In an 8k filed yesterday, the company stated that the Chairman has been arrested, Jim Rogers resigns, and Chinese operations “appears to be abandoned”. From 8k:
- Chairman Zhang Hongcheng has been detained and that an investigation regarding his conduct had proceeded to the second of three stages, in which the prosecutor determines whether to go forward with charges. The Board is informed that the potential charge against Chairman Zhang is illegally obtaining funds from the public.
- Given the above, the Board has determined to request Chairman Zhang’s resignation as soon as communication with Chairman Zhang can be established.
- As previously announced, the Company’s full Board became aware in late 2014 that one of the Company’s subsidiaries had entered into contracts to obtain license rights to film and television content at a total cost of RMB 525 million. To date, the Board has been unable to verify the authenticity of the contracts, the identity of the counterparties, or the goods or services received by the Company pursuant to the contracts.
- The Company’s business in China appears to be abandoned, with retail stores closed and empty. Management has been unable to determine whether the Company’s wholesale business is operating.
- On November 19, 2014, James Rodgers, Jr. informed the Company that the one-year contract pursuant to which he served on the Board expired in June 2014 and that since he had not renewed the contract; he was no longer a member of the Board as of June 2014. Mr. Rodgers served as Chair of the Compensation committee.