Wednesday, January 26, 2011

Tuesday, January 25, 2011

China Botanic Pharmaceutical (CBP) reports fourth quarter and fiscal year 2010 results

China Botanic Pharmaceutical Inc. (AMEX: CBP) (formerly Renhuang Pharmaceutical, Inc.), today announced financial results for the three months and fiscal year ended October 31, 2010.

Fourth Quarter 2010 Highlights

Net sales grew 15.2% year-over-year to $16.7 million
Gross profit increased 13.3% to $9.1 million from $8.0 million in the fourth quarter of fiscal year 2009
Gross margin was 54.4%.

Net income was approximately $5.6 million or $0.14 per diluted share, as compared to approximately $5.8 million or $0.15 per diluted share a year ago. New products, including Qing Re Jie Du Oral Liquid, Compound Schisandra Tablets, and Ginseng and Deer Antler Extract accounted for 8.2% of gross sales in the fourth quarter of fiscal 2010.

Fiscal Year 2010 Highlights

Net sales rose to $55.2 million, an increase of 27.1% over fiscal year 2009
Gross profit increased to $29.4 million, up 27.4% from $23.1 million
Gross margin was 53.3% compared to 53.2% in fiscal year 2009

Net income rose 20.4% to $17.9 million or $0.44 per diluted share, as compared to $14.8 million or $0.41 per diluted share in fiscal year 2009
Introduced three new products: Qing Re Jie Du Oral Liquid, Compound Schisandra Granules and Deer Antler Extract, which together accounted for approximately 3.0% of gross sales in 2010

"We are pleased to report double digit revenue and net income growth in fiscal year 2010. This fiscal year, we maintained a leading market position with our Siberian Ginseng product series and successfully introduced several new products, including Compound Schisandra Tablets, which strengthens our offering in the nerve-regulation and depression treatment segment," said Mr. Shaoming Li, Chairman and Chief Executive Officer of China Botanic. "During the year, we experienced increases in average selling prices of several of our products, reflecting the continued strong demand for our all-natural plant based remedies."

Fourth Quarter Fiscal 2010 Results
During the three months ended October 31, 2010, net sales increased 15.2% to $16.7 million, from $14.5 million during the same period in 2009. The rise was mainly attributable to growing market acceptance and resulting increased sales volume of the Company's new products. China Botanic also successfully gained additional market share during the quarter.

Gross profit increased 13.3% to $9.1 million compared to $8.0 million in the fourth quarter of fiscal 2009. Gross margin decreased to 54.4% as compared to 55.3% in the same period of 2009. The growth in gross profit was mainly driven by increased sales. The decline in gross margin was a result of changes in the Company's product mix and higher raw materials costs.

Operating expenses for the fourth quarter of fiscal 2010 were $3.5 million, as compared to $2.2 million in the same period last year. Sales and distribution expenses rose to $1.3 million from $1.1 million a year ago. The spending increase reflected continued investment in the Company's distribution network and TV advertising in order to increase product market share and create greater consumer awareness of the Company's premium quality products. General and administrative expenses increased to $1.4 million from $0.4 million in the fourth quarter of fiscal 2009, primarily reflecting warrants and options granted for services, increase in professional fees, and amortization of intangible assets purchased in the fourth fiscal quarter. Research and development expenses were $0.8 million, up from $0.7 million in the year ago period, reflecting the Company's commitment to continuing to build a pipeline of products.

Our operating income in the fourth fiscal quarter was $5.6 million, compared to $5.8 million in the fourth quarter of 2009. Operating margin decreased year-over-year to 33.6% from 40.0%. The Company did not incur income tax expenses as its subsidiary registered in the PRC has been granted a tax holiday for fiscal 2010. For the fourth quarter ended October 31, 2010, net income declined by 3.0% to $5.6 million, or $0.14 per diluted share, from $5.8 million, or $0.15 per diluted share in the prior year period.

Fiscal Year 2010 Results

For the fiscal year ended October 31, 2010, net sales were $55.2 million, up 27.1% from $43.4 million in fiscal 2009. The increase in sales was mainly attributable to the launch of new OTC medicines, increased demand and strong market acceptance of the Company's products, effective marketing efforts and product price increases. Gross profit was $29.4 million, up 27.4% from gross profit of $23.1 million in fiscal 2009. Gross margin was 53.3% compared to 53.2% in fiscal 2009. Operating expenses for fiscal 2010 were $11.6 million, as compared to $8.3 million for the same period a year ago. Income from operations was $17.8 million, up 20.2% from $14.8 million in fiscal 2009. Net income was $17.9 million, or $0.44 per diluted share, up 20.4% from $14.8 million, or $0.41 per diluted share, for the same period a year ago.

