 As a time honored tradition, the International Stock and Bond Markets were closed in observance of Good Friday. On this annual occurrence, most businesses including the SEC are open for business. According to Panic of 1907 or Not, Trading Stops on Good Friday, the New York stock exchange has been closed every Good Friday for at least 144 years, except 1898, 1906 and 1907. 1907 was the same year of the Panic of 1907, also know as the 1907 Bankers’ Panic. This financial crisis that occurred when the New York Stock Exchange fell nearly 50% from its peak in 1906. According to The Panic of 1907 issued by Fred E. Foldvary, Senior Editor at The Progress Report, the fundamental causes of the Panic of 1907 were the flawed monetary and fiscal systems of the United States. Legend still has it that the panic of 1907 was the driving force behind not having a “Bad Friday”.
In honor of the Good Friday, I would like to introduce “Make Good Provisions”. While Chinese companies conduct a reverse merger and subsequently private placement, the make good provision can be usually found followed. It is a written guarantee that the company will meet their projections or be prepared to pay a penalty. This investor protection can then be used to measure future earning performance. The make good provision requires management to place up a portion of shares into escrow account and set up certain performance targets. The targets can be pre-tax net income, earning per share, revenue, or production capacity. If the company fails to achieve the goal, the stocks will be released to investors. Of course, if the company reaches the goal, the stocks will be returned.
Many of the companies we cover have make good provisions allowing us to perform hedge fund like calculations and stock analysis. Unlike most financial commentary, China Vesting reads the small print. Our premium newsletter subscribers will get proprietary analysis done on make good provisions. Here are examples from companies we cover.
China Advanced Construction Materials Group (CADC)
In connection with the private placement that CADC closed on June 11, 2008, the company and the investors entered into a Make Good Agreement whereby the shareholders agreed to transfer 3,500,000 shares of common stocks to the investors on a pro rata basis if the company could not meet certain performance targets:
1) At least $5,200,000 of after-tax net income for the fiscal year ended June 30, 2008;
2) At least $9,000,000 of after-tax net income for the fiscal year ended June 30, 2009;
3) At least $9,000,000 of after-tax net income for the fiscal year ended June 30, 2010.
China Valves Technology (CVVZ)
In connection with the private placement that CVVZ closed on August 26, 2008, the company and the investors entered into a Make Good Escrow Agreement whereby the shareholders agreed to transfer 25,166,064 shares of common stocks to the investors on a pro rata basis if the company could not meet certain performance targets:
1) At least $10,500,000 of after-tax net income for the fiscal year ended December 31, 2008;
2) At least $23,000,000 of after-tax net income or $0.369 of fully diluted EPS for the fiscal year ended December 31, 2009;
3) At leaset $31,000,000 of after-tax net income or $0.497 of fully diluted EPS for the fiscal year ended December 31 2010.
China Sky One Medical (CSKI)
In connection with the private placement that CSKI closed on February 21, 2008, the company and the investors entered into a Make Good Agreement whereby the shareholders agreed to transfer 3,000,000 shares of common stocks to the investors on a pro rata basis if the company could not meet certain performance targets:
1) At least $1.05 of fully diluted EPS for the fiscal year ended December 31, 2007;
2) At least $1.63 of fully diluted EPS for the fiscal year ended December 31, 2008.
Tianyin Pharmaceutical (TPI)
In connection with the private placement that TPI closed on January 25, 2008, the company and the investors entered into a Make Good Escrow Agreement whereby the shareholders agreed to transfer 2,410,283 shares of common stocks to the investors on a pro rata basis if the company could not meet certain performance targets:
1) At least $5,600,000 of Reported Net Income or $0.16 fully diluted EPS for the fiscal year ending June 30, 2008;
2) At least $7,200,000 of Reported Net Income or $0.20 fully diluted EPS for the fiscal year ending June 30, 2009.
Rino International (RINO)
In connection with the private placement that RINO closed n October 5, 2007, the company and the investors entered into a Make Good Agreement whereby the shareholders agreed to transfer 5,580,000 shares of common stocks to the investors on a pro rata basis if the company could not meet certain performance targets:
1) At least $16,000,000 of after tax net income for the fiscal year ending December 31, 2007;
2) At least $28,000,000 of after tax net income for the fiscal year ending December 31, 2008.
