Seeking Alpha


Send Message
View as an RSS Feed
View nemesisjudge's Comments BY TICKER:
Latest  |  Highest rated
  • Kandi Technologies' 10-Q Reveals Phantom Sales Growth And Other Serious Concerns [View article]
    Illuminati is correct in his statement. Any author that "dares" to speak out against the "beloved" Kandi gets severely attacked and personally insulted like there is a witch hunt. What is this telling us about the integrity of the company's backers? Yet I have seen numerous comments from supporters in various Kandi articles that are blatantly untrue, inaccurate and misleading - but not a squeak from other supporters to point out the errors.

    People should read the attacks on authors who wrote negative articles on other companies that eventually did turn out to be no good. If the company is fully legitimate in every way, its share price will recover, the shorts lose money, the longs' profits will recover, the author is discredited, and a great buying opportunity was presented. If the company does eventually have problems, then people were forewarned.

    The author laid out his case and he does not like the risk. If someone does not like the democracy that we live in, then I suggest they get on the next plane to North Korea and live in a like minded society.
    Jul 24, 2014. 03:25 PM | 8 Likes Like |Link to Comment
  • Kandi Technologies Dominates China's Electric Car Market [View article]
    Dear geleng,

    In addition to your fundamental misunderstanding of SEC investigations, which I have already pointed out, I have the following quote for you from the Chairman and CEO of Enron about their SEC investigation:

    "We will cooperate fully with the S.E.C. and look forward to the opportunity to put any concern about these transactions to rest."

    That prophecy did not turn out so well for him.

    The SEC conducts its investigations privately and does not make public the investigation's status unless it has filed an enforcement action. The only regulated disclosure requirement needed is that there is an SEC investigation if an enforcement action was likely. The company's opinion as to the investigation's outcome is its own, and not that of the SEC.

    The SEC investigation has not concluded, therefore you cannot say the "results were not negative".
    Jul 22, 2014. 03:20 PM | 2 Likes Like |Link to Comment
  • Kandi Technologies Dominates China's Electric Car Market [View article]
    Frellgem's comment is not true. The statement made about the SEC investigation for Kandi in its 10K is unambiguously clear. There is no doubt that Kandi itself is currently under SEC investigation. To deny this is blatantly untrue, and very poorly reflects on the credibility of its supporters. Which part of this statement from Kandi's 10K does frellgem not understand?

    "The Company has been furnishing documents to the Denver Regional Office of the Securities and Exchange Commission in response to a document subpoena issued on November 21, 2013 regarding a matter known as In the Matter of Kandi Technologies Group, Inc"

    This is a clear reference to the company. If it was against short sellers, the investigation would state the name of the short sellers, not the company. Frellgem does not understand this.

    When frellgem says:

    "Meanwhile, Kandi stock registrations have gone effective since the SEC investigation was voluntarily disclosed"

    she is also unable to understand my previous comment, despite it being phrased and referenced as clearly as possible, that the disclosure of an SEC investigation is not voluntary if the company's legal counsel believe that legal proceedings are imminent.

    Frellgem then very bizarrely goes on to state "The $5 price you claim is a tiny fraction of the company's net book value on liquidation!" when I have made no reference to anything of that nature.

    If the company's business was so easily verifiable, the SEC would not have the need to subpoena documents from the company, nor would it have a reason to upgrade its inquiries to a Formal Investigation.
    Jul 22, 2014. 01:32 PM | 3 Likes Like |Link to Comment
  • Kandi Technologies Dominates China's Electric Car Market [View article]
    Geleng is wrong. Anyone who proclaims that disclosure of an SEC investigation is always voluntary is either very poorly informed or deliberately telling lies to mislead.

    Regulation S-K, Items 103 (the Company) and 401(f) (Directors) DOES require disclosure of an SEC investigation if a formal legal proceeding is filed or is known to be imminent; these are also materiel events.

    This means Kandi is obliged to make the disclosure of an SEC investigation if there is an expectation from its legal counsel that this will lead to litigation from the SEC. Geleng's reference that the disclosure is voluntary only applies if there is no expectation or presence of legal proceedings resulting from the investigation.

    There are many references to this. Here is one:

    "Most counsel conclude that an investigation is a material fact if the investigation is likely to result in significant action against the company and/or its management. Failure to make such disclosure has been the basis for private and class action allegations."

