Call(s) to Action: None

Here are the stories that the GeoTeam is following today… (Please see full disclosures at bottom)

  • ChinaHybrids
    • LLEN ($0.40) – Dismissed Kabani and Co.  and has not appointed a new audit firm at this time.  The company is also commencing an investigation into certain actions by former CEO Dickson Lee who was indicted by the U.S. Department of Justice.  Recall we were integral in getting LLEN halted and delisted.
    • CALI ($2.27) – Stated it will vigorously oppose a “grossly unfair and highly damaging” plan by the Depository Trust Corporation, (DTC)  to suspend all book entry services (Global Lock) provided to DTC participants with respect to CALI shares.  CALI stated the decsion is not based on any wrongdoing by the Company and there have been no allegations made against it.
    • GPRC ($1.44) – Received plan from DTC to impose global lock on its securities. The company said there were no allegations made about any improprieties by Guanwei
    • AUTCF ($12.02) – Reported 122% increase in Q1 2014 revenues.  Q1 2014 revenues of $158.4 million vs $71.4 million in prior year.
    • ENGA ($2.36) –     announced that it has entered into a partnership with MarketLeverage to acquire an existing business and revenue stream related to the mobile network traffic and advertising network owned by MarketLeverage.
  • U.S. News
    • IIN ($8.10) – Reported strong Q2 2014 results but states growth will slow in second half of 2014.  Reported Q2 2014 EPS of $0.13 vs loss of $0.34 on 53% sales growth.  Expects 20% growth in second half compared to same period of 2013.
    • CVTI ($13.09) – Reported strong bottom line growth in Q2 2014 on flat revenues.  Reported Q2 2014 EPs of $0.25 vs $0.13 in prior year.  Q1 2014 non-GAAP net loss of $0.01 vs loss of $0.08
    • RTIX ($4.29) –  Reported strong Q2 2014 results; beat analyst EPS by $0.01, beat on revenue and guided above for full year EPS and revenue for FY2014.                
  • Pump and Dumps
    • WSTI ($0.87) – Late yesterday, Seeking Alpha published a short thesis article by Auspex Research titled “Will WindStream Technologies’ Stock Be Worth 5 Cents By Next Year?”  Recall we released our first short thesis report on WSTI on 7/1/2014.

For more timely information, particularly during the daily trading session, we urge our members to read our message board posts daily.

Disclosure: Long ENGA; Short WSTI ; Other Long Positions; Other Short Positions; Pump & Dump Positions (Password GEO2014)

Summary of general highlights:

On the Asian Front…

China Auto Logistics(NASDAQ:CALI) ($2.27) –  a top seller in China of luxury imported automobiles, a leading provider of auto-related services and a soon to be entrant in used car sales in China, today said :

it will vigorously oppose a “grossly unfair and highly damaging” plan by the Depository Trust Corporation, (“DTC”), as detailed in a notification letter received by the Company from DTC on July 17, 2014, to suspend all book entry services provided to DTC participants with respect to CALI shares (the “Global Lock”). The letter indicated the Company has until August 13, 2014 to provide a written response stating its objections to the DTC action, after which DTC will make either a determination or a request for further information within 20 business days.

According to the Company, the DTC decision to impose a “Global Lock” affecting all current shareholders is not based on any wrongdoing by the Company and there have been no allegations made against it. Rather, it is said to be based on DTC becoming aware of a recent SEC enforcement action against S. Paul Kelley et. al., in which the SEC alleges that Kelley et. al., among other offenses, violated Section 5 of the Securities Act. DTC’s concern is that certain deposits made by Kelley et. al. were in violation of DTC’s eligibility standards, and were commingled with shares of CALI eligible for deposit.

Guanwei Recycling (NASDAQ:GPRC) (1.44) – China’s leading clean tech manufacturer of recycled low density polyethylene (LDPE), reported today:

it received a letter of notification from the Depository Trust Company (“DTC”) on July 18, 2014, that DTC intends to suspend all book entry services provided to DTC participants with respect to GPRC shares (the “Global Lock”). The letter indicated the Company has until August 14, 2014 to provide a written response stating its objections to the DTC action, after which the latter will make either a determination or a request for further information within 20 days.

