Exceed Company Ltd. (NASDAQ:EDS)

BEIJING, May 19, 2015 /PRNewswire/ -- Exceed Company Ltd. (EDS) ("Exceed" or the "Company"), one of the leading domestic sportswear brands in China, today reported the following developments in the company:

Resignation of CFO

Ms. Vivien Tai ("Ms. Tai"), the Company's chief financial officer ("CFO"), has resigned from the Company.  The effective date of Ms. Tai's resignation was March 17, 2015.  Ms. Tai resigned from her position as CFO for personal reasons.

In the past two months, the board of directors and senior management of the Company had been trying to convince Ms. Tai to reconsider her decision but such efforts were unsuccessful.

Mr. Shulong Yu, the Company's deputy financial officer ("Mr. Yu"), was appointed as interim CFO on May 4, 2015.

Resignation of Director

Mr. Yea-Mow Chen ("Mr. Chen") has resigned as a director of the Company. The effective date of Mr. Chen's resignation was March 19, 2015. 

In the past two months, the board of directors of the Company had been trying to convince Mr. Chen to reconsider his decision but the parties could not reach an agreement.

As a result of Mr. Chen's resignation:

1. The board of directors of the Company now consists of four members -- Messrs. Lin, Ding Dong Dong, Jin Jichun and Pang Xiaozhong -- instead of five. Messrs. Jin and Pang are independent non-executive directors, and Messrs. Lin and Dong are executive directors.
2. The board of directors of the Company no longer has a majority of independent non-executive directors.
3. Various committees of the board of directors of the Company now consist only of two members instead of three. These committees include the independent committee, which was set up to oversee the Privatization; audit committee; compensation committee and nominations committee.
4. The audit committee no long has an audit committee financial expert.

The vacancy on the board of directors resulting from Mr. Chen's resignation has not been filled. The Company is actively looking for a suitable candidate to replace Mr. Chen.

Offshore Service Providers

All of the Company's business operations are in China, and its offshore operations are limited to administrative support for the U.S. listing and investor relations.  The use of the Company's funds outside of China was controlled by Mr. Shuipan Lin, the Company's chairman and chief executive officer ("Mr. Lin"). Due to illness, Mr. Lin had been unable to cause the Company to remit funds outside of China for the prompt payment of service providers in recent months. 

As a result of Mr. Lin's inaction, a substantial number of these service providers have suspended or terminated their services for the Company. The business operations of the Company, including relationships with suppliers and customers, were unaffected.  Payments to the service providers and employees in China were also unaffected.

The amounts involved were relatively small in magnitude. The Company's offshore operations, however, have halted as a result. The Company thus failed to meet its accounting and financial reporting obligations to its shareholders and the public. 

In the view of the board of directors of the Company, Mr. Lin bears primary responsibility for the failure to establish the management discipline and internal controls essential for meeting the Company's responsibilities as a public company. The board of directors is sympathetic to Mr. Lin's explanation for the delay but strongly disagrees with his approach in handling the situation.  The board of directors reserves the right to conduct investigation it deems appropriate if additional facts emerge that may suggest other reasons behind Mr Lin's inactions. 

The board of directors has adopted the following remedial measures:

1. Mr. Ding Dong Dong, executive director of the Company ("Mr. Ding"), will bear primary responsibility of the Company's offshore operations, including its dealings with regulatory authorities.
2. One or more consultants and administrative assistants will be recruited to assist Mr. Ding in managing the Company's offshore operations and Mr. Yu in preparing the Company's financial statements under IFRS.
3. Mr. Ding is in the process of identifying an auditing firm to complete the audit and a law firm to prepare the Form 20-F.

Delisting from Nasdaq

On April 21, 2015, the Company received a letter from the Nasdaq Stock Market relating to unpaid fees for continued listing and a notice that the Company's common stock would be delisted on April 30, 2015 if the fees were not paid in a timely fashion.  For the reasons stated in the section "Offshore Service Providers" above, the fees were not paid and as a result the Company's common stock no longer trades on Nasdaq.

Delay in Form 20-F Filing

The Company will be delaying the filing with the U.S. Securities and Exchange Commission ("SEC") of its annual report on Form 20-F for the fiscal year ended December 31, 2014 (the "Form 20-F"), which was due onApril 30, 2015. The Company will file a Form 12b-25 as notification to the SEC of its inability to timely file the Form 20-F. It will not file for the 15-day extension permitted as part of Form 12b-25 as it will be unable to complete the work required to file the Form 20-F within the 15-day period.

The Company's inability to file the Form 20-F on time is attributable to the resignation of the CFO and the suspension or termination of services by the relevant service providers, details of which are contained in the sections titled "Resignation of CFO" and "Offshore Service Providers" above, as well as the unexpected delay in the completion date of the Privatization.

Based on representations from Mr. Lin, the board of directors of the Company previously projected that the Privatization could have been completed by April 30, 2015 and therefore did not anticipate the need to file the Form 20-F.  As that date has passed, the Company will prepare and file its Form 20-F for fiscal year 2014 as soon as possible.

Timetable for Privatization

As previously announced, on December 2, 2013, the Company entered into the Agreement and Plan of Merger (as amended from time to time, the "Merger Agreement") by and among the Company, Pan Long Company Limited ("Parent"), a Cayman Island company wholly owned by Mr. Lin, the Company's chairman and chief executive officer, and Pan Long Investment Holdings Limited, a wholly owned subsidiary of Parent ("Merger Sub"). If the Merger Agreement is approved by the Company's shareholders and other closing conditions stated in the Merger Agreement are met, the Company will merge with and into Merger Sub, and all shareholders of the Company other than Mr. Lin and other rollover shareholders and dissenting shareholders, will receive $1.78 per share in cash (the "Privatization").

Due to unexpected delay in Mr. Lin's financing plan, the Merger Agreement has not been put to a shareholder vote as of this date.

Assuming the Form 20-F is completed and filed and Mr. Lin's is able to obtain financing for the Privatization, the Company currently anticipates that it will be in a position to amend its Schedule 13E-3 filing in connection with the Privatization and convene the extraordinary general meeting of the shareholders to consider and approve the Merger Agreement and complete the Privatization towards the end of the second quarter or early in the third quarter of 2015. 

BEIJING, May 19, 2015 /PRNewswire/ -- Exceed Company Ltd. (EDS) ("Exceed" or the "Company"), one of the leading domestic sportswear brands in China, today reported the following developments in the company:

Resignation of CFO

Ms. Vivien Tai ("Ms. Tai"), the Company's chief financial officer ("CFO"), has resigned from the Company.  The effective date of Ms. Tai's resignation was March 17, 2015.  Ms. Tai resigned from her position as CFO for personal reasons.

In the past two months, the board of directors and senior management of the Company had been trying to convince Ms. Tai to reconsider her decision but such efforts were unsuccessful.

Mr. Shulong Yu, the Company's deputy financial officer ("Mr. Yu"), was appointed as interim CFO on May 4, 2015.

Financial Highlights - Six months ended June 30, 2014 ⁽¹⁾

• Revenue was RMB845.2 million (US$136.2 million), representing a 29.7% period-over-period increase.
• Gross profit was RMB230.9 million (US$37.2 million), representing a 32.2% period-over-period increase. Gross margin was 27.3%, representing a 0.5 percentage point increase as compared to 26.8% for the six months ended June 30, 2013.
• Operating profit was RMB96.9 million (US$15.6 million), representing a 157.7% period-over-period increase.
• Net profit was RMB70.4 million (US$11.4 million), representing a 176.1% period-over-period increase.

