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I am short Advanced Battery Technologies (ABAT) for the following reasons:
1. The Chairman appears to have transferred ownership of ABAT’s key subsidiary to himself without explanation or compensation; 2. ABAT leads investors to think that it makes cutting-edge electric cars, when in fact it produces cheap scooters and bicycles; 3. ABAT claims unrealistic margins in what it admits is a commodity space; 4. ABAT claims to have increased revenue from $4.2 million to $97.1 million from 2005 to 2010 while DECREASING its employee count; 5. ABAT claims distribution relationships which appear to be fake; 6. ABAT is a serial issuer of equity at low prices; 7. ABAT spent $20 million to acquire a company linked to the Chairman without disclosing the relationship; 8. ABAT spent $22 million or 7x sales to acquire a failing and possibly related company; 9. ABAT issued 11 million shares to the Chairman and other individuals to repay a “loan” which appears to be entirely fabricated; 10. Despite a parade of auditors and multiple restatements, ABAT still has material weaknesses; 11. ABAT’s RTO promoter, John Leo, is behind a number of suspicious Chinese reverse mergers, most notably CYXI; 12. No fundamental institutions are significant shareholders.
In short, I think that the financial statements and management of ABAT cannot be trusted and therefore the stock is worth zero.