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The DGW Crookery Updated & It Looks Even Worse
The DGW Crookery Updated & It Looks Even Worse
The DGW Crookery Updated & It Looks Even Worse
com
1992?
1989?
Duoyuan
Global
Water
lists
the
Langfang
facility
as
a
plant
or
area
of
operaIons.
This
must
be
where
the
company
produces
the
required
materials
and
equipment
to
carry
out
their
“water”
business.
Duoyuan
Digital
Press
also
lists
Langfang
Manufacturing
base
as
an
area
of
operaIons.
Could
it
be
that
this
plant
creates
water
equipment
and
doubles
as
a
prinIng
facility?
We
find
it
highly
unlikely.
Contacted investor relations (IR) about who owns the Langfang facility?
Our
team
contacted
IR
on
12.17.10
and
we
spoke
to
a
pleasant
woman
named
Ashley
who
listened
to
our
concerns
about
overlap
and
who
owned
the
Langfang
facility.
Our
worry
is
that
the
asset
is
booked
by
both
DYP
and
DGW
on
the
balance
sheet
under
the
property,
plant,
and
equipment
(PPE)
secIon.
The
other
large
concern
is
with
the
equipment
inside
of
the
plant
and
the
revenues
Ied
to
anything
produced
and
sold.
She
also
acknowledged
that
DYP
&
DGW
have
the
same
address.
We
decided
to
examine
DYP’s
10-‐Ks
to
determine
if
they
menIon
this
facility
and
sure
enough
they
do.
In
a
Form
10-‐Q
for
the
period
ending
March
31,
2010
the
company
states
that
they
have
construcIon-‐in-‐progress
at
the
LangFang
Duoyuan
facility.
Under
the
PPE
secIon
of
that
10-‐Q,
DYP
claims
to
have
$4,292,379US
associated
with
the
construcIon-‐in-‐progress
at
the
LangFang
facility.
If
DYP
is
taking
construcIon
expenses
associated
with
the
Langfang
facility,
does
that
mean
they
own
it
and
does
DGW
also
Langfang
claim
it
on
their
balance
sheet
as
an
asset?
Why
does
DGW
show
this
facility
on
their
website
as
a
source
of
operaIons?
This
is
highly
suspect
in
our
opinion
and
fear
the
company
is
double
booking
revenues
&
expenses
associated
with
the
Langfang
plant.
From
DYP’s
Form
10-‐Q
for
the
period
ending
December
31,
2009:
“Langfang
Duoyuan
is
located
in
a
Special
Economic
and
High
Technology
Zone
and
the
PRC
tax
authority
has
offered
a
special
income
tax
rate
to
Langfang
Duoyuan
for
doing
business
in
the
special
zone.
With
the
approval
of
the
local
government,
Langfang
Duoyuan
is
exempt
from
income
taxes
for
five
years,
commencing
with
their
first
profitable
year
of
operaIons.
Langfang
Duoyuan
has
operaIng
losses
prior
to
the
calendar
year
ended
December
31,
2002,
and
began
generaIng
a
net
profit
for
the
calendar
year
ended
December
31,
2003.
Therefore,
Langfang
Duoyuan
had
an
income
tax
exempIon
for
the
years
ended
December
31,
2003,
through
December
31,
2007.
Langfang
Duoyuan
has
been
subject
to
an
income
tax
rate
of
25%
starIng
January
1,
2008,
under
the
newly
unified
corporate
income
tax
rate.” 2
2 Duoyuan Printing Inc. December 31, 2009 Form 10-K (filed February 11, 2010), page 11
Duoyuan
Global
Water
P a g e
|
5
DL | davianletter.com
With massive overlaps to Duoyuan Digital Press (DYP) investors should stay away.
Earlier
this
year,
DYP
saw
it’s
stock
drop
massively,
aner
the
company
fired
it’s
auditor
at
the
Ime,
Deloioe
&
Touche
(Deloioe).
DYP
cited
that
Deloioe
was
hanging
up
the
company’s
10-‐K
filing
and
we
think
righpully
so.
Deloioe
was
requesIng
access
from
DYP
to
certain
expense
reports,
bank
accounts,
etc.,
linked
to
$3MM
in
expenses.
The
company
would
not
grant
the
firm
access
to
these
records
and
Deloioe
refused
to
sign
off
on
the
report.
A
short
Ime
aner,
Deloioe
was
fired.
Since
there
is
much
overlap
between
these
two
companies,
DGW
saw
their
stock
sell
off
in
the
wake
of
the
DYP
fiasco.
Management
has
since
hired
a
third
party
audit
commioee
to
review
their
pracIces
and
this
will
most
likely
come
back
posiIve,
which
should
be
no
surprise
and
taken
as
a
grain
of
salt.
Wenhua Guo, the founder and chairman inks deals between his companies. How are investor
interests protected?
Mr.
Guo
is
the
founder,
chairman,
and
at
one
point
the
CEO
of
DYP
and
DGW.