BEIJING, Oct. 21, 2014 /PRNewswire/ -- Exceed Company Ltd. (EDS) ("Exceed" or the "Company"), one of the leading domestic sportswear brands in China, today announced that on October 20, 2014, it entered into an amendment (the "Merger Agreement Amendment") to the Agreement and Plan of Merger (the "Merger Agreement"), dated December 2, 2013, by and among the Company, Pan Long Company Limited ("Parent"), an exempted company with limited liability incorporated under the laws of the Cayman Islands and wholly owned by Mr. Shuipan Lin, the Company's Chairman and Chief Executive Officer, and Pan Long Investment Holdings Limited, a wholly owned subsidiary of Parent.

Under the terms of the Merger Agreement, either the Company or Parent could terminate the Merger Agreement without payment of a termination fee if the merger contemplated by the Merger Agreement (the "Merger") was not consummated by the termination date of September 2, 2014 (the "Termination Date"). The Merger Agreement Amendment extends the Termination Date to December 31, 2014. The Merger Agreement Amendment also (i) increases the fee payable by Parent to the Company to US$2,500,000 if the Merger Agreement is terminated under circumstances where a termination fee of US$2,000,000 would previously have been payable and (ii) provides that the Company is no longer obligated to pay a termination fee to Parent if the Merger Agreement is terminated under circumstances where a termination fee of US$1,000,000 would previously have been payable (although the Company would continue to be responsible for reimbursing Parent's expenses in connection with the transaction under certain circumstances).

In connection with the Merger Agreement Amendment, on October 20, 2014, the Company also entered into an amendment (the "Limited Guaranty Amendment") to the Limited Guaranty between the Company and Mr. Lin, dated as of December 2, 2013 (the "Limited Guaranty"). The Limited Guaranty Amendment increases the amount guarantied by Mr. Lin under the Limited Guaranty from US$2,000,000 to US$2,500,000.

The Company's board of directors, acting upon the unanimous recommendation of the special committee of the board of directors, has approved the Merger Agreement Amendment and the Limited Guaranty Amendment.

As previously announced, the extraordinary general meeting of the Company's shareholders to consider the approval and adoption of the Merger Agreement and the Merger that was originally called and scheduled for April 16, 2014 will be reconvened at a later date to be announced in order to allow additional time for the Company to provide updated information to its shareholders. The Company expects to file with the Securities and Exchange Commission (the "SEC") and send to shareholders promptly updated information regarding the Merger Agreement, the Merger Agreement Amendment, the Limited Guaranty Amendment and the Company. The Company will give notice to shareholders of the date on which the adjourned extraordinary general meeting will be reconvened as soon as a date is selected.

BEIJING, Sept. 23, 2014 /PRNewswire/ -- Exceed Company Ltd. (EDS) ("Exceed" or the "Company"), one of the leading domestic sportswear brands in China, today announced that the special committee of the board of directors of the Company is in discussions with Mr. Shuipan Lin ("Mr. Lin"), the Company's Chairman and Chief Executive Officer, regarding a proposed amendment to the Agreement and Plan of Merger (the "Merger Agreement"), dated December 2, 2013, by and among the Company, Pan Long Company Limited ("Parent"), an exempted company with limited liability incorporated under the laws of the Cayman Islands and wholly owned by Mr. Lin, and Pan Long Investment Holdings Limited, a wholly owned subsidiary of Parent.

Under the terms of the Merger Agreement, either the Company or the Parent may terminate the Merger Agreement without payment of a termination fee if the merger is not consummated by the termination date of September 2, 2014 (the "Termination Date").  As of the date hereof, the Merger Agreement has not been terminated by either party.  The proposed amendment would extend the Termination Date.  The Company will provide a further update with respect to the proposed amendment and the timing of a reconvened shareholder meeting to approve the Merger Agreement once discussions with respect to the proposed amendment have been finalized and such amendment has been executed.

In addition, Mr. Lin has provided the special committee with the following updates regarding the availability of the financing contemplated to be received by Mr. Lin in order to fund the merger consideration:

• Mr. Lin has been advised by Ms. Weixin Zhuang and Mr. Guomin Chen that Ms. Zhuang and Mr. Chen would not be able to make available to Mr. Lin by depositing in an overseas bank account designated by Mr. Lin the full amount of the loans to be extended in accordance with the terms of the Loan Agreements between Mr. Lin and each of Ms. Zhuang and Mr. Chen.  In light of the foregoing, the parties terminated the Loan Agreements.  In connection therewith, Mr. Lin returned that portion of the loans (in an aggregate amount of US$5 million) that had previously been deposited in Mr. Lin's overseas bank account by Ms. Zhuang.
• On September 5, 2014, in order to provide for financing to fund his equity commitment under the Equity Commitment Letter, Mr. Lin then entered into a loan agreement with Mr. Chunti Ding (the "Ding Loan Agreement"). Pursuant to the Ding Loan Agreement, Mr. Ding agreed to extend a term loan of US$15,000,000 bearing interest of 10% per annum to Mr. Lin.
• On September 5, 2014, Mr. Lin and Mr. Ding terminated the Ding Loan Agreement.  On the same day, Mr. Lin entered into a loan agreement with Ms. Xiuyu Chen (the "Chen Loan Agreement").  Pursuant to the Chen Loan Agreement, Ms. Chen agreed to extend a term loan of US$15,000,000 bearing interest of 9.5% per annum to Mr. Lin (the "Chen Loan").  According to the terms of the Chen Loan Agreement, the principal and interest of the Chen Loan will be repaid in lump sum in cash within two months after the closing of the merger contemplated by the Merger Agreement.  The Chen Loan will be used by Mr. Lin to fund his equity commitment to purchase Parent securities pursuant to the Equity Commitment Letter. 

Fourth Quarter 2014 Financial Results 

• Revenue was RMB495.9 million (US$81.9 million), representing a 32.7% year-over-year increase.
•  

Shuipan Lin, Exceed's founder, Chairman and CEO, commented, "2013 proved to be a challenging year for Exceed and the Chinese sportswear industry in general. Our financial results for the fourth quarter and the year ended December 31, 2013 continued to be impacted by the weakening consumer demand in China for our products, which was primarily due to the ongoing global macroeconomic uncertainties and the slowdown of economic growth in China. However, we have seen signs of a slow market recovery in the domestic sportswear industry, and we believe that the excessive inventory or stocking, which bothered the domestic sportswear industry for quite some time, is gradually reducing. In response to the prevailing market conditions, we took a prudent approach to control the amount of orders placed by our distributors. In addition, we continue to enhance the efficiency of our distribution network by closing or relocating inefficient retail selling locations. We believe that these initiatives will help to reduce the overall inventory of finished products in the retail selling locations."

"Despite the unfavorable operating environment and volatile prospects, we are still confident in the outlook of China's sportswear industry. We believe that the economic slowdown will not hinder the development of the domestic sportswear industry in the long run. Our experience over the years has led us to believe that market demand for leisure sportswear will be a dominant driving force behind the growth of the industry. The increase in demand is mainly attributable to the increase in the disposable income of consumers and changes in the attitude of consumption, and we are optimistic about the long-term development of the domestic sportswear industry. We believe Exceed is in a good position to consolidate its leading position in its target market segments as the market develops."

Business Highlights and Outlook

• There were 3,080 Xidelong retail selling locations as of December 31, 2013. During the fourth quarter of 2013, there was a net decrease of 221 locations as compared with the number of locations as of September 30, 2013. During the year of 2013, there was a net decrease of 1,829 locations as compared with the number of locations as of December 31, 2012. The net decrease of retail selling locations was caused by the closure of the relatively inefficient retail selling locations. Our retail selling locations are operated either by our distributors or by authorized third party retailers.
• On November 19, 2013, Xidelong (China) Co., Ltd., our principal PRC subsidiary, was successfully awarded as one of the "Most Influential Chinese Brands" in the corporate activity organized by hc360.com, a B2B e-commerce platform in China.

BEIJING, March 24, 2014 /PRNewswire/ -- Exceed Company Ltd. (NASDAQ: EDS) ("Exceed" or the "Company"), one of the leading domestic sportswear brands in China, today announced that it has called an extraordinary general meeting of its shareholders (the "Special Meeting"), to be held on April 16, 2014, at 10:00 a.m. (Hong Kong time), at United Conference Centre, 10/F, United Centre, 95 Queensway, Hong Kong, to consider and vote on the proposal to adopt the previously announced Agreement and Plan of Merger (the "Merger Agreement"), dated December 2, 2013, by and among the Company, Pan Long Company Limited ("Parent"), an exempted company with limited liability incorporated under the laws of the Cayman Islands and wholly owned by Mr. Shuipan Lin ("Mr. Lin"), the Company's Chairman and Chief Executive Officer, and Pan Long Investment Holdings Limited ("Merger Sub"), a wholly owned subsidiary of Parent.

Pursuant to the terms and subject to the conditions of the Merger Agreement, Merger Sub will merge with and into the Company with the Company as the surviving corporation and becoming a wholly owned subsidiary of Parent (the "Merger"). If completed, the Merger will result in the Company becoming a privately held company and the ordinary shares of the Company no longer being listed on NASDAQ. The Company's board of directors, acting upon the unanimous recommendation of an independent committee, approved the Merger Agreement and the Merger and resolved to recommend that the Company's shareholders vote to adopt the Merger Agreement.

Shareholders of record as of the close of business in the British Virgin Islands on March 21, 2014, the record date for the Special Meeting, are entitled to receive notice of the Special Meeting and to vote the ordinary shares of the Company owned by them at the Special Meeting. Additional information regarding the Special Meeting and the Merger Agreement can be found in the transaction statement on Schedule 13E-3 and the definitive proxy statement included therein, that the Company intends to file with the Securities and Exchange Commission (the "SEC") on March 21, 2014, w

FUJIAN, China, Dec. 2, 2013 /PRNewswire-FirstCall/ -- Exceed Company Ltd. (NASDAQ: EDS) ("Exceed" or the "Company"), one of the leading domestic sportswear brands in China, today announced that it has entered into a definitive Agreement and Plan of Merger (the "Merger Agreement") with Pan Long Company Limited ("Parent"), an exempted company with limited liability incorporated under the laws of the Cayman Islands and wholly owned by Mr. Shuipan Lin ("Mr. Lin"), the Company's Chairman and Chief Executive Officer, and Pan Long Investment Holdings Limited ("Merger Sub"), a business company with limited liability incorporated under the laws of the British Virgin Islands ("BVI") and a wholly owned subsidiary of Parent, pursuant to which Parent will acquire the Company for US$1.78 per ordinary share of the Company (a "Share").  This represents a 19.5% premium over the closing price of US$1.49 on August 16, 2013, the last trading day prior to the Company's announcement on August 19, 2013 that it had received a "going private" proposal, and a 24.4% premium over the volume-weighted average closing price of the Company's Shares during the 30 trading days prior to August 16, 2013.  The consideration to be paid to holders of Shares implies an equity value for the Company of approximately US$60.1 million, on a fully diluted basis.

Upon consummation of the transactions contemplated under the Merger Agreement, Parent will be beneficially owned by Mr. Lin, (and/or entities affiliated with or related to them) (collectively, the "Buyer Group"), together with seven existing shareholders of the Company (and/or entities affiliated with or related to them) who have elected to transfer, prior to the closing, their Shares to Parent in exchange for newly issued shares of Parent (the "Rollover Shareholders").

Subject to the terms and conditions of the Merger Agreement, at the effective time of the merger (the "Effective Time"), Merger Sub will merge with and into the Company, with the Company continuing as the surviving corporation and a wholly owned subsidiary of Parent (the "Merger").  At the Effective Time, each of the Company's Shares issued and outstanding immediately prior to the Effective Time will be cancelled in exchange for the right to receive US$1.78 in cash and without interest, except for the excluded Shares (the "Excluded Shares"), which include: (i) Shares legally owned by Parent; and (ii) dissenting Shares (the "Dissenting Shares") owned by holders of Shares who have validly exercised and not effectively withdrawn or lost their dissenter's rights pursuant to Section 179 of the BVI Business Companies Act, 2004, as amended (the "BVI Companies Act") (the "Dissenting Shareholders"). Each Excluded Share issued and outstanding immediately prior to the Effective Time will be cancelled and will cease to exist, and no consideration will be delivered with respect thereto. Each Dissenting Share will be cancelled at the Effective Time for the right to receive the fair value of such Shares as determined in accordance with the provisions of the BVI Companies Act.

Parent has received from Mr. Lin an equity commitment letter, pursuant to which Mr. Lin has committed to subscribe for ordinary shares in Parent in the amount of US$19,545,858 subject to adjustment in certain cases.  Mr. Lin has also entered into a limited guarantee in favor of the Company.

The Company's board of directors, acting upon the unanimous recommendation of the independent committee formed by the board of directors (the "Independent Committee"), approved the Merger Agreement and the Merger and resolved to recommend that the Company's shareholders vote to authorize and approve the Merger Agreement and the Merger. The Independent Committee, which is comprised solely of independent and disinterested directors of the Company who are unaffiliated with any of Parent, Merger Sub, or the Buyer Group, negotiated the terms of the Merger Agreement with the assistance of its financial and legal advisors.

The Merger, which is currently expected to close in the first quarter of 2014, is subject to customary closing conditions, including the approval by an affirmative vote of shareholders representing more than seventy percent (70%) of the outstanding Shares of the Company as of the record date, present and voting in person or by proxy as a single class at an extraordinary general meeting of the Company's shareholders which will be convened to consider the approval of the Merger Agreement and the Merger. As of the date of the Merger Agreement, the Rollover Shareholders have agreed under a voting agreement to vote all in favor of the Merger Agreement and consummation of the transactions contemplated thereby, including the Merger. If completed, the Merger will result in the Company becoming a privately held company and its Shares will no longer be listed on Nasdaq.

Houlihan Lokey (China) Limited is serving as financial advisor to the Independent Committee. K&L Gates LLP is serving as United States legal advisor to the Independent Committee and the Company. Walkers is serving as BVI legal advisor to the Independent Committee.  Skadden, Arps, Slate, Meagher & Flom LLP is serving as United States legal advisor to the Buyer Group.

Third Quarter 2013 Financial Results

• Revenue was RMB481.8 million (US$78.7 million), representing a 12.9% year-over-year decrease.
• Net profit per share was $0.09 vs. last years $0.15.

Shuipan Lin, Exceed's founder, Chairman and CEO, commented, "As anticipated, our results in the third quarter continued to be impacted by weakening consumer demand in China, which was largely attributable to the economic slowdown in China. It is expected that de-stocking, or a reduction of inventory in the market in response to a weak demand outlook, will continue in the near future. As a result, overall sales volume across our main footwear and apparel product lines decreased, resulting in a decline in revenue, compared to the same period in 2012. In response to the prevailing market conditions, we took a prudent approach to control the amount of orders placed by our distributors. In addition, we continue to enhance the efficiency of our distribution network by closing or relocating inefficient retail selling locations. We believe that these initiatives will help to reduce overall inventory of finished products in the retail selling locations.

