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bspm - BSPM Note 11 in annual a red flag?
The commitments (Note 11) in BSPM's annual rpeort ballooned from Q3 to Q4. Went from under $2 mill I think to over $26 mill.
And the company doesn't even have $20 mill cash per the annual. So wonder how they plan on closing/buying on these commitments (they are commitments afterall- maybe a PIPE?). Also wonder what exactly they are buying.
Doesn't look like any of their past SEC-filed Qs have had commitment levels anywhere near that level. And I do not see any PRs as to the names of the companies they are buying.
Looks suspicious to me.
Especially being a China reverse merger. I suppose the sector is due for a bounce but widespread fraud is seeming pretty clear in the space.
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Here's the cut and paste from annual Q4 report (1st) and Q3 rpeorts:
Note 11 - COMMITMENT
Research and Development (“R&D”) Agreement
As of 31 December 2010, the Company entered into three agreements with certain research institutes to conduct clinical trials for three new drugs and one existing drug. Pursuant to these agreements as of December 31 2010, the Company paid $1,247,694 as a deposit for clinical trial expenses and is obligated to pay the research institutes an additional $1,302,293 upon completion of the clinical trials.
Capital commitments
As of December 31, 2010, the Company had capital expenditure commitments on construction contracts, purchase of the proprietary technologies and acquisition of business of approximately $26,700,000.
---Here's Q3 verbiage:
Note 11 - COMMITMENT
Research and Development (“R&D”) Agreement
On November 15, 2009 and December 19, 2009, the Company entered into three agreements with Fourth Military Medical University Xijing Hospital State Drug Clinical Research Center (“Fourth Military”) to conduct clinical trial for two new drugs. Pursuant to these agreements, the Company paid Fourth Military $767,785 in the fourth quarter of 2009 as a deposit for clinical trial expenses and is obligated to pay Fourth Military an additional $613,681 upon completion of the clinical trial.
Construction Contracts
The Company is committed to various construction contracts for a raw material processing plant with a total contract price of approximately $1,418,313. As of September 30, 2010, the cash commitment remaining for these contracts was approximately $223,944.
---Notice the huge jump. Hmmm.
Given the tricks that seem to be getting played on balance sheets and such in the RM China space, these represent red flags to me. Especially without clear identity to the companies and such being acquired and amounts these represent on the balance sheet (along with the abrupt rise in the level of commitments going on the annual compared to the Q3).
What kind of sales from these commitments/company purchases? How long have they done what they do? How familiar are the companies with each other (wink wink)?
Thanks for this. I'd need to switch to a different broker to short something this low, but this is also useful for long investors to see and decide whether they should cut their losses.