Karl Francis

China Sky's Weight-Loss Patch Has a Questionable Future

CSKI has received all the required approvals from Chinese regulators to sell the Slim Patch in China, its main market. That's what counts, not what the US FDA or the US FTC opines. Somehow, Asensio forgot to mention that.

China Sky Confusion: Management Is Flying in Circles

It's obvious that you are getting frustrated. In spite of your relentless smear attacks, the stock price isn't crashing.

It's revealing that you don't even try to contact the company and ask for clarification of the alleged issues. If others address those issues in the CC and if management tries to provide detailed answers, you qualify those answers as tortuous and report them in an intentionally distorted way. It should be clear that in CC's of Chinese companies, there is always some information loss in translation and misunderstandings occur. It's always advisable to contact management afterwards to check this out before basing arguments on what the interpreter has said.

In your eyes, the company is always at fault. If CSKI changes (and upgrades) to a better known auditor, you call that suspicious, if it doesn't, it's bad too. The current auditor, Moore Stephens, is a well regarded international accounting group with a good presence in China. Why should CSKI switch to another one? Management says that it has chosen Moore Stephens last year after consultation with its international institutional investors. What is bad with that? Management has said that it will stick with this auditor because it has learned that changing the auditor too often invites critique. Management has also explained that it is difficult for a Chinese micro cap to get full auditing services from one of the big four accounting firms. Those firms are more focussed on big companies. Now that CSKI has been able to contract one of this four as a second auditor for help in further enhancing internal auditing and accounting, you are not happy again. It's obvious that if the company can further enhance the credibility of its accounting, you are getting in serious trouble with your short position.

You allege that the company's business is less than reported. Because the company's reported earnings translate into fast growing piles of cash on the company's balance sheet, you insinuate that Moore Stephens has wrongly certified non existing cash. You avoid saying this directly because you know that this could invite lawsuits and that you could be proven wrong easily, leading to another conviction (see asensioexposed.com).

Regarding inventories, management has explained it's just in time inventory policies. Why should the company be obliged to pay deposits to suppliers for asking them keep enough inventories of raw materials, if those suppliers are eager to have CSKI as a customer? During the year, CSKI's inventories are low, but not unnaturally low. At year end, most finished good inventories are pushed into the sales channels, resulting in somewhat higher receivables. The reasons for this have been explained. If this hasn't satisfied you, you should try to clarify this with management. Many major investors regularly visit the company's facilities in China and ask detailed questions directly to management. You should do the same before drawing premature conclusions.

Based on your own web of very questionable allegations and wrong or distorted arguments, and mostly quoting yourself, you are spinning a rather absurd case.

Revealing the Shoddy Practices of China Sky One Medical

Cabeza Howe, your arguments and wording are strangely similar to those of the known short seller and convicted fraudster Asensio, well known for his smear tactics. What's your relation with that person?

Regarding CSKI. I can't say it better than China Expert.

MSPC is a well respected international auditor group - certainly one of the best international auditors working in China. Do you pretend that this auditor has wrongly certified CSKI's impressive cash reserves and cash flows?

Three Reasons to Heed China Sky One Medical's 10-K Filing Extension

Today, the company gave an explanation fort the delayed 10K filing which caused the stock to jump 10%. The reason is a harmless technicality.

The company upgraded its auditor in two steps from an unknown local Chinese firm to a well regarded international audit organization. That was clearly a positive and not a negative development.

The company's independent directors have a scientific orientation. It would indeed be preferable to have one or two US based independent directors with a financial background. Maybe Mr Qui Feng is a talented individual able and willing to rise to the task. Maybe he has been put on the audit committee because he is fluent in English and can better communicate with the international auditors.