed, we then looked to verify and cross
check the long-lived asset figures disclosed in note 16 (of the 2010 and 2011 10Ks) to the long-lived
asset figures that could be derived from the consolidated balance sheet.
The 2010 Singapore Long-Lived Assets from 3 Sources
2010 10K 2011 10KSingapore
Filing
In US Dollars $134,993 $67,781 $77,407
In Singapore Dollars $173,379 $87,055 $99,418
The Singapore Dollar (SGD) to US Dollar on 12/31/2010
= 0.7786. The low for the SGD USD in 2010 was 0.7028,
which means currency does not explain the variance
between the 2010 long-lived asset # from the 2011 10K
and the 2010 Singapore financial statements.
Page 17 of 46
We found that 2011’s long-lived assets as calculated from the consolidated balance sheet do not equal
the total long-lived assets number found in note 16. The 2010 numbers add up; 2011’s do not as shown
below22:
No matter how we calculate long-lived assets, either (I) subtracting current assets from total assets or (II)
adding up the long-lived assets one by one, neither calculation equals long-lived assets found in note 16.
In our experience studying and uncovering some of the great accounting-related frauds in the last 20
years, one common characteristic many have shared: basic, straight-forward numbers that should add
up, don’t. Even if these specific discrepancies are small in isolation, they are indicative of much bigger
problems.
How much did Ebix pay for Confirmnet (including earnouts)? The Ebix India filings Say One Thing, the
SEC Filings Another
Ebix’s Indian subsidiary’s filings and SEC filings tell the same story as far as how much was paid for
Confirmnet (including earnouts) in 2008 and 2009. In 2010, however, they do not. They differ by at least
$5 million, as shown in the below table23:
Gotham City Research is not sure which numbers are correct. Either the 10Ks are correct, the India
filings are correct, or neither are correct. Just like the Singapore long-lived assets, however, the clear
implication here is that the Ebix financial statements are not reliable, accurate, or complete.
Long-lived assets from the 2011 10K
thousands $ 2010 2011
From Note 16 $242,518 $346,287
Derived from Balance Sheet $242,518 $347,365
Variance $0 ($1,078)
Total Cost of Confirmnet Acquisition: the SEC Filings vs. the Indian Filings
2008 2009 2010
Investment in Confirmnet
SEC FILINGS (in 1,000s $) $7,294 $3,279 $2,975
INDIA FILINGS (in 1,000s $) $7,526 $3,310 $8,233
INDIA FILINGS (in 1,000s Rupees) 361,849 153,965 367,532
From India Balance Sheet
INDIA FILINGS (in 1,000s $) $7,237 $10,316 $17,667
INDIA FILINGS (in 1,000s Rupees) 361,849 515,814 883,346
Assume the INR USD is 0.0208, 0.0215, and 0.0224 for year end
2008, 2009, and 2010 respectively.
Page 18 of 46
Ebix Taxes: Sham in Fact or Sham in Substance
What Ebix and CEO Robin Raina Have Said Regarding Alleged Ebix’s Tax Strategies
Robin Raina says that Ernst & Young International has ensured that Ebix follows India's regulations in its
transfer payments. "The government has given a pretty good tax rate to us," says Raina. "We are not
running a tax shelter."1
He has also said “No US IP has been transferred to any other country” as shown below2:
Gotham City Research does not trust the company’s account of its tax strategy. We believe it is a sham
in fact, if not in substance for the following reasons:
• The $66 million undisclosed related party loan seems to serve no purpose other than to reduce
taxes; the loan seems to violate the arms-length principle, in nearly every way possible.
• The purchase/transfer of IP assets from Australia/US to Singapore financed with the proceeds
from the undisclosed loan doesn’t seem to serve any economic role other than tax minimization.
• Intellectual property is a very small percentage of Singapore’s intangible assets. Nearly 90% of
the intangible assets purchased were Goodwill and Contractual/Territorial Relationships.
Page 19 of 46
Ebix’s flow of cash, profits, composition of assets, and certain operational details don’t agree with
Ebix’s explanations of its tax strategies.
• Singapore’s balance sheet contained no intangible assets prior to 2009, which is not supportive
of Raina’s claims that Singapore had IP structures in place “many years back”
• Singapore’s director wears way too many hats, some which seem of a conflicting nature.
• Ebix India’s cash declined by $11 million between 5/7/2012 and 8/7/2012, with no explanation.
• Confirmnet acquisition was financed by an Indian subsidiary, which seems a taxable event.
• We estimate Ebix must have repatriated cash from India to the US to pay for its Planetsoft
Acquisition. Or the cash never left the US.
• Interest income on cash seems low for a company that should be swimming in cash offshore.
• E-Z Data, wholly owned subsidiary of Ebix, transferred US intellectual property to Ebix Singapore,
contrary to Raina’s claim “No US IP has been transferred to any other country.”
We believe Raina and Ebix were motivated by the desire to minimize taxes, fund acquisitions with funds
that otherwise belong to taxpayers, support the stock via dividends and stock buybacks with funds that
otherwise belong to taxpayers, and self-enrichment.
Ebix’s taxes looked suspicious even before we uncovered the above stated facts. Specifically3:
• Ebix had the lowest effective tax rate of its peers in 9 of the last 10 years.
• Ebix’s tax rates in 2009 and 2010 were 3% and 1% respectively, even as CRM, IBM, AAPL, GOOG,
and MSFT tax rates were between 21%-41% in the same period.
• Ebix’s geographic allocation of pre-tax profits over 2008-2011 appears at odds with geographic
location of its assets and the sourcing of its revenues.
• Revenue vs. profits vs. PP&E disparity could draw scrutiny from IRS.
• Uncertain tax reserve seems exceptionally low, at 1.6% of total pretax income (in last 4 years), is
one of lowest of companies analyzed. IRS has not received years 2007-2011; if unfavorable
review, may not have sufficient reserve to offset the assessment.
• Aspects of Ebix's tax provision do not conform to GAAP. Since 2002, Ebix has provisioned $5
million in GAAP taxes in total, despite being profitable from a GAAP perspective each quarter.
Source: http://www.sabrientsystems.com/files/pdf/Effective-Tax-Rates.pdf
Page 20 of 46
The Singapore Undisclosed Related Party Loan and the Arm’s Length Principle
The arm’s length principle, despite its informal sounding name, is found in Article 9 of the OECD Model
Tax Convention and is the framework for bilateral treaties between OECD countries, and many non-
OECD governments, too. Article 9 states4:
[Where] conditions are made or imposed between the two [associated] enterprises in their
commercial or financial relations which differ from those which would be made between
independent enterprises, then any profits which would, but for those conditions, have accrued to
one of the enterprises, but, by reason of those conditions, have not so accrued, may be included
in the profits of that enterprise and taxed accordingly.
Said differently, a transfer price should be the same as if the two companies involved were indeed two
independents, not part of the same corporate structure.