    The link to this reference is here (Page 5):

    The disclosure of the investigation was made in the 10K filings for the fiscal year 2013. This means the company does not need to make further disclosure of potential legal proceedings in its subsequent 10Q filings in the following fiscal year unless there is a material change in events. That is why there was no mention of the SEC investigation in the Q1 2014 announcement. It means that the status of the SEC investigation or expected legal proceedings has not changed. It does not mean that it has concluded. The reference for this rule is provided here:

    "A legal proceeding need only be reported in the 10-Q filed for the quarter in which it first became a reportable event and in subsequent quarters in which there have been material developments. Subsequent Form 10-Q filings in the same fiscal year in which a legal proceeding or a material development is reported should reference any previous reports in that year."

    Here is the link to this SEC rule in their Form 10Q General Instructions. Refer to the top of Page 6.
    Jul 22, 2014. 11:19 AM | 4 Likes Like |Link to Comment
  • NQ Mobile Slammed As It Dumps Its Auditor [View article]
    This reflects very poorly on the quality and conclusion of the so called independent investigation if PWC felt that more information was needed.

    PWC's observation of original third party bank and financial records would have gone a long way to confirming or dismissing the round tripping allegations. Delusional longs will forget to mention that PWC's request for this was in part based on suspicion raised from the electronic data already collected. Surely Yidatong would be more than willing to help out its buddy NQ Mobile, and show PWC its records if all was well - in fact they may love to show all just to prove MW wrong. But they did not.

    Even if there is a reluctance to open up the books because its a China thing, there are still suspicious revenues from overseas books that could be examined.

    Clinging to the idea that confirmation of cash means no fraud is totally clueless and unbelievably stupid. Sino Forest had most of its cash confirmed. In the Olympus round tripping fraud, the cash was all there. There are loads of fraud schemes where the cash is confirmed. At this stage, my greatest suspicion is that NQ was using its cash for undisclosed loan guarantees or term investments that ultimately funded round tripping schemes. The cash had to exist to do that, and it looks like a lot of this was raised from capital issues.

    This should be a lesson learned, but as past frauds have shown and future frauds will show (wait and see), there will always be a group in denial, demonstrably incompetent, and wholly dishonest about the reality.
    Jul 18, 2014. 09:43 AM | 5 Likes Like |Link to Comment
  • Kandi Technologies: Let's Try The Truth For A Change [View article]
    Harris Goldberg, Mr Hu was NOT:

    "the only Chief Scientist in the Energy Section, in a country of 3 billion people during the time he served"

    And bergerbros' statement is also wrong. Mr Hu was NOT:

    "the chief scientist on what the Chinese called a "Manhattan Project" to develop economic EV's for the emerging middle class"

    Here is the full truth instead of the misleading half truth:

    "From October 2003 to April 2005, Mr. Hu served as the Project Manager (Chief Scientist) in the WX Pure Electric Vehicle Development Important Project of Electro-vehicle in the State 863 Plan."

    That's taken straight from Mr Hu's bio on the Kandi website-here is the link:

    This means Mr Hu was Project Manager (Chief Scientist) of the State 863 plan for the EV subsidiary of a very large Chinese conglomerate called Wanxian Group. This is one project out of many different organizations' projects working towards the objectives of the State 863 plan. Mr Hu was not THE chief top of the pile scientist for the whole of the PRC, Energy (or New Energy) Section, for the State 863 plan overall. The role of WX chief scientist for EVs in this project is still a good background to have, but it is nowhere near the same as being head honcho chief new energy scientist of the actual State 863 plan itself for the whole of the PRC.

    I am surprised that the author, who wrote an article with the very specific title "Let's Try The Truth For A Change", could make such a statement, even though the author must have re-checked these facts when correcting his error on the dates that Mr Hu supposedly served as Chief Scientist for the PRC, Energy Section. Nevertheless, I have enough respect for Mr Goldman to accept that this may have been a genuine mistake.

    What is less acceptable are comments from KNDI supporters like bergerbros, who without checking up on the facts, then regurgitate like a parrot incorrect statements and exaggerate them even more, saying things like "Mr. Hu was the chief scientist on what the Chinese called a Manhattan Project"! This speaks volumes about the quality and reliability of statements from certain KNDI supporters.

