Allen Yesilevich | April 13, 2011

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Shares of China Sky One Medical, Inc. (NASDAQ:CSKI) have fallen more than 70% since it received a subpoena from the Los Angeles office of the U.S. Securities and Exchange Commission (SEC) in September 2009.  The subpoena sought documents related to all aspects of the audit process for China Sky One and its subsidiaries.   On February 22, China Sky One Medical issued a press release providing an update on its regulatory filings.  The company stated that it submitted corrected financial reports for 2007, 2008, and 2009 to the local Chinese State Administration for Industry & Commerce (SAIC) offices in the jurisdictions in which its subsidiaries are located.

Back on September 7, 2010, after the company issued a press release announcing a downward revision in guidance and the resignation of its CFO, Mr. Stanley Hao, due to health considerations, shares of China Sky One Medical fell 31.17% to $6.67 per share.  China Sky One Medical lowered its 2010 revenue forecast from a range of $160 to $164 million to $128 to $136 million and adjusted its net income guidance from the range of $40 to $41 million to $26 to $31 million.   China Sky One Medical said the downward revision was caused by “the termination of relationships with certain private distributors.”

The Public Company Accounting Oversight Board (PCAOB) noted in an April 2009 inspection report that it found significant “audit deficiencies” at China Sky One Medical’s auditor, MSPC.  The PCAOB declared that the audit firm didn’t have enough evidence to support its opinion on financial statements, Bloomberg reported.

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