According to the Singapore Inland Revenue Authority of Singapore (“IRAS”), to determine the arm’s
length interest rate, some factors to consider include5:
• the nature and purpose of the loan,
• market conditions at the time the loan was granted,
• the principal amount,
• tenure and terms of the loan, etc.
We believe the undisclosed related party loan between clearly violates the “arm’s length principle” for
the following reasons:
1. No independent party would ever have made such a loan of this size, and with such absurd loan
to value, interest coverage, and other debt ratios. An underwriter would simply reject such a
loan request. As a result, there would be no loan, and no market clearing interest rate.
2. No independent party would lend on such lax and fuzzy terms, i.e. an indefinite term loan.
3. Market conditions in 2009 only add to our beliefs stated in 1. And 2.
4. The purpose of the loan was to acquire intangible assets; we believe the intangibles assets were
transferred for little to no reason other than to avoid US and Australian taxes.
No Independent Party Would Approve the Singapore Loan
This loan not only lacks precedent transactions, but its absurdly uneconomic nature is not consistent
with an “arms length” transaction: The interest coverage and loan to asset ratios are quite comical6:
Undisclosed Related Party Singapore Loan: Debt Ratios
thousands SGDs 2006 2007 2008 2009
Revenue $3,715 $2,785 $2,695 $2,721
Profit before tax $832 $268 ($338) $1,496
Total Assets $4,277 $5,068 $4,398 $17,822
Loan to revenue 23.3x 31.1x 32.1x 31.8x
Interest coverage 0.11x 0.03x -0.04x 0.19x
Loan to assets 20.23x 17.07x 19.67x 4.85x
Page 21 of 46
No independent Party Would Lend to Ebix Singapore PTE LTD on Such Lax and Ambiguous Terms
Ebix Singapore PTE LTD’s 2009 & 2010 filings provide little information regarding the terms of the loan:
We deduce that “is not expected to be repaid with the next twelve months” indicates that the loan has
no clear maturity date, as the 2009 and 2010 contain the same language. That is, this is a loan of
indefinite duration. Based on precedent transactions and underwriting standards, the terms are not
consistent with an arms-length transaction.
A Closer look at the Singapore Operations
Raina claims, “Our world-wide development and IP structure was established in these places many years
back as a globalization need.”7
The facts with respect to Singapore suggest otherwise, as Singapore had no intellectual property on its
balance sheet in 20088:
Page 22 of 46
Singapore only had 6-11 employees prior to its purchase of intangible assets from Australia/US9:
Ebix Singapore’s Director, John Graham Prior, seems to wear way too many hats, as he is10:
• Ebix Singapore’s 1 of 2 Directors (who signed off on the last two financial statements)
• Corporate Senior Vice President of International Business and Intellectual Property
• Primary point of contact for all inquiries
• And primary sales contact
Legitimate businesses separate the sales function from the accounting/audit function. But in the case of
Ebix, the same person who signs off on the audited financial statements is also the primary sales contact,
and the primary contact for general inquiries. That seems improper, and indicative of negligible
infrastructure.
So in short, the facts don’t support Robin Raina’s claim that, “Our world-wide development and IP
structure was established in these places many years back as a globalization need.”11
In fact, all the above mentioned facts suggest Ebix only modified Singapore’s organizational structure in
order to reap the rewards of the favorable tax structure (contrary to Raina’s claim otherwise).
Over 95% of Singapore’s Intangible Assets Have Nothing to Do with Intellectual Property
Robin Raina would have you believe that Ebix is swimming in intellectual property, and that Singapore is
some mecca of intellectual property. So let’s look at what the numbers say12:
Employee Count
2008 2009 2010
Americas 308 412 533
Australia 63 66 77
Zealand 9 9 12
India 251 460 530
Singapore 6 11 27
Total 637 958 1179
Page 23 of 46
As more clearly shown below, most of Ebix’s intangible assets are unrelated to IP assets:
We will go a step further: goodwill and contractual/territorial relationship are largely worthless, if they
were marked to market, as Ebix is a roll-up, with declining organic growth. It seems that Ebix Singapore
bought ‘goodwill’ and ‘contractual/territorial relationships’ from Australia (possibly the US), for reasons
we cannot fathom.
The only reason we can come up with are : (1) Ebix wanted to give off the appearance that it owns a
large amount of IP (hoping no one would look at the footnotes, and discover the truth) (2) and fool the
Singapore government into approving a low tax rate.
We don’t see how the paper ownership of paper assets that have little value beyond the paper it’s
written on, somehow magically enables Ebix to avoid US taxes. Recall that we have three different
numbers for 2010’s Singapore intangible assets, as we discussed earlier. All in all, it all seems way too
good to be true. Our belief is that these funny looking transactions serve little to no purpose other than
to minimize taxes for Ebix, inc.
Ebix India’s Cash Declined by $11 Million Between 5/7/2012 and 8/7/2012, With No Explanation
One of the tell-tale signs of transfer pricing schemes run by some of the more well known companies –
such as Apple, Google, etc. – is that foreign profits in favorable tax regimes remain offshore, not just on
paper. The precise reason transfer pricing has gotten so much attention is that in the event these funds
are repatriated back onshore, these companies have to pay taxes on them (follow the recent Dell
headlines, for example)13.
Singapore Intangible Assets - Breakdown by Type
thousands of Singapore $s 2008 2009 2010
Goodwill $0 $53,551 $52,060
Contractual/Territorial Relationships $0 $21,053 $21,053
Intellectual Property rights $0 $3,897 $3,897
Developed technologies $0 $638 $874
Trademarks $0 $225 $225
Customer relationships $0 $3,584 $4,884
Database $0 $0 $268
TOTAL INTANGIBLE ASSETS, GROSS $0 $82,947 $83,261
Singapore Intangible Assets - % Breakdown by Type
2008 2009 2010
Goodwill 0.0% 64.6% 62.5%
Contractual/Territorial Relationships 0.0% 25.4% 25.3%
Intellectual Property rights 0.0% 4.7% 4.7%
Developed technologies 0.0% 0.8% 1.0%
Trademarks 0.0% 0.3% 0.3%
Customer relationships 0.0% 4.3% 5.9%
Database 0.0% 0.0% 0.3%
TOTAL 0.0% 100.0% 100.0%
Page 24 of 46
So how is it that Ebix can use or move $11 million of cash (cash by geographic segment shown below)
from India with no explanation, between May 7, 2012 and August 7, 2012?14
It would seem that the $11 million was either used in India or used elsewhere. It does not appear to
have been transferred over to another region, as 8/7/2012 total cash shows a meaningful decline.