    No doubt someone is thinking to say that these statements did not really mean Mr Hu was the chief scientist for the PRC, Energy Section (or New Energy Section). Yet that is the precise wording used, and that is the interpretation which readers are being led to believe. I will surely fall off my chair rolling in laughter if anyone attempts to wriggle out of this by suggesting these statements were not meant to be read that way.

    It is astonishing that KNDI supporters moan about inaccurate statements from short sellers when inaccurate statements also come from their own camp. There are many other things written in this article and its comments section that I do not agree with, but for now, enough said.
    Jul 20, 2013. 04:56 PM | 8 Likes Like |Link to Comment
  • Xinyuan Real Estate: Trading At 36% Of Book Value [View article]
    It is not correct to say that it is very hard for Chinese home builders to commit fraud. It is not hard for them to take on undisclosed off balance sheet trust loan financing. This is a potential hidden liability that can be difficult for the auditor to spot.

    It is also not hard for them to use their bank cash balances in undisclosed loan guarantees, This is one of the reasons why some companies have apparently large unsecured cash bank balances but are reluctant to spend it or use it for dividends/share buybacks (however there are also legitimate reasons for this as well).

    I have also seen Chinese home builders flatter their operating cash flows by buying smaller companies that are pure holding vehicles for land banks and booking this as a capital acquisition within investing cash flows, instead of booking it as working capital expenditure on inventory within operating cash flows. Its like a legal form of window dressing, but it does mislead investors on the company's working capital expenditure.

    Those are just examples; there are a number of other things they can do. Are you seriously saying that checks made by local government officials are a guarantee that a company's finances are legitimate?

    I am talking about Chinese home builders in general with respect to your comment that fraud is hard to commit for these types of companies. I have not looked at this particular company in enough detail yet to judge whether there is a heightened risk of fraud.
    Jul 12, 2013. 06:25 AM | 3 Likes Like |Link to Comment
  • Kandi Technologies' Recent Multi-Billion Dollar Coup Creates An Avis ZipCar Times Ten [View article]
    Arthur Porcari, only a few days ago you insisted that the company would not use their S-3 registration to raise cash with new shares. To use your words from your article:

    "Rumors spread by ignorant Chinaphobes and short selling attack writers have been "warning" investors on Tweets and Blogs that since KNDI filed an S-3 Shelf Registration with the SEC a few months ago, that "any moment", the company is going to be doing a dilutive stock offering now that the price and volume is up. While I am totally comfortable that there is no offering being considered until the stock is multiples of the current level if ever, don't take my word for it, but "read the market" and use your own common sense."

    And to use your words a few days ago in the comments section from Mr Pearson's KNDI article:

    "Let me first address the total BS you are creating. KNDI does not need any money next week, or for that matter in the next year. They filed the S-3 like all listed companies do to take advantage of a major move up. Like over $25 a share if at all."

    Just a few days later what does KNDI do? They raise a big chunk of cash with new shares at only $6.03 plus warrants using their S-3 registration. To use the company's words:

    "The Shares, the Warrants and the Common Stock issuable upon exercise of the Warrants are being offered by the Company pursuant to an effective shelf registration statement on Form S-3, which was filed with the Securities and Exchange Commission on April 19, 2013 and was declared effective on May 23, 2013."

    So what was that you were saying about "ignorant Chinaphobes"? The "total BS" being created about the S-3 registration?

    You also insisted that KNDI had great credit facilities for borrowing more money from the bank. That does not reconcile with the company needing to raise some $26m and that "the net proceeds from this offering will be used for general working capital purposes".

    In the comment's section to Mr Pearson's article, I pointed out that KNDI was now having to borrow extra cash at the extortionate rate of 12%. This was a clear indication that the lender did not think the company had such great finances and that KNDI may use the S-3 registration to issue new shares. You attempted to dismiss this by insisting that 12% was a normal rate for multi-year bank loans in China. 12% is not a normal rate for multi-year loans in China. and I provided the evidence to show this.

    Only two days ago, the company issued a statement, which you posted in this comments section, that attempted to give assurances about its finances.Two days later, it raises more capital. Obviously the company was not going to say in the statement that it had no intention of raising more capital, because the whole idea of an S-3 registration is to raise more capital, despite you insisting that it would not do so.

