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  • youarenotajediyet08 youarenotajediyet08 Oct 6, 2010 11:09 AM Flag

    Interpretation Of The Evidence (Part II)

    1) I think the lease agreement was presented as summary of schedule of payment, bank statement of lease paid and lease terms. In China, the lease agreement could vary--there is no way it has to be 100 pages or 1 page, depending on whether the contract is standard.

    2) Tax Paid is the ONLY (not "might"--Waldo, what the fark you think you are?) definitive evidence to verify the revenues and the legitimacy of the enterprise. Don't forget, the company also has the 'Proof of Tax Paid" (完税证明). This evidence shows that the government certifies the business as legitimate.

    3) All the taxes are paid QUARTERLY. Please verify with other CFO of China. Some shorts who are simply shameless.

    4) Bank Statement. What we saw on the Investor Day is official bank statement. Don't forget we have auditors. Auditors would ask for the INDEPENDENT verification DIRECTLY from the bank on the clients' bank balances--what we called Bank Confirmation Letter. The letter is sent out on behalf on the auditor and will be mailed back DIRECTLY to the auditor, not the company.

    6) To prevent the company shifting money from A to B, the auditor would watch large amount of transactions on every month end of beginning of the month. Also, the auditor would sample over 20% of the transactions to verify the merchants and invoices to make sure there really is a deal and business. Be reminded: it's a standard audit procedure for any audit firm.

    7) There is absolutely no way for the company to publish its bank statement openly on its website or whatever forms the short sellers’ request. It will be a public insult to the auditor, the U.S SEC and a public humiliation to the company and shareholders. It's already an unprecedented event in the U.S. corporate history that a company open its audited accounts to the investors, not mentioning "publishing" it on its website.

    The company has opened up its financials to more than 40 investors on the day and there is no way this could be "selective disclosure"--as everything was reported on SEC filings.

    8) SAIC filing--I thought we have gone over this issue. After China's No.10 Regulation (10号文), a domestic enterprise wanting to set up an oversea tax friendly holding, must have certain corporate structure and any foreign SAIC report is non-statutory. As for CHBT, it may just report its holding company's activities--which is only a shell.

    I interviewd six of CHBT's former employees. One low level sales manager said he got pay 500,000 RMB total from 2005-2007. That's more than 160,000 RMB a year. He has around 20 people to monitor and the company has around 200 former sale force.

    If the company really earned 6 million RBM in total in 2007, how could it be possible to pay out all these people?

    Sentiment: Sorry, youarenotajedi, I used your name on Seeking Alpha because the name was so cute.

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