If you go to the SEC's filings for Yong 12/31/2012, filing dated 4/1/2013 10K, look at the Consolidated Balance Sheet, at the line item Accounts receivable, amount = $294 million or almost $300 million. This is double what the 12/31/2011 A/R number was, from just the year before. Then go to the Consolidated Income Statement for 12/31/2012, it shows total Revenues for 2012 at $443 million. The large A/R balance, particularly in comparison to prior periods and in proportion to full year revenues is causing the NASDAQ to seek further resolution, explanation.
If the auditors become satisfied Yong's A/R is substantially collectible and or has been collected already, the issue will quickly go away.. Every company is different, including the composition of its Accounts Receivable, but a large number of companies like A/R to be collected in 30, 60 or 90 days. Large A/R balances can be a red flag, but frequently it is simply a timing issue. As of 3/31/2013, since that would be 90 days after 12/31/2012 - a best resolution scenario would be that Yong's A/R has been substantially collected or some sort of signed Note Receivable from a major customer or two who could be having temporary liquidity issues.
The auditors are already satisfied that A/R is substantially collectable. KPMG issued an unqualified opinion. If KPMG believed there were sufficient "red flags" in Yong's F.S., then they would have qualified the opinion, disclaimed an opinion or resigned and notified the SEC of potential fraud at YONG. None of this happened. The arrogance of Nasdaq lies in the fact that Nasdaq believes they no more than KPMG even thought KPMG auditors just spent a few months at YONG conducting an audit. What additional information/investigation beyond the audit report does Nasdaq need to reopen trading? This is form over substance at its finest. Shareholders now have current audited F.S. and we can make our own decision on the validity of those financials. I don't need some analyst at Nasdaq to interpret the data for me or seek additional information. I do need Nasdaq to get out of the way so the proposed deal can move forward on its own merits.
By being too greedy, mg’t has painted themselves into a corner. They’ve more than likely collected much of the A/R, but don’t want to report it and are probably stalling while their lawyers figure out if Nasdaq can legally question audited results, whether the results are substantially different from past results/patterns or not. Is it Nasdaq’s role to want explanations for larger than normal audited A/R’s? Maybe, as one of their roles is to protect the exchange’s reputation, but wow, thin ice if that is what's holding up trading. Either way, like I said before, everything m’gt does just adds fuel to the lawsuits. Could they appear any more guilty? I wish they would just come clean, report the actual collections, and if it justifies a higher buyout price and they lose financing, so be it. I can wait out a temporary sp drop if it happens. The way the company is growing, if the deal falls through they could simply quit shirking their true responsibility and support the sp like a normal, honorable business would do, pay dividends, buy stock back, do PR, etc., and in a few years Wu, MS, us, everyone would be rewarded big time.
We really don't know why the halt is on, so I'm surprised so many seem upset with Nasdaq. Nobody here knows if YONG has responded to all of their inquiries or even what the inquiries are. Sure, YONG said in an announcement that it just related to information on collection of AR, the 10K, and the status of the going private, but we don't know the details and what specifics may not have been addressed yet. If you listened to the conference call, where management refused to answer the question about whether they had received any new communications from the Nasdaq, I would assume that they had and there was probably more info they needed to provide, which, given the continued halt, they must not have provided sufficiently in Nasdaq's estimation.
Read the rest of the financial info available. They have collected about $220 million. Also there is $45 million of what whould have been receivables before in the inventory. Delivered to distributors, but not sold at year end under their new revenue recoginition rules.
Taking the $293m - 220m leaves = $73m still open A/R and it is now past the normal 90 day normal collection period. Also, if there was $45m in inventory and it should have been in A/R, that could mean open A/R after 90 days may be $73m + $45m = $118m. That's a material sum of outstanding A/R after what could be termed a normal collection period. or 90 days past overdue, representing over 25% of the year's revenue. Again, this may be perfectly normal, 100% explainable. As of 3pm today, trading was not yet resumed for Yong on the NASDAQ.