"While we expect to continue to operate under unfavorable economic conditions for the remainder of this year, we believe that we have the right strategy in place to effectively manage our production and inventory levels, maintain a lean operating structure and continue to strengthen our brand awareness. We believe that the worst time for the sportswear industry may have had passed and a rebound or recovery should occur after most of the finished products are absorbed in the market."

Business Highlights and Outlook

• There were 3,301 Xidelong retail selling locations as of September 30, 2013. This reflected a net decrease of 901 locations as compared with the number of locations as of June 30, 2013 and a net decrease of 1,608 locations as compared with the number of locations as of December 31, 2012. The net decrease of retail selling locations was caused by the closure of the relatively small and inefficient retail selling locations. Our retail selling locations are operated either by our distributors or by authorized third party retailers.
• The Company will continue to sponsor the "Fitness for All" program in 2013. In July 2013, a series of cycling charity marathon activities were organized under "Xidelong Fitness for All cum Schwinn Charity Marathon Ride" in Shanghai, Guangzhou, Beijing, and Xian in China. Participants of the rides included national fitness coaches, numerous fitness and cycling enthusiasts, trendy followers, as well as foreigners.
• On September 3, 2013, Xidelong (China) Co., Ltd., our principal PRC subsidiary, was successfully nominated as one of the "Most Influential Brands" in China in the corporate activity organized by hc360.com, a B2B e-commerce platform in China.

FUJIAN, China, August 19, 2013 /PRNewswire-FirstCall/ -- Exceed Company Ltd. (NASDAQ: EDS) ("Exceed" or "the Company"), one of the leading domestic sportswear brands in China, today reported that its board of directors (the "Board of Directors") has received a preliminary, non-binding proposal from its chairman and chief executive officer, Mr. Shuipan Lin ("Mr. Lin") and his affiliates (including Tiancheng Int'l Investment Group Limited), HK Haima Group Limited, Wisetech Holdings Limited, Windtech Holdings Limited and RichWise International Investment Group Limited (collectively, the "Consortium Members"). The Consortium Members propose to acquire all of the outstanding ordinary shares of the Company not currently owned by them at a proposed price of $1.72 per ordinary share in cash as part of a going private transaction, subject to certain conditions. The proposal represents a premium of 15% to the closing price of the ordinary shares of the Company on August 16, 2013, a premium of 38% to the average closing price of the ordinary shares of the Company during the last 30 trading days, and a premium of 42% to the average closing price of the ordinary shares of the Company during the last 60 trading days. As of August 17, 2013, the Consortium Members in the aggregate owned approximately 66.5% of the total outstanding ordinary shares of the Company. A copy of the text of the proposal letter to the Board of Directors is attached as Exhibit A.

In response, the Board of Directors has formed a special committee (the "Special Committee") consisting of Messrs. Jin Jichun, Chen Yea-Mow and Pang Xiaozhong, each an independent non-executive director, to consider this proposal. Mr. Jin will be the Chairman of the Special Committee. The Special Committee will retain a financial advisor and legal counsel to assist it in its work.

The Board of Directors cautions the Company's shareholders and others considering trading in its securities that the Board of Directors has just received the non-binding proposal from the Consortium Members and that no decisions have been made by the Special Committee with respect to the Company's response to the proposal. There can be no assurance that any definitive offer will be made, that any agreement will be executed or that this or any other transaction will be approved or consummated.

Second Quarter 2013 Financial Results

• Revenue was RMB350.8 million (US$57.2 million), representing a 37.6% year-over-year decrease.
• Gross profit was RMB95.9 million (US$15.6 million), representing a 40.8% year-over-year decrease. Gross margin was 27.3%, representing a 1.5 percentage point decrease as compared to 28.8% for the second quarter of 2012.
• Operating profit was RMB22.6 million (US$3.7 million), representing a 36.3% year-over-year decrease.
• Net profit was RMB15.6 million (US$2.5 million), representing a 48.0% year-over-year decrease.
• Net-gaap was $0.08 vs. last years $0.15.

Shuipan Lin, Exceed's founder, Chairman and CEO, commented, "as anticipated, our results in the second quarter continued to be impacted by weakening consumer demand in China, which was largely attributable to the economic slowdown in China. As a result, overall sales volume across our main footwear and apparel product lines decreased, resulting in a decline in revenue. In response to the prevailing market conditions, we took a prudent approach to control the amount of orders placed by our distributors. In addition, we continue to maximize the efficiency of our distribution network by closing or relocating the inefficient retail selling locations. We believe that these initiatives will help to digest inventory in retail selling locations."

"While we expect to continue to operate under unfavorable economic conditions for the remainder of this year, we believe that we have the right strategy in place to effectively manage our production and inventory levels, maintain a lean operating structure and continue to strengthen our brand awareness. We believe that there is room for growth in the sportswear market, and we intend to achieve a year on year single-digit percentage increase in sales in the long run."

Business Highlights and Outlook

• There were 4,202 Xidelong retail selling locations as of June 30, 2013. During the second quarter of 2013, there was a net decrease of 494 locations as compared with the number of locations as of March 31, 2013. During the six months ended as of June 30, 2013, there was a net decrease of 707 locations as compared with the number of locations as of December 31, 2012. The net decrease of retail selling locations was caused by the closure of the relatively small and inefficient retail selling locations. Our retail selling locations are operated either by our distributors or by authorized third party retailers.
• The Company will continue to sponsor the "Fitness for All" program in 2013. On June 8, 2013, the launching ceremony was held in Beijing with the support by the General Administration of Sport of China and China Sports Publications Corporations. The theme of the event is "Fitness moves, Happy Chinese joins". It brings the message of actively promoting scientific fitness and happy life philosophy through a variety of fitness activities.
• On June 28, 2013, "Fitness for All" program was launched in Xiamen where the "Zumba cum Carnival Night" event was held. Olympic weightlifting champion, Zhang Xiangxiang, together with professional fitness coaches, led thousands of people in a lively fitness carnival night.
• In July 2013, Fujian Business Association announced that Xidelong (China) Co. Ltd., our principal PRC subsidiary, was one of the 2012 top 50 enterprises in Fujian Province.

• Revenue was RMB301.1 million (US$48.5 million), representing a 66.3% year-over-year decrease.
• Gross profit was RMB78.8 million (US$12.7 million), representing a 69.7% year-over-year decrease. Gross margin was 26.2%, representing a 2.8 percentage point decrease as compared to 29.0% for the first quarter of 2012.
• Net profit was RMB9.9 million (US$1.6 million), representing a 92.3% year-over-year decrease.
• Net profit per share Basic and Diluted  US$0.05 vs. last years RMB3.88

Shuipan Lin, Exceed's founder, Chairman and CEO, commented, "As anticipated, our results in the first quarter were impacted by weakening consumer demand in China, which was largely attributable to the domestic economic slowdown. As a result, overall sales volume across our main footwear and apparel product lines decreased, resulting in a decline in revenue. In response to the prevailing market conditions, we took a prudent approach to control the amount of orders placed by our distributors. Even though we face intense competition in the sportswear industry, we continued to stay focused on our mass market positioning. We continue to introduce a range of popular priced sportswear products to target the mass market and to better align with customer preferences.

