THE SQUEAKQUEL - LOST IN TRANSLATION AT LIHUA INTERNATIONAL

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

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.