The $11 Million Not Used Within India
India’s long-lived assets actually declined in India between 3/30/2012 and 9/30/2012 (long-lived assets
by geographic segment shown below), despite announcing “Ebix Purchases Two New Buildings in India,
to Build a Office Campus Over 4000 Square Meters” on 8/27/1215:
Ebix was Highly Acquisitive in 2012, perhaps that’s where the $11 Million Ended Up
Acquisitions16
• $34 mm Planetsoft 6/5/2012 – Aliso Viejo, CA based , as further explained below
• $10 mm Trisystems 8/15/2012 London based
• $5 mm Taimma 4/2/2012 – Montreal based
• $5 mm Fintechnix 6/1/2012 Australia based , explains the decline Australia’s cash balance
• $2 mm curepet investment – NY based
Cash & ST Investments by Geographic Segment
thousands $s 3/12/2012 5/7/2012 8/7/2012 11/5/2012
US $9,356 $7,489 $8,450 $14,009
CANADA $751 $979 $979 $2,609
LATIN AMERICA $1,067 $1,508 $1,905 $1,603
AUSTRALIA $7,605 $3,123 $3,855 $6,673
SINGAPORE $1,962 $871 $1,508 $1,579
NEW ZEALAND $861 $467 $585 $1,655
INDIA $9,962 $15,875 $4,511 $1,316
EUROPE $1,936
SWEDEN $15 $16 $15 $15
TOTAL $31,579 $30,328 $21,808 $31,395
NON US $22,223 $22,839 $13,358 $17,386
Long-Lived Assets by Geographic Segment
thousands $s 3/30/2011 6/30/2011 9/30/2011 12/31/2011 3/30/2012 6/30/2012 9/30/2012
US $237,464 $245,051 $247,174 $258,347 $261,713 $315,847 $320,124
CANADA $0 $0 $0 $0 $8,925 $9,290
LATIN AMERICA $18,180 $18,664 $18,599 $14,179 $14,452 $12,632 $12,908
AUSTRALIA $1,506 $1,458 $1,292 $1,286 $1,441 $1,401 $1,542
SINGAPORE $70,922 $61,959 $52,549 $63,866 $65,749 $71,456 $71,180
NEW ZEALAND $36 $202 $186 $233 $260 $240 $245
INDIA $3,674 $7,245 $6,824 $8,376 $11,064 $10,376 $10,422
EUROPE $13,696
SWEDEN
TOTAL $331,782 $334,579 $326,624 $346,287 $354,679 $420,877 $439,407
Page 25 of 46
If Ebix used the $11 million from India to finance any of the above transactions, we wonder if it paid any
taxes related to the necessary repatriation of those funds.
It is Unclear How Ebix Financed its Planetsoft Acquisition Without Repatriating Cash from India
Most of Ebix’s revenue is generated in the US and Australia; the cash somehow makes its way to
Singapore and India. That’s fine, but if the funds then return to the US or other regions to finance
acquisitions, without any payment of taxes … we wonder if it’s too good to be true.
You can keep the cash onshore, and pay a higher tax rate, or you can move the cash offshore, and keep
it there; you can’t have it both ways (the only way one might be able to have it both ways is via some
special financing facility. However, Ebix has never mentioned or disclosed in its filings; furthermore,
Ebix’s balance sheet doesn’t seem able to support such an arrangement).
Planetsoft’s total cost is $40 million, of which $34-35 million was paid in cash. Ebix funded “using a mix
of internal cash reserves and the Bank credit line available to Ebix.”17
The problem with this explanation is it would imply that Ebix’s US cash balance would have gone
negative to finance this transaction, even with their credit line fully maxed out according to our
calculations18:
Note that the calculations shown don’t factor in the following (source of funds would decline):
• Not all revenues are derived from US, which means not all cash flow is US based.
• Planetsoft seems to have closed before 6/30, which means Ebix did not have the full period’s
cash flow to pay for it.
A more plausible explanation is that Ebix used monies from India (without paying taxes). It would make
more sense from a business perspective, as most businesses maintain a certain minimum level of
operating cash to support operations. The other possibility is that the funds never left the US.
As discussed in the prior section, Ebix’s cash disclosures by country shows India is the only region
where Ebix’s cash actually declined in relevant period.
SOURCES OF CASH COMMENTS
Debt $31,000 Net addition to debt.
CFFO $21,000 CFFO is for full period, acquisition closed earlier.
Cash $8,000 US cash estimate, avg. between 5/7 and 8/7
TOTAL $60,000
USES OF CASH OTHER COMMENTS:
Buyback $9,400 The uses of cash exceed sources of cash.
Other acquisitions + capex $15,000 India is only country where cash declines from 5/7 to 8/7.
Planetsoft $34,000
Dividend $3,300
TOTAL $61,700
Page 26 of 46
Ebix’s Yield on its Cash is Low, Given it Should be Swimming in Interest Earning Assets Offshore
With much higher prevailing interest rates in India, Australia, and Latin America, we struggle to
understand why Ebix has only yielded 1.7%-2.2% on its cash19:
We believe this means that the cash never really leaves the US (& is instead used to make acquisitions),
it leaves only when it has to (for tax compliance purposes), or the cash moves around frequently.
The Undisclosed Related Party Loan in Singapore Further Shields Taxable Income
Based on our calculations, the undisclosed related party loan reduces Singapore taxable income by
around $7,000,000 (Singapore dollars) annually20, so long as the loan (of indefinite duration) remains
outstanding. This is in addition to the tens of millions of dollars in taxes the loans helped save, via the
purchase of intangible assets. We think the indefinite duration of the loan serves no purpose other than
to shield taxes indefinitely.
Also note how the interest expense from this loan exceeds the net interest expense of Ebix, inc. by
around 5x:
Interest Income
thousands $ 2010 2011
Cash + ST investments $29,690 $25,100
Interest income $519 $557
GCR estimate $1,191 $1,007
Reported yield 1.7% 2.2%
Page 27 of 46
Ebix Software India Private Ltd paid for ConfirmNet, Apparently without Paying Taxes
Ebix appears to have paid 100% cash for Confirmnet, through its Ebix Software India Private Ltd
subsidiary.21 We’re not aware of any taxes Ebix paid for this transaction, even though an Indian entity
paid for a US entity, suggesting funds flowed from India to the US (what appears to be a repatriation
event). If Dell has to pay taxes on funds it returns to the US from various offshore locations, shouldn’t
Ebix?
Recall that it is not clear how much exactly Ebix paid for Confirmnet in the first place, as the India filings
say one thing, and the SEC filings another (as discussed earlier in this report).
Ebix Singapore PTE LTD Purchased Intellectual Property, Apparently without Paying Any Taxes
It would seem that Ebix Singapore PTE LTD’s purchase of E-Z Data’s intellectual property resembles Ebix
India’s purchase of Confirm-Net, i.e. both subsidiaries used foreign funds (that was originally earned
onshore) to finance US acquisitions, apparently without any tax consequences.
Raina claimed in a 2011 investor day (a week immediately after Copperfield Research publicized their
first report on Ebix): "No US IP has been transferred to any other country".22
The Singapore filings and SEC filings suggest otherwise (see the ‘transfer of intangible assets’ line item;
we’re certain the E-Z Data transaction is contained with the $76 million)23:
Page 28 of 46
Ebix’s Stock Deserves to be Halted
On November 5th, 2012, a Bloomberg story claimed that:1
“Ebix is being investigated by the U.S. Securities and Exchange Commission for its accounting
practices, four people with direct knowledge of the probe said.”