"While we expect to continue to operate under unfavorable economic conditions for the remainder of this year, we believe we have the right strategy in place to effectively manage our production and inventory levels, maintain a lean operating structure and continue to strengthen our brand awareness. Our priorities for the remainder of this year will focus on strengthening our brand equity through effective marketing and maximizing the efficiency of our distribution network, and the continued execution of our long-term operational plan to align our production facilities and sales network to best capture growth opportunities in China's evolving sportswear market. We believe that the continued execution of our strategy and operational plan will strengthen our competitive position over the long-term and allow us to maximize our growth opportunities in anticipation of an improving macroeconomic environment."

Business Highlights and Outlook

• Update of sales and distribution network 
  
  • There were 4,696 Xidelong retail selling locations as of March 31, 2013. During the first quarter of 2013, there was a net decrease of 213 locations as compared with the number of locations as of December 31, 2012. The net decrease of retail selling locations was caused by the closure of the relatively small and inefficient retail selling locations. Our retail selling locations are operated either by our distributors or by authorized third party retailers.
    
• Marketing initiatives and brand recognition
  • The Company will continue to sponsor the "Fitness for All" program in 2013.
  • In April 2013, the Company attended the 15^th Jinjiang Footwear (Int'l) Exposition, China, one of Asia's largest professional footwear brand expositions. We have introduced our new footwear products with three underlying concepts including "Environmental Friendly", "High Quality of Light Weight Materials" and "Ergonomic Health and Safety".
  • We cooperated with Jinjiang municipal government councils to run the "The 6^th Creative Design Contest of International Footwear Culture" for the fifth consecutive year to promote the energetic and creative image of "Xidelong" brand. The contest drew attention from local schools, teenagers and enthusiastic individuals. The geographical locations of the contestants in 2013 extended from Fujian Province to other provinces.

Financial Highlights - Second quarter

• Revenue was RMB562.0 million (US$88.3 million), representing a 24.2% year-over-year decrease.
• Gross profit was RMB162.0 million (US$25.5 million), representing a 29.6% year-over-year decrease. Gross margin was 28.8%, representing a 2.2 percentage point decrease as compared to 31.0% for the second quarter of 2011.
• Operating profit was RMB35.5 million (US$5.6 million), representing a 67.7% year-over-year decrease.
• Net profit was RMB30.0 million (US$4.7 million), representing an 81.1% year-over-year decrease.

Shuipan Lin, Exceed's founder, Chairman and CEO, commented, "As anticipated, our results in the second quarter were impacted by weakening consumer demand in China, which was largely attributable to the domestic and global economic slowdown. As a result, overall sales volume across our main footwear and apparel product lines decreased, resulting in a decline in revenue. In response to the prevailing market conditions, we began in the second quarter to proactively limit production and delivery of products to better manage inventory levels at our distributors. Despite the unfavorable operating environment, we managed to outperform our revenue guidance for the quarter, supported by our ongoing brand building and marketing initiatives which have continued to raise the degree of market recognition of the Xidelong brand name and the average selling prices of our products, especially in our footwear segment."

"While we expect to continue to operate under unfavorable economic conditions for the remainder of this year, we believe we have the right strategy in place to effectively manage our production and inventory levels, maintain a lean operating structure and continue to strengthen brand awareness. Our priorities for the remainder of this year will focus on strengthening our brand equity through effective marketing and prudent expansion of our distribution network, and the continued execution of our long-term operational plan to align our production facilities and sales network to best capture growth opportunities in China's evolving sportswear market. We believe that the continued execution of our strategy and operational plan will strengthen our competitive position over the long-term and allow us to maximize our growth opportunities in anticipation of an improving macroeconomic environment."

Business Highlights and Outlook

• Expansion of sales and distribution network
  • There were 4,982 Xidelong retail selling locations as of June 30, 2012, an increase of 342 compared with June 30, 2011. During the second quarter of 2012, 60 retail selling locations were added. Our retail selling locations are operated either by our distributors or by authorized third party retailers.
• Marketing initiatives and brand recognition
  • We use the "happy lifestyle" theme in our promotional activities and product offerings and continue to engage By2, a popular Taiwan-based musical group, as a product spokesperson. We will maintain these promotional initiatives as they have been effective in enhancing the "Xidelong" brand image and have helped to support our strong results.
  • The Company was selected as the official partner of the "Fitness for All" Sports Campaign for the third consecutive year, and will continue to sponsor the "Fitness for All" program in 2012.
• Update on new operational plan

Financial Highlights - First quarter

• Revenue was RMB894.6 million (US$142.1 million), representing a 19.0% year-over-year increase.
• Gross profit was RMB259.8 million (US$41.3 million), representing a 11.7% year-over-year increase. Gross margin was 29.0% representing a 2.0 percentage point decrease as compared to 31.0% for the first quarter of 2011.
• Operating profit was RMB147.3 million (US$23.4 million), representing a 14.8% year-over-year increase.
• Net profit was RMB128.0 million (US$20.3 million), representing a 3.1% year-over-year increase.

Shuipan Lin, Exceed's founder, Chairman and CEO, commented, "We delivered healthy results for the first quarter with revenues exceeding our guidance, supported by especially strong growth in footwear sales. Overall consumer demand remained stable during the first quarter, and we continue to benefit from the prudent expansion of our distribution network and our ongoing marketing and branding efforts. We are pleased to see that our 'happy lifestyle' branding theme continues to resonate with younger generations who are seeking fashionable and functional products at a good value. We will continue to focus our marketing and branding initiatives, including the ongoing refurbishments and upgrades to the retail selling locations operated by our distributors and authorized third-party retailers and our promotional initiatives to gain a further share of the growing sportswear market in China.

"Looking ahead, we expect to face increasing headwinds as our distributors have adopted a more conservative approach given the uncertain macroeconomic environment in China and abroad. As a result, we have revised our estimate for the total value of the wholesale orders placed during the Spring/Summer and Autumn collection sales fairs which has consequently impacted our outlook for the full year 2012. Nevertheless, we remain committed to our strategy to strengthen our brand equity through effective marketing and expansion of our distribution network. In addition, we are continuing to execute our operational plan to maximize our growth potential in the evolving PRC domestic sportswear market. We believe our plan is a critical element of our long-term growth strategy, as increasing internal manufacturing capacity will allow us improve our bargaining power and provide more stability to our supply chain, which we believe will ultimately allow us to drive gross margin expansion over the long term. We believe that our ongoing strategic and tactical initiatives, coupled with the execution of our share repurchase program, will position us to deliver increasing value to our shareholders over time."

Business Highlights and Outlook

• Expansion of sales and distribution network
  • There were 4,922 Xidelong retail selling locations as of March 31, 2012, an increase of 464 compared with March 31, 2011. During the first quarter of 2012, 78 retail selling locations were added. Our retail selling locations are operated either by our distributors or by authorized third party retailers.
    
• Marketing initiatives and brand recognition
  • We use the "happy lifestyle" theme in our promotional activities and product offerings and continue to engage By2, a popular Taiwan-based musical group, as a product spokesperson. We will maintain these promotional initiatives as they have been effective in enhancing the "Xidelong" brand image and have helped to support our strong results.
  • We attended the "Fitness for All Campaign 2011" closing and award ceremony in Beijing in mid-January 2012, where we received the Chinese General Administration of Sport's Outstanding Contribution Award for the second consecutive year.
  • The Company will continue to sponsor the "Fitness for All" program in 2012.
    
• Update on new operational plan

Second Quarter Fiscal 2012 Guidance & Full Year Outlook

Continuing macroeconomic headwinds in China have contributed to a tempering of consumer demand for sportswear products, which has resulted in our distributors adopting a more conservative approach to the second half of 2012. Exceed expects to generate net revenues in the range of RMB482.0 million to RMB519.0 million in the second quarter of 2012, representing an approximate year-over-year decrease of 30% to 35%, as compared with RMB741.5 million in the same period of 2011. For the full year 2012, the Company currently expects a year-over-year decline in net revenue of approximately 20%, as a result of the lower wholesale order activity at its 2012 sales fairs.