Financial Condition

As of October 31, 2010, the Company had cash and cash equivalents of approximately $27.8 million and total current assets of approximately $50.5 million. As of October 31, 2010, China Botanic had working capital of approximately $47.1 million as compared to $32.0 million for the fiscal year ended October 31, 2009. The Company has enhanced its working capital position as a result of tightened credit terms extended to customers and a decrease in the level of inventories. The Company had no long-term debt on its balance sheet as of October 31, 2010. Shareholders' equity stood at $69.8 million, compared with $50.5 million as of October 31, 2009. Net cash flow from operating activities increased to $23.8 million during fiscal year end October 31, 2010 from $13.1 million for fiscal year ended October 31, 2009, primarily reflecting increases in net income and trade receivables and a decrease in inventories.

Subsequent Events

On November 23, 2010, the Company successfully exhibited its unique portfolio of natural products at the 108th China Import and Export Fair recently held in Guangzhou, China. The Company attracted over 1,000 foreign and domestic visitors at its booth and signed letters of intent from 10 prospective distributors.

On November 29, 2010, the Company changed its name from Renhuang Pharmaceutical Inc. to China Botanic Pharmaceutical Inc. to better reflect the Company's corporate identity, brand image and business operations. The legal structure of China Botanic remains unchanged.

On December 2, 2010, Siberian Ginseng (Acanthopanax) Total Flavonoids Extract was awarded the third prize by the recently held Heilongjiang Province Science and Technological Progress assessment.

On December 14, 2010, the Company announced the appointment of Mr. David Dong as its new Chief Financial Officer.

Business Outlook

The market demand for pharmaceutical products in China is rapidly growing and China Botanic's growth strategy focuses on capitalizing on such opportunity through new product introductions, marketing efforts to gain additional market share and a larger distribution network. For fiscal 2011, the Company estimates net sales and net income to grow at 28% to 30%. Excluding any non-cash, non-operational gains or expenses, the Company expects fiscal 2011 net sales of $70.6 million to $71.7 million and net income of $22.9 million to $23.2 million. The Company experiences seasonality in its business, which is strongest in the first and fourth quarter and softer in the spring and summer season or the second and third quarter. Additionally, the Company's financial guidance also reflects its plan to continue to expand its sales and distribution network to drive growth in market share and to increase R&D spending on its pipeline projects.

"In 2011, we expect to see strong growth in revenue as a result of increased market acceptance and awareness of the benefits of our Siberian Ginseng Series in treating depression and nerve-regulation. We also anticipate many of our products will be listed in the reimbursement catalog of essential medicine for health insurance and we expect to grow as the PRC government moves forward with its Health Reforms in 2011," said Mr. Li. "We will continue to present our product offering at international pharmaceutical trade shows and conventions as they present outstanding opportunities to showcase our products to an international audience. In fiscal 2011, we anticipate continued sales growth from China and expansion into the overseas market."

EPS Q4 could have been $0.19 but increased general and administrative expenses kept EPS at $0.14. Their guidance for FY 2011 gives us a good feeling for the future. Especially the fact that they want to expand outside China.

Monday, January 24, 2011

China's 3G users hit 47 million

The number of China's third generation (3G) mobile telecommunication users soared to 47.05 million by the end of last year, the Beijing News reported.

Approximately, 36.83 million 3G users were new subscribers in 2010.

Among the three major mobile operators in the country, China Mobile, which is now the largest mobile carrier in the world, saw the largest increase from over 3.4 million reaching 20.7 million by last year.

In the same year, China Unicom's new 3G users increased by over 11 million while China Telecom added 8.2 million to its total.

Earlier November, 2010, the Ministry of Industry and Information Technology (MIIT) said that China aimed to have 150 million 3G mobile users by 2011, while investment in 3G development would hit 400 billion yuan.

China's telecommunication industry reported 744.8 billion yuan ($109.53 billion) in revenues during the first ten months of 2010, up 6.6 percent year on year, according to figures released by the MIIT.

China issued third generation, or 3G, telecom service licenses in Beijing on January 7, 2009.