The DTC decision is the result of a recent SEC enforcement action against S. Paul Kelley and four other individuals, in which the SEC alleges that Kelly et al issued unregistered shares of the Company in violation of Section 5 of the Securities Act. (See Securities and Exchange Commission v. S. Paul Kelley. et al., Civil Action No. 2:14-cv-2827) (D. N.J., filed May 5, 2013). It is DTC’s position that such shares were not eligible for deposit at DTC for book entry services. Because all the Company’s shares held by DTC are freely interchangeable, DTC has determined to implement the Global Lock. The Company said there were no allegations made about any improprieties by GPRC, and believes DTC’s actions are unfair and unnecessarily damaging to current shareholders and the Company.

The Company said it is reviewing its options and, if there are any new developments with respect to this matter, it will inform shareholders.

Engage Mobility(OTCCB:ENGA) ($2.36) -a provider of mobile technology, marketing and data solutions, announced that it has

entered into a partnership with MarketLeverage to acquire an existing business and revenue stream related to the mobile network traffic and advertising network owned by MarketLeverage. Engage will become the exclusive mobile servicing and fulfillment agent for MarketLeverage, and will provide mobile network management and fulfillment services, as well as offer its own mobile platform and mobile responsive design services and technologies to the existing network advertising clients.

“We are really excited to have finalized our partnership with MarketLeverage,” said James Byrd, CEO of Engage. “MarketLeverage is one of the oldest and best-known pay per performance and affiliate marketing networks in the world, and to have the opportunity to provide our technology and services to their customer base is a significant accomplishment for us. MarketLeverage has a very large and established advertising client base and we are privileged to have the opportunity to work with them. To be able to acquire an existing revenue stream at the same time is a real bonus for Engage.”

Market Leverage is one of the oldest and most trusted pay per performance networks, and has previously been recognized as a Top 100 Inc Advertising Firm and Fortune 5000 fastest growing company.

L & L Energy (NASDAQ:LLEN) ($0.40) –  LLEN engages in production, processing, and sale of coal in the People’s Republic of China.  In an 8k filed today the company announced:

As a result of the United States Department of Justice indictment against Dickson Lee, the former Chairman and CEO of L & L Energy, Inc. (the “Company”), which was subsequently amended to include the Company as a defendant, the Company intends to commence an investigation into certain actions taken by Mr. Lee while he served as CEO.

Since the public indictment of the Company and Mr. Lee, the Company has had difficulty collecting receivables in China. Due to the Company’s lack of cash flow, it does not expect that it will be able to file its Form 10-K Annual Report for the year ended April 30, 2014 by the filing deadline.  As a result of the lack of cash flow, the Company elected to not re-engage the FORMER AUDITOR (Kabani and Co.)

Autochina Intl (OOTC:AUTCF) ($12.00) — AUTCF is China’s largest commercial vehicle sales, servicing, leasing, and support network.  Reported Q1 2014 results:

  • Total revenues of $158.4 million, up 122.0% from $71.4 million
  • Non-GAAP net loss for Q1 2014 of $0.01 vs loss of $0.08 in prior year

Quote from management:

“We were pleased with AutoChina’s strong start to 2014 as we grew the number of new commercial vehicles leased by 124.0% year over year to 2,802 in the first quarter, which tends to be a seasonally weaker period for us due to the Chinese New Year holiday. We believe market conditions in China’s heavy truck sector have stabilized, and we continue working to better position the Company to capitalize on the industry’s positive momentum with new service offerings for the transportation and logistics industries.”

On the U.S. Front…

Notable U.S. Earnings…

Stock Price** EPS Estimate Reported EPS Prior Year Reported EPS
Covenant Trans (NASDAQ:CVTI) $13.40 $0.19 $0.25 $0.13
Intricon (NASDAQ:IIN) $7.02 n/a $0.14* -$0.31*
Rti Surgical (NASDAQ:RTIX) $4.40 $0.02 $0.02* $0.02*

* denotes non-GAAP; ** Pre-market

For more timely information, particularly during the daily trading session, we urge our members to read our message board posts daily.

Sincerely,

The GeoTeam