WEB NEWS Investor Alert
Glenn A. Little was the sole officer, director, and controlling stockholder of the shell that EGHA merged into.
Excerpt from 2010 10K of the shell company
Since 1988, Mr. Little has been successful in the reactivation of various inactive public companies, similar to the Company, upon his acquisition of a controlling position in each entity. As demonstrated by the following list of companies which consummated reverse merger transactions during the past five (5) years where Mr. Little held comparable titles and duties to those he holds in the Company:
Year combination
transaction
Entity
File/CIK #
occurred
Tomahawk Industries, Inc.
318299 2004
Boulder Acquisitions, Inc.
721693 2004
Basic Empire Corporation
1166389 2004
Fast Eddie Racing Stables, Inc.
770461 2005
Parallel Technologies, Inc.
710846 2005
Las Vegas Resorts Corp.
808011 2005
United National Film Corporation
842694 2007
Jade Mountain Corporation
1165527 2007
GeoTeam® Note:
Let's see how successful some of the RTOs associated with these shells have performed:
Six of the referenced shells completed reverse mergers with Chinese firms
Three of them have credibility issues :
Basic Empire Corporation was the shell that allegedly fraudulent company, China Agritech (NASDAQ:CAGC), merged into.
United National Film Corporation was the shell that Wuhan General Group (NASDAQ:WUHN) merged into. Please see our recent investor alert revealing that the company is in violation of debt covenants.
Jade Mountain Corporation was the shell that allegedly fraudulent company, Rino Intl (PINK:RINO), merged into.
As for the other 3...
Boulder Acquisitions, Inc. was the shell that China Recycling Energy (NASDAQ:CREG) merged into.
Parallel Technologies, Inc. was the shell that Fushi Copperweld (NASDAQ:FSIN) merged into.
Las Vegas Resorts Corp. was the shell that Winner Medical Group (NASDAQ:WWIN) merged into.
...It remains to be seen.
Comments & Business Outlook
First Quarter Results :
Revenue rose 150% to $10.4 million from $4.2 million in the third quarter of fiscal year 2010
Gross profit grew 171% to $3.9 million from $1.4 million in the third quarter of fiscal year 2010
Net income increased 167% to $2.4 million from $0.9 million in the third quarter of fiscal year 2010
Basic and diluted earnings per share increased to $0.07 from $0.03 in the third quarter of fiscal year 2010, despite an increase of approximately 2.5 million shares outstanding
" We are very pleased to see another robust quarter of revenue and earnings growth, which is a strong testimony to the success of our new lines of EVO products launched in May 2010 ," commented Chengchang Shoes' Chairman and Chief Executive Officer, Mr. Guoqing Zhuang. " Our proprietary EVO soles, featuring favorable abrasion resistance and enhanced cushioning relative to standard EVA soles, have been very well received in the market and are attracting more customer orders. We will continue to develop new products to consolidate Chengchang's leadership as a product innovator in China's rapidly growing sports shoes industry. We are confident that we have the right business strategy, supported by our experienced R&D team and efficient operating system, to meet strong current demand for our shoe sole products ."
Investor Presentations
In anticipation of the planned presentation by 8888 Acquisition Corporation at the Annual China Investment Conference held by Rodman & Renshaw (the “Conference”), the Company is filing this current report on Form 8-K to disclose its planned
presentation materials in order to avoid the selective disclosure of any material nonpublic information at the Conference.
Liquidity Requirements
To date, we have financed our operations primarily through cash flows from operations, augmented by short-term bank borrowings and equity contributions by our stockholders.
Cash flow from operation and short-term bank loans are likely to continue to be our key sources of financing for the foreseeable future, although in the future we may raise additional capital by issuing shares of our capital stock in an equity financing. We expect to renew our short term loans when they become due.
Comments & Business Outlook
Second Quarter FY 2011 Results :
Revenue rose 112% to $12.4 million from $5.9 million in the second quarter of fiscal year 2010
Gross profit grew 127% to $5.0 million from $2.2 million in the second quarter of fiscal year 2010
Net income increased 117% to $3.3 million from $1.5 million in the second quarter of fiscal year 2010.
