CSKI is based Harbin, China. In addition to weight loss patches, the company produces and sells sprays, ointments, and other Chinese traditional pain relief and health and beauty products. CSKI became US-listed through a reverse merger in May 2006.
The SEC alleged CSKI falsely stated in 2007 annual and quarterly reports that it had entered into a strategic distribution agreement with a Malaysian company that would become the “exclusive” distributor of CSKI’s “slim patch” in Malaysia and generate US$1m per month in sales. However, the company never actually entered into any such agreement. CSKI instead created approximately US$19.8m in phony export sales to Malaysia that were recorded as revenue in its financial results for 2007 and 2008. CEO Yan-qing Liu certified the overstated financial results, which appear in CSKI’s financial statements in the period to 2010.
The company was delisted in 2014 and found guilty by default in 2015.
In 2008, OPM was 39% (98th percentile). RoPA was 350% (99th percentile).
US District Court: Legal Document, 4 Sep 2012
PCAOB: Report on the auditor, 31 Mar 2011
China Sky One Medical: Annual Report 2010