Jinhao Motor Co Common (PINK:GIMC)

On November 17, 2011, PricewaterhouseCoopers Hong Kong (“PwC”) resigned as our independent registered public accounting firm.

Our Board of Directors had engaged PwC on December 1, 2010 to audit our financial statements for the fiscal year ended December 31, 2010. On March 28, 2011, by letter to our Chief Executive Officer, PwC advised us that it was unable to complete its audit work because it had encountered five issues that remained unresolved and that, in PwC’s view, prevented PwC from obtaining a full understanding of transactions carried out by us. The issues identified by PwC in its letter of March 28, 2011 were:

(1)  discrepancies in our VAT invoices and our VAT filings with tax authorities;
 
   
(2)  discrepancies in certain supporting documents for payments and receipts and in certain of our banking records;
 
   
(3)  inability to verify sales of finished goods through third party acknowledgement and inconsistencies in records of finished goods and raw materials inventories;
 
   
(4)  inconsistencies in pricing arrangements among us, export-import companies and overseas dealers; and
 
   
(5)  inability to verify the existence and valuation of certain items of property, plant, equipment and work-in-progress.
 

On March 31, 2011, Jinhao Motor Company (the “Company”) filed a Form 12b-25, Notification of Late Filing, pursuant to which it disclosed that it would be unable to timely file its Annual Report on Form 10-K for the year ended December 31, 2010 due to the fact that it has not completed the process of preparing and integrating its operating and financial information into financial statements for the fiscal year ended December 31, 2010. The Company stated that it anticipated that it would file its Form 10-K no later than the fifteenth calendar day following the prescribed due date, as permitted by Rule 12b-25 under the Securities Exchange Act of 1934, as amended (“Exchange Act Rule 12b-25”).

The Company has determined that it is unable to file its Annual Report on Form 10-K for the year ended December 31, 2010 within the grace period afforded by Exchange Act Rule 12b-25. The Company’s audit committee, which consists of two independent directors participating in the Company’s first annual reporting cycle since the Company’s reverse acquisition transaction in August 2010, is conducting an independent review of certain of the Company’s accounting policies and practices and related matters in order that the Company’s financial reporting be as complete and accurate as possible. The Company currently expects that this internal investigation will be completed, and its Form 10-K filed, within 30 days.