Jiangbo Pharmaceuticals, Inc.(fka JGBO)

[Ecomike]

I am still watching this one from the side lines, so I have no axe to grind here, just interested in getting to the entire truth, and all the factors involved. I still suspect the news here is not as bad as most think it is, but I could be wrong on this one.

I ran across a post today in Alpha Seeking, on another short hammered stock I do own shares in, and a poster on that article posted this from the 10-Q of that company (ABAT), that I think may answer some questions in the entire China/US RM stock sector about the issue of moving cash to the USA to pay say dividends.

Here it is:

Why don't you read the SEC-filings instead of making stuff up?
They are considering it.

From the 10-Q

Restrictions on Dividends and Other Cash Transfers

All of our business operations are carried out by our two subsidiaries and one variable interest entity in China. In the future, in order for the U.S. parent corporation to pay dividends to our shareholders from the earnings obtained in China, we will have to transfer funds from our Chinese subsidiaries through Cashtech Investment Limited, our BVI subsidiary, and then to Advanced Battery Technologies, our U.S. parent corporation. Our ability to transfer funds in this manner will limited by two factors:

1) Statutory Reserves . The Company Law of the PRC applicable to Chinese companies with foreign ownership provides that net income can be distributed as dividends only after:
a. Cumulative prior years’ losses have been recouped;
b. 10% of after tax income has been allocated to a statutory surplus reserve until the reserve amounts to 50% of the company’s registered capital;
c. 10% of after tax income has been allocated to a statutory common welfare fund, which is established for the purpose of providing employee facilities and other collective benefits to the company’s employees; and
d. Allocations have been made to the discretionary surplus reserve, if such a reserve is approved at the meeting of the equity owners.

2) Currency Conversion . The Chinese Yuan (Renminbi) is not freely convertible into Dollars. The State Administration of Foreign Exchange (“SAFE”) administers foreign exchange dealings and requires that they be conducted though designated financial institutions. Foreign Investment Enterprises, such as Harbin ZQPT and Wuxi ZQ, may purchase foreign currency from designated financial institutions in connection with current account transactions, including profit repatriation.

These factors will limit the amount of funds that we can transfer from our Chinese subsidiaries to our U.S. parent company and may delay any such transfer. In addition, upon repatriation of earnings of our Chinese subsidiaries to the United States, those earnings may become subject to United States federal and state income taxes. We have not accrued any U.S. federal or state tax liability on the undistributed earnings of our foreign subsidiaries because those funds are intended to be indefinitely reinvested in our international operations. Accordingly, taxes imposed upon repatriation of those earnings to the U.S. may reduce the net worth of the Company.