Year in review
First of all I am an investor of FCPG for over 2 ½ years now. I have been with FCPG when they went from a local distributer of Medicines to a National Distributer of Medicines via the National License to sell on the internet. They went from large profit margins for the local sales to significantly smaller profit margins in exchange to participate in the national sales. In order to qualify for the national license FCPG agreed to the lower profit margins, Management decided by expanding the top line growth the bottom line would over time expand and would not have any limits. This still seems like a good decision, the only drawback has been qualifying for expansion capital... This was derailed by the previous auditor, Rotenberg (EFP) by not turning over the work done on the financials. Without 10k filings expansion capital was not made available. Banks are kind of funny that way; they require proof of income before lending any money. We also have other issues to deal with in regards to this sector of stocks.
What has happened is this sector of, the reverse merger sector, these Chinese companies listed on the US exchanges they took a big hit. Some of the Reverse Merger stocks deserved it and others did not. FCPG in my opinion did not deserve just because it is a reverse merger stock. That being said Management of FCPG has not helped by not communicating in a significant manner to offset any of the overall moods towards this sector of stocks.
Now getting to where we are at this time the relationship with FCPG and EFP was an unusual one. When they severed their relationship with FPCG EFP did not dispute financials reports submitted by EFP they just stated FCPG owes $40,000.00 so the reports owed to FCPG, the financials, could not be released until the $40, 000 was paid in full. Never mind EFP has been paid hundreds of thousands of dollars for the work already performed up until that point. EFP should have at least released the auditing work completed up until that point. That would have meant releasing the full 2012 10k report and possibly the first quarter of 2013. EFP decided not to do either, so I ask the question did EFP perform any work that they were paid for. Just because EFP notified FCPG they were leaving China does in no way release them form the obligation of supplying FCPG for work completed and paid for. So the question is did EFP perform any work at all and if not why not? Again remember there was no dispute over previously filed 10k reports. Suing EFP for none performance is probably worth pursuing in a court of law in my opinion.
Now where are we with regards to the overall picture of these Chinese companies listed on foreign exchanges? China still has not come to an official agreement with international investment community on auditing guidelines for the books on China soil. This then leaves a big confidence issue with the overall international investment community about these Chinese companies. You would think that being listed on the US exchanges would have cleared some of the that issue up but it has not. This forces these companies to keep two sets of books one for the PRC and the other for the international investment community. This creates doubts and opens up the door for corruption and as no one really knows what is what because of the lack confirmation of earnings. This is at the heart of the reporting problems of FCPG and other Chinese small companies listed on foreign exchanges. The original hiring of EFP (Rotenberg) was supposed to have taken care of this issue by consolidating the reporting requirements of the PRC and the international investment rules by simultaneously filing with the PRC and the SEC, but it appears solving this issue never materialized for FCPG. Thus for now we can only hope the hiring of Marcum will cure this problem time will tell.
The fact the SEC has not suspended this stock from trading at this time is a bright spot. I have been very critical of management’s action of not communicating with their minority shareholders. Either management does not feel the urgency in communicating with the rest of us because they own the majority of the stock or they feel it would be counterproductive at this time to say anything at this time. Why the lack of communication is hard to say as we can only speculate because of the absence of any communication.
The other bright spots for this stock is that they are doing business in China and do have a national license to sell medicines over the internet nationwide and they have expanded to meet the real and potential growth by expanding their warehouse space and the number of employees working. This has all been muted by the fact no financials have been filed over the last year and no forward looking estimates have been released. This has hampered FCPG growth prospects, because of not being able to obtaining any working capital loans to assist in the expansion of sales desired and hoped for by this time.
The only evidence of growth was the last 10k filings back a year ago and the top line growth was over 20% and profit margins were improving. But we really do not know officially what has occurred since then because of the lack of any financials.
So the issues at this time are, will FCPG formally hire Marcum and what will the 10k filings look like. Will a listing in the Singapore and HK exchanges overcome being a reverse merger stock in the US? These are issues hanging over this PPS at this time. Also If Marcum is formally hired when will they provide an audited version of all up to date 10k financials. If all of these issues are satisfied this will open up several possibilities for the advancement of the stock price for FCPG.
Taken into account the issues regarding this stock one can only wait and see. If Marcum is officially hired that would be bullish for this stock but if Marcum is not officially hired then well this stock will go the way of the other Reverse Mergers and be delisted.
I for one am hopping and wishing Marcum is hired, it appears they might and the fact the SEC has not delisted this stock at this point even without any formal 10k or any updated 8k filings is positive.
So in closing if all goes according to plan and Marcum comes on board and financials are filed correctly then the derailed expansion plans of FCPG will be back on track. This will open up the possibilities of getting working capital without diluting shareholder value that is all positive. Again time will tell and time is running out for FCPG.
This stock has all kinds of upward potential but it is still a speculative investment and one should treat it as such.
AI
