GLOBAL SOURCES

Global Sources Ltd. (Nasdaq: GSOL) is perhaps the original and oldest existing China RTO Company in the US stock market. In March 2000, Global Sources exchanged 100% of its shares for a 95% stake in Fairchild (Bermuda) Ltd., a subsidiary spun‐off from the now bankrupt Fairchild Corp. Through this deal, Global Sources obtained a public listing on the Nasdaq in order to provide liquidity to shareholders and a venue for raising additional source of funds for expansion.

A closer look at GSOL’s business model reveals indications of weakening fundamentals, and significant customer dissatisfaction with their online media services, which is their largest and fastest growing revenue source. We also find a number of unusual issues with their financial reporting including a lack of standardized reporting metrics, voluntary changes in accounting standards from GAAP to IFRS, changes in auditors over “fees”, and multiple CFO and executive transitions. Furthermore, we believe the Company has an unusual financial strategy which has focused on misallocating significant capital to real estate purchases, at the expense of internal investment to its core businesses. Through our research, we are unable to explain or justify any of these financial actions, and conclude the Company is not run for the benefit of public shareholders.

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