Hopefully those adds will pay off as it seems a bit silly to sell here at .08. Volume doesn't indicate the private placement "investors" are dumping escrow shares. If we want to be naive and believe the CEO in stating they were just a little short on GAAP acquainted help, that's fine, but something smells here and I'll explain why. I encourage all discussion about this situation.
Private placements in this sector, once thought of as bullish depending on the price, can be exactly the opposite depending on the integrity of both parties. Remember the $50,000 consulting fee paid to Desmond Holdings at the time of the private placement? I'd love to believe this secretive Hong Kong-based group controlled by the Kansagra family (google Bhupendra Kansagra...too bad court cases are public record and we can see who controls Desmond Holdings, ie Kesha Appliances case) somehow had honest intentions in wanting to be involved with a US listed Chinese RTO penny stock. Mark Pajak, director of the PIPE lead "investor" Wise Star Capital is a director for Desmond Holdings. Wise Star/Desmond just became a near 10% owner in this company due to failure to timely file the 10k. Remember, the CEO delegated this seemingly secondary task of an annual report to his assistant and didn't know the status only days before he'd lose nearly 1.5 m escrow shares (must have been awfully distracted in his travels). Also remember there are warrants to increase that 9.9% to 14.9% exercisable near .40. How cute that the investor's initial ownership % was just under the 5% threshold that would require disclosure for an OTC listed company and it's now just under the 10% required on the pinks.
We know CSGJ has secured permits for a big expansion but they've been short on funds. Why are they no longer interested in raising equity capital? They didn't attend Rodman & Renshaw or the Deal Flow Media conference, the latter being sponsored by their supposed IR firm. Hampton Growth states that they've been "uncommunicative" but Wenji sure was ambitious to raise capital in the past (spouting insanely unrealistic expectations ahead of these conferences in the past). Why the change of direction? My opinion is they have secured financing but no longer need the US shareholder to fund the expansion, thus the neglect. Also, why involve Hampton Growth at this point?
CFO Search: This extensive CFO "search" is a good way to cover their back side if legal concerns about a potential "go dark, relist elsewhere" situation are voiced (not that it's illegal, just unethical to go about it in a misleading manner, which could reflect badly on a relisting effort). Without a permanent CFO, they have an excuse to delay filing and drive the price down further. What % ownership is necessary to completely remove yourself from US markets and relist elsewhere? When thinking of this, remember the ole preferred issuance, common R/S, preferred conversion trick. As an aside, & in the context of the CFO search, why all the sudden London connections toward late '10? Column Associates, Wise Star, Desmond Holdings? Purely coincidence, I'm sure.
If Desmond Holdings is not involved in the fleecing of retail investors, which I'm sure is not something the Kansagras would like to be known for, they're on the receiving end too. A lot of institutions have been duped in this sector, but most involved companies in industries much more difficult to validate. Most have also been duped by companies that were exposed by shorts, not those that simply went completely dark after pumping PR after PR in times leading up to the disappearing act while operating an easy to validate business in a sector experiencing M&A as encouraged by the government. Who knows, maybe they're getting screwed too but I really don't believe it here. After all, what was that consulting fee for? They haven't been involved with any other RTO's that I'm aware of (please correct me here if I'm wrong). If, by chance, Desmond/Wisepark is also getting duped, Wenji and Jun Song are one brazen duo. This investment would just be a drop in the bucket for Kansagra & Pajak but the kiss of death for a future listing elsewhere for China Shuangji (unless they're acquired by a different entity which I find hard to believe due to the CEO's pride). I'm just guessing that maybe they want a bit more than a drop in the bucket. Of course this is just one possibility, the others being CSGJ is simply delinquent and trying to catch up or fully planning to delist for good (then why no dilution while still the chance?).
One other observation to support some skullduggery...why retain high profile legal counsel at this time? I think it goes without saying that there are some things going on behind the scenes. For the retail investor's sake, it would be nice if one thing occuring were a Marcum Bernstein & Pinchuk audit. Oh that's right, they forgot the 8-k that should have accompanied that merger. Blame the CFO issue.
I think the Song family understands their personal wealth will benefit much more from a listing on another exchange. In this event, their subtle screwing of US shareholders stemming from the uncontrollable events resulting from not having a CFO may be perceived more favorably than a more blatant approach.
