Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.
On May 29, 2019, Yangtze River Port and Logistics Limited (the “Company”) received a delisting notification from The NASDAQ Stock Market LLC (“NASDAQ”) indicating that the Nasdaq Regulation Staff (the “Staff”) has determined to delist the Company’s common stock from NASDAQ pursuant to Rule 5810(c)(1).
The Staff made the decision to delist the Company’s common stock from NASDAQ based on its determination of the following matters: (i) the Staff believes the Company participated in a scheme to artificially support its stock price; (ii) the Staff believes that the Company made false and misleading statements in its press releases and to the Staff; and (iii) the Staff believes that the Company failed to make any significant progress towards executing its business plan since listing more than two years ago. The Staff believes these matters raise public interest concerns warranting delisting in accordance with Listing Rule 5101 and the false and misleading statements made by the Company to Staff constitute a violation of Listing Rule 5250(a).
The Company believes that some allegations made the Staff have not been properly verified and the timing of which is erroneous.
(i)The Staff firstly alleged that the Company was involved in an effort to artificially support its stock price in order to maintain compliance with NASDAQ’s minimum $1 price for continued listing. This allegation was based on an investigation conducted by the Financial Industry Regulatory Authority (“FINRA”). The unverified results of FINRA’s investigations indicated that FINRA found two of the accounts in question were in the names of original shareholders of the Company, one account listed an authorized trader who is a Company advisor, and three of the brokerage accounts were in the names of individuals who appear to be neighbors of the Company’s Chief Executive Officer, angyao Liu. However, the Company does not believe FINRA should conclude that the Company was involved in an effort to artificially support its stock price just based on the fact that Mr. Liu knows these shareholders. In fact, the Company has previously disclosed the Company’s relationship with the original shareholders when it completed its reverse merger years ago. In addition, the Staff made their decision based on FINRA’s finding that the listed address for the bank accounts connected with the brokerage accounts in which the trading activity at issue occurred matched the address of the Company’s principal offices in New York. The Staff has never asked the Company about the address issue before it made the decision to delist the Company’s common stock. In fact, the reason why the original shareholders opened accounts using the Company’s office address was because they needed a U.S. address as their mailing address when they opened their accounts with TD Bank in New York. The Company does not believe that FINRA should conclude that the Company was involved in the trading activity that occurred in these accounts just because these accounts used the Company’s office address.
(ii)The Staff misunderstood the timing in its second allegation, which indicated that Company made false and misleading statements in its press releases and to the Staff. In particular, regarding the status of legal judgments against the Company and efforts to enforce them, the Staff alleged that the Company indicated in its press release dated December 12, 2018 and its response to the NASDAQ dated December 21, 2018, that the initial proceedings were instituted “before the said properties appreciated and doubled in value between 2017 and 2018. Consequently, the purchasers are now reluctant to enforce the judgments and sell back the properties to Wuhan Port.” The Staff believed these statements contradicted the translation of the documents evidencing the judgements, which were dated July 2018 (collectively, the “Judgements”) and showed that the purchasers, far from reluctant, took affirmative steps in July 2018 to enforce the judgments. However, the Company made it clear in its response letter to the NASDAQ dated May 7, 2019 (the “2019 Response”) that after the judgements were entered in July 2018, Wuhan Yangtze River Newport Logistics Co. (“Wuhan Newport”), the Company’s operating subsidiary, discussed with the purchasers about repurchasing the commercial units. However, because the value of these properties had increased significantly, the purchasers asked Wuhan Newport to continue developing these areas according to the original development plan and said that they were no longer willing to enforce the judgments and sell these properties back to Wuhan Newport.