To start this off, lets point out the positive and the negative, starting with the positive. International Building Technologies Group, Inc. (INBG) is fully reporting to the SEC and they are trading on the OTCQB. As most of us penny stock traders know, getting onto the OTCQB is huge. The OTCQB market tier helps investors easily identify companies that are Registered and current in their reporting obligations with the SEC or report to a U.S. banking or insurance regulator. OTCQB securities are quoted on Pink OTC’s quotation and trading system and some may also be quoted on FINRA’s OTCBB. With OTCQB ranking on INBG, we have free Level 2 available on pinksheets.com. Fact of the matter is, it is not a pink sheet. The next positive is that the company filed an 8-K with the SEC on June 2nd, stating the following: “On May 25, 2010, the Company signed a non-binding Letter of Intent to merge with FHH Sino New Energies Co., Ltd., a Chinese company (“FHH Sino”) located in Weihai, Shandong Province of China. FHH Sino is a petroleum storage company that offers petroleum storage tanks and facilities for rental to the petroleum importers/exporters in Weihai, a coastal city in Shandong Province of Northern China.” So now we know that FHH Sino New Energies Co. is the merging company. It also states that the address of FHH Sino New Energies Co., Ltd.:
FHH Sino New Energies Co., Ltd.
Rm. 1403, Zhong Xin Bldg.,
2 Qing Dao N. Road, Weihai
Shangdong Province, PRC 264200
I could not find anything on FHH Sino on the internet however, 23° 8' 30.98? N 113° 19' 2.83? E (copy paste that into Google Earth) and there is a little dot that has the Zhong Xin Building. There is a picture there that is a view from the Tian He Sports Center. Now, to find out if FHH Sino is in that building, we need to contact a relative, friend, or someone in China that can check. If you Google Tian He Sports Center and browse pictures, the Zhong Xin Building is very evident that it exists. However, again, we do not know if Room 1403 belongs to FHH Sino. Via the 8-K, we also know that FHH Sino made a $230,000 as the good faith deposit will be deposited into the assigned bank account of INBG by the Company to execute this LOI within 5 days to execute this LOI and to cover the expenses, costs and accounts payables that may occur during the transaction period. Such $230,000 will be debited against debts and accounts payable on INBG book. Another good thing is that the company might be issuing PR regarding their DD process. Also via the PR, it states that “INBG, together with its financial, legal and other advisors will need to complete customary due diligence including, but not limited to (i) meetings with management and site visits; (ii) receiving more detailed historical financial statements, including an analysis of fixed costs, variable costs, customer information and capacity utilization; (iii) reviewing the existing projections; (iv) reviewing the Company’s business plan; (v) a detailed review of the balance sheet and profit and loss accounts; and (vi) a general corporate review, including a legal review of agreements, material contracts, leases, litigation and other matters; (vii) preparing a road map, business plan, prospectus and finish due diligence within 90 days from receipt of the initial payment.” So basically, there is up to 90 days for DD to be finished and PR could occur about the DD during that time. To note some more positives from the 8-K, “according to a recent appraisal prepared by an accounting firm in accordance with China accounting standards, the Chinese company has net assets worth RMB 370 million (approximately US $54,000,000) and will generate annual revenues of RMB 100 million (approximately US $14, 000,000) after its completion of construction of Phase I and execution of rental contracts business in early 2011.” Then, “INBG is a full reporting company listed on OTCBB since 2007 and meets all the compliances and regulations of US SEC. We believe that as soon as INBG satisfies the minimum equity, revenue requirement, as well the other requirements of qualification, INBG can move up to be listed on NASDAQ or AMEX main board, accordingly.” Next, in accepting the merger some good things happen. Those include “an extension of existing employment contracts for INBG officers” and a “guarantee of Buy-back or exchange of common stock for preferred stocks (not exceed US$2.3 millions) that are currently held by IBTGI officers or investors.” Finally, one of the last positives is the chart, which is a “so so” positive. A golden cross was formed and the key resistance of .0005 held.
A negative includes the liabilities of the company. Basically, this deal is all INBG has. They might go bankrupt if this deal falls through. A reverse split might follow with or without the merger. Is the CEO diluting or not? We know for a fact that he is not selling his shares because a Form 144 and a Form 4 would be needed to be filed if so. The merging company, to raise capital, might dilute the stock. We do not know that FHH Sino is in Room 1403, Zhong Xin Building. Finally, why does the CEO not pick up his calls?
A neutral standpoint is the ratio of the stock us shareholders of INBG get of common stock of one of FHH Sino’s holding or subsidiary company. This is stated from Kenneth Yeung, CEO of INBG. He said “INBG intends to merge with FHH Sino by exchanging INBG’s common stock with FHH Sino’s holding or subsidiary company.” What will the ratio be? INBG proposes to acquire all the existing shares at net book value of FHH Sino. The exact terms and conditions for the acquisition, including the exact number of INBG shares to be exchanged with the Selling Shareholders, will be negotiated with the Selling Shareholders.
AI