Friday, January 21, 2011

China's natural gas consumption to increase

By Zhou Yan (China Daily)
China's apparent natural gas consumption is expected to grow by 22.6 percent in 2011 from 106 billion cubic meters (cu m) in 2010.

That's because domestic consumption of the clean fuel is set to surge in accordance with the country's need to reduce carbon emissions, according to a report released by the research arm of China National Petroleum Corporation (CNPC).

The demand for natural gas may hit around 130 billion cu m in 2011, and the figure is set to climb to 230 billion cu m by 2015, the country's biggest oil and gas maker by market value said on Thursday.

Domestic output of the fuel will reach 150 billion cu m in 2015, a rise of 58 percent compared with 2010. "The three biggest State-owned oil and gas producers saw their natural gas production register a double-digit increase in 2010," said Duan Zhaofang, a natural gas researcher at the CNPC Research Institute of Economics and Technology.

China has become a net importer of the clean fuel since 2006 and its imports may reach 30 billion cu m this year from 2010, the report showed. That will include 15 billion cu m of piped gas and 120 million tons of liquefied natural gas (LNG).

China imported 4.4 billion cu m of natural gas from Central Asia in 2010, while construction began on a gas pipeline linking Myanmar and China in June and is expected to be operational in 2013. The world's largest energy consumer is currently negotiating with Russia, the world's largest supplier of oil and gas, to set up a pipeline that is expected to transport a total of 70 billion cu m of the fuel annually from 2015.

"Price remains a major factor in deterring natural gas imports," Duan said.

China hiked the factory price of domestically made natural gas in 2010, laying the foundations for a reform of the pricing scheme within one or two years, she said.

China aims to cut its carbon dioxide emissions per unit of GPD by 40 to 45 percent in 2020 from 2005's level. As such, the country has stepped up efforts to explore and produce unconventional natural gas, such as shale gas, as it strives for cleaner energy sources.

In addition, CNPC's report also projected that China's apparent oil demand may rise 18.7 percent from 2010 to 540 million tons in 2015 on the back of the country's rapid economic expansion. Apparent demand takes into account domestic output and net imports, but excludes stockpiles

Amid the consumption increase, the nation's overseas oil dependence ratio may climb to 60 percent from 55 percent in 2010.

China also accelerated the pace of cross-border cooperation in its "going abroad" policy last year, to tap into more natural resources through the merger and acquisitions (M&A) activities of its big oil and gas producers.

The amount of overseas M&A by Chinese firms in the oil and gas industry reached a new high of $30 billion in 2010, accounting for 20 percent of the global total, CNPC said.

Among the deals, 80 percent took place in Canada and South America and unconventional sources, including deepwater drilling and oil sands assets, accounted for more than 80 percent of the total cross-border transactions in terms of capital.

"Going forward, we expect that international cooperation will take place in Africa, South America, and Canada, given the ample reserves of oil and gas in those regions, " said Wu Mouyuan, engineer of Overseas Investment Environment Research Department under the CNPC's research institute.

This could in the long run be positive news for out of favor stocks China Natural Gas (CHNG) and Sino Gas Int. (SGAS). The last one has a price target of $1.70 and trades at bankruptcy price of $0.45. RedChip's research report Sino Gas Int.

Artificial Life (ALIF) announces second healthcare iPhone/iPad app

Artificial Life, Inc.,  announced yesterday their upcoming mobile telemedicine health solution, NeuroDerMo, the second in a series of mobile healthcare products. The name "NeuroDerMo" is short for Neurodermatitis + Mobile. Neurodermatitis is a serious skin condition that will be monitored and managed by the application through inputs by patients and caregivers.

Research shows that six percent of the world's population is suffering from some form of neurodermatitis and that its prevalence globally is on the rise*. This skin disorder may be associated with other medical conditions such as psychological disorders, depression anxiety, nervousness eczema and/or psoriasis. It can also be exacerbated by chronic scratching and is common in children*.

NeuroDerMo is launched as a management solution for this segment of the population suffering from neurodermatitis and can be used as an aid in the successful treatment of the condition. This product leverages Artificial Life 's (ALIF) OPUS-M™ platform for end-consumers, healthcare providers and healthcare businesses. NeuroDerMo is scheduled for commercial availability in early Q2 2011. The product follows the Company's successful launch of their first healthcare monitoring mobile application GluCoMo™, a diabetes monitoring mobile application on the iPhone and iPad.

Introducing NeuroDerMo

The NeuroDerMo app is a mobile telemedicine and healthcare solution allowing patients, caregivers, doctors, and hospitals to share and communicate through mobile mediums such as smartphones, tablets, netbooks and other mobile internet devices. The goal is to track changes in skin conditions by closely monitoring many variables (such as redness, itchiness, etc.) which is facilitated by mobile data sharing and smart back-end processes. The NeruoDerMo app will enable remote and real-time monitoring and management of patients by doctors and hospitals with enhanced healthcare services which can result in a reduction in administration costs. NeuroDerMo offers an easily accessible repository of monitoring data for the neurodermatitis condition for patients to share with friends, families and caregivers.

NeruoDerMo has a customized mobile device front-end client and portal as well as a custom back-end infrastructure supported by Artificial Life's m-commerce solution OPUS-M™:

The NeuroDerMo front-end is comprised of two parts, a mobile client and a web portal. The mobile client is able to support most major smartphone platforms; allowing users to keep track of relevant information in real time such as wound condition tracking, food and medication intake and more. A photo diary with camera snapshots of affected areas gives users a chronological visual diary of their condition history. Sharing of information is also simplified and promoted through online social communities and forums so that users can quickly share their latest medical status, wound conditions, and other medical information with others. For greater flexibility and convenience, a synchronized web portal is also available for users and their friends, family members, and caregivers.

The NeuroDerMo back-end is powered by Artificial Life's OPUS-M™ technology and allows for friends, families, and caregivers to share critical information with each other.

Business Model
The front-end mobile client of NeuroDerMo will initially be launched as a free mobile app and service with limited features. Depending on the needs of the users, additional premium features and functions for the mobile client can then be purchased inside the mobile app in the coming versions.

NeuroDerMo will soon also be offered as a white label solution and can be adopted by doctors, health clinics, hospitals and/or healthcare industry businesses. The pricing of the customization, integration and maintenance services are based on monthly rental and usage fees.

"Artificial Life further expands its telemedicine health app portfolio with our upcoming launch of NeuroDerMo, a powerful mobile monitoring solution for patients suffering from neurodermatitis. We plan to grow more in the telemedicine field and will soon expand our healthcare app portfolio to include a wide-ranging family of mobile monitoring apps available across many smartphone platforms," said Eberhard Schoneburg, CEO of Artificial Life, Inc.


Tuesday, January 18, 2011

Weikang Bio-Technology (WKBT) expects to report fiscal 2010 revenue of $77.8 million and net income of $31.2 million or $1.04 Earnings per Share

Weikang Bio-Technology Group Co., Inc. today announced preliminary revenue and net income results for fiscal 2010.

For the fiscal year ended December 31, 2010, the Company expects to report net revenues of $77.8 million, representing a 64% increase from revenues of $47.5 million reported for fiscal 2009. The Company also expects to report net income of $31.2 million, which represents an increase of 100% from $15.6 million reported for fiscal 2009, and earnings per share of $1.04.

Commenting on the figures, Mr. Yin Wang, Chairman and CEO of Weikang, said, "2010 was an outstanding year of growth for Weikang, driven largely by the launch of multiple products under our Rongrun and TianFang brands. Our preliminary 2010 financial results far exceeded our September guidance of $55 million in revenues and $21 million in net income, and we remain very optimistic about our business prospects in 2011. We maintain our 2011 guidance of 30% to 50% revenue growth over 2010 and approximately 60% gross margin due to increased sales of high-margin products as a percent of total revenue, and we look forward to providing a complete picture of our 2010 financial results when we file with the SEC in March."

The stocks are just trading above $3.00, we expect they will be trading between $5.00-$6.00 in some months from now.


Sunday, January 16, 2011

Chinese RTO's explained

All investors in Chinese RTO's I would recommend to read the book:

Reverse Mergers: And Other Alternatives to Traditional IPOs (Bloomberg Financial) from David N. Feldman an authority and leading expert on reverse mergers, in which a private company becomes publicly traded through a merger with a publicly held "shell" company. His book on the subject, Reverse Mergers and Other Alternatives to Traditional IPOs, Second Edition (Bloomberg Press, 2009) was originally published in 2006.

A reverse merger into a shell company (a back door IPO) is essentially the acquisition of a non-operating public company by a private company, with the public company surviving. The shareholders of the private company gain control of the public company by merging their company into the public shell and receiving shares in the public shell as their merger consideration. The public company is called a “shell” because there is nothing inside – it’s typically not an operating company at the time of the transaction. The private company shareholders obtain the majority of the shares and board control; the private company’s name is usually adopted.

The process is often marketed as taking only a few weeks (much quicker than a traditional IPO) and avoiding a related lengthy and expensive SEC review – should the shell already be registered with the SEC.

To be fair, a reverse merger can be a cheaper and faster way to go public. You can often bundle it with a fund raising, lock up shareholders (so they don’t dump shares into the liquidity you might get) and cash out minority investors who need to sell. Theoretically, you can use the “public” shares as acquisition currency after you complete the transaction. And, if the business performs well you will have a higher price, liquidity and perhaps even an institutional following.

What you’ve seen more often is an increased burden for management from the demands of being public. Below a certain market cap institutions can’t or won’t buy company shares so investment banks aren’t motivated to make a market or initiate research coverage. As a result, shares trade thinly.

Financing is tough – the participants in such transactions tend to litter their deals with warrants and dilutive and contingent terms (should the company not meet certain performance criteria). Since the initial “shell” company often failed, a stigma can linger. Unlike with an IPO no large chunk of raised funds necessarily accompanies this route to becoming public (which can justify the increased scrutiny, cost and burden of being public).

Many companies completing a reverse merger don’t succeed. In many cases it has nothing to do with being public. Companies pursuing these alternatives are typically smaller (on average with market caps of $50-$100 million initially) than IPO candidates, so they tend to fail at about the same rate as any group of similarly situated private companies. And others fail because they went public for the wrong reasons (such as only to obtain one round of financing).

When a company starting to trade on the OTC Bulletin Board more often than not faces thin trading initially. But good companies watch their market support build over time with proper IR help, etc. And more and more companies are bypassing the Bulletin Board with a two step process of completing a reverse merger and PIPE, then doing a secondary public offering that brings the first trade right to Nasdaq or NYSE AMEX, where trading volume is typically much stronger.

Also shells with a legacy can be problematic as issues from the past are inherited by the target when it merges in.

More and more shells are turning to so-called Form 10 shells that are created from scratch as shells and never have any operating business in them. They become fully SEC reporting, but no trading is allowed until a reverse merger and subsequent SEC registration of shares takes place. Here there is no stigma from past operations. These Form 10s have been used successfully dozens of times in the two-step process outlined above.

Assume that any company looking at a reverse merger also has an IPO available to it. Most of these companies do not meet the size criteria of the IPO investment banks, but yet know they can benefit from being public in order to make capital formation easier (and yes billions of dollars in financing over the years have gone to OTCBB companies), make acquisitions using stock as currency, creating a path to liquidity for themselves and their investors, and incentivizing management with valuable stock options.

And yes there are still some unscrupulous Chinese companies around (show me an area of Wall Street where that isn’t true), but if management is legitimate, experienced and ethical a company can prosper and we investors also.

Avoiding Problems: How to identify quality China based companies listed on the U.S. Stock Exchanges

Article from NY Global Group

Some highlights:

Cultural Understanding is Critical to Successful Investing:

Peter Siris, a New York based Chinese-English bilingual money manager at Guerilla Capital who has invested in many U.S. listed China based companies, is perhaps one of the few people on Wall Street that have a good understanding of how to invest in small cap growth Chinese companies. He has put it very well in one of his media interviews:

"Most people who own these China stocks don't go to China, they don't know these companies, and they don't speak the language. And so they can be suckered in both long and short."

Due Diligence Process May Have Uncovered Some Problems Early On:

Some investors prefer public companies that have gone public through IPOs. But the reality is that it makes no difference whether the company went public through an IPO or a reverse merger – they go through the exact same level of SEC reviews when a financing related registration statement SEC Form S-1 is submitted to the SEC.

Problematic Chinese companies represent a very small percentage of all China based, U.S. listed companies. The majority of China based, U.S. stock exchange listed companies are compelling opportunities for investors to tap into the growth of China.

Structural changes however, should be made so that the investing public in the U.S. gets as much protection by investing in China names as they invest in U.S. companies. The following are some observations:

China Based Companies with VIE Structures Are the Single Biggest “Time Bombs” in the U.S. Markets:

In a VIE structure, the public shareholders do not own the underlying assets in the operating entity – the actual business that generates revenues and earnings for common shareholders. Instead, all of the sales and incomes reported by the public company and filed with the SEC are booked through contractual agreements whereby a company’s management and founders agree to transfer their rights to sales and incomes from the operating business to the public company. The original founders retain the ownerships of the underlying tangible hard assets such as cash, factories, land use rights, machinery, customers etc. In theory and in reality, company management and founders can choose to walk away and leave the public shareholders with no legal claims to the assets of an operating entity. Doesn’t this sound crazy? It certainly does.

RINO was a good example of a VIE structure. RINO’s market capitalization was at one time approaching $1 billion. Shareholders that bought shares in RINO apparently did not realize the inherent risks involved since they perhaps did not bother to read the company’s SEC filings which disclosed risks associated with a VIE deal structure.

A public company in the U.S. with a VIE structure poses the single biggest risk to U.S. investors. Alarmingly, companies with the VIE structure represent more than 20% of the entire universe of China based, U.S. listed companies listed on U.S. stock exchanges, including almost all of the high flying internet stocks. The vast majority of them have become public companies in the U.S. through IPOS.

In contrast, China’s own domestic stock exchanges do NOT permit listing of any company whose revenues are organized under a VIE structure. The VIE structure was created by global law firms in the early 2000s to intentionally circumvent legal requirements in China that prohibit foreigners from owning shares in China based internet companies. That law is still applicable in China today. However, the “creative” VIE structure has become a main stream listing process for China based companies – with almost all of them listed through IPOs in the U.S. markets. What do shareholders own by buying shares of a company organized under a VIE structure? Legal professionals may argue that shareholders get sufficient protection through those management contracts. The reality is, in today’s China, a VIE structure is nothing but a piece of paper evidencing certain “right” that is next to impossible to enforce under Chinese laws.

Companies with “Earnings Make Good Provisions” Pose Significant Risks to

The typical audience of early investors in U.S. listed China based companies are small hedge funds, those with less than $100 million under management and are never long term holders. The vast majority of them are unwilling to or are unable to perform much due diligence on the target companies in China. A popular mechanism that caters to these types of investors is created, by Wall Street bankers and lawyers and is given the fancy name of “earnings make good provisions.” In this approach, investors demand a company CEO make personal guarantees as well as on behalf of his company that certain minimum net income targets must be met by the company, typically for 3 years in a row from the date of the investment. If the company misses its earnings targets in a particular year, the CEO could lose the majority control of his company to the investors to “make good” on those earnings promises. This financing mechanism is worse than a weather forecast. Unless one can predict weather conditions precisely on a specific date, three years in a row, one may lose control of his company. Such mechanism not only stimulates management fraudulent behavior but also limits the investing public’s upside – earlier investors often sell short against their positions. This is one of the main reasons why many China based, U.S. listed high growth small cap companies trade at single digit current year multiples and are highly vulnerable to short seller attacks – they fight the short sellers on a daily basis as a result of their previously entered “earnings make good provisions” related financings. A lot of Chinese company CEOs complain about these “poison terms”, often sold to them by small investment banks. The willingness to do “all things possible” to achieve those earnings targets - a high risk endeavor for both the companies and the investing public.

Investors can follow some own criteria before investing in US-listed stocks:

“NYGG 10 Commandments” which they strictly follow during their client acceptance process:

1. Leader: A market leader in a high growth industry in a favorable market environment

2. Operator: • Managed by Company founders and industry experts, not capital markets personnel

• Founders/management must own majority of the Company

3. Profitable: • Minimum US$2 million in recent year net income (U.S. or International GAAP audited)

• Net income margins of at least 15%. Strong balance sheet, no long-term debt

4. Growth: • Minimum year over year growth of 50% in net income in the last two years

• Anticipate minimum YOY growth of 50% in net income in the next two years without

requiring significant additional investment capital

5. Ownership: Company must own 100% of the underlying business and related assets

(REJECT revenue recognition through VIE structure or “management contracts”)

6. Quality: Must exceed listing standards for the NASDAQ, NYSE or other stock exchanges

7. Commitment: • All Company insiders must sign share lock-up agreements

• Restrict personal share sales to the general public for minimum 3 years from the date of

Company’s initial listing on a stock exchange

8. Governance: • Strong corporate governance, strict compliance with all laws and regulations

• Quality legal representation and quality independent audit firm audits

9. Proactive: • Management team must have strong English communications skills

• Regular participation in deal or non-deal road shows through quality investment banks

10. Clean: Simple capital structure - no “poison” financings or “earnings make good” provisions

Faceoff: Heat Over Chinese Reverse Mergers

Chinese reverse mergers are continuing to make headlines, causing investors to take notice and, as a result, these special types of mergers have come under increased scrutiny.

