Late in the afternoon during yesterday’s trading session, we sent members an email stating that, “We have used the increase in LLEN shares as an opportunity to short more stock. Today’s (9/24/2013) LLEN press release inaccurately addresses one of our allegations and altogether fails to comment on any other points, like Hong Xing.”
After taking a more thorough look at the release, we have begun to identify certain inconsistencies. Here is a quote from the press release:
“In the company’s SEC Form 10-K report for the year ended July 31, 2013, the company clearly states that it acquired the mines by purchasing equity interests in Union Energy subsidiaries.”
Since the company specifically uses the words “clearly states” and also italicized the word “subsidiaries”, we assumed it would be simple to locate the phrase, “…it acquired the mines by purchasing equity interests in Union Energy subsidiaries.” On the contrary, our team was unable to find this phrase or any reference to LLEN having purchased any equity interest in “Union Energy subsidiaries.” Furthermore, the company also stated the following:
“The Company completed the acquisition by obtaining a 95% equity interest in two entities, “Guizhou Union Energy Shun Da Inventory and Transport Corporation”, the owner of LuoZhou Coal Mine and “Guizhou Union Energy WuZhou Energy Development Corporation”, the owner of LaShu Coal mine.”
Again, we were unable to locate one reference to “Guizhou Union Energy Shun Da Inventory and Transport Corporation” and/or “Guizhou Union Energy WuZhou Energy Development Corporation.”
We find it difficult to believe that Dixon Lee would make a public statement that appears to contain such blatant misrepresentations right after we just questioned the integrity of the company.
Finally, the company has not publicly disclosed any of the contracts that support its claims regarding its purchase of the LuoZhou and LaShu Coal mine.
In general, our team, in all its years of research, has never seen a company with such poor disclosures as LLEN.