VVR made many lies, very much harmed investors and stole a lot of money. Man who steals money loses wife.
Lawfirms supporting lies. Please report this to government. or pomerantz (212) 661-1100. innocent people very hurt.
NEW YORK, April 6, 2011 (GLOBE NEWSWIRE) -- Advanced Battery Technologies, Inc. (Nasdaq:ABAT), a leading developer, manufacturer and distributor of rechargeable polymer lithium-ion batteries as well as a manufacturer of electric vehicles, responded today to the research report published online on March 30, 2011 by a short seller operating under the pseudonym "Variant View Research."
The publication by Variant View was, by its admission, intended to support the short-selling activities of the actual author of the report. ABAT's management carefully reviewed the report when it was first published and determined that it, like other self-serving short seller "reports," consisted of nothing more than innuendo and distortions of the clear facts published in ABAT's reports to the SEC. Some of the Company's shareholders have, however, requested that ABAT respond directly to the allegations, and so below we respond to each of the 14 allegations set forth in the Variant View report.
Allegation 1: The Chairman appears to have transferred ownership of ABAT's key subsidiary to himself without explanation or compensation.
The Facts: Heilongjiang ZQPT, the referenced subsidiary, has been owned by 16 investors, including Chairman #$%$, since it was organized in 2002. In 2004 the owners of Heilongjiang ZQPT transferred all of the benefits and obligations of ownership of Heilongjiang ZQPT to Harbin ZQPT, a subsidiary of ABAT. Under U.S. GAAP, the transfer of those benefits and obligations meant that the balance sheet and financial results of Heilongjiang ZQPT must be consolidated with those of ABAT as if it were a subsidiary. Thus, for accounting purposes, ABAT reported in its SEC filings from 2004 to 2009 that it "owned" Heilongjiang ZQPT. In 2009 ABAT decided that it would be more appropriate to explain the relationship in detail, which accounts for what Variant View mistakenly refers to what "appears" to it to be a transfer of ownership.
In sum, there has been no transfer of ownership of Heilongjiang ZQPT, to our Chairman or otherwise. All that occurred was a change in how ABAT characterized the relationship in its filings, and that characterization was entirely proper.
Allegation 2: ABAT leads investors to think that it makes cutting-edge electric cars, when in fact it produces cheap scooters and bicycles.
The Facts: ABAT is a battery manufacturer. Among the products it manufactures are batteries that may be used in electric cars. ABAT's subsidiary, Wuxi ZQ, is a vehicle manufacturer. Among the vehicles that Wuxi ZQ manufactures are ATVs that can be used as agricultural transport vehicles or sport-utility vehicles. Pictures are available on the Wuxi ZQ website. As our 10-K states (and the Variant View report notes), Wuxi ZQ's highest priced vehicle sells for $3,471.
No person reading our SEC filings or looking at our website in good faith could draw the conclusion that ABAT manufactures electric cars.
Allegation 3: ABAT claims unrealistic margins in what it admits is a commodity business.
The Facts: ABAT does not "claim" margins. ABAT reports margins in its financial statements, which have been audited by highly-reputable independent accounting firms. Moreover, the "peers" on whose experience Variant View purports to compare to ours are not comparable at all – which doubtlessly explains why Variant View provides no information about the purported comparables at all. Nonetheless, Variant View is perfectly content to try to score points with this kind of false "proof." The innuendo on which Variant View relies, however, can hardly trump information confirmed by independent auditors.
Allegation 4: ABAT claims to have increased revenue from $4.2 million to $97.1 million from 2005 to 2010 while decreasing its employee count.
The Facts: Again, ABAT does not "claim" revenues. ABAT reports revenues in audited financial statements. We have also reported massive investment in upgrading our assembly lines to improve their efficiency. The incredulity of the author of the Variant View report that we have been able to increase revenue while reducing labor only indicates his/her ignorance of basic principles of industrial efficiency.
Allegation 5: ABAT claims distribution relationships which appear to be fake.
The Facts: Our subsidiary, Wuxi ZQ, has a distribution relationship with each distributor identified in ABAT's 2010 Form 10-K, and we have the executed distribution agreements to prove it. The Variant View "research" into the existence of distributors in several European countries, using English language Google searches and phone calls to random, unidentified employees, is typical of the kind of pretzel logic on which these short sellers rely to try to drive down share price and allow them to cash in. Once again, the facts trump the short seller's innuendo. Our audited financial statements for 2010 show that Wuxi ZQ made $49 million in sales during the year. If its distributors are "fake," how did it do that?
Allegation 6: ABAT is a serial issuer of equity at low prices.
The Facts: During the past three years ABAT has more than tripled its revenues and increased its net income by 350%. To fund that expansion, it has issued equity for cash. 90% of the equity offerings were made at or above the contemporaneous market price. Approximately 10% were made at 95% of the contemporaneous market price. We are proud of our success in accessing the capital markets to fund our growth.
Allegation 7: ABAT spent $20 million to acquire a company linked to the Chairman without disclosing the relationship.
The Facts: Variant View's "proof" of an undisclosed related party transaction is that the acquired company and Company subs both have the letters "ZQ" in their name and that the Company's Chairman was listed as an officer and representative of the acquired company. Given the thinness of the "proof," it is hardly a surprise that Variant View just got it wrong – again.