A
recent
10-‐Q
from
DYP
shows
that
Wenhua
Guo
has
related
party
transacIons
in
between
his
companies.
In
this
example
DYP
rents
office
space
from
Duoyuan
InformaIon
Terminal
Manufacture
Co.,
of
which
Wenhua
Guo
is
the
sole
shareholder.
The
lease
between
DYP
and
Mr.
Guo
is
for
$990,000US
over
three-‐years.
This
property
was
owned
by
Duoyuan
Water
Recycle
Technology
Industry
Co.,
who
was
also
a
related
party.
Mr.
Guo
has
a
lucraIve
arrangement
in
place
here.
DYP,
a
company
that
he
has
a
significant
interest
in,
leases
from
another
company,
which
Mr.
Guo
is
the
sole
shareholder
of
Duoyuan
InformaIon
Terminal
Manufacture.3
3 Duoyuan Printing Inc. December 31, 2009 Form 10-K (filed February 11, 2010), page 18
Duoyuan
Global
Water
P a g e
|
6
DL | davianletter.com
Here was Mr. Guo, DGW’s Chairman and CEO from their last conference call on uIlizaIon rates:
“Michael
Cox
of
Piper
Jaffray:
Okay.
Thank
you.
And
then,
I
was
wondering,
if
you
could
talk
about
your
capacity
situaIon
or
where
you
are
from
a
uIlizaIon
standpoint
at
your
Langfang
facility?
Wenhua
Guo,
CEO
and
Chairman:
I
want
to
share
three
points
with
you,
firstly,
given
the
current
basic
producIon
situaIon
we
have
around
the
whole
year,
we
are
operaIng
at
almost
maximum
capacity
and
at
the
beginning
of
the
given
year
[inaudible]
it
comes
to
the
end
of
the
given
year,
our
capacity
uIlizaIon
will
usually
be
lower
than
the
difficult
months
of
the
given
year.
And
secondly
from
a
professional
expert
–
professional
specialist
point
of
view,
we
are
transforming
our
facility
from
a
manually
operated
factory
into
an
automated
assembly
line.
And
thirdly,
we
are
transforming
our
facility
from
a
mulI-‐product
line
into
a
professional
diversified
product
porpolio
based
operaIon.
I
feel
it
is
very
hard
for
me
to
give
you
a
posiIve
number
to
describe
the
uIlizaIon
raIo
of
our
capacity.
Thank
you.”4
DGW
claims
to
be
founded
in
1989/1992
and
lists
this
facility
as
their
sole
source
of
manufacturing
and
operaIons.
How
can
it
be
that
there
is
no
facility
at
this
address
in
2010?
If
there
is
no
building,
how
is
DYP
taking
construcIon
expenses?
X536
NOT here!
Conclusion
It
is
our
conclusion
that
if
DGW
is
not
commixng
fraud
by
double
booking
assets
and
expenses
Ied
to
certain
assets,
we
would
be
surprised.
There
are
simply
too
many
loose
ends
and
small
things
that
do
not
add
up
at
both
DYP
and
DGW.
Mr.
Guo
has
done
everything
to
make
himself
untrustworthy
and
unIl
he
provides
more
clarity
into
his
companies
book,
we
think
both
companies
could
be
a
fraud.
Both
companies
have
become
sloppy
and
have
even
made
errors
on
their
websites.
A
company
should
know
when
it
was
founded
and
ensure
that
the
correct
data
is
on
the
website.
The
fact
that
DYP
is
already
under
scruIny
for
it’s
accounIng
pracIces
should
make
investors
in
DGW
very
concerned.
Not
only
do
these
companies
share
Mr.
Guo,
but
headquarters,
plants,
etc.
Disclaimer and Independence: As
of
the
publica0on
date
of
this
report,
The
Davian
Le9er,
LLC
has
NO
posi0on
or
interest
in
this
company,
but
our
clients
may
or
may
not
have
exposure.
This
report
does
not
purport
to
be
a
complete
statement
of
all
material
facts
related
to
any
company,
industry,
or
security
men0oned.
The
informa0on
provided,
while
not
guaranteed
as
to
accuracy
or
completeness,
has
been
obtained
from
sources
believed
to
be
reliable.
The
opinions
expressed
reflect
our
judgment
at
this
0me
and
are
subject
to
change
without
no0ce
and
may
or
may
not
be
updated.
Past
performance
should
not
be
taken
as
an
indica0on
or
guarantee
of
future
performance,
and
no
representa0on
or
warranty,
express
or
implied,
is
made
regarding
future
performance.
This
no0ce
shall
not
cons0tute
an
offer
to
sell
or
the
solicita0on
of
an
offer
to
buy,
nor
shall
there
be
any
sale
of
these
securi0es
in
any
state
in
which
said
offer,
solicita0on,
or
sale
would
be
unlawful
prior
to
registra0on
or
qualifica0on
under
the
securi0es
laws
of
any
such
state.
This
research
report
was
originally
prepared
and
distributed
to
clients
of
The
Davian
Le9er,
LLC.