NATURE OF THE ACTION
ABAT describes itself as a developer, manufacturer, and distributor of rechargeable polymer lithium-ion batteries. The Company describes its products to includerechargeable batteries for mine-use lamps, electric automobiles, motorcycles, cellular phones,notebook computers, and other personal electronic devices. The Company originally went publicthrough a reverse merger transaction with a shell company called Buy It Cheap.com in 2004 andclaims to have increased its revenues from $11,000 in 2003 to $97 million in 2010.2.
This case arises from the misappropriation of Company resources by theCompany’s Chairman of the Board, Defendant Zhiguo Fu (“Fu”), who appears to havetransferred ownership of ABAT’s key subsidiary to himself without adequate compensation or justification, and a series of materially false and/or misleading statements to investors and thepublic made by Defendants including, among other things, (a) that ABAT makes cutting-edgeelectric cars, when in fact it produces cheap scooters and bicycles; (b) that ABAT increasedrevenue from $4.2 million to $97.1 million from 2005 to 2010; (c) that ABAT has certaindistribution relationships which appear to be fake; (d) that ABAT spent $20 million to acquire acompany linked to defendant Fu without disclosing the relationship; and (e) ABAT issued 11million shares to defendant Fu and other individuals to repay a “loan” which was fabricated.3.
These materially false and/or materially misleading statements were brought tolight on March 30, 2011 when a report by Varient View Research (“Varient”) entitled“Advanced Battery Technologies (ABAT): The Most Egregious Chinese RTO” (the “Report”)was published on the financial website Seeking Alpha. In reaction to the Report, the price of theCompany’s stock fell by $1.50 per share, or approximately 43%, to close at $2.01 per share onMarch 30, 2011.
Case 1:11-cv-04383-CM Document 1 Filed 06/28/11 Page 2 of 37