A-Power Energy (APWR US)

A-Power was a BVI holding company, operating via PRC companies engaged in the design, construction and installation of distributed power generation systems. In June 2011, Prescience Investment Group published a report[1] (highlighted on Seeking Alpha) which argued:

  • APWR has a history of internal weaknesses over financial controls. A-Power’s auditor issued an adverse opinion in the 2009 audit and APWR has yet to publish its 2010 audited financial statements.
  • Management’s compensation structure offers enormous bonuses on an all-or-none basis for achieving lofty performance goals.
  • For 2009, SAIC filings showed approximately $25m of revenue, compared to $311m in SEC filings.
  • APWR discloses a number of “Related Party Balances” in which APWR is both lending money to and borrowing money from related individuals and businesses. There is no mention of the actual transactions occurring between APWR and these related businesses. Prescience’s investigators in China have uncovered numerous additional undisclosed companies owned and/or operated by A-Power’s CEO.

Capture
A Class Action[2] was launched and succeeded against A-Power, in connection with: failure to disclose, (1) that A-Power issued financial statements for the years ending December 31, 2008 and 2009 that allegedly significantly overstated its actual revenues and total assets, and understated total liabilities, in violation of GAAP, and (2) alleged related party nature of certain significant transactions, and failed to disclose alleged additional related parties in violation of GAAP. SEC registration was revoked in 2013.

[1] Prescience Investment Group: Evaluating the Clouds Overshadowing A-Power Energy Generation Systems, Jun 2011

[2] US District Court: Legal Document, 31 May 2012

A-Power: Annual Report 2009

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