Full Year 2011 Results

• Revenue was RMB3,288.6 million (US$522.5 million), representing a 21.8% year-over-year increase.
• Gross profit was RMB992.3 million (US$157.7 million), representing a 17.9% year-over-year increase. Gross margin decreased from 31.2% for 2010 to 30.2% for 2011.
• Operating profit was RMB498.2 million (US$79.2 million), representing a 21.6% year-over-year increase.
• Net profit was RMB470.1 million (US$74.7 million), representing a 33.1% year-over-year increase.

Mr. Shuipan Lin, Exceed's founder, Chairman and CEO, commented, "We are pleased to report healthy results for the full year 2011, with over 20% growth in revenue and 30% growth in net income. Our results were supported by our ongoing marketing and branding efforts which have promoted our brand image and allowed us to further penetrate the domestic sportswear market in China. Our key target audience, younger generations in China's developing second and third-tier cities continue to identify with our 'happy lifestyle' branding theme. In addition, our involvement in the nationwide 'Fitness for All Campaign 2011' was recently recognized with an Outstanding Contribution Award from China's General Administration of Sport, the government agency responsible for sports in China, which further enhanced our brand image. By continuing to improve the awareness and acceptance of a 'Sports Lifestyle,' Exceed is helping to educate a whole new generation of Chinese youth about the benefits of leading a healthy and active life.

"In addition to our ongoing marketing and branding efforts, we have made progress on our operational plan to maximize our growth potential in the evolving PRC domestic sportswear market. As recently announced, we have sought to improve our internal manufacturing capacity, thereby increasing our bargaining power, providing more stability to our supply chain, which, in turn, we believe will positively affect our gross profit margin. A significant part of our new operational plan is to purchase a 400,000 square meter parcel of land in Ruichang City, Jiangxi Province, where we plan to establish a new operating subsidiary and construct a new production facility upon this parcel of land. Upon completion of the construction of our new production facility in Ruichang City by the end of 2013, we expect that our annual production capacity for our footwear products will increase to approximately 30.0 million pairs while also gaining certain internal apparel production capabilities.

"The filing of our annual results was rescheduled to allow us sufficient time to properly assess the accounting treatment of certain escrow shares and earn-out shares. To reflect the revision to our method of accounting in relation to our conditional obligations in relation to release and issue these escrow shares and earn-out shares, we subsequently restated results for 2009 and 2010. The restatement resulted in a non-cash and non-operating gain of RMB170.9 million, RMB1.6 million and RMB36.6 million from change in fair value of contingent share liability for the year ended 2009, 2010 and 2011, respectively. In addition, we believe our reassessment of the accounting treatment in this instance demonstrates our commitment to maintaining the highest level of transparency and disclosure in all of our reporting practices. Looking ahead, despite ongoing macroeconomic headwinds, we believe the execution of our operational plan combined with our continued brand building activities will position us to deliver steady growth in the year ahead. We will continue to expand our market presence at a measured pace to keep our sales and distribution channel and inventories in-line with consumer demand. Beyond our operational initiatives, the Company is also seeking to maximize shareholder value by extending the date of expiration of our previously announced US$10 million share repurchase program from February 14, 2012 to August 14, 2012. As of today, this extension will give us more time to prudently repurchase shares up to US$7.6 million that may yet be purchased under the share repurchase program. The strength of our balance sheet and financial position allow us to continue investing in the Company's future while simultaneously returning value to our shareholders."

First Quarter Fiscal 2012 Guidance

Exceed expects to generate net revenues in the range of RMB841.6 million to RMB864.1 million in the first quarter of 2012, representing a year-over-year increase of approximately 12% to 15%, as compared with RMB751.4 million in the same period of 2011. This represents the Company's preliminary estimates, and is subject to change.

Our premium research emailed to our members on 4/12/2012

A few GeoInvesting members have asked the GeoTeam for added perspective on the Exceed (NASDAQ:EDS) story. We have identified a red flag that should not be uncommon to GeoInvesting readers. Just as in our LTUS and CGPI investigations, we have some concerns about EDS and Land Use right fees it claims to have paid to the municipal government of Ruichang City, Jiangxi Province.

See our EDS commentary here.

To be among the first to receive alerts like this, subscribe to our premium service!

FUJIAN, China, April 3, 2012 /PRNewswire-Asia-FirstCall/ -- Exceed Company Ltd. (NASDAQ: EDS) ("EDS", "Exceed" or the "Company"), the owner and operator of "Xidelong" brand and one of the leading domestic sportswear brands in China, has provided additional detail pertaining to the agreement announced by the Company on February 17, 2012. As previously disclosed, the Company had entered into an agreement with the municipal government of Ruichang City, Jiangxi Province, for the investment and construction of a sportswear manufacturing base on a parcel of land in Ruichang city, Jiangxi Province, PRC. Under this agreement, the Company would purchase a parcel of land of 400,000 square meters in Ruichang city, for a total consideration of RMB198,000,000, subject to municipal and administrative approvals. This parcel of land will be used for the construction of a new production facility, which is expected to be completed by the end of 2013.

The parcel of land is a prime piece of real estate within Ruichang Industrial Park West, located within close proximity to the office of the municipal government of Ruichang city, the Ruichang train and bus stations and the Ruichang Aimin Hospital. Given its prime location in the center of the city, the parcel of land is priced at RMB330,000 (approximately $52,300) per Chinese acre. In addition, the city will incur costs in relocating current residents, conducting environmental cleanup, conducting surveys and rezoning the land before it will be available for development.

As previously announced, the Company has made a deposit of RMB46,800,000 (approximately US$7.4 million) as a performance bond in conjunction with the signing of the agreement. The land will be officially purchased at an auction that will hopefully take place sometime later in 2012, after the government settles with the existing residents of the land. The Company intends to establish a new operating subsidiary in Jiangxi Province and construct a new production facility on the purchased land in order to increase its internal manufacturing capacity and expand its control over the product development process from setting up the supply chain of raw materials, moulds and supplementary materials, to in-house production, to delivery.

Notes:

1. A Chinese acre is equivalent to approximately 1/6 of a US acre

2. The following are coordinates for the location of the "parcel of land:" (1) Latitude: 29.699351786662326 / 29 degrees 41' 57"; (2) Longitude: 115.67490399462895 / 115 degrees 40' 29".

FUJIAN, China, March 30, 2012 /PRNewswire-Asia-FirstCall/ -- Exceed Company Ltd. (NASDAQ: EDS) ("EDS", "Exceed" or "the Company"), the owner and operator of "Xidelong" brand - one of the leading domestic sportswear brands in China - today announced that it has reached settlement (the "Settlement Agreement") with D.B. Research LLC ("D.B. Research"), an independent research firm based in Chesapeake, Virginia, and its principal Michael Joseph Ritinski, in connection with the reports issued by D.B. Research in August 2011 and on March 14, 2012 (the "Reports").

Pursuant to the Settlement Agreement, D.B. Research has agreed to remove the Reports from its website and undertake its best efforts to remove said Reports from third-party websites. D.B. Research has further agreed to relinquish any positions it has relative to Exceed and that it will not assist others in the future in taking short positions in the Company's stock. As a condition of settlement, neither D.B. Research nor Mr. Ritinski admit to any liability or wrongdoing.

Mr. Shuipan Lin, Exceed's founder, Chairman and CEO, commented, "The Company is pleased with the terms of settlement with D.B. Research and Mr. Ritinski, and believes that settlement of the matter was in the best interest of the Company and its shareholders at this juncture. Exceed has and continues to maintain the highest degree of transparency and disclosure with regards to all aspects of its financial reporting and corporate communications, and is intent on protecting its shareholders from any further damage inflicted by short sellers who stand to benefit financially by a decline in the Company's share price."

FUJIAN, China, March 16, 2012 /PRNewswire-Asia-FirstCall/ -- Exceed Company Ltd. (NASDAQ: EDS) ("EDS", "Exceed" or "the Company"), the owner and operator of "Xidelong" brand - one of the leading domestic sportswear brands in China, today announced that it has retained Winston & Strawn LLP to issue a cease and desist letter to D.B. Research, an independent research firm based in Chesapeake, Virginia, in connection with the reports filed by D.B. Research in August 2011 and on March 14, 2012.

Exceed has requested that D.B. Research immediately retract its statements contained in the aforementioned reports, issue a press release acknowledging the retraction, remove said reports from its website and request removal of the reports from the Seeking Alpha website, refrain from further dissemination and distribution of the reports and any information contained within the reports, and take all other necessary actions to prevent the reports and the information contained therein from being disseminated further. Exceed will pursue further legal action should D.B. Research not comply with its request in the requested timeframe.

Furthermore, the Company notes that the report filed by D.B. Research on March 14, 2012 concerning the Company's land purchase agreement announced on February 17, 2012 is inaccurate and willfully misleading.

Mr. Shuipan Lin, Exceed's founder, Chairman and CEO, commented, "While taking legal action is not our preferred approach, we believe it is necessary at this juncture to protect the company and its shareholders from further damage inflicted by malicious short sellers who stand to benefit financially by a decline in our share price. Exceed has and continues to maintain the highest degree of transparency and disclosure with regards to all aspects of its financial reporting and corporate communications. We will utilize all available resources at our disposal to seek redress against misrepresentations and defamatory statements made against us in an effort to maintain the positive reputation we have built over the years in financial markets and in the sportswear industry in China."

FUJIAN, China, February 13, 2012 /PRNewswire-Asia-FirstCall/ -- Exceed Company Ltd. (NASDAQ: EDS) ("EDS", "Exceed" or the "Company"), the owner and operator of "Xidelong" brand - one of the leading domestic sportswear brands in China, today announced that its Board of Directors (the "Board") has extended the date of expiration of Exceed's existing US$10 million share repurchase program from February 14, 2012 to August 14, 2012. To date, the Company has purchased up to 485,242 of its ordinary shares, at an aggregate cost of approximately US$2.1 million, with a balance of approximately US$7.9 million available for further repurchases under the share repurchase program.

The share repurchase program will be reviewed from time to time and may be adjusted or terminated at any time without prior notice. Stock repurchases under this program may be made through open market purchases, in privately negotiated transactions, in block trades, pursuant to a 10b5-1 plan, or otherwise. The timing and actual number of shares repurchased will depend on market conditions, trading price of the ordinary shares and other factors and be subject to the restrictions relating to volume, price and timing under applicable laws.

Mr. Shuipan Lin, Exceed's founder, Chairman and CEO, commented, "We remain confident in our long-term strategy to expand Exceed's share of the domestic sportswear market and deliver profitable growth. With our healthy balance sheet and strong financial position, we continue to maintain the flexibility to both return value to shareholders and invest in our future growth."

Third Quarter 2011 Results

Financial Highlights – Second quarter ended June 30, 2011(1)

• Revenue was RMB741.5 million (US$114.7 million), representing a 15.7% year-over-year increase.
• Gross profit was RMB230.0 million (US$35.6 million), representing a 9.2% year-over-year increase. Gross margin was 31.0%, representing a 1.9 percentage point decrease as compared to 32.9% for the second quarter of 2010.
• Operating profit was RMB109.8 million (US$17.0 million), representing a 3.9% year-over-year increase.
• Net profit was RMB94.7 million (US$14.7 million), representing a 5.2% year-over-year increase.
• EPS was $0.47 vs $0.45

Shuipan Lin, Exceed's founder, Chairman and CEO, commented, "We delivered steady top- and bottom-line growth in the second quarter with revenues exceeding guidance and sales in all three of our product categories increasing, demonstrating the healthy underlying demand for our products. We continue to benefit from the expansion of our distribution network in third-tier and selected second-tier cities, where retail sales trends remain strong, and from our increasing brand recognition supported by our effective marketing campaigns. In addition, we continued to invest in R&D to maintain our competitive advantage in our target markets by developing new products that effectively blend fashion with functionality, further supporting demand for our products among China's discerning but value conscious shoppers.

"As we head into the second half of the year, we remain committed to our strategy to ensure the long-term development of Exceed, including execution of our new operational plan initiated in the first half of 2011. We have made steady progress on the near-term components of that plan, namely the construction of new staff quarters which is currently underway. Our balance sheet remains healthy, with sufficient cash on hand to support our long-term development plans, including the accelerated construction of new factories, potential acquisitions of existing factories and expansion of our network of regional sales and logistics centers. We believe this strategic expansion of our internal production capacity will help to mitigate the impact from ongoing labor shortages while allowing us to effectively compete in a consolidating industry."

Business Highlights and Outlook

• Expansion of sales and distribution network
  • There were approximately 4,640 Xidelong retail stores, which are operated by our distributors and authorized third party retail store operators, as of June 30, 2011, an increase of approximately 653 compared with June 30, 2010. During the second quarter of 2011, approximately 182 retail stores, which are operated by our distributors and authorized third party retail store operators, were added.
  • The Company continued to deepen penetration into new cities, with a focus on third-tier cities in affluent provinces such as Guangdong, Jiangsu and Zhejiang provinces and selective expansion into second-tier cities. From June 30, 2010 to June 30, 2011, approximately 145 new stores, which are operated by our distributors and authorized third party retail store operators, were opened in these provinces
    
• Marketing initiatives and brand recognition
  • The Company uses the "happy lifestyle" theme in promotional activities and product offerings and continues to engage By2, a popular Taiwan-based musical group, as a product spokesperson. The Company will maintain these promotional initiatives as they have been effective in enhancing the "Xidelong" brand image and have helped to support our strong results.
  • The Company will continue to sponsor the "Fitness for All" program in 2011.
  • The Company has engaged Genedigi, one of the largest and longest standing China-based marketing and public relations firms to support its general public relations and marketing initiatives in China.

• Update on new operational plan
  • In response to ongoing trends in the highly competitive sportswear industry in China, including the consolidation of outsourced manufacturers and labor shortages which have resulted in weakened bargaining power, supply chain instability and gross profit margin pressure on brand owners like Exceed, we announced in the first quarter a long-term initiative to increase our internal manufacturing capacity and expand our network of regional sales and logistics centers. In the near-term, to specifically address the shortage of labor faced by all players in the sportswear industry in China, we also initiated a solution to construct new staff quarters to improve the working and living environments of our employees and bolster staff retention. The expected staff quarter construction project cost is approximately RMB150 million, with an aggregate gross floor area of approximately 66,000 square meters. We have started the construction project for the new staff quarters and approximately one-third of the construction has been completed to date.

As previously announced, we intend to capitalize on the abundant labor supply in the inner and western parts of China through the construction of new production facilities and the acquisition of other production facilities. For example, we plan to acquire existing shoe sole manufacturers and apparel manufacturers to enhance our internal productivity.

The preliminary production facility plan is as follows:

The production facility plan has not been finalized and may subject to change in the future.

