China Sky’s Promote of PriceWaterhouse in Earnings Release Belies Internal Controls Claim

China Sky One Medical, Inc. (NASDAQ: CSKI) released second quarter earnings today. The earnings release, which raises a series of questions that are addressed in a separate report, makes two references to CSKI’s purported engagement of PricewaterhouseCoopers (“PWC”) as a consultant on “financial reporting and control.” PWC is not CSKI’s auditor, but their consultation has apparently neglected to rectify a very basic problem: the suspension of CSKI’s main “holding” subsidiary from doing business in California, the state in which it is incorporated.

The principal subsidiary of CSKI is a corporation called American California Pharmaceutical Group, Inc. (“ACPG”) that has been suspended by the California Secretary of State, according to public records. China Sky’s 2008 Form 10-K refers to ACPG as a “holding company subsidiary.” California corporate records show that ACPG has been suspended since November 29, 2007. Click here and here to view the public records.

California corporations can be suspended for not filing an information statement with the California Secretary of State, or for not filing an annual tax return with state offices.

The direct implications of ACPG’s corporate suspension for CSKI’s public listing or business operations are not clear. However, the suspension shows another instance of CSKI’s problems in corporate controls and governance, and inadequate disclosures to shareholders.

The California records also list the president of ACPG as Qiaomin Hu and the registered agent as Lynn Chao. CSKI’s 2008 10-K states that CSKI’s officers Liu Yan-Qing and Han Xiao-yan “also serve as officers and directors of ACPG.” Liu and Han’s names do not appear in California corporate records for ACPG.

Posted in China Sky One Medical, Inc.

Manuel Asensio doesn’t bet often. But when he does, it’s wise to pay attention.

Paul Kaihla
eCompany Now
1 2 3 4 5 6 7 8 9
About Our Founder
Learn more about asensio.com's founder, Manuel P. Asensio, and the website's origins. Click here to be directed to Mr. Asensio’s professional biography.
Media Record
Click here to see selected articles that discuss asensio.com's work and its unique legacy. asensio.com also strives to maintain a complete record of articles dealing with the companies that are the subject of asensio.com research.
Investment Record
Click here to view a list of the companies that have been subjects of asensio.com reporting and click here to see the complete investment record.
Asensio and FINRA
Asensio & Company, Inc. and Manuel P. Asensio are the only dedicated short sellers ever to have been members of FINRA. This unique-minority membership created complications in the regulatory relationship. Being the first activist short investors and among the first FINRA member firms with a website added to the complexity. A statement by Mr. Asensio is available here. Information necessary to obtain a meaningful understanding of the dispute is available in complete form HERE.