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Steven R. Chapski
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Steven R. Chapski, CPA, CFE, CSM, is a partner in Chapski & Chapski, CPAs, LLP. He graduated with honors from the School of Business Administration at the University of Michigan in May of 1991. He passed with high distinction the Certified Public Accountant (CPA) examination later that same... More
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  • THE SQUEAKQUEL - LOST IN TRANSLATION AT LIHUA INTERNATIONAL 3 comments
    Dec 21, 2009 10:32 AM | about stocks: LIWA, CSKI

    Like China Sky One Medical, Inc. (OTCPK:CSKI), Lihua International, Inc. (NASDAQ:LIWA) has material differences between their financial reports filed with the China State Administration for Industry and Commerce (NYSE:SAIC) and their financial statements filed with the U.S. Securities and Exchange Commission (SEC). A comparison of the two filings is as follows:

    Lihua International, Inc.

           

    China SAIC Filings vs. US SEC Filings

           

    January 1, 2007 - December 31, 2008

      

    China SAIC

    US SEC

     

    China SAIC

    US SEC

       

    USD

    USD

     

    USD

    USD

       

    12/31/07

    12/31/07

     

    12/31/08

    12/31/08

    Cash & bank

      

    2,936,326

    3,213,649

     

    10,645,142

    27,791,849

    Short-term investment

      

    0

      

    0

     

    Bills receivable

      

    1,371

      

    24,939

     

    Dividend receivable

      

    0

      

    0

     

    Interest receivable

      

    0

      

    0

     

    Accounts receivable

      

    5,371,939

    5,385,078

     

    6,973,368

    5,042,739

    Other receivables

      

    6,640,880

    3,963,591

     

    16,159,998

    0

    Advances to supplies

      

    299,947

      

    6,253,671

     

    Inventory

      

    2,616,449

    2,597,918

     

    2,619,422

    586,938

    Including: Raw materials

      

    437,037

      

    132,649

     
       

    2,011,064

      

    2,373,360

     

    Prepaid expenses

      

    1,988

      

    0

     

    Long-term investment due within one year

      

    0

      

    0

     

    Other current assets

      

    0

    848,036

     

    0

    494,245

       

    -

    -

     

    -

    -

    Current assets

      

    17,868,900

    16,008,272

     

    42,676,540

    33,915,771

    Long-term investment on stocks

      

    0

      

    0

     

    Long-term investment on bonds

      

    0

      

    0

     

    Equity division

      

    0

      

    0

     

    Total long-term investment

      

    0

      

    0

     

    Fixed assets-cost

      

    883,410

    5,948,274

     

    2,980,141

    7,440,943

    Less: Accumulated depreciation

      

    180,011

      

    381,405

     

    Net fixed assets

      

    703,399

    5,948,274

     

    2,598,735

    7,440,943

    Less: Fixed assets depreciation reserves

      

    0

      

    0

     

    Fixed assets net value

      

    703,399

    5,948,274

     

    2,598,735

    7,440,943

    Project goods and material

      

    0

      

    0

     

    Projects under construction

      

    0

    3,714,555

     

    1,724,059

    7,095,833

    Liquidation of fixed assets

      

    0

      

    0

     

    Total fixed assets

      

    703,399

    9,662,829

     

    4,322,794

    14,536,776

    Intangible assets

      

    4,799

    5,257

     

    2,369,826

    4,214

    Long-term deferred expense

      

    2,270

    4,398,268

     

    29,076

    8,332,732

    Other Long-term assets

      

    0

      

    0

     

    Intangible assets and other assets

      

    7,069

    4,403,525

     

    2,398,902

    8,336,946

    Deferred taxes debit

      

    0

    0

     

    0

    23,395

       

    -

    -

     

    -

    -

    Total assets

      

    18,579,368

    30,074,626

     

    49,398,236

    56,812,888

       

    =

    =

     

    =

    =

            

    Lihua International, Inc.

           

    China SAIC Filings

           

    January 1, 2007 - December 31, 2008

      

    China SAIC

    US SEC

     

    China SAIC

    US SEC

       

    USD

    USD

     

    USD

    USD

       

    12/31/07

    12/31/07

     

    12/31/08

    12/31/08

    Short loans

      

    4,113,000

    4,107,001

     

    7,628,400

    6,145,202

    Bills payable

      

    1,805,607

      

    7,981,196

     

    Accounts payable

      

    1,132,911

    2,483,158

     

    875,931

    1,643,544

    Advances from clients

      

    427,135

    480,917

     

    794,917

    830,744

    Accrued payroll payable

      

    25,572

      

    43,948

     

    Welfare payable

      

    0

      

    0

     

      Including: bonus and welfare fund

      

    0

      

    0

     

    Dividend payable

      

    0

      

    0

     

    Interest payable

      

    0

      

    0

     

    Taxes payable

      

    38,978

    399,663

     

    (192,508)

    401,436

    Other unpayable

      

    361

      

    0

     

    Other accounts payable

      

    4,212,766

    3,521,403

     

    14,219,635

    0

    Drawing expense in advance

      

    0

      

    233

     

    Long-term liabilities due within one year

      

    0

      

    0

     

    Other current liabilities

      

    0

      

    0

     
       

    -

    -

     

    -

    -

    Current liabilities

      

    11,756,330

    10,992,142

     

    31,351,752

    9,020,926

    Long term loans

      

    124,761

    0

     

    133,497

    0

    Bonds payable

      

    0

      

    0

     

    Long-term account payable

      

    0

      

    0

     

    Special accounts payable

      

    0

      

    0

     

    Other long-term liabilities

      

    0

      

    0

     

