NanoTech Entertainment Inc (NTEK)

[readthechinastudy]

Spinoff? I don't think so. NTEK probably created a separate, wholly-owned subsidiary to protect itself, in case the acquired company has any skeletons in the closet (e.g., pending lawsuits). This is a common and recommended practice. Six months after the acquisition, NTEK could learn that the acquired company is being sued. If the acquired company is ruled at fault, the burden of payment would fall on NTEK. If the lawsuit is large enough, it could wipe out NTEK. By creating a wholly-owned subsidiary, only the subsidiary is vulnerable to a lawsuit, and the rest of NTEK and its assets are protected. It's similar to a small business owner creating an LLC or S-Corp. By doing this, the person/company suing can't go after the small business owner's personal finances and assets (house, cars, etc.).

GTAL