The chop is a device used to affix the corporate seal on a document. All business transactions in China require this. It's like a notary seal.
So far, no word from Mr. Fan concerning the status of the appeal. I have a sinking feeling that it will not be granted and the stock will be delisted on Monday. I tried to impress upon him that the only recourse given the short deadline he is under is to bring Mr. Cheng back as an officer in the company. If he loses the NASDAQ listing, Tri-Tech Holding essentially folds and it will make it much more difficult for the company to expand internationallly.
I am trying to understand why the corporate seal being in Mr. Cheng's possession is an issue anyway, unless it has to do with the VIE agreement. Perhaps, Tri-Tech Beijing holds the seal, even though it belongs to BSST, as a kind of collateral to ensure that BSST will abide by the VIE agreement. That must be how they maintain control over these subsidiaries.
It all depends on who the market makers are. What will help is institutional support, of which there is very little right now. Hopefully, the CEO will get HSBC to recommend the stock to institutional clients.
Was reading today about Plug Power. They make fuel cells. Fuel cells were all the rage in the early 2000's only to fizzle out later in the decade. Plug had a deal with GE to develop fuel cells for homes, and at one time the stock hit $1500 per share, taking into account reverse splits. The technology never panned out. The stock cratered to .12 per share last year. But a new CEO had been brought in around 2008. He visited with each customer and determined what was working and what was not. He surmised that they should focus on power for forklifts. In December of 2013, after 5 years on the job, he announced the company would make a profit. The next day the stock ran from .50 to 1.50. Yesterday it hit 7.00, an almost 6000% gain in one year.
Bottom line is this. Butch has been honing the product line. He has found a partner that he can work with given the limited financial resources of BSD Medical. If he can get to cash flow positive, I expect the stock will follow in the footsteps of PLUG. That's my plug for BSDM.
You're right. An SEC investigation won't do much, but Mr. Fan would dare not travel to the US if there is a judgment against him. Mr. Fan wrote me back to say that he appreciated my suggestion and that he was working to the best of his capacity on this issue. I tried to impress upon him that a Chinese court remedy would not save that company, that the best option is to re-instate Mr. Cheng as a company officer immediately.
It will eventually pop as the naked shorts get their fail to deliver notices. It will take a few days, as many as 7 for this to happen. Would be nice if the company came out with other eye-popping news about that time.
apparently, you don't understand how the market operates. I've been investing for 30 years. There is a herd mentality. Why does CBAK pop all of a sudden? It's a Chinese battery manufacturer, nothing special. It's shares took off because Telsa announced a battery factory. You would think this would kill CBAK because they would no longer be a supplier, but no, because it's a battery manufacturer, it popped. Whenever there's any kind of association with market leaders, the herd instinct takes over.
I was in SUTR many years ago, before Chinese stocks were all the rage, around $6 a share, long before the collapse due to Muddy Waters exposing fraud. Back then it was very low float. It did nothing for the longest time, then when steel companies became the focus of the herd, it popped. Samsung gives the company visibility in a growth market. Congratulations, SUTR is now on the radar screen of the big boys!
First of all, the company shares are undervalued given the revenues and profits. With improved productivity, it is expected the profits will soar. The Samsung order gives the company both credibility and visibility. I expect this to be the first of many orders. The selloff is typical of small companies as the big boys short to buy cheap shares. You should see an analyst making a buy recommendation soon. Right now, low float Chinese stocks are on fire.
It is a loss for them in that they won't be able to raise capital through the US markets nor will they be able to profit from their TRIT shares. Their executives, such as Mr. Fan, will be subject to an SEC investigation.
It is extremely important that you write Phil Fan (email@example.com) and insist that he resolve this situation with Mr. Cheng immediately! Even if it takes bringing him back at CEO. Believe me, I have gone through this with Rino International and it will not be pretty! The SEC will get involved, lawsuits will be filed, and even if he succeeds in getting the stock to trade on the pink sheets, it will become virtually worthless. The lawsuits will get you pennies on the dollar and that assumes the court can collect. We must do all we can. Remember China is 13 hours ahead of EDT, so we have already lost a couple of days. The company must resolve this by Friday!
So bottom line is these subsidiaries surrendered their voting rights (the voting rights of their companies) over to Tri Tech Beijing for 25 years, which is 100% owned by Tri-Tech Holding (Tri-Tech Beijing is the wholly owned foreign entity which does consulting to the subsidiary in exchange for 90% of their profits). The shares of the subsidiaries also are pledged as collateral for cash flow payments. The subsidiary shareholders agree to allow Tri-Tech Beijing to appoint some of their board members, and give them the right to purchase their shares should it be allowed in the future. In exchange, they received shares in Tri-Tech Holding. So what would happen if Tri-Tech Holding (TRIT) shares collapsed. The shareholders of these subsidiaries would be out the money they had in TRIT, but what about their company shares? Technically, they still own them, but Tri-Tech Beijing controls them for 25 years. So their hands are tied. They can't sell their interest in their subsidiaries as far as I can tell. That includes Gavin Cheng.
Concurrently, on November 28, 2008, the shareholders of Yanyu and Tranhold (other than the SOE Shareholder of Yanyu) entered into and caused Yanyu and Tranhold, as applicable, to enter into a series of control agreements described below with TTB in return for ownership interests in TRIT. Through the formation of TRIT and TTII as holding companies, the Yanyu and Tranhold investment entities now own, respectively, approximately 24.73% and 21.99% of the ordinary shares of TRIT. In addition, other shareholders affiliated with Tranhold or Yanyu hold, in the aggregate, approximately 9.47% of our ordinary shares. The remaining approximately 43.81% of TRIT’s ordinary shares belong to other investors. TRIT, in turn owns 100% of the equity of TTII, and TTII owns 100% of the equity of TTB.
I see no Form 4's filed with the SEC. This is the form used for insiders to buy and sell stock. I did see this in an amended S1, prior to the IPO:
"Assuming the sale of the maximum offering, entities controlled by our employees, officers and/or directors will, in the aggregate, beneficially own approximately 59.54% of our outstanding shares. Assuming the sale of the minimum offering, entities controlled by our employees, officers and/or directors will, in the aggregate, beneficially own approximately 66.26% of our outstanding ordinary shares. As a result, our employees, officers and directors will possess substantial ability to impact our management and affairs and the outcome of matters submitted to shareholders for approval. "
I believe these shares were given in consideration of the Chinese-based subsidiaries to relinquish operational control to the holding company. So Cheng should have received some shares for BSST, as founder of that subsidiary. But none of the SEC filings contain just how many shares he owns. At any rate, he's shooting himself in the foot by doing this.
I believe Tri-Tech Holding is a VIE, which is not legally recognized in China. So Cheng can keep the chop with impunity. As far as the Chinese government is concerned, he still owns the company. Therein lies the problem. The only way to get it back is to talk some sense into him. I'm trying to find out if he owns any Tri-Tech shares. If he insists on keeping the chop, the company will get delisted, and the share price will plumment. Money talks.
Possibly if management was on top of things. But OTC is a wild, wild west. No market makers involved. Difficult to trade, especially low float stocks.
Problem is Fan can't make Cheng return the chop, so how can they ever do a financial statement that is believable. They are only doing themselves in with this spat. Some 44% of shares are held by insiders. If the price collapses, they lose. Get Cheng back on board, for crying out loud, and end this nightmare!