Cleantech Innovations (PINK:CTEK)

On February 21, 2012, CleanTech Innovations, Inc., or the Company, decided not to appeal the dismissal of the Company’s suit against the NASDAQ Stock Market, LLC and NASDAQ OMX Group to the Second Circuit Court of Appeals. The Company will continue its appeal of NASDAQ Listing Qualifications determination to delist the Company’s common stock to the Securities and Exchange Commission.

On January 31, 2012, the United States District Court for the Southern District of New York dismissed CleanTech Innovations, Inc.’s suit against the NASDAQ Stock Market, LLC and NASDAQ OMX Group on the basis of a lack of federal subject matter jurisdiction. The Company currently plans to appeal to the Second Circuit Court of Appeals.

CTEK has filed for a temporary injunctive relief against NASDAQ from being delisted.  The GeoTeam finds it peculiar that although they constantly refer to a consultant in their complaint, that this consultant is never named.  Here is the full document.

On January 5, 2012, CleanTech Innovations, Inc., or the Company, filed an amended complaint in the United States District Court for the Southern District of New York against the NASDAQ Stock Market, LLC and NASDAQ OMX Group, referred to collectively as NASDAQ, attached hereto as Exhibit 99.13. The complaint is based partly on NASDAQ Listing Qualifications Staff’s extensive discriminatory and racially biased remarks captured on testimony records. The Company alleges in the complaint that NASDAQ engaged in racially-motivated discriminatory acts and policies against the Company in connection with the determination of the NASDAQ Listing Qualifications Department, led by Michael Emen, NASDAQ Senior Vice President and head of Listing Qualifications, under its so called “broad discretionary authority” to delist the Company’s common stock for engaging in a fully disclosed financing transaction negotiated at arm’s length with Chinese institutional investors. The Company further alleges that NASDAQ’s discriminatory actions and racist remarks made by Michael Emen resulted in a violation of the Company’s equal protection rights under the United States Constitution, amounted to selective prosecution and intentionally breached the Company’s attorney-client privilege. The Company is seeking a permanent injunction enjoining NASDAQ from using its discriminatory policies against the Company and is also seeking at least $300 million in monetary damages. The Company is represented by former United States Senator Arlen Specter, Esq., former Chairman of the United States Senate Committee on the Judiciary, and Fensterstock & Partners LLP in this action.

On January 8, 2012, The China LiaoNing Provincial Government Small and Medium Enterprises Bureau, a major provincial government regulatory agency, sent official letters to The United States Department of Commerce and The Office of the United States Trade Representative, expressing the agency’s grave concerns regarding the racially-motivated discriminatory acts of NASDAQ against the Company and the resulting damage to the Company and China-U.S. business and trade relations. The English translations of the official letters are attached as Exhibit 99.14.

Excerpt from letter:

We have been deeply troubled that officials within the Nasdaq Stock Market (“Nasdaq”) have acted in a racist manner that has been discriminatory against CleanTech Innovations, Inc. (“CleanTech”), a well-respected company located in our province. We know CleanTech very well and it enjoys an excellent reputation, widely regarded as a leading wind tower manufacturer serving the clean energy industry. We understand from its founder and Chairman, Ms. Bei Lu, that CleanTech fully complies with all Nasdaq listing requirements and has never violated any U.S. securities laws, however was delisted based upon arbitrary and capricious decisions by the Staff of Nasdaq simply because CleanTech is a China based company. Due to such unjustified delisting, CleanTech has lost more than $200 million in shareholders’ value; its good name and reputation have been unfairly tarnished which has caused direct harm to our local economy due to CleanTech’s customer concerns and loss of customer orders. CleanTech’s tarnished reputation associated with the Nasdaq delisting has caused CleanTech irreparable harm and inability to raise any capital in any global capital markets in the world. This has prevented CleanTech from participating in a $100 million job-creating project in New Jersey, part of the “Select USA” program supported and advocated personally by President Obama and the Administration.

we seek additional capital to finance completion of wind tower contracts which had been scheduled for completion in 2011. Our ability to raise capital from the capital markets to finance our already signed wind tower supply contracts has proven impossible since a decision by the NASDAQ Listing and Hearing Review Council in January 2011 to delist our common stock. That decision is currently before the Board of Directors of NASDAQ. Should the decision be made final by the Board, we have prepared an appeal to the SEC since we believe the Council decision was unwarranted, improper and excessive. The delisting decision has caused irreparable harm to our operations, our reputation and our shareholders. It has also negatively impacted our ability to execute on already announced and signed contracts and as a result, we had no choice but to transfer fulfillment of certain contracts to third parties and lose such related revenues.

