{ "docId": "019dd923-622c-750b-8b9a-83df2d8136b6", "docSlug": "40a11d17abe5", "documentTitle": "Qutoutiao, Inc. (QTT)", "authorId": "60_Wolfpack_Research", "authorName": "Wolfpack Research", "documentKindSlug": "research-note", "documentKindLabel": "Research note", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2020-01-17 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 17, "pageCount": 23, "prevPage": 16, "nextPage": 18, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 1, "notes": "This is a research note page from Wolfpack Research, focusing on corporate governance and disclosure failures.", "elementsJson": [ "paragraph", "bullet_list", "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b9a-83df2d8136b6/17", "deckHref": "/decks/019dd923-622c-750b-8b9a-83df2d8136b6", "deckJsonHref": "/decks/019dd923-622c-750b-8b9a-83df2d8136b6.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b9a-83df2d8136b6#slide-17", "components": [ { "bbox": null, "kind": "callout", "text": "QTT claimed that we are dishonest, yet they failed to disclose that 5 of Shanghai Jifen’s subsidiaries had their equity frozen by the Chinese courts the day before their response was published.", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-70f7-7334-b226-13f6c56bb86d", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.185, "w": 0.764, "x": 0.118, "y": 0.275 }, "kind": "list", "text": "Has Innotech Ltd., the entity that holds Eric Tan's QTT shares, sold any shares? Why hasn't QTT disclosed the current holdings of its insiders and principal shareholders since the 424B4 filed on April 3, 2019? Mr. Tan is reported to have pledged/sold millions of shares of Wutong Holdings Group. Would Mr. Tan like us to detail his dealings with Wutong? More importantly, would Mr. Wan Weifang like us to write a full report on Wutong? What about QTT's original CEO, Lei Li? How many shares has he sold? Why did he resign? Why was Lei Li's resignation followed by many more resignations of mid and upper level management, including Editor-in-Chief Xiao Houjun?", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "a828f487-7d99-4b9c-b922-f06378676300", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.065, "w": 0.764, "x": 0.118, "y": 0.675 }, "kind": "paragraph", "text": "Furthermore, a portion of Shanghai Jifen's bank accounts were frozen with value RMB 86 million on January 3, 2020, apparently related to the same legal action as the equity freezes. We believe that both of these developments should be considered \"material legal proceedings,\" which are one of the few events the SEC requires foreign private issuers such as QTT to disclose to investors on Form 6-K.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "52736d03-980f-40be-8ba7-9a8291e20cc7", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.065, "w": 0.764, "x": 0.118, "y": 0.595 }, "kind": "paragraph", "text": "QTT claimed that we are dishonest, yet they failed to disclose that 5 of Shanghai Jifen's subsidiaries had their equity frozen by the Chinese courts the day before their response was published. Shanghai Jifen is QTT's core operating subsidiary which operates the Qutoutiao app. In our opinion, this is hypocrisy of the highest order.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "654941b8-e9b4-4438-a84f-4d133d388021", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.035, "w": 0.764, "x": 0.118, "y": 0.478 }, "kind": "paragraph", "text": "10. QTT has accused us of being dishonest regarding its numerous lawsuits, yet QTT has not disclosed the fact that RMB 86 million of its bank accounts were frozen by a Chinese court on December 23, 2019:", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "8a73b521-f002-4bf9-9747-73628794f856", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.035, "w": 0.764, "x": 0.118, "y": 0.128 }, "kind": "paragraph", "text": "9. QTT's disclosures regarding insider sales are welcome, but QTT's reluctance to disclose the current holdings of its Insiders and Principal Shareholders raises serious questions:", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b4bea835-ee6c-45f1-b0a4-177b1aa2d073", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.065, "w": 0.714, "x": 0.168, "y": 0.171 }, "kind": "quote", "text": "Mr. Tan has not sold a single share of Qutoutiao during the IPO or after the IPO, and has taken the CEO role to drive the business forward. All the shares owned by Mr. Tan are founder's shares, and Mr. Tan has not earned any share rewards for his role as the CEO or Chairman of the Company. Mr. Tan has not pledged any of his shares to obtain cash advances either.", "attrs": null, "subkind": "pull-quote", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "89d26808-8f6a-40b6-a077-092047dfff6d", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.045, "w": 0.714, "x": 0.168, "y": 0.535 }, "kind": "quote", "text": "At the time of this response, the pending litigation shall not have material impact on our daily normal business operations, and we do not record any contingent liabilities relating to this pending litigation.", "attrs": null, "subkind": "pull-quote", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c66c9f30-33a8-43a5-8742-d79f9cbc8e64", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "“Mr. Tan has not sold a single share of Qutoutiao during the IPO or after the IPO, and has taken the CEO role to drive the business forward. All the shares owned by Mr. Tan are founder’s shares, and Mr. Tan has not earned any share rewards for his role as the CEO or Chairman of the Company. Mr. Tan has not pledged any of his shares to obtain cash advances either.” — Qutoutiao (quoted by Wolfpack Research)", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-70f7-7334-b226-16f33ea219cd", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.764, "x": 0.118, "y": 0.855 }, "kind": "source-note", "text": "19-22 Footnotes regarding Bloomberg, Sina, court records, and SEC filings.", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "96ed03d5-8862-4269-b382-8810b397c894", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }