Roddy Boyd ofwww.thefinancialinvestigator.com posted an excellent article on SkyPeople Fruit Juice and its legal battle with Absaroka Capital. The article can be found here:
Particularly fascinating is the discussion of SkyPeople’s SAIC filings, which provides evidence that companies in China are using objectionable means to alter filings after being exposed for wrongdoing by short sellers. In this case, Absaroka used Chinese SAIC filings in its June 2011 report as evidence that SkyPeople was providing misleading information in its historical SEC filings. The Chinese SAIC filings showed revenue and profit that were fractions of what the Company reported to the SEC.
SkyPeople’s lawyers responded by accusing Absaroka of issuing fabricated SAIC financial statements, despite the fact that Absaroka’s SAIC filings corresponded with what had been independently found by investigators at Geoinvesting.com and by the Rosen Law Firm in its class action lawsuit.
When Absaroka subsequently hired Akin Gump to acquire the SAIC filings so that Absaroka could use them in its court response to SkyPeople, the SAIC filings suddenly were missing key financial statements that appeared to have been removed. Yet the footnotes to those financial statements had not been removed, and referenced similar figures to what Absaroka had originally retrieved. Furthermore, Absaroka’s Chinese lawyers then received death threats from callers asking them why they had acquired the SkyPeople SAIC filings.
It appears that SkyPeople has tampered with its Chinese filings after being accused of wrongdoing, and has done so in such an amateur manner that reveals the tremendous incompetence involved at some of these U.S.-listed Chinese reverse merger companies.
We have done substantial work on SkyPeople and question how a fruit juice company has generated EBITDA margins above 30% consecutively for the past five years. SkyPeople has also miraculously grown revenue at a CAGR of more than 45% from 2006 to 2010, despite spending very modest amounts on capital expenditures. We’re not sure what will happen with the lawsuit, but we believe that money doesn’t grow on trees, SkyPeople’s included, and that the company’s stock price will find its way towards zero at some point in the future.
The original Absaroka article can be found here.