China Growth Stocks

[CSykes]

SIAF.. the scoop..

There are a number of reasons why the company is not on the OTCBB, none of which were the Company's making.

First, Belmont Partners put them into a "piggy back" shell. It is not really a pinksheet per say, it was a mineral rights company formed in the 70's that traded on the Spokane OTC (which eventually merged into the "pinksheets") Basically it wass kind of like a shelf company with a ticker and free trading stock.

Belmont provided the auditor and transfer agent to bring the company current and utilize its "piggy back" status to obtain quotation on the OTCBB.

If a security is delisted from The New York Stock Exchange or from the American Stock Exchange, then the usual Form 211 filing and review process will apply. However, some exchange-listed securities are already quoted in the Pink Quote system on an unpriced basis. This provides the market maker with an exemption to filing a Form 211 in the event the security is delisted from the Exchange. In this case, any market maker that had been quoting the security in the Pink Quote system for the 30 days prior to delisting could continue to make a market in the Pink Quote system upon delisting. The security generally becomes "piggy-back qualified" the same day it is delisted and any other market maker can then publish quotes in the Pink Quote system without first submitting a Form 211 to FINRA. To find out if an Exchange-listed security is being quoted on the Pink Quote system concurrently, please call Pink OTC Markets' Issuer Services Department at 212-896-4420 or email us at [e-mail].

The auditor ultimately is where the delay came about. IMHO (and I have complained to the CEO as such) The current auditor was simply not up to task to handle the needs of SIAF. They are simply to small and do not have the resources to handle a Chinese company.

The biggest delay was caused by the valuation of the Land bank. In China, they recently discontinued the practice of valuing land at a set price across the country. They determined that some areas were in fact worth more and moved towards a provincial valuation system. Because the auditor is not large enough, or has the proper experience, they refused to take into account this new valuation model and instead relied on a more basic form of valuation provided by GAAP. In other words they were lazy.

This killed over $0.30 of book value over what the China affiliates were showing. Like any good CEO.. he fought with the auditor over this valuation.

After much expense and effort, the company finally caved into the auditor and book was reduced from around $1.30 to the audited $.89 in 2007. You will see this reduction on the audit as a "impairment loss on goodwill", $6.8M worth in 2007 and $19.6M in 2006.

That was a substantial chunk out of both the assets and earnings because the impairment affected EPS as well.

I hope this clears some things up. The 2006-2007 audit is very informative. I fortunately have a sister in law who just happens to be a SOX/PCAOB auditor so I have learned how to pick apart financials quite well.. and it can be a very huge edge when conducting DD.. as was the case with SIAF..