Commencement of Internal Investigation
On March 21, 2016, the Board resolved to undertake an
investigation (the Investigation) into the Companys operations and assets and
those of its subsidiaries in China and into the activities of Companys former
CEO and significant stockholder, Ms. Lianyun Han, as those activities relate to
the Company and its subsidiaries, to identify the location of the Companys and
its subsidiaries assets and potentially seize control of the Companys and its
subsidiaries assets from the CEO. The Board has engaged FTI Consulting (China)
Limited (FTI) to provide certain advisory and due diligence services relating
to the Investigation and the law firm of King & Wood Mallesons to represent
the Company and support FTIs efforts and to provide other legal advice related
to the Investigation.
The initial phase of the Investigation will involve
investigative due diligence on the Companys variable interest entity Daqing
Shuaiyi Biotech Co Ltd. with an emphasis on operational status and working
capital position. Based upon the initial Investigation, the scope of the
Investigation will potentially expand to include investigative due diligence on
other entities with an emphasis on working capital assets and operational status
and reputational due diligence.
The Company will delay the release of its 2015 financial
results due to the pending Investigation and does not anticipate filing its Form
10-K until after the conclusion of the Investigation. The Company does not
intend to comment further regarding the Investigation until it is completed.
Appointment of Y. Tristan Kuo as VP of Investor
Relations
On March 31, 2016, the Company appointed Y. Tristan Kuo as the
Companys VP of Investor Relations and the Company entered into an Employment
Agreement with Mr. Kuo, pursuant to which, among other things, the Company
agreed to pay Mr. Kuo an annual salary of $30,000. Mr. Kuos position is a
part-time position. The Employment Agreement also contains covenants prohibiting
Mr. Kuo from competing with the Company during his employment or for a period of
six months thereafter, or disclosing any confidential information of the
Company. The Employment Agreement may be terminated by either party for any
reason upon 10 days notice.
On March 31, 2016, the Company and Mr. Kuo also entered into a
Restricted Shares Grant Agreement, pursuant to which the Company granted 20,000
restricted shares of the Companys common stock to Mr. Kuo under the Companys
2009 Equity Incentive Plan. The restricted shares will vest in full on September
30, 2016. If Mr. Kuos service with the Company ceases for any reason other than
his (a) death, (b) disability, (c) retirement, or (d) termination by the Company
without cause, any unvested restricted shares will be automatically forfeited to
the Company.
The foregoing descriptions of Mr. Kuos Employment Agreement
and Restricted Shares Grant Agreement do not purport to be complete and are
qualified in their entirety by reference to the Employment Agreement and
Restricted Shares Grant Agreement which are filed as Exhibits 10.3 and 10.4 to
this Current Report on Form 8-K, respectively, and are incorporated herein by
reference.
Mr. Kuo, age 61, has more than 30 years of experience in
accounting, financing and information systems for companies in the
manufacturing, commodity trading and banking industries and has served in the
capacity of CFO, CIO and Controller. Mr. Kuo serves as the Chief Financial
Officer of Success Holding Group International, Inc., a provider of personal
improvement seminars, and has held such position since August 2015. Prior to
that, he served as CFO/CIO Partner of Tatum, a management and advisory services
firm, from December 2014 to August 2015, as an independent board member and
audit committee chairman of KBS Fashion Group Limited (NASDAQ:KBSF) from August
2014 to May 2015, and as the Chief Financial Officer of Crown Bioscience, Inc.
from June 2012 to November 2013. Prior to that, Mr. Kuo served as Chief
Financial Officer of China Biologic Products, Inc. (NASDAQ: CBPO), a Chinese
biopharmaceutical company, from June 1, 2008 to May 31, 2012 and served as its
Vice President Finance between September 2007 and May 31, 2008. Prior to that,
Mr. Kuo worked for the Noble Group in Hong Kong as the Senior Business Analysis
Manager from February through August 2007 and as the CFO of Cuisine Solution,
Inc., a then publicly traded company in Alexandria, Virginia, from December 2002
to January 2007. Mr. Kuo also served as the Vice President of Information System
for Zinc Corporation of America in Monaca, Pennsylvania from 2001 and 2002 and
as Chief Information Officer and Controller of Wise Metals Group in Baltimore,
Maryland, the largest independent aluminum sheet producer in the U.S., from 1991
to 2001. Mr. Kuo obtained his Master's degree in Accounting from The Ohio State
University and Bachelors degree in Economics from Soochow University in Taipei.
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There are no arrangements or understandings between Mr. Kuo and
any other persons pursuant to which he was selected as an officer. Mr. Kuo was
elected until his successor is duly elected and qualified. There is no family
relationship that exists between Mr. Kuo and any directors or executive officers
of the Company. In addition, there has been no transaction, nor is there any
currently proposed transaction between Mr. Kuo and the Company, that would
require disclosure under Item 404(a) of Regulation S-K.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking
statements provided by the Private Securities Litigation Reform Act of 1995. The
word expect and similar terms and phrases are used in this notification to
identify forward-looking statements and statements regarding future events that
involve risks and uncertainties. Risks, uncertainties and assumptions that could
affect the Companys forward-looking statements include, among other things, the
future appointment of a CEO and the conduct of the Investigation. You are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this report. The Company undertakes no obligation
to revise or update any forward-looking statements to reflect events or
circumstances after the date hereof.