The Biostage (BSTG) Chronicles: the annual meeting on Thursday 6/24/21, will there be any answers?

June 23, 2021 1:03pm

Is there more to the “zombie” designation after additional questions pile-up after RSM US LLP, their auditor “ceased the client-auditor relationship” – one sure sign of problems <read more>

Biostage (BSTG): The “pump” is STILL promoting on Wednesday as it trades +$0.60 at $1.30 with 11,755 shares traded … by noon ... and then suddenly drops -$0.05 after Tuesday’s share price INFLATION of +$0.09 with 4,779 shares trading, Monday closed flat at $1.21 with 572 shares traded following Friday closing flat at $1.21 with 333 shares traded, Thursday’s volume of 735 shares dropping the price -$0.09 to $1.21 and last Wednesday’s trading of 200 shares driving the share price +$0.089 to $1.30 … WHO is buying this “zombie” as IF we didn’t know? BSTG NEEDS to “pump” the share price for the annual meeting on Thursday!  

WHAT’s the allure of a “zombie’ company; again, WHO exactly is buying these shares?

What’s behind the “pump and promote”; a company with NO runway?

• A filed IND with NO clinical trial initiation after a year plus (+),
• Their auditor (RSM US LLP) “has walked,
• WHY the inclusion of this disclosure (from reading) in the 10-K, BSTG has “identified a material weakness … “in our internal control over financial reporting. Our ability to remediate this, our discovery of additional weaknesses and our ability to achieve and maintain effective control over financial reporting, could adversely affect our results of operations, our stock price and investor confidence in our company.”
• A part-time financial officer,
• A Beijing, China based board of directors (BOD) majority,
• Barely ANY employees left in 17,000 square feet of office (maybe 3 who show-up and 1 IT part-timer?
• What’s with management's lack of clarity and aggressive dilution?
• Does it also put MORE fiduciary and transparency responsibility on board and audit committee members, Herman Sanchez and James Schmerling?
• WHERE is continued funding coming from? As of 6/24/21, BSTG had $500 K of operating cash, an accumulated deficit of $69 million, an IND that was approved for clinical initiation which has YET to START and a civil lawsuit over a deceased individual caused by tracheal implants and has also to indemnify Harvard Bioscience?

Where is William (Bill) Fodor PhD, the chief scientific officer of BSTG, who was RESPONSIBLE for the IND and the NON - clinical trial initiation and WHAT’s the 1 year plus hold-up?

• WHY the silence?
• Did he rush the initial filing to the FDA considering all the ramifications especially the financial “INTERESTS” page at the end of the filing?
• Were not 4 adult patients to be tested, implemented and measured before the pediatric IND could be EVEN considered by a secondary filing of results from the first studies?

After such a wait, doesn’t this CSO realize a NEW filing will be needed to initiate ANY clinical trial? Which also makes the pediatric filing a BUST?

Is Mrs. Bin Zhao, the head of DST Capital, Weston, Mass. BSTG’s major and seemingly ONLY investor RESPONSIBLE for these unfulfilling “activities especially the “purchase, pump and promote” share volatility?

• Should MINORITY PUBLIC shareholders HOLD Mrs. Bin Zhao responsible for the many missteps by the current management team to MAINTAIN their RIGHTS?
• Did she did not appoint her neighbor, Hong Yu to be her representative and now president of BSTG?
• Should Mrs. bin Zhao of DST Capital, BSTG’s major funder be interviewed by regulatory bodies to validate the past particulars of stock placements? (Those securities are usually issued through private placements, Regulation D offerings)?
• Which also brings up a question of legal, regulatory and legitimacy of gifting for re-selling these restricted and unregistered shares by Mrs. Bin Zhao? Do they pass the regulatory net worth test, definition of risk parameters that underscore the “going concern” issue of Biostage as a public company?
• DOESN’T the SEC and the Mass Secretary of State Enforcement division NEED to REVIEW her participation?

WHAT is the status of the $1,000,000 “gift” to Connecticut Childrens (hospital) where the CEO, James Schmerling of this hospital is a board of director member and $429 ,500.00 is still OWED (that is NOT listed as a payable in FY20 and Q1/21 financials by BSTG, that is all but broke?

Re RSM US LLP, “Wouldn’t quit, walked-away or resigned fit the action specifically.” … https://www.regmedinvestors.com/articles/11932

Additional questions:

• Did they forget that transparency has its virtues?
• WHY hasn’t a notice of “The top U.S. securities regulator adopting measures that would kick foreign companies off American stock exchanges if they do not comply with U.S. auditing standards, and require them to disclose any governmental affiliations” been included in 10-K disclosures?
• The Holding Foreign Companies Accountable Act, signed into law by then-President Donald Trump in December, is aimed at removing Chinese companies from U.S. exchanges if they have failed to comply with American auditing standards for three years in a row.
• The rules also require firms to prove to the SEC they are not owned or controlled by an entity of a foreign government and to name any board members who are Chinese Communist Party officials, the SEC said in a statement. The agency fast-tracked the rules around how companies should submit documentation because it was required to issue them within 90 days of the Act becoming law. Three (3) directors of BSTG, Jason Jing Chen (chairman of BSTG’s board of directors), Ting Li (Donghai Securities Co., Ltd) and Wei Zhang, MD (Peking University) all reside in China – what are their affiliations?

Lingering questions regard the role of Liu Dong Hai, chairman of Dixintong Technology Group (D. Phone, the largest smartphone retailer in China) and Mrs. bin Zhao, who resides in Weston, Ma. of DST Capital?

All these questions could have been avoided IF they had kept the “team” together that qualified the IND “package” but, did Hong Yu – president and Shunfu Hu – VP of business development and operations NEED to indulge their egos or was it … “ORDERS” from Beijing, China after “losing” many payables from past consultants?

MINORITY PUBLIC shareholders are waiting, watching and weighting responses to MAINTAIN their RIGHTS.

Opinions expressed are those of the author and are subject to change, and not intended to be a forecast of future events, a guarantee of future results, nor investment advice.

Whether information or intelligence is good, bad or somewhere in between; I put into context what is relevant and useful for investors.  All investments are subject to risks. Investors should consider investment objectives.