    I am making these points because there has been much criticism from supporters of KNDI about how some concerns with the company were apparently misleading or inaccurate. However, it has now become the case that particular KNDI fanatics were themselves also misleading and inaccurate about the company's finances.

    I have no doubt that you will now attempt to put a positive spin on this new share issue for the company, but what you cannot repair is the damaged reputation of all KNDI supporters who set out on a ludicrous witch hunt to discredit comments relating to concerns about the company's finances; concerns that have now turned out to be perfectly legitimate.

    Just remember, you are not always right, and people who question your assumptions are not always wrong, and they are not always "shorties" or "bashers".
    Jun 26, 2013. 01:14 PM | 5 Likes Like |Link to Comment
  • Nam Tai: Can The Land Offset Core Business Woes? [View article]
    When going in to detail, land use rights in China can get complicated, as can be the associated accounting. Some of the indications in the 20F are that most of its PRC land is in the form of "granted" land use rights (ie fixed terms, etc). Granted land use rights are the ones that have commercial value, can be sold in the market, used for most purposes, etc. If it has granted land use rights then that's fine.

    However, I cannot find any reference to the specific term "granted" land use rights, which is very unusual and very strange-nearly every Chinese company that I have looked at does say what type of land use right it has.

    There is a big difference if its land use rights are "allocated" or contributed" instead of "granted". There is also a difference between "owning" land use rights (to be clear, I do not mean own the land, I mean own the land use right) and "leasing" land use rights. The difference may determine if the company can sell, rent or use land as collateral for bank loans. I am open minded on this if you have an opinion.
    Jun 25, 2013. 02:18 AM | Likes Like |Link to Comment
  • What The Market Missed On Kandi [View article]
    Arthur Porcari, what you say is not true. The average interest rate is only 6-7% for multi-year loans in China and they come in a variety of different forms. These are for non-SOEs. Yet in comparison Kandi is charged nearly double at 12% for extra debt.

    This quote is from Institutional Investor magazine-the article's name is “China’s SMEs Look Increasingly to the Bond Market for Financing”:

    “SME bonds, which generally have maturities of about 30 months, offered yields of 6.37 percent on average last year, according to NAFMII”. Here is the link to the article:

    SMEs are Small to Medium Enterprises in China. NAFMII is the regulatory authority for China‘s Inter-bank bond market and operates under the supervision of the PBOC. These SME bonds are considered relatively high risk, and yet comparing yields, Kandi’s bond is nearly double their average yield.

    For those interested, there is even a junk bond market in China. Here is a link describing it:

    And here are some specific examples of other financing forms:

    In May 2013, Yingli Green Energy, listed on the NYSE, issued 1.2 billion RMB-denominated multi-year three-year medium-term notes (MTNs) at a low annual interest rate of 5.78% . Here is the link:

    Even China BAK Battery, listed on NASDAQ, can get cheap three and five year bank loans at 6.4%. CBAK’s loan details are on page F30 in their 2012 10K.

    Zhongpin Inc, listed on NASDAQ, has a series of cheap multi-year bank loans with four Chinese banks, with interest rates ranging from 6.4% to 7.2% and maturities for each year up to 2020. They are all listed on Page 67 of their 2012 10K.

    All my opinions are based on fact, with references provided. Lower yield multi year loans do exist in China, and come in a variety of forms. The company is borrowing extra money at long term rates of 12% when it is supposed to have great finances and when other companies in China can do it much more cheaply.
    Jun 24, 2013. 11:48 AM | 2 Likes Like |Link to Comment
  • What The Market Missed On Kandi [View article]
    Arthur Porcari, what you say does not address the real issue, which you have attempted to obfuscate through a load of waffle. If you knew anything about company analysis and cared to get your facts straight then you would know that a 12% loan rate using a 3 yr bond is an unusually high interest rate for a company that is supposed to be in good financial condition and have great prospects.

    Everbright did a risk assessment of Kandi and decided it appropriate to charge it a high 12% interest rate to reflect higher risk. Not 6% or 7%, but 12%. This is a much higher cost of extra debt. If the company had such great finances and prospects, then it would be charged a lower interest rate. Therefore investors should be concerned.

