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THE SQUEAKQUEL - LOST IN TRANSLATION AT LIHUA INTERNATIONAL

|Includes:CSKI, Lihua International Inc (LIWA)

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.
Stocks: LIWA, CSKI