More Explanation of the Fraud at Emcore (Nasdaq:EMKR)



It has not been a great month for Emcore. 

May 5:  The company puts out a fraudulent press release announcing an order of $28 million by a customer who has no verifiable projects or funding.

May 7:  Emcore publicly disclosed in a form 8-K that the business unit acquired from Intel lost $100 million with -20% gross margins and declining revenues.  (Did they pay Intel or did Intel pay them to take these assets?)

May 7:  Emcore announces earnings that showed a net loss for the quarter of $17.5 million or (.27 cents)

May 19:  Emcore investment in World Water takes a turn for the worse, as OTCBB:WWAT is down more than 20% on a losing quarter.

Citron Research announces that ES Systems has finally spoken.

Over the past few weeks we have attempted to speak with management of Emcore but have not received any responses.  We were finally able to get in contact with Greg Watson of Green and Gold Energy who put us in touch with James Park from ES Systems.  It must be noted that ES Systems is by far Emcore’s largest solar products customer of record.

From: [email protected]
To: James Park, [email protected]
Date: Monday, May 19, 8:48 pm

Mr. Park,

I am writing to you at the suggestion of Greg Watson. Can you please tell me who has funded your solar farms? Also, what design and engineering firm have you hired to assemble the farm? Lastly, can you please tell me how much money ES Systems has forwarded Emcore to date? I look forward to cleaning up all confusion. Also, it would be a great help if you can send me any press clippings on the project.

Thank You.

Andrew Left

To Which in Response Citron Received

From:[email protected]
To:[email protected]
Date:May 19, 2008 11:59pm

Mr. Left,
I am very much disappointed about you that you are making a untruth statement in citron I didn’t told you that we ESS got funding from Wall Street.( We don’t need any fund from out of Korea including US) If you want any information from me. You would better correct your wrong statement in citron about me and our company first and ask me about the informations what you may want to know.

Why are you lying about ES ?


You be the judge on that exchange. 

It is important to note that beyond the initial press release, CEO Reuben Richards talked up ES Systems on the conference call.  He stated about his team:

“They have reviewed the projects, been to the site. They’ve determined the equity debt financing on these projects.  So when Hong talks about a fully funded and licensed project, that is all in place. As he said in Korea this is going to be a first.  They are going to raise the cap on the number of megawatts installed.”

What he is referring to is the mysterious 70MW solar farms from the mysterious ES Systems. Citron urges every shareholder and enforcement regulator to consider this carefully.  Without any real commercial validation for large-scale solar implementation of their products, Emcore has officially announced a $28 million add on order for solar products for a 70 MW project in Korea.

To point out how preposterous this is, we note that by Emcore’s own estimates ($4 per watt installed price, considered very low by most industry experts) a 70 MW project requires at least $280 million in capital costs.  Yet, when explicitly asked by analysts, Emcore management insisted this order is an add-on that follows a press release from Green and Gold Energy announcing 500 MW in projects by ES Systems.  That would be another $2 billion in capital construction.

Note:  There is not one piece of press in the world outside of Emcore press releases that independently confirms the building of these farms.  Citron notes that this is a world where even the smallest 1 MW project gets press.

To give an example of just how exaggerated the EMKR numbers are we look at recent news from two legitimate players in the solar business.

On May 20, 2008, solar giant Sun Power (Nasdaq:SPWR) completed at 1.4MW solar plant in Korea.

Last month Yingli Energy (NYSE:YGE) entered the Korean market with a sale of solar systems to two major energy providers.  One order is for 1.3 MW and the other is for 2MW.

It is because the lies of Emcore have been so bold and outlandish, without any regard for reality that Citron has called for regulatory intervention.  The ES Systems claim is almost as bold as the one made in January that Emcore had contracted for the sale of products supporting 200 MW to 700 MW solar projects to Sunpeak Solar, another company that has no operating history or cash.  A deal that size would make it the largest solar project in the world.

Attention management of Emcore!  Before you go any further, please keep in mind some laws:

Securities Exchange Act of 1934

SEC. 18. [78r]  (a) Any person who shall make or cause to be
made any statement in any application, report, or document filed
pursuant to this title or any rule or regulation thereunder or any
undertaking contained in a registration statement as provided in
subsection (d) of section 15 of this title, which statement was at the
time and in the light of the circumstances under which it was
made false or misleading with respect to any material fact, shall
be liable to any person (not knowing that such statement was false
or misleading) who, in reliance upon such statement shall have
purchased or sold a security at a price which was affected by such
statement, for damages caused by such reliance, unless the person
sued shall prove that he acted in good faith and had no knowledge
that such statement was false or misleading.

Speaking of the law, Citron Research refers readers to the recent ruling of the California Court of Appeals with regard to the protection afforded by California’s anti-SLAPP statute to the writings of a blogger who shorts the stocks of fraudulent companies for profit.  For the record, the case was GTX Global vs. Left – our case.

“The court found that Left’s statements were subject to the protections afforded by the anti-SLAPP statutes, because they addressed matter of public interest.  Finding that GTX had failed to submit any evidence that defendant’s challenged statements were false or defamatory, the court accordingly dismissed the suit.”


Will any shareholder, board member, employee, or anyone who might have a clue as to who is running the ship at Emcore please send us an email explaining ES Systems and the mystery orders?  Inquiring minds want to know.

Cautious Investing To All