GEO Investing

Call(s) to Action: XXII, DGLY, NHTC, VRYAF

The GeoTeam offers it own rebuttal to XXII’s response to GeoInvesting’s article, “22nd Century Group: A Lot Of Smoke, Not Enough Fire”.  We disagree with the rebuttal by XXII’s management and stand by the sourced facts in our original article. XXII claims that the “misleading and inaccurate statements are too numerous to address,” but we think if the four they picked out to address are their best points, shareholders should be extremely worried. Additionally, we will welcome further rebuttal from XXII management, should they find it necessary.  Please see our full rebuttal on Seeking Alpha.

DGLY (traded sharply higher to over $14 in pre-market trading) has risen 200+%  over the last 7 trading days as its body worn cameras targeted to law enforcement industry are gaining market traction.  The recent IPO of GPRO has probably also increased awareness for DGLY.  ISNS and VII have also been rising  sharply on the heels of  DGLY.  We think the rise in ISNS and VII are unwarranted since neither of them sell body worn cameras, according to SEC filings and their web sites.  ISNS and VII shares were sitting at  $2.35 and $2.10 , respectively, before they ran .  Both companies are  not  growing  revenues and are losing money.  Here are our tweets from yesterday regarding  ISNS:

  • Believe $ISNS move higher on heels of $DGLY unwarranted. Appears does not sell body worn cameras. Anemic rev growth and losing tons of money
  • Believe $ISNS should totally reverse its recent run to trade at around the $2.35 level.

NHTC ($12.74) – Locked in the rest of our gains.  Recall on 8/26/2014  we stated we began to unwind our long NHTC position.  Shares are up more than 525% since we disclosed our long position on 9/5/2013.

VRYAF ($3.15) – Closed out our long position at a loss. Yesterday the company announced that the acquisition by Verisae has been completed for $3.19 per share.  We are obviously disappointed  that  the company accepted an offer that  does not  take into account the transformative initiatives recently  implemented by management that have already begun to bare fruit.

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

  • ChinaHybrids
    • CREG ($1.39) – Chairman will purchase 13.8 million newly issued shares at market prices. Why didn’t Chairman just buy shares from Carlyle Group who has been trying to liquidate its position in CREG,  instead of diluting the stock. Carlyle still owns nearly 12 million shares.
    • LAS ($3.10) – Shares marked up on official signing of the previously announced JV with BITA and Youxinpai Information Technology.
    • ONP ($1.99) – Announced $2.5 million registered direct offering for 2.5 million shares at a price of $1.60.
    • SCLN ($6.79) – Announced that the China Food and Drug Administration has approved the registration of DC Bead® for the embolization of malignant hypervascularized tumors.
    • GOMO ($10.40; marked down sharply in pre-market) – Reported Q2 2104 results; missed top and bottom line analyst estimates, guided below for Q3 revenues and announced CFO resignation.
    • SGOC ($1.62; marked up in pre market) – Launched online sales platform on
    • VNET ($28.31) – Reported Q2 2014 results; missed analyst EPS estimate but beat on revenue and guided above for Q3 2014 revenue and raised full year 2014 revenue guidance(above estimates).
  • U.S. News
    • CCUR ($6.93) – Reported strong Q4 2014 results; reported non-GAAP EPS of $0.23 vs $0.01 in the prior year on 20% sales growth.  Investors should note the company has a history of inconsistent results.
  • GeoBargains/GeoBargains on the Radar
    • GeoBargain on the radar IG ($6.42) – Oppenheimer initiated coverage with “Outperform” rating and price target of $8.00.

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

Disclosure: Long IG; Short ISNS, LAS; Other Long Positions; Other Short Positions; Pump & Dump Positions (Password GEO2014)

Summary of general highlights:

On the Asian Front…

Select China Earnings…

Stock Price** EPS Estimate Reported EPS Prior Year Reported EPS
Sungy Mobile Ltd Adr (NASDAQ:GOMO) $8.27 $0.14 $0.09* $0.05*
21 Vianet Group (NASDAQ:VNET) $29.36 $0.10 $0.05* $0.05*
Kongzhong (NASDAQ:KZ) $8.04 n/a $0.03* $0.18*
China Nepstar Chain Drugs (NYSE:NPD) $2.39 $0.00 -$0.02* $0.00 Intl (NASDAQ:DATE) $5.82 $0.07 $0.07* $0.09*
Acorn Intl (NYSE:ATV) $1.88 n/a -$0.50* -$0.35*
Keyuan Petrochemicals (OOTC:KEYP) $1.18 n/a $0.01* $0.01*
Iao Kun Group Holding Co (NASDAQ:IKGH) $2.95 $0.01 -$0.12* $0.20*

* denotes non-GAAP; ** Pre-market

Please see our ChinaHybrid June 2014 quarter earnings screen (password GEO2014) for select companies that have reported earnings.

In Other News…

China Recycling Energy (NASDAQ:CREG) ($1.39) – a leading industrial waste-to-energy solution provider in China, today announced

that its Chairman and CEO, Mr. Guohua Ku, has entered into a Share Purchase Agreement (“SPA”) with the Company on August 27, 2014 to purchase 13,829,074 shares of common stock of the Company (the “Shares”) at the market price. The SPA was unanimously approved by the Company’s Board of Directors on August 25, 2014, and became effective upon the execution by the parties, today.

Under the SPA, the Company shall issue and sell the Shares to Mr. Ku at US$1.37 per share, the average closing price quoted on the NASDAQ Global Market for the common stock of the Company for the 15 trading days prior to the effective date of the SPA. The total purchase price for the Shares shall be paid by Mr. Ku within 20 days of the effective date of the SPA.