Basic and diluted earnings per share increased to $0.10 from $0.05 in the second quarter of fiscal year 2010, despite an increase of approximately 2 million shares outstanding
"We are very pleased with this quarter's robust revenue and earnings growth, which primarily reflects broad customer acceptance of our new lines of EVO soles and EVO compound pellets, both of which launched in May 2010 ," commented Chengchang Shoes' Chairman and Chief Executive Officer, Mr. Guoqing Zhuang. "We believe our proprietary EVO soles, featuring favorable abrasion resistance and enhanced cushioning relative to standard EVA soles, highlight Chengchang's leadership as a product innovator in China's rapidly growing sports shoes industry. We are confident that we have the right business strategy, supported by efficient operating systems and sufficient manufacturing capacity, to meet strong current demand for our shoe sole products ."
The Company plans to purchase more manufacturing equipment to increase its production capacity during the second half of fiscal year 2011 , in order to meet increasing demands of our shoe sole products. We will continue to ramp up our production and anticipate increasing sales of our EVO soles and EVO compound pellet products for the second half of fiscal year 2011, which are currently well received by the market.
Financial Target Agreements
In connection with the Securities Purchase Agreement, our Chairman and CEO Mr. Zhuang entered into a make good escrow agreement , or the Make Good Escrow Agreement, whereby Mr. Zhuang pledged to several other parties, including the investor, 7,492,154 shares of our common stock owned by him in support of the Company’s obligation to satisfy a pre-established after tax net income level.
If our after tax net income for the six month period ended December 31, 2010 is less than RMB 45,997,157 (approximately $6.97 million), then, based upon an agreed formula, all or a portion of the shares placed into escrow will be transferred to the investors and other parties pro rata. If, however, our after tax net income for such period equals or exceeds RMB 45,997,157 (approximately $6.97 million ), the shares placed into escrow will be returned to Mr. Zhuang.
Reverse Merger Activity
On October 19, 2010 Sports Power, Inc. became a public entity via a reverse
merger transaction .
On October 19, 2010 , we entered into a securities purchase agreement, or the Securities Purchase Agreement, with an investor whereby we issued 2,547,500 shares of our common stock for an aggregate purchase price of $4.5 million, or $1.77 per share .
Company Snapshot:
Engaged in the business of designing, producing and selling high quality soles used to manufacture athletic and leisure shoes
Industry Snapshot:
The PRC sportswear market, which includes footwear, apparel and accessories, has expanded rapidly in recent years and had an estimated size of approximately $9.8 billion in 2009. According to Frost & Sullivan, a business research and consulting firm, the footwear market was the largest segment in the PRC sportswear market in 2008 generating sales of approximately $3.9 billion. Sales of footwear generated approximately 50.5% of the total revenue in the sportswear market.
Source: Frost & Sullivan
According to the UBS Investment Research, the sports footwear market is projected to reach RMB 297 billion (approximately $44 billion) by 2020 with a CAGR of 15.7% from 2010 to 2020 based on the projected overall sales of RMB 69 billion (approximately $10 billion) in 2010. The market for sports footwear is expected to grow steadily in the next decade. The UBS report estimates a CAGR of over 15% for sports footwear, ranking it third among 23 categories of consumer goods in the PRC.
Post Merger Share Calculation :
459,900: Pre reverse merger outstanding shares
31,059,267: Newly issued shares of Common Stock
2,547,500: Shares from private placement
GeoTeam® best effort calculation of total post reverse merger shares assuming full conversions: 34,066,667
Financial Snapshot:
Our revenues grew 46.1% from $17.87 million in fiscal year 2009 to $26.11 million in fiscal year 2010.
Our operating income grew 71.7% from $5.5 million in fiscal year 2009 to $9.4 million in fiscal year 2010. Our net income grew 75.0% from $3.9 million in fiscal year 2009 to $6.9 million in fiscal year 2010.
Our net income was approximately $6.91 million in the fiscal year ended June 30, 2010, as compared to approximately $3.95 million in fiscal year 2009, representing an increase of approximately $2.96 million, or 75.03% .
Cash Flow
Years Ended
June 30,
2010
2009
Net cash provided by operating activities
$
7,118,357
$
3,844,498
Net cash (used in) investing activities
(790,327
)
(464,786
)
Net cash (used in) financing activities
(2,843,403
)
(1,499,071
)
Effects of exchange rate change in cash
68,416
17,026
Net increase in cash and cash equivalents
3,484,627
1,880,641
Cash and cash equivalent at beginning of the year
2,960,156
1,062,489
Cash and cash equivalent at end of the year
$
6,513,199
$
2,960,156