    If the company had such great finances and is about to make so much money then it would not need to issue an S-3 statement proposing a capital raising exercise of up to $60m.

    Anyone should know that a 12% borrowing rate is high. The risk indicators are very clear, and even though they do not seem to bother you, they certainly bother me, and they certainly bothered Everbright.
    Jun 22, 2013. 03:13 PM | 3 Likes Like |Link to Comment
  • What The Market Missed On Kandi [View article]
    I think the greater risk is the company not being allowed to substantially increase its debt (unless its at very high interest rates), which may limit its ability to increase sales through credit and consequently restrict account receivables growth. As of the last 10Q, account receivables were some $38m with another $11m in notes receivables. Instead of growing this, Kandi must get customers to pay up using more cash rather than letting them buy more on credit.

    There are also $22m of notes payable due next week (see page 26 of the recent 10Q up to March 2013). The company also needs to deliver $16m upfront cash for the jv.

    All these factors must be reasons why the company recently filed an S-3 to raise up to an extra $60m in stock. It is both common sense and inevitable that the company will try to issue new shares.

    It will be interesting to see how things develop.
    Jun 21, 2013. 05:24 PM | 1 Like Like |Link to Comment
  • What The Market Missed On Kandi [View article]
    Dirk McCoy, I'd bluntly say that you have not read the news during the last several days where there is a growing credit crunch amongst Chinese banks, and it is highly likely that in future it will be much harder for companies to renew bank loans on a revolving basis. Unless of course you think there is no credit problem in China?

    Here is a link to an article from Businessweek that describes the current situation:

    One paragraph from this articles says:

    "More responsible means reining in some of the rapid lending that has helped drive growth. In a worrying sign, such lending has recently become less effective at doing so—likely because more and more new credit has gone toward paying off interest on outstanding loans (and is probably helping hide a growing bad-debt problem, too). Financing has been “going to firms that were rolling over their loans, and that is not causing an expansion of the economy,”

    The company also recently issued a bond at the a very high rate of 12%, with the funds coming from China Everbright Securities. I assume China Everbright did their due diligence on the risks for this company and know more about Kandi than you. Do you think a borrowing rate of 12% is the normal rate for a company that has great finances?

    Related to China Everbright Securities, China Everbright Bank, and other banks were previously lending Kandi money at the rate of 6-7%. Now the borrowing rate for extra cash has shot up to 12% using this bond. Please do not try to understate the risk for this company.

    For those who wish to dispute this interest rate, The details of the 12% bond can be found at the bottom of Page 26 from the latest 10Q filings. The comparable bank loan rates are at the bottom of Page 24.
    Jun 21, 2013. 03:22 PM | 5 Likes Like |Link to Comment
  • Market's Epic Mistake Causes Cleantech To Triple [View article]
    No mikiamit, you said that Chinese patents are proof that a company is not a fraud. But I showed very unequivocally that there are companies with Chinese patents that are frauds.Therefore you cannot say Chinese patents are proof that a company is not a fraud.
    My point is incredibly obvious and simple to understand. It is a mystery to me, and no doubt a mystery to other readers, why you have difficulty in understanding this if you are as qualified and as experienced as you say you are.
    Jun 17, 2013. 03:58 PM | 1 Like Like |Link to Comment
  • Market's Epic Mistake Causes Cleantech To Triple [View article]
    Here are some very well known company frauds that also had Chinese patents issued to them:

    RINO International: "We own three patents in the PRC covering our waste water treatment technology." (Last known audited 10K filing)

    Douyuan Global Water: "Currently, we hold eight Chinese patents, two of which are for inventions, five are for utility models and one is for design." (Last known audited 20F filing).

    China Biotics: "As of March 31, 2011, we currently had three patents in total, one for production process, one for packaging design, and one for packing equipment design." China Biotics also specifically mentions SIPO and gives the patent numbers. (Last known 10K filing).

    Again, I could go on and on.

    Therefore you cannot say that patents are proof that a company is not a fraud or that it is not engaged in some form of fraudulant activity..

    What surprises me is that if you have so much experience in China business, then you would know that Chinese patents are not proof that there is no fraud in a company.
    Jun 17, 2013. 05:28 AM | 2 Likes Like |Link to Comment