Well here's what can be done with a Nevada public company that goes dark.
I saw this on another board bit immediately thought of gpsi.
Force umm to play nice.
Quote:
To all WKBT shareholders:
I want to thank everyone who responded to our effort to unite to secure value for our WKBT shares. We have reached the minimum of 10% or 3,550,000 shares required to file a legal action against WKBT in Nevada, where WKBT is incorporated. Now we must decide whether to pursue such legal action.
Nevada courts have recently recognized the right of at least 10% of the outstanding shares, where the company has not provided annual meetings and financials for at least two years, to request a receiver to take control of the company. Once a receiver is appointed, in the case of WKBT, he would (a) secure an agreement with CEO Dr. Yin Wang to prepare and relist WKBT on a Chinese exchange within 12 months (ironically much easier for a receiver to effect than the company itself, since only court approval is required), or (b) require WKBT to repurchase our shares for "fair value." Either would require updated financials - the receiver's first priority after assuming control of WKBT - but based upon admittedly limited financial information I believe either approach would provide $1.25-1.50/share to participating shareholders.
We have the benefit of some on-the-ground investigation, and WKBT does appear to be a real, even growing, business. But certainly we cannot rely upon the accuracy of previously reported WKBT financials. We do have some evidence that CEO Dr. Wang has previously considered a relisting in China although those plans were shelved. Importantly, over 9,000,000 shares of WKBT are owned of record by Chinese citizens, excluding the 16,000,000 shares owned by CEO Dr. Wang himself.
If the true financial condition of WKBT would support a relisting in China, it is unlikely CEO Dr. Wang would resist such a relisting. He would probably only resist if he was concerned that revealing the true financial statements of WKBT would expose him to fraud charges in China (with potentially severe consequences) - if that is the case, he would probably be interested in a buyback of our shares in the $1.25-1.50/share range simply to cover-up his wrongdoing.
If you are going to participate in such an effort, this is probably the time to do so. It would be virtually impossible for another group of shareholders to find another 3,550,000 shares to bring a second lawsuit against WKBT in Nevada - we have most of the larger U.S. shareholders already in this case. So CEO Dr. Wang, if he has something to hide, would be in the clear for many years if he settles with us.
I have already provided everyone with the credentials of attorney/receiver Robert Seiden, the only receiver I am aware of with some record of success against similar Chinese companies which have "gone dark." As stated in the recent Wall Street Journal article, Mr. Seiden has had success in this area but our success is by no means guaranteed. Although he has proven that he will bring enormous pressure upon the target CEO and company, my own opinion is that ultimate success depends upon how real the underlying business and assets are. Even the most talented receiver cannot recover assets and profits which never really existed.
There are two costs involved in pursuing WKBT. First, is the cost of seeking appointment of a receiver in state court (Nevada). In our case that would be $15,000 or less. Once Mr. Seiden is appointed as the WKBT receiver by the court, he requires a $65,000 receiver expense advance (which is also an expense cap). He charges the WKBT estate an hourly fee and he will also receive 8% of any settlement. In most of the cases he has taken he has been able to seize sufficient assets to repay that expense advance to shareholders within a few months. After that any expenses he incurs comes from the WKBT assets he finds. The costs are pro-rated based upon shares, so we are looking at a total cost (which is capped and cannot exceed) $80,000 or $.0225/share. And unless WKBT is a complete fraud we should get $65,000 refunded within a few months. "If" WKBT turns out to actually be a complete fraud then we lose an additional $.0225/share but at least
would know we might as well declare the shares worthless and take the tax loss.
We have done a corporate search of the WKBT subsidiaries and we still own the operating subsidiaries in China. And as I said, internet searches in Chinese indicate that WKBT is a real business, and actually seems to be doing rather well.
I have just over 1,000,000 shares of WKBT and so would contribute $22,500 - considering my cost basis in WKBT, and the fact that if this legal action is not taken it will probably be many years before I might recover any value for my shares, spending another 2.25 cents/share seems to make sense. I expect (hope) to recover $18,200 (the receiver expense advance portion) of the $22,500 within a few months.
Each shareholder will also have a no-cost contingent fee option, which will be 35% of any recovery (which includes 8% of any recovery to Mr. Seiden).
No one can say for certain what we can recover, but my best guess is that CEO Dr. Wang will agree to buyback our shares for $1.25-1.50 per share, as that would give him many years of peace and quiet, whether to cover-up any actual fraud or to actually grow and relist his business in China.
Please let me know whether you would like to participate in this lawsuit, and which cost option you prefer: (a) 2.25 cents/share (paid directly to Mr. Seiden), or (b) no-cost 35% contingent option. Once the necessary 10% of outstanding shares agree to participate I will provide an agreement letter for your review. (If we ultimately have more than 3,550,000 shares participate the cost per share would be decreased proportionally.)
If I can answer any questions please feel free to contact me.
Best regards,
Michael Sammons
15706 Seekers St
San Antonio, TX 78255
210-858-6199