The increase in total net sales was attributable to our continued increase in sales of high grade pressure vessels, which have experienced increased demand in the China market in 2011, and the resale of certain raw materials. We believe the decrease in wind towers sales is a temporary condition while we seek additional capital to finance completion of wind tower contracts which had been scheduled for completion in 2011. Our ability to raise capital from the capital markets to finance our already signed wind tower supply contracts has proven impossible since a decision by the NASDAQ Listing and Hearing Review Council in January 2011 to delist our common stock. That decision is currently before the Board of Directors of NASDAQ. Should the decision be made final by the Board, we have prepared an appeal to the SEC since we believe the Council decision was unwarranted, improper and excessive. The delisting decision has caused irreparable harm to our operations, our reputation and our shareholders. It has also negatively impacted our ability to execute on already announced and signed contracts and as a result, we had no choice but to transfer fulfillment of certain contracts to third parties and lose such related revenues.

On September 20, 2011, CleanTech Innovations, Inc. (the “Company”) promoted Mr. Sheng Ma, the Company’s Accounting Supervisor, to the position of Chief Financial Officer, replacing Ms. Nan Liu, who voluntarily resigned, effective September 20, 2011. The Company thanks Ms. Liu for her services and notes that Ms. Liu is not resigning because of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

Previously released 2011 first quarter financial results:

CLEANTECH INNOVATIONS, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
THREE MONTHS ENDED MARCH 31, 2011 AND 2010 (UNAUDITED)
		2011				2010
Net sales		$	3,932,665			$	232,118
Cost of goods sold			2,859,117				112,567
Gross profit			1,073,548				119,551
Operating expenses
Selling			289,892				53,978
General and administrative			607,231				162,468
Total operating expenses			897,123				216,446
Income (loss) from operations			176,425				(96,895	)
Non-operating income (expense)
Interest income			10,105				3,341
Interest expense			(327,019	)			(103,986	)
Other income			4,472				-
Other expenses			(12,582	)			(42,376	)
Subsidy income			800,111				373,229
Total non-operating income			475,087				230,208
Income before income tax			651,512				133,313
Income tax expense			(153,385	)			(38,160	)
Net Income			498,127				95,153
Foreign currency translation			397,097				1,374
Comprehensive Income		$	895,224			$	96,527
Basic weighted average shares outstanding			24,971,019				15,122,000
Diluted weighted average shares outstanding			25,216,184				15,122,000
Basic earnings per share		$	0.02			$	0.01
Diluted earnings per share		$	0.02			$	0.01

2011 Order Backlog:

CleanTech has signed contracts and received orders totaling more than $50 million (including VAT tax) for the delivery of our wind tower products in 2011 to various wind energy companies in China. CleanTech anticipates fulfilling these orders, as well as potentially receiving new orders, in 2011.

Management Comments:

Bei Lu, Chairman & CEO of CleanTech, commented: "CleanTech is very pleased with our first quarter financial results in what is normally the slowest seasonal quarter each year. Our strongest quarters typically are the second half of each year. During the first quarter, we noticed strong customer demand for wind towers. Our product quality is excellent and we also have expanded our production capacity. We anticipate the positive market trend to continue throughout 2011.”

Business Outlook

Ms. Lu continued: “Since the recent nuclear crisis in Japan, China has put a greater sense of urgency into expanding its wind energy industry through funding and other financial support. We believe the current favorable market environment for the wind energy industry in China has presented the best historical opportunity for a wind energy equipment supplier like CleanTech to expand further. CleanTech is in an excellent position to potentially win additional wind tower supply contracts in 2011 from China’s largest energy companies.”

3-Year Share Lockup, Total Commitment to CleanTech’s Long-Term Shareholders

“CleanTech’s entire management team has voluntarily locked up its shares for 3 years, restricting sales of their shares to the general public through December 2013. CleanTech management’s fundamental interests are aligned with those of our public shareholders. We look forward to a year of record earnings growth in 2011 in the clean technology wind energy industry,” concluded Ms. Lu.

On February 28, 2011, CleanTech Innovations, Inc. received notification that the NASDAQ Listing Qualifications Panel had determined to delist the Company’s securities from The NASDAQ Stock Market (“NASDAQ”), effective with the open of business on March 2, 2011, pursuant to NASDAQ’s discretionary authority under Listing Rule 5101. In response, the Company has filed an appeal of the Panel’s determination with the NASDAQ Listing and Hearing Review Council; however, such appeal will not stay the delisting set for March 2, 2011.