Ebix swiftly issued a press release, in which Robin Raina, Chairman, CEO and President of Ebix, said2:
“The Ebix senior management team has not been advised of nor is it aware of an any SEC
investigation regarding the Company’s previous filings”.
Whatever the case, investors should seriously doubt the accuracy, reliability, completeness of Ebix’s
financial statements, disclosures, and past remarks. We doubt CBH obtained reasonable assurance that
Ebix’s financial statements & schedules were free of misstatement, contrary to their claims otherwise.
We believe that Ebix’s stock should be halted, until its financial statements are reliable, accurate, and
complete. We also believe the current auditor has to go, as they’re not doing their job.
The following serve as the bases of our opinions:
• Ebix never filed its Singapore subsidiary’s 2011 financial statements with the Accounting and
Corporate Regulatory Authority of Singapore (“ACRA”), likely as a result of heightened scrutiny.
• Ebix never filed its India subsidiaries’ 2011 financial statements with India’s Ministry of
Corporate Affairs, likely for the same reasons it did not file with Singapore regulators.
• Ebix Singapore’s 2010 and 2009 financial statements were signed off well over a year after each
respective year’s fiscal year end, even though filings prior to 2009 were all filed within a year.
• Ebix filed the 2010 and 2011 10Ks without Singapore’s 2010 audited financial statements signed
off (Ebix Singapore’s 2010 financial statements were signed off on March 20, 2012).
• Unclear how CBH obtained reasonable assurance that Ebix’s financial statements & schedules
were free of misstatement, without the audited Singapore financial statements.
• Robin Raina claims Ebix parted ways with KPMG, while SEC filings indicate that KPMG resigned.
• We wonder how “independent“ Cherry Bekaert Holland is, given the cozy relationship that
exists between CBH, EBIX, STSI (CBH’s 2nd largest publicly traded client), & tennis star John Isner.
• Ebix added a new Risk Factor –"If we fail to maintain an effective system of internal controls, we
may not be able to accurately determine our financial results or prevent fraud."
• Ebix has flooded the SEC with amended 10Ks, without correcting the irregularities we pointed to.
• Captive and impotent Board of Directors & audit committee. None reside in the United States.
• 58 comment and response letters filed with the SEC, between 2007 and 2012.
• Ebix, formerly known as Delphi, was a posterchild of bad behavior. It was in the red and
indulging in revenue recognition practices that got its audit partner banned/censured by the SEC.
Page 29 of 46
The Missing 2011 Singapore Financial Statements
Given how crucial Singapore is to Ebix’s alleged tax strategy (as detailed earlier in this report), we were
disappointed to find that Ebix has yet to file its 2011 filings with the Accounting and Corporate
Regulatory Authority of Singapore (“ACRA”)3:
Page 30 of 46
We also find it funny that Ebix filed for what appears to be a 1-2 month extension in May 2012:
It’s been over 9 months since Ebix Singapore for an extension, and still no 2011 financial statements.
The Missing 2011 India Financial Statements; Ebix filed its 2011 10K before Ebix India’s 2011 Filed
We unsuccessfully tried obtaining the 2011 financial statements for the two India subsidiaries (though
by 2011, we believe they were to be merged, or “amalgamated” into one entity4), using three
independent India-based contacts, over the last 3 months. All mentioned that Ebix had technically filed
some of the forms for 2011, but did not file the financial statements. All three sources stated Ebix did
not release any useful information for 2011. Note that CBH and Ebix signed off on the 2011 10K before
the India filings have been released.
Ebix Singapore PTE LTD Filed its 2010 Financial Statements after Ebix, inc. Filed the 2010 & 2011 10Ks
Ebix somehow released its 2010 & 2011 10Ks before Ebix Singapore released its 2010 financial
statements. The table below shows the dates the filings were signed off:5
Ebix's 10Ks 2010 and 2011 10Ks were Signed Off before the Singapore 2010 Financial Statements was Signed Off
2004 2005 2006 2007 2008 2009 2010 2011
Singapore Filings 9/14/2005 8/14/2006 6/14/2007 7/15/2008 7/30/2009 6/13/2011 3/20/2012 NOT FILED
10Ks 3/18/2005 3/10/2006 4/9/2007 3/28/2008 3/30/2009 3/16/2010 3/16/2011 3/15/2012
Days filed after 10Ks 180 157 66 109 122 454 370 NOT FILED
Director Richard Richard Andrew Baey Baey Graham Graham NOT FILED
Who Signed Off* Baum Baum Wakefield Cheng Song Cheng Song John Prior John Prior NOT FILED
Ebix Auditor BDO BDO BDO HA&W CBH CBH CBH CBH
* Director other than Robin Raina who signed off on the Ebix Singapore filings.
The dates for the 10Ks are the dates when the 10K was originally filed; does not include date of any subsequent
amended.
Page 31 of 46
It’s unclear how Cherry Bekaert Holland signed off on either the 2010 or 2011 10Ks without the audited
Singapore 2010 filing. It’s also unclear how CBH signed off on the 2011 10K without the 2011 Indian and
Singapore filings.
Also note: Ebix Singapore’s 2010 and 2009 financial statements were signed off well over a year after
each respective year’s fiscal year end. Prior to 2009, however, the Singapore filings were all filed within
a year’s time. We would like to point out that 2008 is when CBH entered the picture. We wonder if this
is a mere coincidence, or sign of something more sinister.
Ebix’s Peculiar New Risk Factor
Ebix snuck in a peculiar new Risk Factor6:
"If we fail to maintain an effective system of internal controls, we may not be able to accurately
determine our financial results or prevent fraud." If we or our independent auditors discover a
material weakness in our controls over financial reporting, the disclosure of that fact, even if
immediately remedied, could significantly reduce the market value of our common stock. In
addition, the existence of any material weakness or significant deficiency would require
management to devote significant time and incur significant expense to remediate any such
weaknesses, and management may not be able to remediate same in a timely manner.”
Captive and Impotent Board of Directors
None of the members of the board of directors reside in the United States, and none of the audit
committee members seem fit to do their jobs. It should concern shareholders that this is the public face
of Ebix’s BOD & audit committee (note that Hans has no demonstrated accounting or finance skills):
Page 32 of 46
We don’t believe that any of the members of the audit committee are fit to do the job. Two are
unqualified and one does not have the time nor is in proximity to do the job7:
• Hans U. Benz has no demonstrated accounting background or skills; based in Europe.
• Hans Ueli Keller has no demonstrated accounting background or skills; based in Europe.
• Pavan Bhalla, the chairman of the audit committee, is an MBA with no CPA credentials, and
resides in India. He is currently a managing director of Aon Hewitt’s outsourcing operations. We
don’t think he has the time, dedicated resources, or proximity to chair the audit committee.
