At 1:30pm today, the 19th of December, another wretched Chinese reverse-merger company, AgFeed Industries (FEED) was halted, after issuing a telling 8k filing. AgFeed, previously discussed here and here, announced that:
The facts learned in the Investigation to date indicate that the Company’s financial accounting staff and management based in China engaged in accounting improprieties during 2009 and 2010 and the first two quarters of 2011 in connection with the Company’s Chinese legacy hog production business that they concealed from the Company’s management in the United States.
The people running the investigation must be real slow learners, since this was obvious, and the local management must be incredibly brazen to have continued the fraud until the middle of 2011, since it was clear in late 2010 that Chinese companies were under the microscope. There was a big management change at FEED in 2011, as well as wholesaling dumping of stock by the Chinese insiders. But foolish investors, with glazed eyes, having drunk the Kool-Aid, enamored with China seem to ignore such giant red flags. The filing continues:
After discussing the facts learned in the Investigation to date with management, the Company’s audit committee concluded on December 16, 2011 that the Company’s previously issued unaudited financial statements for the quarters ended March 31 and June 30, 2011, as well as its audited financial statements for the years ended December 31, 2010 and 2009, should be restated. As a result, the Company’s consolidated balance sheets as of March 31 and June 30, 2011 and December 31, 2010 and 2009, the Company’s consolidated statements of operations and other comprehensive income (loss) for the quarters ended March 31 and June 30, 2011 and the years ended December 31, 2010 and 2009, the Company’s consolidated statements of cash flows for the quarters ended March 31 and June 30, 2011 and the years ended December 31, 2010 and 2009 and the footnotes thereto should no longer be relied upon.
Sad to say, this is not the first restatement for FEED this year, and 2012 is likely to bring even more:
These restatements are in addition to those previously reported by the Company in its Current Report on Form 8-K filed with the Commission on November 10, 2011.
The Investigation by the Special Committee is ongoing, and the Company is continuing to review previously issued financial statements relating to these and other periods. As a result of the ongoing review by the Special Committee and the Company, the Company is unable at this time to estimate the amount and effect of such restatements in each affected accounting period. The Company intends to file its restated financial statements as soon as practicable.
At least the Interim CEO and Chairman, John Stadler, finally realized he was being scammed by the Chinese, or was he part of it? Either way, he’s fleeing the sinking ship…
On December 16, 2011, John Stadler resigned as Chairman of the Board and Interim Chief Executive Officer and as a director of the Company for personal reasons. His resignation was not the result of any disagreement with the Company relating to its operations, policies or practices. In addition, his resignation does not relate to the facts learned in the Investigation to date referred to in Item 4.02 above.
Oh wait, his resignation has nothing to do with the facts learned in the Investigation? Anyone here believe that?