stock ticker: SOLD

Is Housevalues.com making buggy whips?

“Know your customer” is the #1 rule of business. At the turn of the century, buggy whip manufacturers were so single mindedly churning out buggy whips that they forgot their customer really wanted vehicle acceleration. Hence, the buggy whip manufacturers went out of business and became a case study in business textbooks for years to come.

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stock ticker: CTDC

“Never seek illicit wealth”
Confucius

Recent Price $11.00 — $14.00
2005 Trading Range $2.00 - $4.00

Shares Outstanding - one wonders

Yes we know China has billions of people and a skyrocketing economy.  Yet, unless U.S. investors start learning about quality companies, more than our jobs will be lost to the Far East - we’ll be exporting large batches of our hard earned dollars.

The “glory story” du jour is a sleepy little company that was lingering at $2 a share for years with a little to non-existent business named Tramford International.  Then like Superman, last month it jumped into a phone booth, changed its clothes and became China Technology Development.  And away it flew.

So what is the business of China Technology Development?

China Development is divided into two business segments.  The first business is related to the field of information network security systems.  Yet, we can’t really say it is a viable business as they have reported annual revenues of  $806k, with an operating loss of $1.2 million as of their last filing date.

http://www.sec.gov/Archives/edgar/data/1027454/000114554905001189/u99898e20vf.htm

Funny enough, China Internet Technology Co, the company that sold CTDC this losing business has, within the past month, liquidated their full 1.1 million share position.  At one time they were a 17% shareholder in CTDC.

http://www.sec.gov/Archives/edgar/data/1027454/000114554906000200/h00333sc13g.htm

The other side of the China Technology Development Business is China Natures Technology, formerly known as Future Solutions Development.   China Nature is a health products company that specializes in bamboo based products.  The company is so dedicated to bamboo that they actually had a division that sold bamboo collectibles, figurines, and bamboo beer.  In September of 2005, the company acquired 51% of China Natures and in December the company decided to exercise their option for the additional 49% for 2.146 million shares (CTDC was trading at $2 at the time).  When you see the financials, it seems as if CTDC grossly overpaid even at $2 a share.that is what happens when you buy something from your largest shareholder.wink wink.

 This is where it gets fun.  Let us look at the business of bamboo. 

Revenues From Jan 28,2003 to December 31, 2004 were  378k..that is for 2 years.

Operating Loss for the same period- 551k

http://www.sec.gov/Archives/edgar/data/1027454/000114554905001694/h00078e6vk.htm

Stocklemon would suggest that these revenues would not even compare to a local gardener who planted bamboo in people’s yards.  This is not a viable operating business.

The meteoric rise in stock price caused the NASDAQ to temporarily halt trading in CTDC.  CTDC responded by saying they were not aware of any reasons for the recent run up in price or volume.  Well, we do know one thing:  it certainly can’t be because of their business.

It is the opinion of Stocklemon that a group of traders have taken ahold of a group of stocks with the word China attached to them and have tried to hock them to the unsuspecting public.  We have seen this before with other buzzwords and we will see it again.  Until then, Cautious Investing To All.