"If the company was allowed to sell the dairy portion of their business during the Form 10 process, I'd like to assume they can tell us what their going to do with the proceeds and give us some projected numbers.... A bad scenario would be the company hiding behind the Form 10 filing and saying "we can't talk about this" and "we can't talk about that". This is the time we really need to have the company talk about their future prospects."--Mauiguy
I don't believe your logic here is sound. Indeed, it is not if I correctly understand the constraints the company is under while going through the Form 10 process. This process does not interfere with the company running their business. As such, if, as in this case, management decided that it would be best for the company to sell the diary division of their business, then they are free to do so at their own discretion. What they could not do--as I understand it--is tell us in advance that they were looking to sell it. Rather, they had to wait until the transaction was complete prior to announcing it. In other words, to suggest that if the Form 10 constraints allow them to sell the dairy division, then it should also allow them to talk about forward looking events, misidentifies what the constraints entail. This is important because, as you well noted, to not see this distinction will necessarily foster expectations about the conference call that the CEO cannot possibly meet and still be faithful to the constraints the SEC has imposed on him. Accordingly, he will be judged as someone trying deceive shareholders by “hiding behind” pseudo constraints.
I think it would be helpful if Chad would provide us with a clear, succinct set of criteria about the constraints management is under so we are have a clearer means of making sense of the cc. For I'm sure Solomon will have to state at various times in the cc that he can't talk about such and such because of the Form 10 constraints. I also suspect that the questions he has to cut short in this fashion will be ones we'd all really like to hear the answers to. If a lot of people are viewing the situation as you expressed it, then a lot of people will react very negatively towards Solomon’s claim that he can’t talk about such and such issue. What’s more, the exact same phenomenon, namely, Solomon stating that he can’t discuss such and such because of the Form 10 constraints, can, if the SEC constraints are properly understood, be seen as a conscientious and responsible act on the CEO’s part to protect shareholder interests. (Disclosing what he shouldn’t will slow down the uplisting process and consequently retard the true value of shareholders’ investments.) Obviously, these are diametrically opposed interpretations of the exact same phenomenon. And where one comes down will in large part be determined by what one’s understandings is about the Form 10 constraints. Hence, the more clarity we have on the issue going into the cc, the more likely we’ll be able to correctly assess what we are being told.
I should emphasize, too, that I’m by no means confident that I understand the restrictions myself; the above I distilled through previous conversations with others. For instance, in the 10-k it was obvious that the new fish farm contract is well underway between the two parties in question. Yet, as Chad noted (post #5495) “the Company applied to form Enping City Bi Tao A Power Prawn Culture Development Co., Limited (BTAPP) … (but) The approvals of the formation of BTAPP by the relevant authorities of the PRC Government is pending.” In other words, here is what appears to be a material event: the agreement to do a JV fish farm. But, clearly, the government approval is still pending and hence is in the future. So why are they allowed to announce this even though one aspect of it is still pending on a future decision? I don’t know. For me it is a gray area. But for someone who has a clear sense of the constraints the company is under would, presumably, be able to explain why a revelation of this sort is permissible but other “future prospects” are not. So, again, to my way of thinking, now is the time to get this information straight, not after the cc.
Steve
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