    Total Long-term liabilities

      

    124,761

    0

     

    133,497

    0

    Deferred tax credits

      

    0

      

    0

     
       

    -

    -

     

    -

    -

    Total liabilities

      

    11,881,091

    10,992,142

     

    31,485,249

    9,020,926

    Paid-up capital

      

    5,957,541

    4,707,425

     

    17,840,292

    21,095,104

      Including: Chinese investments

      

    1,200,980

      

    0

     

                      Including: State capital

      

    0

      

    0

     

                      Foreign investments

      

    4,756,561

      

    17,840,292

     

      Less: Investments returned

      

    0

      

    0

     

    Net paid-up capital

      

    5,957,541

    4,707,425

     

    17,840,292

    21,095,104

    Capital surplus

      

    24,591

      

    26,394

     

    Surplus reserves

      

    114,259

    1,343,338

     

    122,260

    2,603,444

    Including: Legal surplus

      

    76,173

      

    81,507

     

                     Discretionary surplus reserve

      

    0

      

    0

     

                    Reserve fund

      

    0

      

    0

     

    Enterprise development fund

      

    0

      

    0

     

    Capital redemption

      

    0

      

    0

     

    Unrealized investment losses

      

    0

      

    0

     

    Unappropriated profit

      

    601,886

    13,031,721

     

    (75,958)

    24,093,414

    Equities

      

    6,698,277

    19,082,484

     

    17,912,988

    47,791,962

       

    -

    -

     

    -

    -

    Total liabilities & equities

      

    18,579,368

    30,074,626

     

    49,398,237

    56,812,888

       

    =

    =

     

    =

    =

            

    Lihua International, Inc.

           

    China SAIC Filings

           

    January 1, 2007 - December 31, 2008

      

    China SAIC

    US SEC

     

    China SAIC

    US SEC

       

    USD

    USD

     

    USD

    USD

       

    12/31/07

    12/31/07

     

    12/31/08

    12/31/08

    Turnover

      

    7,028,194

    32,676,834

     

    8,797,416

    50,006,057

    Including: Export Sales

      

    297,398

      

    488,984

     

    Less: Cost of goods sold

      

    6,668,152

    22,910,937

     

    8,279,038

    33,202,344

    Including: Cost of export sales

      

    0

      

    585,347

     

    Tax and associate charge

      

    3,827

      

    1,939

     

    Main Business Profits

      

    356,215

    9,765,897

     

    516,439

    16,803,713

    Add: Other operating income

      

    18,944

      

    183,215

     

      Less: Sales expense

      

    97,411

    417,314

     

    241,770

    700,029

               Management expense

      

    195,932

    454,908

     

    686,306

    1,907,043

               Including: Business entertainment expenses

      

    0

      

    67,064

     

                                Research and development expense

      

    0

      

    0

     

               Finance expense

      

    132,504

      

    555,826

     

               Including: Interest expense

      

    147,484

      

    543,324

     

                                Interest revenue

      

    17,435

      

    48,779

     

                                Exchange net loss

      

    (653)

      

    53,484

     

    Operation profit

      

    (50,688)

    8,893,675

     

    (784,248)

    14,196,641

    Add: Investment income

      

    0

      

    0

     

    Including: Joint venture income

      

    0

      

    0

     

    Subsidy income

      

    0

      

    0

     

    Non-operating income

      

    83,087

    15,655

     

    216,357

    72,094

    Less: Non-operating expenses

      

    50,144

    96,535

     

    139,583

    774,175

               Including: Non-current assets dispositi on loss

      

    0

      

    0

     

    Total profits before tax

      

    (17,745)

    8,812,795

     

    (707,474)

    13,494,560

    Less: profit tax

      

    8,424

    1,089,107

     

    0

    1,792,681

    Minority interest

      

    0

      

    0

     

    Add: Unrealized investment losses

      

    0

      

    0

     

    Net profit

      

    (26,169)

    7,723,688

     

    (707,474)

    11,701,879

     

     

    Highlights of the 2008 differences include $11 million in cash per SAIC instead of $28 million per SEC, $18 million in equity per SAIC instead of $48 million per SEC, $9 million in revenue per SAIC instead of $50 million per SEC, and $1 million in net loss per SAIC instead of $12 million in net profit per SEC.

    In a press release, China Sky admitted their SAIC financial reports showed lower revenues and earnings than their SEC financial statements. Their CFO reassured that their "financial statements as filed with the SEC, on Form 10-K and 10-Q, are accurate and in compliance with generally accepted accounting principles." What they failed to explain was why there was a difference between their SAIC financial reports and their SEC financial statements. Investors in both CSKI and LIWA, the media, and SEC should all demand to know why from its CFOs, audit committees, and auditors.



    Disclosure: Author is short CSKI and has no position in LIWA.
    Themes: Short ideas Stocks: LIWA, CSKI
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Comments (3)
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  • Chimin Sang
    , contributor
    Comments (291) | Send Message
     
    Very useful information Steven. I added link to your blog in comments of my two previous articles.
    23 Dec 2009, 03:04 PM Reply Like
  • tz647w
    , contributor
    Comments (8) | Send Message
     
    Steven, it looks the SAIC website doesn't have an online search function to look up the company filings. How do you find SAIC filings for LIWA and CSKI? By the way, I am skeptical about these two companies' numbers as well from other sources.

     

    SAIC website:

     

    www.saic.gov.cn/englis.../
    30 Dec 2009, 02:25 AM Reply Like
  • AhYap
    , contributor
    Comments (48) | Send Message
     
    Please provide source URL of your information from SAIC. Thank you.
    17 Mar 2010, 10:49 AM Reply Like
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