Crisis At China's Largest VMS Provider, Netposa, Now State-Controlled

*******, ***** ***** ****** as *** ***'* ******* VMS ********, ** ** a ******. *** **** is ******** **** ****** bills **** *******, *** its ******** ** ***** sued *** **** $*** million ** ************ *****, resulting ** ***** ******** NetPosa **** *** ******. This *** ***** ** the *** ********** ******** became *******'* *********** ***********.

****** **** ****, ** examine *** ****** ** NetPosa, *********:

• ******* **********
• ******** ********** ******* **** Government **** *********
• ****** *** **** ******
• ******** ************* ******* ******* Unauthorized *****
• *** ********** ********
• **********: **** ******* *******?

[***************]

**********

********* ******* ******* ***** (aside **** ******* **** *** *** Arecont),*******- ******* ** **** - ** * *** VMS ******** *** ******* police. **** **** ******* the **** **** *** subsidiary ** **************** * ******* **** leak ** ********, ********* ******** ***** attention *********.

*****'******** ************ ************* ******* ** *** of *** ******* *** firms *********. ******* **** over $*** ******* ** revenue ** **** ********* to ********* ******; *** **********, ********* did **** **** **** that,** ~$*** *******.

Accounts ********** ******* **** ********** **** *********

******* *** *********** **** accounts **********, *.*. *** customers *** *** ****** their *****. *** **** had ~$*** ******* ** AR (*.* ******* ***)***-**-**** ****.****'* **** **** *******'* entire ******* *** **** year *** * **.*% increase **** *** **** before (*** ****************** ****** **** ****):

**** ******** *******'* ********* reports *** **** ** them ********* ***** ******** clients **** ******* ***** or ***** ********* *****. However, *** **** ****** in ******* ****** ********** ** *** ******* to **** ****** ******* of ***** *********** ********* struggles **** * ******* government**** *********:

*** ** ***high ***** ** ***** ********** **** and the decline ** ***** ********* ******* ********, the growth rate of the company's business needs will slow down, the construction period of the project will be extended, and the period of corporate capital withdrawal will be lengthened. This *** ****** ** ** ******** ** *** ****** ** ******** ********** *** ** ******** ** *** ****** ** *** *****. [emphases added]

*******'* *********** ** **** remained *********** *********, ******** at $**** (*.* ******* RMB) ** **** ****, a **% ******** ****-**-****, per *******'*****-**** ******,***** ****** **** "** present, ***** [**********] ****** revenues *** ********* *** debt ****** *** ****":

Stocks *** **** ****** *** ** ********

****************** ****** **** *** shares ** *** ******** and ********** ********* ****** ** **** different ****** *** ** lawsuits ********* ***. **** affected **% ** *******'* total ******. **** $** in **** **** ** NetPosa ** ***** *** frozen** ****.

Internal ************* ******* ******* ************ *****

** ********* **, ***************** ******** ************* ******* that *** *** **** his **** *** *******'* as ********** ** ***** loans **** ******* *********. The ***** *****'* **** fully ****, ** ***** firms *** *** ***** and ********* ****** ** freeze ***'* ****** *** some ** *******'*. *** total ****** ** ************ loans ** **** $****, of ***** **** $*** has **** **** **** so ***.

Chairman **** ***** ** ***** *** ****** *****

*** ***** **** ******* carried *** *** *** purposes:

*** ***** *** ** that *** ***** ****** his ************* ******'* ** force-liquidated, ** ** *** pledged **** ** **** as ********** ** ******** for **** (~**% ** his ****** **** ******* as ** ********* ********** ** ****,**** **** * **** of ********% ** *******.) ******** ****** ** common ** ***** *** has **** ***** ** a *****"****** ** ********* ****"**** ***** ****** *******.

****'* *** ** ******: as *******'* ***** ***** fell, ***'* ********* *** more ********** (******) ** cover *** *****; **** even **** ****'* **********, they ******** **** (* "margin ****"). *** ************* disclosed **** ************-****** ***** made ********** ** ***** such ****** *****; **** were ****** ** *** and ******* *** *** no ******** ***** *************. In **** ***** ******* board ******* *** **** off ** **** ************, but ***** **** ** records ** *** ***** ever ******* ** **** about ***** (** ***** be ********).

Clearing ******** **********

*** ****** ******* ** the ***** *** ** obtain ********** **** ** clear *******'* ******* ******** receivable *******. **** *****, these **** ********* ****** by *** *** *******, but ******* ****** ***** authorization.

NetPosa ********

**** ********** *** *** result ** *** ******* of *****, *** ******* chairman. ******, ******* **** it ***** ****** *** lawsuits *** ***** ***** to "***** *** **** as **** ** ********":

*** ******* **** ******* a ****** ** ****** the ********** *** ****** accounts *** ** *** non-compliant **********; ** *** same ****, *** ******* and *** ******* ***** of ********* **** **** the ****** *********** ***********, Mr. *** *****, ** take ********* ******** ** actively ***** *** ******** of ****** *********' ******* guarantees, ******* **********, ***., and ***** *****. ******* the ********* *** ***** the **** ** **** as ********.

NetPosa *** *** ********** **********

**** *** ***** **** after *** ******* ********** officially ****** *******'* *********** shareholder, **** ****** ****** over **% ** *** company's ******.

** ***** ****, **************** * ******** ***** *** * subsidiary ** *** *****-***** Assets *********** *** ************** Commission (*****) ** ******* Province ******* ***** ** controlling ***********, **** ***** buying **** ** ***'* shares ******** *** ********* voting ****** **** *** rest.******* *************** ********** ****** **** oversees *** *******'* *****-***** enterprise ****** *** ****** *** ******** *********** shareholder** *********. ** ***** September, *** ******* ********** *****'* ************.

************ ***** ******* ****** ** **** of * ******* ********** plan ** "******* ******* ***********", **** ******* ********* to ***** ** *&* center ** *******'* ******* Chengdu.******* ***** ******* ******* positively ** *** ****, with*** ********* ***** **** *******'* repayment ****** **** ***** government ********. **** ******** are *** ******* ** China, ************ ** *** economy *****, ** ******** in *** ***'******** ***** ****** ** Private ***** ** **** Them ******.

*****'* ** ******** ***** was ***** ** *****'* undisclosed ***** ***** ** the ***** ********, ***** raises ********* ***** ***** due *********. *******'********* ********************** ***** ********** ** "recently **********" ** *** company's "*******" **********.

Conclusion: ******* *** **** **** **** ***

******* *** ******* ******** receivable ****** *** *** discovery ** *** **** unauthorized *****, **'* *** clear ** ** *** surmountable ***** ********* ***. In *********** *************, ******* ****** ** could *** **** *** judgment ***** *** ******** impact ** *** ********:

*** ***** ********** ******* have ******* *********** *** have *** *** **** closed. ** ** *********** impossible ** ***** *** impact ** *** *******'* current ****** ** ****** profits.

**** *** ** ****** knowledge ** *******'* ******** fate, ****** ****** ** NetPosa's *** ********* ***********. NetPosa *** *** ******* to *** ******** *** comment.