China Agritech (PINK:CAGC)

BEIJING, May 20, 2011 /PRNewswire-Asia-FirstCall/ -- China Agritech, Inc. (NASDAQ: CAGC) ("China Agritech", or the "Company"), a leading organic compound fertilizer manufacturer and distributor in China, today announced that the Nasdaq Hearings Panel has denied the request of the Company for continued listing and has determined to delist and suspend trading of the shares on The Nasdaq Stock Market effective at the open of business on Friday, May 20, 2011. The Company's shares are expected to subsequently trade on the OTC Market.

The Company remains committed to dispelling the allegations made against our Company. The independent investigation is proceeding under the supervision of the Special Committee. The Company expects the investigation will be completed within the next couple of months. The Company is dedicated to providing accurate and complete information to our shareholders and is focused on completing the investigation and audit process so that concerns about the Company can be properly addressed. The Company expects to be able to file the 2010 10-K within a reasonable time period after the completion of the investigation and audit process.

On November 13, 2010, China Agritech, Inc. (the “Company”) appointed Ernst & Young Hua Ming (“E&Y”) as its independent registered public accounting firm. On March 14, 2011, the Company terminated the services of E&Y. During the period from November 13, 2010 to March 14, 2011, E&Y never conducted a review or completed an audit of any of the Company’s financial statements. The decision to terminate E&Y was recommended and approved by the Audit Committee of the Board of Directors of the Company.

The following events occurred within the period from E&Y’s engagement to the date of E&Y’s dismissal. On December 15, 2010, E&Y provided a letter to the Audit Committee of the Board of Directors of the Company (the “Audit Committee”) describing certain matters that, if not appropriately addressed in a timely manner, may result in audit adjustments, significant deficiencies or material weaknesses and/or delays in meeting the 10-K filing deadline. The Company believes it responded to the matters outlined in E&Y’s December 15, 2010 letter. E&Y does not agree that those matters had been fully addressed and believes those matters could have materially impacted the Company’s internal control over financial reporting as of December 31, 2010. On March 8, 2011, E&Y informed the Audit Committee that it had encountered additional issues and concerns that, in E&Y’s view, required additional information and procedures, including the initiation of an independent investigation, in order to verify certain transactions and balances recorded on the Company’s financial statements and records for the year ended December 31, 2010. E&Y also orally advised the Audit Committee that it may not be able to rely on management’s representations based on the issues identified. The Company believes that it was taking appropriate steps to respond to E&Y’s recommendations for further investigation prior to the time of E&Y’s dismissal. E&Y does not agree with the Company’s assertion in this regard.

On March 13, 2011, the Company announced that it formed a special committee of its board in order to investigate certain allegations made by third parties with respect to the Company and certain related issues and that the Company would not be able to meet the its Form 10-K filing deadline. E&Y informed the Company that, in its view, there was a material omission of fact from the Company’s press release relating to the formation of the special committee, as the press release did not specifically disclose that the independent investigation was related to issues which were identified during the performance of the Company’s year end audit. E&Y further advised the Company’s representatives that E&Y may resign as the Company’s auditors if a revised press release was not issued. The Company, however, believed that the specific disclosure in the press release about the investigation combined with the disclosure of the indefinite delay in the 10-K filing, was a clear indication to the market that issues had arisen in connection with the annual audit which would have to be addressed.

E&Y informed the Company that the issues identified in performing their audit may, if further investigated, have adverse implications for the financial statements covering the three quarterly reports filed by the Company on Form 10-Q during 2010, and advised the Audit Committee to inform the predecessor auditors of the issues identified, so that they can assess the impact on prior financial reports.

 
BEIJING, March 13, 2011 /PRNewswire-Asia-FirstCall/ -- China Agritech, Inc., a leading organic compound fertilizer manufacturer and distributor in China, announced that it has formed a Special Committee (the "Committee") of its Board of Directors in order to investigate certain allegations made by third parties with respect to the Company and certain related issues.
 
The Committee will consist of five members, including Gene Michael Bennett, Lunzhang Dai, and Hailin Zhang, who are members of the Audit Committee of the Board of Directors, and Zheng Wang and Xuenong Zhang, who are members of Board of Directors. The Committee will retain its own independent counsel and forensic accounting firm to advise the Committee in connection with its investigation.
 
Considering that the investigation will not get underway until next week, the Company will not be able to meet the March 16, 2011 filing deadline for its Form 10-K and will be filing for an extension of time to file its Form 10-K. In addition, because the Form 10-K will not be able to be filed until the investigation is complete, the Company is not able to predict when the filing will take place.