Ebix has Filed 10 Amended 10Ks In The Last 10 Years, and 7 Before That:
Robin Raina Claims Ebix Left KPMG, Not the Other Way Around
Robin says they went with BDO because BDO gave an offer they couldn’t refuse, they were moving to
Atlanta (from Illinois), and there was to be a KMPG partner change. His tone and words make it sound
like it was on the company’s initiative, not KPMG’s8:
“The fee structure was high. And BDO came in and offered not to exceed 200K. A deal
for 2 years, across the world… Why don’t we move in to BDO? That was the reason we
changed from KMPG, there was no negativity.”
Yet SEC filings clearly show KMPG resigned9:
"KPMG LLP resigned as the independent registered public accounting firm of our Company"
"(1) delegation of authority and what KPMG considered to be inadequate reviews by a person other
than the preparer of accounting information, (2) the lack of a formalized contract review process to
ensure proper revenue recognition, (3) the lack of a complete understanding of the Company’s
income tax positions and related accounts, (4) inadequate documentation for certain unusual
transactions (including the basis for the Company’s accounting conclusions), and (5) internal control
matters (documented and testable control environment) under the Sarbanes-Oxley Act"10
Page 33 of 46
Cherry Bekaert Holland’s Opinion on Ebix’s Internal Controls is at Complete Odds with the Opinions of
Former Employees and Former Auditors
CBH has claimed11: “In our opinion, Ebix, Inc. maintained, in all material respects, effective internal
control over financial reporting as of December 31, 2011, based on criteria established in Internal Control
— Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO).” CBH has also made similar claims in prior year’s 10K filings.
The senior billing analyst in the Peak complaint makes claims at complete odds with CBH’s statement.12
One of Ebix’s former auditors, BDO Seidman, also "identified certain significant deficiencies relating to
the Company’s internal control over financial reporting"13
As mentioned in the prior page, KPMG expressed similar concerns as BDO.
Then on December 12, 2008, Ebix, Inc. received notice from Habif, Arogeti & Wynne, LLP of its decision
not to stand for re-appointment as Ebix’s independent registered public accountant.14 Ebix would seem
to be a prized client for Habif, so it seems quite odd to us that it voluntarily left Ebix.
And in the meantime, Ebix’s business has grown in complexity (i.e. there are more subsidiaries).
Therefore, past concerns about its internal controls seem more relevant today, than in the past.
It’s one thing for Ebix to have different auditors for different subsidiaries (which itself is a red flag), but if
CBH is signing off on Ebix’s 2010 and 2011 financial statements without the Singapore 2010 and 2011
filings, that seems like a clear violence, in substance, if not form, of CBH’s duty as an auditor.
The Cherry Bekaert Holland, Ebix, John Isner Connection
Ebix sponsors John Isner, the #22-ranked tennis player in the world. His website says plainly that it is
“powered by EBIX.”15 (see upper right hand corner of the image below). It also mentions that they
recently signed-on with Star Scientific:
Page 34 of 46
The name ‘Star Scientific” (“STSI”) stuck out because they are CBH’s 2nd largest publicly traded company
client, after Ebix.16
STSI signed Isner to promote their ant-inflammatory product, even though Star Scientific’s mission is to
“promote maintenance of a healthy metabolism and to reduce harm associated with the use of tobacco
at every level.”17 Seems like a funny thing for a tennis player to sponsor himself.
The two operative words for Star Scientific is “stock promotion”. It is in their DNA. The founder and CEO,
Jonnie Williams is a case in point. Mr. Williams has a long history of stock promotion that led to SEC
sanctions18.
“On January 7, Chief Judge Joseph L. Tauro, U.S. District Court for the District of Massachusetts,
entered Orders of Permanent Injunction against Jonnie R. Williams (Williams), a Sarasota,
Florida stock promoter.
The Commission's complaint alleged that the defendants were involved in a fraudulent scheme
to promote Spectra's securities through false publicity in violation of Section 17(a) of the
Securities Act of 1933 and Section lOeb) of the Securities Exchange Act of 1934 and Rule lOb-5
thereunder. Williams was also charged with violations of the beneficial ownership provisions by
his alleged failure to report his sales of Spectra's stock during the course of the publicity
campaign.”
Unsurprisingly, there was a recent negative article titled, “Star Scientific's Made-Up, Misleading
Relationship With Johns Hopkins” by Adam Feuerstein19 (he’s the widely followed Senior Columnist at
TheStreet, who covers biotech/drug stocks)
Page 35 of 46
Shares Are Worth No More Than $5.00
Ebix is, according to Robin Raina1:
Page 36 of 46
Is Ebix a good Business? Let’s Look at the Facts
What Robin Raina is not telling you:
• Ebix Has Not Generated Lasting Free Cash Flow
• Raina2: "Our cash-generating rate continues to increase. The story of Ebix is a cash
story." Yet Ebix has actually burned cash during the Reign of Raina:
• Ebix Has a Poor Balance Sheet – Working Capital less Debt is Very Negative & Declining
• Tangible Book Value is Very Negative, and Declining
• Ebix’s Equity is at Risk of Heading to Zero, given Ebix’s Poor Balance Sheet, If:
1. The US IRS, SEC, and other regulatory agencies reclaim cash that belongs to taxpayers
2. Outstanding litigations cost Ebix more than expected
3. The foreign counterparts to the SEC and IRS take action
4. We estimate the IRS liability alone can easily exceed $100 million
Ebix's Free Cash Flow
thousands $ 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 YTD
Cash Flow from Operations ($13,333) ($7,663) ($3,239) ($742) $3,343 $2,810 $5,483 $4,375 $15,039 $26,825 $33,877 $52,779 $71,286 $54,002
Capital Expenditures ($894) ($138) ($520) ($538) ($555) ($366) ($484) ($537) ($1,754) ($615) ($3,129) ($1,754) ($2,829) ($1,468)
Acquisitions ($50) $0 $0 $0 $0 ($8,156) $0 ($15,091) ($14,138) ($73,191) ($44,035) ($18,151) ($18,522) ($57,600)
Free Cash Flow ($14,277) ($7,801) ($3,759) ($1,280) $2,788 ($5,712) $4,999 ($11,253) ($853) ($46,981) ($13,287) $32,874 $49,935 ($5,066)
Cumulative Free Cash Flow ($14,277) ($22,078) ($25,837) ($27,117) ($24,329) ($30,041) ($25,042) ($36,295) ($37,148) ($84,129) ($97,416) ($64,542) ($14,607) ($19,673)
Ebix's Negative Value as a "Net-net"
thousands $ 2006 2007 2008 2009 2010 2011 YTD