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 China Petroleum & Chem ADS (SNP) files 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16]. NOTICE IS HEREBY GIVEN that the on-site annual general meeting (“Annual General Meeting”) of China Petroleum & Chemical Corporation (“Sinopec Corp.” or the “Company”) for the year 2009 will be held at Kempinski Hotel, 50 Liangmaqiao Road, Chaoyang District, Beijing, China on Tuesday, 18 May 2010 at 9:00 a.m. Holders of domestic shares are provided with internet voting to participate at the Annual General Meeting.
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 A-Power Energy Generation Systems, Ltd. (APWR) files 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16]. SHENYANG, China, March 31, 2010, A-Power Energy Generation Systems, Ltd. (NASDAQ: APWR) ("A-Power" or "the Company"), a leading provider of distributed power generation systems in China and a fast-growing manufacturer of wind turbines, today reported its unaudited financial results for the fourth quarter, and the fiscal year ended December 31, 2009.
4Q09 Financial Highlights
— Revenues were $125.9 million for a 54.6% year-over-year increase;
— Gross margin was 21.3% vs. 17.8% in 4Q08;
— Excluding the expenses and non-cash losses related to the convertible bond and warrants, non-GAAP Net Income
attributable to common shareholders for Q4 was $20.6 million, or non-GAAP diluted EPS $0.61;
— GAAP loss was $23.9 million, or $0.69 per diluted share;
— Cash, Cash equivalent and restricted cash were $179.8 million.
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 CDC Corp. (CHINA) files 6-K - Report of foreign issuer [Rules 13a-16 and 15d-16]. As of December 31, 2009, CDC Corporation (the “Company”) accumulated an aggregate of approximately $34.1 million in inter-company liabilities (the “Inter-Company Balance”) owed to its subsidiary, CDC Software Corporation (“CDC Software”). As previously disclosed in public filings made by CDC Software in connection with its initial public offering in August 2009 and subsequently discussed in the Company’s and CDC Software’s quarterly earnings releases, the Inter-Company Balance resulted primarily from allocations between the Company and CDC Software of certain costs incurred by either the Company or CDC Software on behalf of the other.
On February 24, 2010, the Company and CDC Software entered into a loan agreement with respect to the Inter-Company Balance (the “Loan Agreement”). The Loan Agreement provides for interest to accrue monthly at the higher of either four (4%) percent per annum, or the LIBOR Rate (as defined in the Loan Agreement) plus two and a half percent (2.5%), per annum. Interest and principal is due at maturity on February 24, 2015. The maturity date may be extended for additional one (1) year periods by the mutual written agreement of the parties.
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 Tianyin Pharmaceutical Co., Inc. (TPI) files 4 - Statement of changes in beneficial ownership of securities. Stewart Lor as Director of Cmark Holdings, Inc. sold 161,680 shares of TIANYIN PHARMACEUTICAL CO., INC. [ TPI ]. Based on the closed price on April 1, 2010, the transaction accounts for $58,851
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 Sohu.com Inc. (SOHU) files 8-K - Current report. On March 30, 2010, the registrant entered into an employment agreement with Mr. Xiaochuan Wang, Sohu’s Chief Technology Officer. Under the terms of Mr. Wang’s employment agreement, he will be entitled to receive (i) an annual base salary of $180,000 and (ii) an annual housing allowances of $30,000 and will be eligible for an annual discretionary cash bonus equal to up to 50% of his annual base salary. Mr. Wang will also be eligible to participate in Sohu’s share incentive plans and will receive health, life and disability insurance. If Mr. Wang terminates his employment with Sohu for good reason or if his employment is terminated by Sohu without cause, he will be entitled to receive severance benefits, including (i) his monthly base salary for the lesser of six months following termination and the remainder of the term of the employment agreement, (ii) health care coverage for up to six months following termination, and (iii) payment of an annual bonus for the remainder of the year in which termination occurs to the extent that the bonus would have been earned had employment continued through the end of the year. Unless sooner terminated by either the employee or Sohu, Mr. Wang’s employment agreement will expire on November 29, 2012.
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