As reported previously, on January 13, 2011, the NASDAQ Listing Qualifications Staff (the “Staff”) notified the Company that it had determined to delist the Company’s securities from NASDAQ, pursuant to its discretionary authority under Listing Rule 5101, based upon the Staff’s assertion that the Company intentionally failed to adhere to its obligations to timely disclose material information regarding a financing to the Staff during the listing application process. The financing at issue was consummated on December 13, 2010

2010 Year Highlights:

• Record revenue of $22.29 million, an increase of $19.56 million or 716% compared to $2.73 million in 2009. Significant revenue increase was due to market entry into high margin wind tower manufacturing business in early 2010 and winning of significant wind tower supply contracts through some of China's largest power companies.

• Net income for the year ended December 31, 2010, increased to $4.22 million from $0.83 million for the year ended December 31, 2009. The increase in net income was attributable to the increased sales of our products.

In December 2010, CleanTech completed a $20 million bridge financing in a combination of long-term debt and equity through institutional investors. The successful financing enabled CleanTech to expand its product backlog significantly and positioned CleanTech for potentially strong results in 2011, anticipated to be the best year of financial performance in CleanTech's corporate history.

Bei Lu, Chairman & CEO of CleanTech, commented: "CleanTech is very pleased with its outstanding performance in 2010 as we expanded into the fast-growing and highly profitable wind tower manufacturing business. We experienced vibrant and strong customer demand from China's largest power companies. CleanTech is in a strong financial position to continue bidding on new contract opportunities and anticipates winning additional wind tower supply contracts throughout 2011. The entire management team and company insiders voluntarily locked up their shares for 3 years through at least December 2013. CleanTech management's fundamental interest is totally aligned with those of our public shareholders. We look forward to delivering a year of record earnings growth in 2011 for our shareholders."

GeoTeam® Note: Subtracting subsidy income from result yields

• Adjusted 2010 EPS of $0.17 compared to $0.04 in the previous year.
• Adjusted 2010 fourth quarter EPS was $0.05 compared to EPS of $0.04 in the previous year.
• Backlog of orders expected to be delivered in 2011 was $39.6 million, which included $27.1 million in wind tower contracts, net of VAT.

Other notes:

Our business is subject to seasonal fluctuations in sales volumes because we sell products that are installed outdoors and, consequently, weather conditions may affect demand for our products. Sales of our wind towers to the wind power industry in the northern provinces of China are affected by seasonal variations in both weather and customer operations. Customers generally request delivery during the second, third and fourth calendar quarters when the weather conditions in the northern provinces of China, where our manufacturing facilities and our customers’ wind farms are located, are more favorable for the installation of wind towers by the customer. Utilities typically place requests for proposals for new wind tower contracts in the fourth and first calendar quarters according to their internal operational schedules and annual budget requirements. In order to satisfy delivery schedules under these contracts, we manufacture most of our wind towers during the second and third calendar quarters for delivery in the second, third and fourth calendar quarters. As we expect the majority of our future revenues and earnings will be from the sale of wind towers to the wind power industry in China, our business will become more affected by the industry’s seasonal variations. Our business is subject to seasonal fluctuations in sales volumes because we sell products that are installed outdoors and, consequently, weather conditions may affect demand for our products. Sales of our wind towers to the wind power industry in the northern provinces of China are affected by seasonal variations in both weather and customer operations. Customers generally request delivery during the second, third and fourth calendar quarters when the weather conditions in the northern provinces of China, where our manufacturing facilities and our customers’ wind farms are located, are more favorable for the installation of wind towers by the customer. Utilities typically place requests for proposals for new wind tower contracts in the fourth and first calendar quarters according to their internal operational schedules and annual budget requirements. In order to satisfy delivery schedules under these contracts, we manufacture most of our wind towers during the second and third calendar quarters for delivery in the second, third and fourth calendar quarters. As we expect the majority of our future revenues and earnings will be from the sale of wind towers to the wind power industry in China, our business will become more affected by the industry’s seasonal variations.

In connection with the rapid development and expansion of our business, we expect to incur significant capital and operational expenses. Management anticipates that our existing capital resources, cash flows from operations, the proceeds from our recent private placement and current short-term bank loans will be adequate to satisfy our liquidity requirements for the next 12 months. However, if available funds are not sufficient to meet our plans for expansion, current operating expenses and loan obligations as they come due, our plans include considering pursuing alternative financing arrangements.