KUNMING, China, Nov. 14 China ShenghuoPharmaceutical Holdings, Inc. (Amex: KUN) ("China Shenghuo" or "the Company"),today announced the findings from its Audit Committee's previously announcedindependent internal investigation into the Company's accounting for certainsales representative commission advances and trade receivables, and otherfinancial reporting matters.
The internal investigation found that two of the Company's financialdepartment personnel improperly accounted for the collection of certain tradereceivables. The effect of these errors was to understate the Company's baddebt allowance, which resulted in the understatement of general andadministrative expenses for fiscal year 2007 and first quarter of 2008.However, the Audit Committee found no evidence to suggest that theseaccounting errors were made at the direction of, or with the knowledge orinvolvement of, the Company's executive officers and management.
As a result, the Company is restating its financial statements for thefiscal year ended December 31, 2007 and the fiscal quarter ended March 31,2008. The restated financials will be released shortly.
The two employees found to be responsible for the accounting errors havebeen removed from their positions. The Company also announced today theappointment of Wendy Fu as the Company's new Chief Financial Officer. Wendy isreplacing Ms. Gao, the Company's former Chief Financial Officer, who resignedeffective November 10, 2008.
In her new position, Ms. Fu will be responsible for the Company'scorporate finances and administration and she will manage all financialreporting responsibilities. Ms. Fu is a U.S. licensed CPA with over 10 yearsof professional experience in accounting, finance and auditing, and she holdsa master's degree in accounting from the University of Texas, Austin.
About China Shenghuo
Founded in 1995, China Shenghuo is a specialty pharmaceutical company thatfocuses on the research, development, manufacture and marketing ofSanchi-based medicinal and pharmaceutical, nutritional supplement and cosmeticproducts. Through its subsidiary, Kunming Shenghuo Pharmaceutical (Group) Co.,Ltd., it owns thirty SFDA (State Food and Drug Administration) approvedmedicines, including the flagship product Xuesaitong Soft Capsules, which hasalready been listed in the Insurance Catalogue. At present, China Shenghuoincorporates a sales network of agencies and representatives throughout China,which markets Sanchi-based traditional Chinese medicine to hospitals and drugstores as prescription and OTC drugs primarily for the treatment ofcardiovascular, cerebrovascular and peptic ulcer disease. The Company alsoexports medicinal products to Asian countries such as Indonesia, Russia andKyrgyzstan. For more information, please visit http://www.shenghuo.com.cn .
Safe Harbor Statement
This press release may contain certain "forward-looking statements," asdefined in the United States Private Securities Litigation Reform Act of 1995,that involve a number of risks and uncertainties. There can be no assurancethat such statements will prove to be accurate, and the actual results andfuture events could differ materially from management's current expectations.Such factors include, but are not limited to, risks of litigation andgovernmental or other regulatory inquiry or proceedings arising out of orrelated to any of the matters described in recent press releases, includingarising out of the restatement of the Company's financial statements; theCompany's continuing ability to satisfy any requirements which may beprescribed by the Exchange for continued listing on the Exchange; potentialadverse effects to the Company's financial condition, results of operations orprospects as a result of possible changes to or restatements of prior periodfinancial statements; risks arising from potential weaknesses or deficienciesin the Company's internal control over financial reporting; the Company'sreliance on one supplier for Sanchi; the possible effect of adverse publicityon the Company's business, including possible contract cancellation; theCompany's ability to develop and market new products; the Company's ability toestablish and maintain a strong brand; the Company's continued ability toobtain and maintain all certificates, permits and licenses required to openand operate retail specialty counters to offer its cosmetic products andconduct business in China; protection of the Company's intellectual propertyrights; market acceptance of the Company's products; changes in the laws ofthe People's Republic of China that affect the Company's operations; cost tothe Company of complying with current and future governmental regulations; theimpact of any changes in governmental regulations on the Company's operations;general economic conditions; and other factors detailed from time to time inthe Company's filings with the United States Securities and ExchangeCommission and other regulatory authorities. The Company undertakes noobligation to publicly update or revise any forward-looking statements,whether as a result of new information, future events or otherwise.For more information, please contact: China Shenghuo Pharmaceutical Holdings, Inc. Mr. Changhua Mu Securities Affairs Representative Tel: +86-871-7282698 Email: firstname.lastname@example.org Grayling Global Eddie Cheung Investor Relations Tel: +1-646-284-9414 Email: email@example.com
SOURCE China Shenghuo Pharmaceutical Holdings, Inc.