FAB Universal falls on Alfred Little report of anti-piracy claims fraud, exaggerated kiosk figures

FAB Universal (FU -4.6%) falls after Chinese fraud researcher Alfred Little issues a short report on the Chinese video content distributor, noting that "FAB's anti-piracy claims are a total and complete fraud."

AL states that based on the firm's due diligence, FAB's Intelligent Media Kiosks are "loaded with very obviously pirated U.S. movies."

The report also claims that FAB's kiosk manufacturers have only supplied 1.6K-1.7K kiosks to the company, or 10% of the claimed 16.8K units deployed. Additionally, AL states that FAB's director of franchisee sales stated that the company only has ~1K kiosk in Beijing, vs. the 3.9K disclosed in a company proxy statement.

AL writes that the company faces a significant undisclosed liability due to the company's promise to kiosk franchisees of guaranteed minimum returns and buyback clauses using FU stock.

Comments (1)
  • osbourne1
    , contributor
    Comments (8) | Send Message
    The Company announced during the CC that they will be posting a directory of the number and locations of the Kiosks to their company website. This should be verifiable information. Don't remember hearing Al asking any questions on the CC. Would like to know Al's sources for information regarding the kiosks, and did he contact all the manufacturers to gather his total or just some manufacturers, there may have been many?
    14 Nov 2013, 04:22 PM Reply Like
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