Until we acquired it in January 2011, the registered owner of the registered equity of Shenzhen ZQ was Wang Changhe. He is the person to whom the purchase price for Shenzhen ZQ was paid.
The Variant View report notes that our Chairman, #$%$ Zhiguo, is identified as an officer and legal representative of Shenzhen ZQ in that company's government registration. That is correct. In order to register the acquisition of Shenzhen ZQ by Harbin ZQPT with the provincial government, Mr. Wang, the seller, gave Mr. #$%$ a power of attorney to represent the company before the government. This was solely an administrative convenience, as the purchase of Chinese companies cannot be completed without government registration performed in person.
Allegation 8: ABAT spent $22 million or 7x sales to acquire a failing and possible related company.
The Facts: Once again, Variant View simply has its facts wrong. The purchase price paid by ABAT for Wuxi ZQ was $12.87 million (cf: ABAT 2009 10-K, Note 3 to the Financial Statements), not $22 million. Variant View addresses Wuxi ZQ's sales in the period before we obtained it, but they neglect to tell you how the subsidiary fared after the acquisition. In 2010 Wuxi ZQ had pretax net income of $15.7 million (cf: ABAT 2010 10-K, Note 22 to the Financial Statements). In other words, we recovered our investment in less than one year! Frankly, we have a hard time being less than proud of this acquisition.
We purchased Wuxi ZQ from Bao Jin and Wuxi Baoshiyun Autocycle Co., Ltd. The only relationship between them and our management before the acquisition was as customers - Wuxi ZQ purchased batteries from Heilongjiang ZQPT. Bao Jin became a major shareholder by reason of the one million shares he acquired in the acquisition - not prior to it.
Allegation 9: ABAT spent $1.5 million on another suspicious transaction.
The Facts: The "suspicious" aspect of this transaction, as reported by Variant View, is that the individual listed as the registered agent of our subsidiary, Beyond E-Tech, Inc., could not be found at the address listed in the Texas Comptroller's website. The reason is simple: he moved and failed to report the move to the Comptroller. (At least he has an address, which is more than can be said for Variant View.)
Allegation 10: ABAT issued 11 million common shares to Chairman #$%$ and two other individuals to repay a "loan" which appears to be fabricated.
The Facts: Yet again, Variant View simply gets it wrong. Variant View's basis for asserting that this transaction involved a "fabricated" loan is its assertion that that transaction was not reported until April 2007. In fact the transaction, which took place in January 2005, was reported in an 8-K filed on January 27, 2005 and again in the 2004 10-K filed in March 2005.
Variant View's other point is that the loan does not appear on the balance sheet in the 2005 10-K. To which we respond: "Of course it doesn't. It was satisfied in January of that year."
The fact is, since the loan was made prior to the reverse merger of the Chinese entity into ABAT, it was recorded as a lien on the factory property that had been purchased with the loan. In January 2005, when ABAT issued stock - at market price - to satisfy the loan, the lien was extinguished and the market value of the stock was recorded as an increase to Construction in Progress and to APIC on our balance sheet.
Allegation 11: Chairman #$%$ has sold an estimated 28 million shares since 2004.
The Facts: Chairman #$%$ has never owned more than the 9,149,730 shares (options included) he currently owns.
Allegation 12: Despite a parade of auditors and multiple misstatements, ABAT still has material weaknesses.
The Facts: The factual predicate – that we had to restate – is correct. ABAT was forced to restate its 2008 and 2009 financial statements because it (a) classified its outstanding stock warrants as equity instruments and should have classified them as liabilities, and (b) classified liabilities of Wuxi ZQ that were discovered after the acquisition as general expenses and should have classified them as a reduction in the gain on the purchase of Wuxi ZQ. We learned from those mistakes. We have engaged an independent firm to assist in preparation of our financial statements, and are dedicated to doing a better job of accounting in the future.
Allegation 13: ABAT's RTO promoter, John Leo, is behind a number of suspicious Chinese reverse mergers, most notably CYXI.
The Facts: The RTO occurred in 2004. John Leo had no relationship with ABAT after February 2005 other than as a relatively small shareholder. The willingness of Variant View to tar Mr. Leo with broad but non-specific allegations ("been involved in a number of shady reverse mergers") and blatant guilt by association speaks volumes about Variant View's integrity, credibility, and agenda.
Allegation 14: No fundamental institutions are significant shareholders.
The Facts: Variant View seems either incapable of getting it right, or, more likely, does not care to. During the past three years, ABAT has raised $90 million by selling equity securities to institutions. Within the past two years, Blackrock, Invesco, and SAM Sustainable Asset Management AG have filed 13Gs reporting the accumulation of positions in our stock. Once again,Variant View Research has no credibility.
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To all of the investors or shareholders:
We thank our investors and shareholders for their support, and regret that unscrupulous people like Variant View are trying to make a fast buck for themselves, at the expense of our investors, by providing false information and scaring our investors. Everyone loses – except the short sellers. We implore our investors, and those who are interested in our company, that if you must read these defamatory statements, please read them carefully and note the difference between sourced and proven facts, like those we have provided above, and innuendo, unidentified individuals, and matters presented as fact but without any identifiable or credible source, as pervades the Variant View "report." We are confident that the Variant view will not survive that scrutiny.
We sincerely invite you to visit our plants in China. All of the staff of ABAT are waiting for your arrival.
CONTACT: Rubenstein Investor Relations