Dallas, Texas 11/08/2013 (Financialstrend) – The $1 million market capped SmartHeat Inc (OTCMKTS:HEAT) is a China based industrial equipment and components manufacturer. The firm which seems to be on its last legs as a viable business entity has racked up accumulated loss of $29 million with net sales of $61 million over the past 12 months.
The firm which employees 811 people has been struggling to sustain its operations from the slowing down cash flow due to falling sales. In fact the firm has seen its sales plummet 30% in the quarter for which it last reported revenue. During trading on November 6, the firm shed almost 37% of its overall market value plunging the stock price to price points which are 25% lower than its prior 52 week low pricing. This huge dumping of the stock in the market was linked to very low trade volumes. While the total stock outstanding is 4.2 million only 2500 trading transactions were responsible for the 37% dip yesterday.
This deluge in valuation has been on since the past few months resulting in a 44% dip in value during the past month of trading and a staggering 93% during the past one year. In order to bring in much needed cash flow, the firm has got into an agreement with consortium of investors to sell equity.
As per the agreement 40% of the stock of the following subsidiaries of SmartHeat Inc. “SmartHeat Taiyu (Shenyang) Energy; SmartHeat Siping Beifang Energy Technology Co., Ltd.; SmartHeat (Shenyang Energy Equipment) Co. Ltd.; Hohot Ruicheng Technology Co., Ltd.; and Urumchi XinRui Technology Limited Liability Company” will be purchased by the investors for RMB 5 million and the purchaser has to come good with the monies before December 2103 end. In turn the parent company can buy back the stock interest from the purchaser any time before February 28, 2014 by paying RMB 5.6 million.
