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Hendrx (HDRX US)

Year: 2005

Chinese water purification equipment manufacturer Hendrx was the product of a 2004 reverse merger. Less than a year after the acquisition of Chinese water assets and a successful private placement, in October and November 2005 the entire newly appointed management team resigned including the CFO, CEO and five directors. This led to a collapse in the company's share price. Then, in March 2006, the company disclosed that it was being sued by Worldwide Water for contractual fraud and patent infringement. It lost the case in April 2008 and was fined US$1m. In April 2011, Hendrx's auditors were disqualified from auditing publicly listed companies owing to its failure to test goodwill which comprised 74% of total assets. Given that Hendrx was loss-making, there is no evidence of profit inflation.

Last updated February 2022

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