Current assets $13,899 $59,405 $25,524 $46,515 $60,782 $63,817 $76,426
Current liabilities $20,008 $25,017 $53,854 $75,097 $39,085 $49,779 $60,661
Working Capital ($6,109) $34,388 ($28,330) ($28,582) $21,697 $14,038 $15,765
Debt $20,486 $15,290 $671 $25,205 $40,218 $71,745
Net-net ($6,109) $13,902 ($43,620) ($29,253) ($3,508) ($26,180) ($55,980)
Ebix's Negative Tangible Book Value
thousands $ 2006 2007 2008 2009 2010 2011 ytd
Book value $26,166 $60,126 $70,142 $170,743 $231,268 $316,115 $352,825
goodwill $23,118 $36,408 $88,488 $157,245 $180,602 $259,218 $337,249
Intangibles $7,867 $7,318 $21,824 $49,728 $53,126 $68,839 $82,281
Tangible book value ($4,819) $16,400 ($40,170) ($36,230) ($2,460) ($11,942) ($66,705)
Potential Back Taxes Owed
thousands $s 2006 2007 2008 2009 2010 2011 YTD TOTAL
Net Income Before Taxes $6,645 $13,199 $28,699 $39,832 $59,654 $73,495 58,543 $280,067
Provision for Income Taxes $680 $533 $1,385 $1,010 $635 $2,117 6,719 $13,079
Effective tax rate 10.2% 4.0% 4.8% 2.5% 1.1% 2.9% 11.5% 4.7%
Statutatory tax rate 34.0% 34.0% 34.0% 34.0% 35.0% 35.0% 35.0% 35.0%
Statutatory tax rate $2,259 $4,488 $9,758 $13,543 $20,879 $25,723 $20,490 $98,023
Potential back taxes owed $1,579 $3,955 $8,373 $12,533 $20,244 $23,606 $13,771 $84,061
Page 37 of 46
Ebix is Worse than Autonomy; a Would-be Acquirer’s Expected IRR is at Best -80%
The following factors suggest that the expected return on an Ebix LBO or acquisition is quite poor:
• The numbers are unreliable, inaccurate, & incomplete – Why buy something without clarity on
the true economics of the business? Unclear why someone wants to volunteer to be the next
Hewlett Packard or Caterpillar3 (who both recently wrote off nearly their entire investments in
Autonomy and a Chinese acquisition respectively)
• The fundamentals, as reported, are poor – Negative organic growth, debt, negative tangible
book value, and no lasting free cash flow generation, leave no room for error.
• A true turnaround would require significant increases in R&D and Sales & Marketing spend –
Ebix does not invest in its own business; R&D and marketing spend would need to rise
significantly just to play catch-up with comparable businesses. This would eat away at margins
and also take a lot of time.
• Why do business with Robin Raina, who makes inaccurate claims about his business & charity?
• Tax situation could mean game over; going private does not mitigate this risk – a strategic or
financial buyer would inherit the tax bill, interest, and penalties, that an IRS and others impose.
• An unusual provision renders going private unappealing –Ebix's board "unanimously approved"
a change in control provision4, whereby Robin Raina is guaranteed a cash payment of 20% of the
difference between the transaction price and the valuation of the company at $7.95 per share in
the event of a change in control.
• Ebix shares are worth no more than 1.0x sales or $5.00/share – Businesses with declining sales
tend to trade for no more than 1.0x sales (see Hewlett Packard, which trades at 0.25x sales).
Ebix trades at over 3.0x sales. Couple the decline in the core business with all the event and
structural risks identified in this report, and Ebix easily trades in lower single digits.
“So we don't really -- everything that's so entangled in each other, that's so difficult for us to
read.” – Robin Raina in the most earnings call, when asked about organic growth5
Page 38 of 46
Robin Raina Foundation: a Crumbling Wall of False Integrity
The public is led to believe that Robin Raina is1…
Desiclub.com Top 50 Coolest Desis of 2012
“We can also boast about the do-gooders in our community, such as the mega successful Robin Raina,
for building homes for those not as fortunate as the rest of us.”2
Page 39 of 46
Robin Raina Tells Investors (and Some Believe Him)3:
“The Company holds its directors, officers and employees to the highest ethical standards in both its
business operations, and in its efforts to achieve long-term value for its shareholders.” – Ebix March 25,
2011 press release4
Robin Raina Foundation
Contrary to conventional wisdom, the great fraudsters of our time – Enron, Stanford, Madoff, etc. – all
surrounded themselves with charity and other walls of false integrity5 to fool and distract their victims:
“White collar criminals build walls of false integrity around them by showcasing their good deeds,
while living a parallel life of crime.” – Sam Antar, former CFO of Crazy Eddie’s
Yet lies have a way of eventually catching up with fraudsters. We believe that time is near for Raina.
• Robin Raina blatantly misrepresented to the South Asia Times about how much his foundation,
the Robin Raina Foundation (“RRF”), typically gives annually.
• RRF’s 2004-2010 tax returns contain material financial irregularities & inaccuracies.
We believe Mr. Raina is worthy of a formal investigation and indictment, given the clear patterns of
misrepresentation as both CEO of Ebix, and Founder/CEO/CFO of the RRF.
Page 40 of 46
Robin Raina Misrepresents his Foundation’s Level of Giving/Spending
We believe that Robin Raina overstated his foundation’s spending by at least 300%.
South Asia Times: How much you give to the foundation? What is its annual outlay?6
Robin Raina: I hate to talk about it. But yes, a majority of the money that comes in for the
foundation comes from me. In a given year, RRF will typically spend about $2 million.
In reality, RRF has spent at most $3.7 million combined since 2004 (the year of its inception), as the
RRF’s form 990s reveal7:
The most RRF ever spent in a single year was $1 million 2010 – half of what he claims they’ve been
spending in a ‘typical’ year. The foundation spent less than $100,000 in 2011 less than 5% of the typical
$2 million he claimed, and a decline of over 90% from the prior year.
What makes things look much worse is that most of ‘total expenses’ consists of funds transferred to the
Robin Raina Charitable Trust (“RRCT”), Raina’s India-based non-profit. Which raises the question:
Is Robin Raina Foundation a Charity?8
Over 75% of RRF’s total spending consist of (I) non-charitable spending on parties, shows, and other
administrative expenses and (II) a transfer of funds to RRCT. If Raina will misrepresent his foundation’s
charitable spending to the South Asia Times, we don’t see what’s to stop him from doing worse. And it
gets worse.
The Robin Raina Foundation’s Tax Returns are Full of Material Accounting Irregularities
We found several different varieties of accounting irregularities, while combing through RRF’s form 990s.
