China-Biotics (CHBT US)

China-Biotics Inc. researches, develops, produces, markets, and distributes probiotics products in the People’s Republic of  China.  The Company product portfolio contains live microbials made with proprietary technology and used as dietary supplements and food additives to improve intestinal health and digestion.

In Jun 2011, reputable Chinese accountant Xia Cao published an article suggesting the operating subsidiary of the company is involved in fabricating net income and overstating the number of outlets they owned.[1]

In Mar 2011, China Economic Review published a report, pointing out that the company’s production facility isn’t large enough to generate the implied output, and that it reported fake customers.[2]

Shortly after that, auditor BDO issued a letter of resignation, alleging that the company forged documents and directed auditors to visit a fake bank website.[3]

The company was delisted in Jul 2011.

[1] Yicai: China Biotics Suspected of Inflating Financial Performance, 21 Jan 2011

[2] China Economic Review: Company Reports: China Biotics, 9 Mar 2011

[3] China-Biotics: Changes in Registrant’s Certifying Accountant, Form 8-K, 23 Jun 2011

China-Biotics: Annual Report 2011

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