In the long-term, recognizing the importance of having sufficient control over our sales channels, we plan to selectively acquire or partially invest in distributors of our products. Furthermore, to improve our market share in China, our strategy involves leveraging our established nationwide network to introduce new brands, which may include entering into licensing agreements with a foreign brand to target different market segments, in order to develop Exceed into a multi-brand operator.

Third Quarter Fiscal 2011 Guidance

Exceed expects to generate net revenues in the range of RMB1,007.2 million to RMB1,023.8 million in the third quarter of 2011, representing an approximate year-over-year increase of 21% to 23%, as compared with RMB832.4 million in the same period of 2010. This represents the Company's preliminary estimates, and is subject to change.

FUJIAN, China, Aug. 15, 2011 /PRNewswire-Asia-FirstCall/ -- Exceed Company Ltd. (NASDAQ: EDS) ("Exceed" or "the Company"), one of the leading domestic sportswear brands in China, today announced that its Board of Directors has authorized the repurchase of up to US$10 million of the Company's ordinary shares within the next 6 months using existing cash reserves. The stock repurchase program will be reviewed from time to time and may be adjusted or terminated at any time without prior notice. Stock repurchases under this program may be made through open market purchases, in privately negotiated transactions, in block trades, pursuant to a 10b5-1 plan, or otherwise. The timing and actual number of shares repurchased will depend on market conditions, trading price of the ordinary shares and other factors and be subject to the restrictions relating to volume, price and timing under applicable laws.

Commenting on the announcement, Mr. Shuipan Lin, Exceed’s founder, Chairman and CEO said, “Recent share price movements for our company and financial market conditions overall have provided us with this opportunity to return value to our shareholders. Furthermore, we believe the authorization of the share repurchase program demonstrates our confidence in the long-term growth prospects for Exceed and the sportswear industry in China.”

It seems that EDS shares got a boost yesterday from favorable mention by hotstockinvestors.com (Hot Stock Investors) That website touts itself as a penny stock/small-cap alert service. Two statements by Picks Penny Stock ("PPS"), the entity that owns the Hot Stock Investors website, leads us to believe they receive compensation for the "research" reports they publish.

The company says it is one of the leading small-cap alerts services of its kind and is frequently contacted by CEO's of public companies for comments and views. Their disclaimer implies that because they receive compensation for PPS's dissemination of the information (as disclosed in their Compensation Disclosure Section), including at times in the form of common stock shares (the "Shares"), PPS should not be considered an independent information source.

PPS employees post messages on their individual message boards as a way to disseminate information on behalf of their issuer clients which should never be used as a means of conducting analysis into the Issuer and should only be used as a starting point to obtain the names of pink sheet or OTC Bulletin Board companies. A third party shareholder may have a potential or actual conflict of interest in paying PPS for the dissemination of the publication while still holding the Issuer's shares of common stock that he or she may sell after the third party shareholder has paid PPS with his or her shares.

We could not find compensation and disclosure statements on the Hot Stock Investors website. We would like to know who paid Hot Stock Investors for their coverage on EDS, as it came only two days after our report was published.

Disclosure: Still short EDS as the company is growing more suspect everyday.  What started out as Red Flags has quickly become more serious. Our investigation is ongoing.

Over the past few months, the GeoTeam has taken a closer look at Exceed Company (EDS), a Chinese footwear and sports apparel manufacturer located in Fujian province that went public through a Special Purpose Acquisition Company (SPAC) in 2009.  The company initially piqued our interest as a result of similarities that it shares with another famous 2009 SPAC from Fujian—China MediaExpress (CCME.PK). 

Though we have not yet completed our on-the-ground due diligence on EDS, an extensive review of company filings and other public documents available in the U.S. and China has left us cautious on the name.

...see our analysis here.

Financial Highlights –First quarter ended March 31, 2011(1)

• Revenue was RMB751.4 million (US$114.7 million), representing a 31.9% year-over-year increase.
• Gross profit was RMB232.6 million (US$35.5 million), representing a 29.4% year-over-year increase. Gross margin decreased to 31.0% from 31.6% for the same period in the fiscal year 2011.
• Operating profit was RMB128.3 million (US$19.6 million), representing a 42.5% year-over-year increase.
• Net profit was RMB110.9 million (US$16.9 million), representing a 43.0% year-over-year increase.
• EPS was $0.51 vs. $0.50

Shuipan Lin, Exceed's founder, Chairman and CEO, commented, "In the first quarter of 2011, we successfully executed our strategy to build Xidelong's brand recognition and deepen our market penetration in China. Our distribution network expansion plan remains focused on China's third-tier cities and in selected second-tier cities; consumers' purchasing power in these regions is growing and because our innovative and stylish products demonstrate good value for money, they have proven to be appealing to consumers in these cities. Our target customers have responded positively as we broaden the variety of footwear, apparel and accessory products that we offer. We have stepped up our investments in R&D to develop functional and fashionable new products and we will continue to dedicate resources to product development and manufacturing in order to regularly launch new products and expand our existing product lines.

Second Quarter 2011 Guidance

Exceed expects to generate net revenues in the range of RMB717.6 million to RMB730.4 million in the second quarter of 2011, representing an approximate year-over-year increase of 12% to 14%, as compared with RMB640.7 million in the same period of 2010.

The Company has recorded an order book growth of 25% for the 2011 Spring/Summer collection sales fair over the same sales fair last year. Since we delivered our summer products much earlier than last year in the first quarter of 2011, we achieved a higher revenue growth of 31.9% in the first quarter of 2011 against the same period of last year. The revenue growth in the second quarter of 2011 will therefore be comparatively lower. This represents the Company's preliminary estimates, and is subject to change.

Fourth Quarter Results:

• Revenue for the fourth quarter of 2010 was RMB656.0 million (US$99.4 million), representing a year-over-year increase of 9.4% from RMB599.4 million for the same period in 2009.
• Gross profit for the fourth quarter of 2010 increased by 10.9% to RMB198.4 million (US$30.1 million) from RMB178.9 million for the same period in 2009
• Net profit was RMB73.0 million (US$11.1 million), representing a 9.0% year-over-year decrease

Exceed expects to generate net revenues in the range of USD 109.72 million to USD 111.46 million in the first quarter of 2011, representing an approximately year-over-year increase of 26% to 28%, as compared with RMB569.8 million in the same period of 2010. This represents the Company's preliminary estimates, and is subject to change.

Mr. Shuipan Lin, Exceed's founder, Chairman and CEO, commented, "We are pleased to report a strong top- and bottom-line performance for the fourth quarter and full year 2010, supported by continued execution of our strategy to develop and enhance our brand, our products and our sales channels.  Our results demonstrate the success of our 'happy lifestyle' brand positioning, which has helped us to gain traction among a wide range of consumers, including the younger generation, which represent the fastest growing segment of the sportswear market in China.  This growing brand recognition, coupled with the expansion of our product offering, has resulted in increased customer demand and higher average selling price ("ASP") of our products.

Third Quarter Fiscal 2010 Guidance

Exceed expects to generate net revenues in the range of RMB795 million to RMB815 million in the third quarter of 2010, representing an approximately 20% to 23% year-over-year increase compared with RMB661.7 million in the same period of 2009. During the last several years, autumn in China has been relatively hot and short as a result of global warming. Retailers have tended to order more summer products and fewer autumn products. The Company mainly delivered its summer products during the first half of the year, and its autumn products during the third quarter. As the weather has been unstable so far this year, we do not expect third quarter revenue growth to be as strong as during the first half of 2010. This forecast reflects the Company's current and preliminary view, and is subject to change.