One variety of discrepancy: RRF’s net assets (i.e., cash) do not add up for 2004-2007’s filings:9
RRF's Total Revenues vs. Total Expenses
thousands $ 2004 2005 2006 2007 2008 2009 2010 2011 TOTAL
Total revenue $192 $422 $714 $611 $1,615 $2,122 $1,728 $1,070 $8,474
Total expenses ($56) ($326) ($598) ($441) ($471) ($704) ($1,054) ($86) ($3,735)
RRF's Questionable Spending Breakdown
thousands $ 2004 2005 2006 2007 2008 2009 2010 2011 TOTAL
Parties, shows, & other admin expense ($145) ($392) ($160) ($104) ($40) ($841)
Funds moved to RRCT ($27) ($6) ($182) ($234) ($590) ($981) ($2,020)
Total questionable spending ($172) ($398) ($342) ($338) ($630) ($981) ($2,861)
Total expenses ($56) ($326) ($598) ($441) ($471) ($704) ($1,054) ($86) ($3,735)
Questionable spending as % of total n.m. 52.8% 66.6% 77.6% 71.8% 89.5% 93.1% n.m. 76.6%
RRF NAV Variance Analysis
2004 2005 2006 2007
As stated in Part I $136,177 $232,293 $348,793 $402,727
Part IV or Part X $136,714 $232,292 $246,292 $246,794
Variance (537) 1 102,501 155,933
% Difference -0.39% 0.00% 29.39% 38.72%
Page 41 of 46
We examined the irregularities from different angles, and believe the mistakes are not innocent or
accidental. At least $250,000-$500,000 is unaccounted for. We also believe Robin Raina is a very
intelligent and capable man. As a result, it would take extraordinary evidence for us to believe he did
not sign off on these form 990s without knowing they were false.
We’ll leave it to readers and regulators to guess where the money is.
Another accounting irregularity we found is that 2008’s net assets at the end of the year do not
reconcile with its stated beginning of the year net assets adjusted for revenue less expenses10:
Note that Robin Raina signed, under penalty of perjury, that he examined the returns, and that they are
true, correct, and complete11:
“Under penalties of perjury, I declare that I have examined this return, including accompanying
schedules and statements, and to the best of my knowledge and belief, it is true, correct, and
complete.” – Signed, Robin Raina, for the form 990s 2004 – 2011
Unlike lying to the South Asia Times about your charitable activities, lying to the government is a serious
criminal (not civil) offense. We believe there is a strong case for an indictment of, and investigation into
Robin Raina, given:
(I) he has a clear, documented history of misleading and deceiving investors, the IRS, the SEC,
business partners, employees, and the general public at large, and
(II) There is a clear pattern of material irregularities found in the form 990s. Perjury is likely only
the tip of the iceberg.
To summarize, Robin Raina and Ebix:
• Provide investors with inaccurate, unreliable, and incomplete financial statements.
• Use funds that belong to taxpayers to instead fund acquisitions and excess CEO compensation.
• Engage in transparent tax avoidance schemes.
RRF 2008's NAV Variance
2008
Net assets, Beginning of the year $246,794
revenue less expenses $1,144,581
Net assets, End of the year (calculated) $1,391,375
Net assets, End of the year (reported) $1,560,795
Variance ($169,420)
Page 42 of 46
Meanwhile, Robin Raina and the Robin Raina Foundation:
• Misrepresent its activities, claiming to give at least 5x more than it does.
• Submits tax returns to the IRS with blatant accounting irregularities, inaccuracies, and
incomplete information.
• Spends 75% on its funds on non-charitable and questionable activities.
Gotham City Research is NOT making this up…12
Page 43 of 46
End Notes
INTRODUCTION
1. Ebix Singapore PTE LTD Report of the Directors and Financial Statements for the financial year
ended 31 December 2010 and 31 December 2009; obtained via ACRA website:
http://www.acra.gov.sg/
2. Ebix 2010 10K, 2011 10K, and Ebix Singapore PTE LTD Financial statements for 2010.
3. Ebix Australia (VIC) Pty Ltd, Annual Financial Report for the Financial Year Ended 2011, 2010, and
2009, filed with the ASIC http://www.asic.gov.au/
4. The South Asian Times, Vol. 5 | No. 37 | January 5-11, 2013
5. Robin Raina Foundation IRS Form 990, 2004 – 2011
6. Robin Raina Foundation IRS Form 990, 2004 – 2011
Ebix’s Accounting: Unreliable, Inaccurate, and Incomplete
1. Seeking Alpha, EBIX: Not a Chinese Fraud, But a House of Cards Nonetheless, Copperfield
Research, March 22, 2011
2. Ebix, Investor Conference CEO Presentation, April 1, 2011
3. Greg Farrell, Bloomberg News, Ebix Accounting Practices Said to Be Probed by SEC, Nov 7, 2012
http://www.bloomberg.com/news/2012-11-05/ebix-accounting-practices-said-to-be-probed-by-
sec.html
4. Ebix press release, Ebix Responds to Bloomberg Article, Nov 5, 2012,
http://www.ebix.com/pressrelease_text.aspx?artid=252
5. Organic growth goes negative, recent 10Qs suggest past 10Qs were inaccurate
a. If The SEC Cometh the SEC Will Findeth Or So We Suspect, , Copperfield Research,
December 5, 2012
b. Prolonging a Foreign Tax Holiday by Bill Alpert of Barron’s , July 17, 2011
6. Prolonging a Foreign Tax Holiday by Bill Alpert of Barron’s , July 17, 2011
7. Anonymous Article Smells Like Market Manipulation At Its Finest, Jeff Van Rhee, Craig-Hallum,
March 25, 2011
8. Ebix Singapore PTE LTD Report of the Directors and Financial Statements for the financial year
ended 31 December 2010 and 31 December 2009; obtained via ACRA website:
http://www.acra.gov.sg/
9. From ACRA search http://www.acra.gov.sg/
10. Ebix Australia (VIC) Pty Ltd, Annual Financial Report for the Financial Year Ended 2011, 2010, and
2009, filed with the ASIC http://www.asic.gov.au/
11. Ebix 2010 10K, and Ebix Australia (VIC) Pty Ltd, Annual Financial Report for the Financial Year
Ended 2011
12. Ebix 2011 10K, and Ebix Australia (VIC) Pty Ltd, Annual Financial Report for the Financial Year
Ended 2011
Page 44 of 46
13. Isaac et al v. Ebix Inc, docket number 2:11-cv-00450, Consolidated class action docket number
1:11-CV-02400-RWS
14. Financial Shenanigans, by Howard Schilit
15. Do You Have a Handle on Your unbilled accounts receivables (a/r)? , by Dave Lundsten and Susan
Moser, Partners with Cherry Bekaert Holland
http://www.ncmahq.org/files/Articles/5AE31_CM0907_Finance.pdf
16. Ebix 10Q filings for Q4 2011, Q1 2012, Q2 2012, and Q 2012.
17. From the 2007, 2008, and 2009 10Ks.
18. From Email correspondences with Professor Ketz, January 29, 2013
19. Ebix 2010 10K and 2011 10K ; the amended 2011 filings did not change long-lived assets
20. Ebix 2010 10K, 2011 10K, and the Ebix Singapore PTE LTD Report of the Directors and Financial
Statements for the financial year ended 31 December 2010.