Mr. Ku stated,

“I have full confidence in the future of the Company and I am pleased to be able to further my contribution to its ability to grow and capitalize on the huge market potential in this new energy industry. I believe that, with the solid execution track record of the Company, CREG is well positioned to capture the significant growth opportunities in the energy saving and recycling market in China and deliver long-term shareholder value.”

Lentuo Intl (NYSE:LAS) ($3.10) – a leading non-state-owned automobile retailer headquartered in Beijing, Bitauto Holdings(NYSE:BITA) ($89.04) – , a leading provider of Internet content and marketing services for China’s fast-growing automotive industry, and Youxinpai (Beijing) Information Technology Co., Ltd. (“UXIN”), a leading professional auto auction service provider in China, today announced,

that senior management attended a ceremony in Beijing marking the signing of the joint venture (“JV”) agreement.

The ceremony was presided over by Mr. William Bin Li, Chairman and Chief Executive Officer of Bitauto, Mr. Chris Kun Dai, Chairman and Chief Executive Officer of UXIN, and Mr. Hetong Guo, Founder and Chairman of Lentuo International. Mr. Lei Luo, Vice-General Secretary of CADA was also in attendance and delivered congratulatory remarks.

The establishment of the JV is moving rapidly and smoothly. The partners expect the JV to be officially registered by the end of September 2014 and are cooperating actively to begin operations before the end of December 2014.

The joint venture, which will originally be centered on Beijing and gradually expand to other cities, will integrate the resources of each partner to build the largest Online-to-Offline platform exclusively focused on high-end pre-owned cars in China. Lentuo will own 60% of the joint venture with Bitauto and UXIN each holding 20%.

Orient Paper (AMEX:ONP) ($1.99) — a leading manufacturer and distributor of diversified paper products in North China, today announced,

that it has entered into a definitive agreement with an institutional investor for a registered direct placement of $2,500,000 of shares of common stock at a price of $1.60 per share.

In addition, the Company will issue to the investor warrants to purchase up to 781,250 shares of common stock. The warrants have an exercise price of $1.70 per share and are exercisable for five years following issuance.

Sciclone Pharmaceuticals (NASDAQ:SCLN)($6.79) – and its partner BTG plc (LSE: BTG), today announced,

that the China Food and Drug Administration has approved the registration of DC Bead for the embolization of malignant hypervascularized tumors.

BTG and SciClone previously entered into an agreement granting SciClone exclusive licensing and distribution rights to DC Bead in China. Under the agreement, SciClone will purchase product from BTG at a specified price for sale in China. Commercial launch plans are now underway.

Friedhelm Blobel, SciClone Chief Executive Officer commented:

“Together with our partner BTG, we will now focus our efforts on preparing for the introduction of the product in the Chinese market. Oncology is a core business focus for SciClone, and our sales team and academic marketing liaisons have established high quality relationships with the medical professionals and institutions that specialize in cancer treatment. We believe DC Bead has the potential to be a valuable addition to SciClone’s oncology product portfolio.”

Louise Makin, Chief Executive Officer at BTG, said:

“Approximately half of the world’s liver cancer patients are in China and there is a great interest among Chinese physicians to offer new, differentiated treatment options. Today’s news marks an important step toward bringing our first interventional oncology product, DC Bead, to the Chinese market where we can help address this need.”

Sungy Mobile Ltd Adr (NASDAQ:GOMO) ($10.40) –  Reported Q2 2104 results; missed top and bottom line analyst estimates, guided below for Q3 revenues and announced CFO resignation.

Mr. Winston Li has tendered his resignation as the chief financial officer of the Company, effective on August 31, 2014, due to personal reasons.

Mr. Yuqiang Deng, Sungy Mobile’s Chief Executive Officer, commented,

“On behalf of the Company, We would like to thank him for his significant contributions to our company during our critical transition to a publicly listed company and wish him well in his future endeavors. Winston has helped to assemble a solid financial team that will report directly to me during this transition period. We are in the process of finding a highly qualified replacement for Winston and aim to announce the appointment of a new Chief Financial Officer in the near future.”

Sgoco Group (NASDAQ:SGOC) ($1.62 marked up in pre market) – a company focused on product design, distribution and brand development in the China display market, today announced,

a new on-line sales platform on to accelerate the delivery of high quality service and products. SGOCO takes a significant step towards the development of e-commerce through this arrangement. With the sharing of vision and strengths, the agreement will allow both parties to drive new growth opportunities.

By signing the new distribution agreement, SGOCO agrees to provide the best-priced, exclusive and competitive products to for online direct sales. The new arrangement enhances the cooperation between these two companies and demonstrates SGOCO’s commitment to establish new distribution channels and its vision of offering customers the latest products to satisfy the demand of online trading platforms.

Regarding the newly launched sales platform, Mr. David Xu, Director, President and CEO of SGOCO, commented,

“SGOCO takes a decisive step further towards the implementation of e-commerce and the alliance is a key strategy for the Company. We are excited to cooperate with and confident that the positive cooperation can create unique and meaningful new growth opportunities. Developing new distribution channels enables our products to be more accessible to our customers and further expand our customer base.”

He added,

“We are constantly looking for potential e-commerce partners and are happy to team up with, a reliable and progressive company which will support our strategy initiatives. Consumers can enjoy superior online retail experience and comprehensive customer services with the new distribution channel. In line with our transformation plan, we are eager to increase our participation in the e-commerce market in the future.”

On the U.S. Front…

Notable U.S. Earnings…

Stock Price** EPS Estimate Reported EPS Prior Year Reported EPS
Concurrent Computer (NASDAQ:CCUR) $7.50 n/a $0.23* $0.01*

* 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.


The GeoTeam