Herb Greenberg, a stock commentator, has been following this topic closely.

Interviews with David Gentry, president and CEO of RedChip Companies, a business that promotes small-cap companies, including Chinese reverse mergers

Thursday, January 13, 2011

Artificial Life (ALIF) announces 96% increase in iPhone/iPod/iPad downloads

Today Artificial Life (ALIF) revealed its current iPhone/iPod and iPad title sales, download numbers and key ranking statistics.

The total number of iPhone/iPod/iPad application downloads generated for the year of 2010 was over 15.7 million in comparison to 8 million downloads in 2009.

As of December 31st, 2010, the Company has produced and released 36 applications for the iPhone, iPod touch and iPad. The top title was downloaded for over 6.2 million times, the second most for over 3.4 million times, and the third most for close to 3.1 million times. The average number of downloads per game was about 0.66 million. Paid iPhone games were sold at between USD 0.99 to USD 4.99 with an average price per game of USD 2.27. All the new games released have achieved Top 100 or higher download rankings in their categories. Artificial Life's (ALIF) games have reached #1 on Apple App Store Top Charts in over 74 countries or 83% of all the offered countries.

The Company has also gained successful results from penetrating the iPad market. For instance, since the launch of Linkin Park 8-Bit Rebellion! iPad Edition in April, 2010, the game has firmly remained in US Top 20 Paid Music Apps in many countries around the world. Other iPad games have also continued to secure their places in the Top 50 charts even months after their releases. GluCoMo™, the first newly launched healthcare iPhone application for monitoring and coaching diabetic patients, has also received positive results with the achievement of being in the US Top 50 Healthcare & Fitness Apps. The highly popular iPhone games: Amateur Surgeon, Red Bull Racing Challenge, and iSink U have also been ported onto the iPad platform with enhanced features and gameplay.

Among the 36 produced games, 26 are based on licensed and branded intellectual property from a variety of licensors while 10 games are based on Artificial Life's proprietary IP. The games have been sold in a total of 89 countries worldwide. The distribution of game downloads by region is: 44% in North America, 34% in Europe and Africa, 17% in Asia Pacific, 3% in Latin America and 2% in the Middle East. The Top 5 countries in terms of download numbers for our products are: United States, United Kingdom, France, Germany, and Canada (with 40%, 10%, 5%, 5% and 5% of downloads respectively).

"2010 has been a very successful year for Artificial Life. Our R&D and technology advancement have greatly contributed in delivering outstanding iPhone/iPod/iPad applications. We will continue to invest in R&D and new game and business apps design to provide highest quality games and business applications for the iPhone and iPad in the year 2011," said Eberhard Schoneburg, CEO of Artificial Life, Inc

The average price per game went up from USD 2.05 to USD 2.27. Also the penetration were they have reached #1 went from 70 to 74 countries.

The distribution of game downloads in the Asia Pacific region is steadily rising from Q2 13%, Q3 15% to Q4 17%. This is a very important sign that their efforts are succesful. We think 2010 results will be astonishing and the stock price does still not reflect the value of the underlying businesses.


Monday, January 10, 2011

Artificial Life (ALIF) strikes product development deal with 3M

Artificial Life (ALIF) today announced that it has agreed with 3M Company to launch three distinct pilot projects to co-develop innovative joint mobile products in 2011.

3M invested approximately $6.5 mm in October 2009 to acquire an equity stake of 10% in Artificial Life (ALIF), Inc. In addition, 3M and Artificial Life had entered into an alliance agreement outlining their intent to collaborate in the coming years on projects related to the research and development of new mobile device products and technology.

The parties intend to develop three pilot projects comes after a paid evaluation period of approximately 14 months during which Artificial Life had developed several show case and prototype mobile and augmented reality applications for a number of business units of 3M globally.

"We are honored that 3M has positively concluded the evaluation of our technology and decided to launch three pilot projects with us in the first quarter of 2011. We are looking forward to working with 3M on these projects and hopefully many more in the coming years," said Eberhard Schoneburg, CEO of Artificial Life, Inc.

Shorts will get burned, maybe not now but in the nearby future.


