Hello LKM BOD,
It’s been a over a week since my last message and it’s quite disappointing to see the continued inaction by the LKM board of directors. By now, I am sure you have seen the momentum that the LKM shareholder action group has gained. Not only does the group have the votes necessary to take the actions on behalf of the company, it’s employees, partners and shareholders, but it has also retained the services of Seiden Group. They are the preeminent law firm in taking and WINNING actions and judgements against China-based companies.
It has become quite clear that the board is not only in a stalemate, but, also complicit in enabling Vincent and Zhongzhi to harm the company and it’s shareholders. This exposes each of you, including former board members, to civil and criminal action and liability. Please do not underestimate the resolve and fortitude of the shareholder group that has assembled. You still have the opportunity to take the right course of action to save the company and protect yourselves and Vincent from legal action that will take place in all jurisdictions including the United States and China. Many of you have assets, investments and residences in the United States and travel here frequently.
Remember, that your loyalty to either Vincent or Henry, does not prevent you from doing the right thing. Remember, the best thing for both of them is for the company to survive and thrive. They have both become conflicted and misguided over the course of the last couple of years. Their personal and financial issues have caused them to act irrationally and selfishly. They are using you and the company as pawns in this process. As their friends, you can actually protect them and save them from their own actions, by acting on your fiduciary duties. They may not thank you today, but they will thank you down the road as their legacies, assets and reputations are recovered.
It’s quite simple:
1. Take the necessary actions to file the 20F, including placing or ask Vincent to take a temporary leave of absence. You can even make the restatement conditional and binding, that Vincent may return to the company once the 20F is filed and the company is compliant with all SEC and NYSE guidelines.
2. Pay the auditors and company counsel. This is fully within your control and purview.
If you do 1 and 2, all else will take care of itself. You actually have a specific fiduciary responsibility to take all steps to file the company’s 20F. By not taking actions 1 and 2, you are in violation of this obligation and are legally liable.
3. Either appoint Larry Chi or a China AI appointee as sole chairman of LKM.
4. Add a shareholder representative and an accounting expert to the board of directors.
5. Appoint Matt Mathison as CFO of LKM accountable to the board.
All of these actions are quite easy to take, especially 1 and 2. I look forward to seeing the results of your action in the next 36 hours.
Special message to Zhongzhi: with the heavy handed, unethical and illegal actions you are undertaking as a director of LKM, you are exposing all your principals and LPs to legal risk. If they don’t already know the risk you are putting them in, they will be made aware imminently.