Elexir is asking its shareholders after the fact to approve of the sale last year of one of its businesses.
The business unit - essentially infrastructure contracts associated with Lucent technology - was sold to Securicom for R1.32 million cash with effect from 1 January 2004.
The Elexir board says the business unit was disposed of without shareholder approval at the time and is only now being rectified.
However, it adds: "It is unlikely that the transaction can in fact be reversed and in addition the directors of Elexir have secured the undertakings of 41.26% of the shareholders, of the required 50%, to vote in favour of the disposal.
The deal is classified as a related party transaction since Brett Casey, a former Elexir director, is a director of Securicom.
Elexir has been restructuring its assets for some time in a bid to cut debt levels.
In the latter half of last year it entered into an agreement with TV Homewatch to pay off debt through the issue of 60 million shares at 3.5c each, totalling R2.1 million.
It said at the same time that it was also issuing an additional 20 million shares at the same price to corporate advisor SME Corporate Solutions, for structuring and negotiating the deal.
The board says the results for the six months to August were prepared on the assumption that Elexir`s capital restructure was implemented by 31 August, resulting in a profit of R5.4 million on restructuring.
However, the restructuring has not been approved, with the directors having obtained the undertakings of only 41.26% of the required 75% of shareholders to vote in favour of the restructuring.
"If the transaction was not accounted for in the 31 August 2004 results, the company would have been technically insolvent," the board says.
As it stands, Elexir no longer meets the requirements for a main board listing on the JSE, and says it is in talks with the JSE relating to the status of its listing.
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