Friday, January 7, 2011

Artificial Life (ALIF) attacked by a SHORT GANG

Like is the case with many OTC BB stocks also Artificial Life (ALIF) is been beaten down by a Short Gang controlling the message boards and posting negative stories about accounting gimmicks.

At these prices we are buying again.

Wednesday, January 5, 2011

Artificial Life (ALIF) launches new investment entity and announces first investments

Artificial Life (ALIF), today announced the launch of a new investment entity and its first two investments.

The company has launched Artificial Life Investments Ltd., a new, wholly owned Cayman Islands subsidiary that will serve as a dedicated investment vehicle of the Artificial Life group.

In late December 2010, Artificial Life Investments Ltd. already made its first two investments, acquiring equity stakes of approximately 19% and 16%, respectively, in ARE Augmented Reality Europe GmbH ("ARE"), a Berlin-based technology start-up, and M-Health Middle East Ltd. ("M-Health"), a Cayman Islands joint venture that is expected to establish its headquarters in Dubai and begin operations in early 2011.

ARE is engaged in the global purchase, license and sale of license rights and patents to special augmented reality technology for mobile applications. Artificial Life Investments Ltd. acquired its equity interest in ARE for approximately $695,000 USD.

M-Health is a newly formed joint venture between Artificial Life and two of its long-term clients and business partners, each with substantial experience and know how relating to doing business in the Middle East. The venture will focus on mobile telemedicine technology sales and distribution in the Middle East. The parties anticipate that M-Health will serve as Artificial Life's distributor and sales agent in the Middle East in the telemedicine field, including actively selling and supporting Artificial Life's Mobil Diab® technology and its mobile diabetes monitoring app GluCoMo™. Artificial Life Investments Ltd. purchased its investment in M-Health by contributing accounts receivable in the aggregate amount of approximately $9.6 million USD. Two other wholly-owned subsidiaries of Artificial Life, Inc. simultaneously acquired, in the aggregate, approximately 3.9% of the equity of M-Health in exchange for accounts receivable worth approximately $2.3 million USD.

Artificial Life Investments Ltd. intends to make additional investments in 2011, acquiring equity stakes in companies that the Artificial Life group considers to be a valuable extension of its core business. The investment focus will be on certain mobile technologies such as augmented reality and optical recognition technologies, telemedicine, social networking and general business apps for mobile devices based on iPhone/iPad and Android operating systems.

Artificial Life Investments Ltd.'s flexible investment strategy, in which equity investments are preferably wholly or partially acquired in exchange for non-cash assets, is designed to take advantage of the current demand for Artificial Life's proprietary technologies. These non-cash assets may include non-exclusive technology licenses, accounts receivable, or stock of Artificial Life, Inc

"The launch of our new investment entity and the completion of its first investments are major milestones in our expansion strategy for 2011 and the coming years. Artificial Life has experienced rapid organic growth over the past couple of years. The Company has now reached a size and maturity where the logical next step is to engage more in M&A activities and to expand further by making selective equity investments in promising start-ups and joint ventures. This is possible in part because of the high demand for our technology, which allows us, for example, to leverage licensing rights in our proprietary technologies for equity in new and promising start-ups or joint ventures. Our new equity investments will give us the opportunity to grow in terms of both increased revenue volumes and new geographical markets," said Eberhard Schoneburg, CEO of Artificial Life, Inc.

Positive news that they are focussing on augmented reality technology. This will be the real deal in some years.


Monday, January 3, 2011

Bob Doll from BlackRock: 2011 A Look Ahead

BlackRock, Vice Chairman Bob Doll has been putting out annual predictions already for more than 15 years. Doll, who helps oversee about $3.2 trillion at BlackRock, the world’s biggest asset manager, just released his ten predictions for 2011.

Bob Doll's 2011 predictions

Saturday, January 1, 2011

Article Barron's: Mergers That Don't Enrich Shareholders

Mergers That Don't Enrich Shareholders, Reverse Mergers of Chinese companies continue to sag

Disappointing China Investor King portfolio results

Static portfolio's don't work.

Especially in China U.S.-listed stocks it is important to take profits and trade the hell out of them. This year was a very volatile year. A year of frauds, short selling, and other negative factors that influenced the  China space a lot. Despite low valuations of the companies that are part of the China Investor Portfolio we could not maintain the nice profits the portfolio had one month ago.

A year to forget.

The best calls I made with the articles How to play the mexican mining boom and China Agri Business (chbu) much better than expected

For me personally miners and trading in some selected US-listed China stocks paid off.