21. Ebix 2011 10K
22. Ebix 2010 and 2011 10Ks
23. Ebix 2008, 2009 and 2010 10Ks. Ebix Software India Private Limited 2008, 2009, and 2010 filings.
The Tax Strategy: Sham in Fact or Sham in Substance
1. Prolonging a Foreign Tax Holiday by Bill Alpert of Barron’s , July 17, 2011
2. From Investor Conference CEO Presentation, as presented by Robin Raina on April 1, 2011
3. The prior tax-related red flags were mentioned by:
a. An Examination of the Risks Associated With Abnormally Low Effective Tax Rates (ETRs),
Gradient Analytics, May 23 2012. http://www.sabrientsystems.com/files/pdf/Effective-
Tax-Rates.pdf
b. Seeking Alpha, EBIX: Not a Chinese Fraud, But a House of Cards Nonetheless, Copperfield
Research March 22, 2011
4. Article 9 of the OECD Model Tax Convention
5. Related Party Loans and Related Party Services, Inland Revenue Authority of Singapore
http://www.iras.gov.sg/irashome/page04.aspx?id=10588
6. Ebix Singapore PTE LTD Report of the Directors and Financial Statements for the financial year
ended 31 December 2009, 2008, 2007, and 2006; obtained via a Singapore contact via the ACRA
website: http://www.acra.gov.sg/
7. Ebix, Investor Conference CEO Presentation, April 1, 2011
8. Ebix Singapore PTE LTD Report of the Directors and Financial Statements for the financial year
ended 31 December 2008, via the ACRA website: http://www.acra.gov.sg/
9. Ebix 2008, 2009, and 2010 10Ks
10. The John Graham Prior information was found in the following places:
a. Ebix Singapore PTE LTD Report of the Directors and Financial Statements for the
financial year ended 31 December 2008, 2009, and 2010.
b. SEC filing form 3, dated October 9, 2012.
http://www.sec.gov/Archives/edgar/data/1559511/000118143112054195/xslF345/rrd3
56973.xml
Page 45 of 46
c. The ‘Contact Us’ and ‘Sales Inquiries’ sections within http://www.ebix.com.sg/
11. Ebix, Investor Conference CEO Presentation, April 1, 2011
12. Ebix Singapore PTE LTD Report of the Directors and Financial Statements for the financial year
ended 31 December 2008, 2009, and 2010.
13. Dell’s Tax Dodge?, February 6, 2013 http://finance.fortune.cnn.com/2013/02/06/dells-tax-
dodge/
14. Ebix 2011 10K, and the 3 most recent 10Qs.
15. Ebix Purchases Two New Buildings in India, to Build a Office Campus Over 4000 Square Meters,
August, 27 2012 http://www.ebix.com/br/pressrelease_text.aspx?artid=248
16. From the SEC filings and press releases.
17. Ebix Acquires PlanetSoft for $40 Million, June 5, 2012
http://www.ebix.com/br/pressrelease_text.aspx?artid=238
18. Ebix 2011 10K, and the 3 most recent 10Qs.
19. Ebix 2010 and 2011 10K
20. Ebix Singapore PTE LTD Report of the Directors and Financial Statements for the financial year
ended 31 December 2010.
21. Facts and deductions regarding ConfirmNet not paying US taxes
a. Ebix Confirmnet Merger Agreement
b. 10K 2008, 2009, and 2010 filings
c. EBIX Software India Private Ltd 2008,2009, and 2010 filings
22. Ebix, Investor Conference CEO Presentation, April 1, 2011
23. Singapore filings and SEC filings show Ebix Singapore purchasing US IP (from E-Z Data)
a. Ebix Singapore PTE LTD Report of the Directors and Financial Statements for the
financial year ended 31 December 2009 and 2010.
b. IP ASSET PURCHASE AGREEMENT SINGAPORE E-Z DATA, form 8K, September 30, 2009
Ebix’s Stock Deserves to be Halted
1. Ebix Accounting Practices Said to Be Probed by SEC, Greg Farrell, Bloomberg News, Nov 7, 2012
http://www.bloomberg.com/news/2012-11-05/ebix-accounting-practices-said-to-be-probed-by-
sec.html
2. Ebix Responds to Bloomberg Article, November 5, 2012
http://www.ebix.com/br/pressrelease_text.aspx?artid=252
3. From the ACRA website: http://www.acra.gov.sg/
4. Ministry of Corporate Affairs, India,
http://www.mca.gov.in/DCAPortalWeb/dca/MyMCALogin.do?method=setDefaultProperty&mo
de=12
5. Ebix 10Ks 2004 – 2011, Ebix Singapore PTE LTD financial statements 2004 – 2010
6. Ebix 2011 10K
7. Based on linkedin profiles and biographies according to the Ebix proxy statements
8. Audio recording to the Ebix, Investor Conference CEO Presentation, April 1, 2011
9. Ebix SEC Filing Schedule 14A, November 21, 2005
Page 46 of 46
10. Ebix 2004 10K
11. Ebix 10K filings
12. Isaac et al v. Ebix Inc, docket number 2:11-cv-00450
13. Ebix 2004 10K
14. Ebix 8K, December 18, 2008
15. http://www.johnisner.com/
16. Capitaliq
17. STSI 10Ks
18. SEC News Digest, Issue 94-17, January 27, 1994
http://www.sec.gov/news/digest/1994/dig012794.pdf
19. Star Scientific's Made-Up, Misleading Relationship With Johns Hopkins, TheStreet, Adam
Feuerstein, January 23, 2013 http://www.thestreet.com/story/11820016/1/star-scientifics-
made-up-misleading-relationship-with-johns-hopkins.html
Shares are Worth No More Than $5
1. Ebix, Investor Conference CEO Presentation, April 1, 2011
2. Prolonging a Foreign Tax Holiday by Bill Alpert of Barron’s , July 17, 2011
3. Wrong Way to Admit You Blew Millions of Dollars, Jonathan Weil, Bloomberg News, January 24,
2013 http://www.bloomberg.com/news/2013-01-24/wrong-way-to-admit-you-blew-millions-of-
dollars.html
4. Ebix Proxy filing form 14A, October 18, 2010
5. Ebix Q3 2012, Conference Call Transcript, November 8, 2012
Robin Raina Foundation: a Crumbling Wall of False Integrity
1. The South Asian Times, Vol. 5 | No. 37 | January 5-11, 2013
2. http://www.desiclub.com/community/culture/culture_article.cfm?id=1071
3. Ebix, Investor Conference CEO Presentation, April 1, 2011
4. Ebix press release, March 25, 2011
5. http://www.whitecollarfraud.com/white-collar-crime-and-criminals.html
6. The South Asian Times, Vol. 5 | No. 37 | January 5-11, 2013
7. Robin Raina Foundation IRS Form 990, 2004 – 2011
8. Ibid
9. Robin Raina Foundation IRS Form 990, 2004 – 2007
10. Robin Raina Foundation IRS Form 990, 2008
11. Robin Raina Foundation IRS Form 990, 2004 – 2011
12. From Robin Raina’s twitter and facebook accounts
a. @RobinRaina1, November 15, 2012
https://twitter.com/RobinRaina1/status/269261187366137856
b. https://www.facebook.com/photo.php?pid=11217167&l=bc5dfc2d8c&id=610711645