UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K/A
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of
Report (Date of Earliest Event Reported):
April 16, 2008
CHINA
FORESTRY, INC.
(Exact
Name of Registrant as Specified in Charter)
Nevada
(State or
Other Jurisdiction of Incorporation)
0-25765
(Commission
File Number)
87-0429748
(I.R.S.
Employer Identification No.)
Room
517, No. 18 Building
Nangangjizhoing
District, High-Tech Development Zone
Harbin, Heilongjiang
Province, The People’s Republic of China
(Address
of Principal Executive Offices) (Zip Code)
011-86 0451
87011257
(Registrant's
Telephone Number, Including Area Code)
_____________________________________________
Former
Name or Former Address, if changed since last report
This
Current Report on Form 8-K/A is filed by China Forestry, Inc., a Nevada
corporation (the “Registrant”), in connection with the items described
below.
ITEM
4.01 CHANGES IN
REGISTRANT'S CERTIFYING ACCOUNTANTS
On April 16, 2008, the Registrant
terminated Turner, Stone & Company, L.L.P. (“Turner, Stone”) as the
independent registered public accounting firm for the
Registrant. Turner, Stone had been the independent registered public
accounting firm for the Registrant, but did not timely complete an audit of the
consolidated financial statements of the Registrant and Subsidiary for the year
ended December 31, 2007, and, as a result, was terminated. Turner,
Stone did not finish the audit despite being given the completed financial
statements and notes weeks before the due date. Turner, Stone announced that
they anticipated that the earliest they could complete the audit was April 21,
2008, which was six days after the April 15, 2008 deadline, causing the
Registrant to receive an “E” from FINRA’s OTCBB. It was the day after
this announcement that that the Registrant terminated Turner, Stone for being
completely unresponsive and failing to live up to the terms of its auditing
agreement. The Registrant is considering reporting Turner, Stone to the PCAOB
for the damages that they caused to the Registrant. In a “sour
grapes” attempt to inflict further damage on the Registrant, they authored a SAS
112 letter to the Chief Executive Officer of the Registrant, which is summarized
below, and with which the Registrant disagrees. It is important to
emphasize that the SAS 112 letter was written five days after Turner, Stone was
terminated, when the firm was no longer the independent registered public
accounting firm for the Registrant.
The work performed on the audit by
Turner, Stone prior to termination contained no adverse opinion or disclaimer of
opinion, and was not qualified or modified as to uncertainty, audit scope or
accounting principles, except as set forth below, inasmuch as the work on the
audit was not completed. The termination of Turner, Stone was approved
unanimously by the Board of Directors.
In connection with the incomplete work
performed by Turner, Stone on an audit for the fiscal year ended December 31,
2007, since the engagement of Turner, Stone and through the dismissal of them,
there have been no disagreements between the Registrant and Turner, Stone on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which, if not resolved to the satisfaction of
Turner, Stone, would have caused Turner, Stone to make reference thereto in
their audit, had it been completed, on the Registrant’s financial statements for
the 2007 fiscal year.
The Registrant has made the contents of
this Form 8-K filing available to Turner, Stone and requested it to furnish a
letter to the Securities and Exchange Commission as to whether Turner, Stone
agrees or disagrees with, or wishes to clarify Registrant’s expression of its
views. A copy of Turner, Stone’s letter to the SEC is included as an
exhibit to this filing.
On April 16, 2008, the Registrant
engaged Malone & Bailey, PC
as its
independent registered public accounting firm. The Registrant had not consulted
with
Malone &
Bailey, PC
regarding the application of accounting principles to any
contemplated or completed transactions nor the type of audit opinion that might
be rendered on the Registrant's financial statements, and neither written nor
oral advice was provided that would be an important factor considered by the
Registrant in reaching a decision as to an accounting, auditing or financial
reporting issues.
Turner, Stone stated in its 5-day late
SAS 112 letter that it considers the following to be deficiencies in internal
control of the Registrant in connection with their incomplete
audit:
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Accounting
entries for the reverse acquisition of Patriot Investment Corporation do
not appear to be correctly
recorded.
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Historical
accounting records for Patriot Investment Corporation are not in the
direct control of the employees currently performing accounting and
reporting functions.
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It
appears that the controls that would normally be expected in a system of
financial accounting and control are below standards used by most
issuers.
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In
addition, Turner, Stone stated that it believed that the following deficiencies
constitute material weaknesses:
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The
Company does not appear to have personnel competent to prepare financial
statements in accordance with the requirements of U.S. Generally Accepted
Accounting Principles and SEC standards. The Company sought
assistance of outside accountants to prepare the financial statements and
then decided to complete the reports
internally.
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Certain
items appear to be improperly expensed in the drafts of the financial
statements.
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There
was no documentation provided for certain material cash
transactions.
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There
was no disclosure in the financial statements or the footnotes concerning
the legality and distribution of a pre-merger dividend or any reference to
applicable state laws in the state of incorporation. Since the
Company had a significant accumulated deficit, it appears disclosure of
this transaction was required under the guidance of APB-6 paragraph
13.
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We
were also requested by counsel to assist in the preparation of the
MD&A disclosures. For us to do so would be a violation of
independence standards.
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The
Company had no documentation of an impairment review of its forestry
licenses.
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There
appears to be ineffective oversight of the Company’s financial reporting
and internal control by those charged with governance. The
Company has no audit committee and we are unaware of directors with
adequate knowledge of SEC reporting requirement, with the exception of Man
Ha, who was the CFO of a Bulletin Board company for years, and a director
of a company listed on the Hong Kong Stock
Exchange.
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CONCLUSION
The
Registrant disagrees with all of Turner, Stone’s belated recitals of
deficiencies in internal control and material weaknesses. We believe
that they are an after-the-fact justification by an accounting firm that was
fired for their inability to complete a timely audit. As mentioned
above, the Registrant is considering a complaint with the PCAOB. It
is worth noting that Turner, Stone was recently terminated from another company
that Malone & Bailey took over for, and such company had recently engaged in
a reverse merger in Harbin, People’s Republic of China, not unlike the
Registrant. Turner, Stone thus has been fired by two similarly situated Chinese
clients in the past 6 weeks for similar forms of
incompetence. Turner, Stone’s belated SAS 112 letter is a weak
attempt to cover its own failings.
After its
engagement as independent registered public accounting firm for the Registrant,
Malone & Bailey, PC has informed us that in their opinion most of Turner,
Stone’s comments lack merit. Malone & Bailey, PC will address those points
with the Registrant that it deems to have merit.
ITEM
9.01 FINANCIAL STATEMENTS
AND EXHIBITS
(c) Exhibits
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16.1
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Letter
from Turner, Stone & Company, L.L.P. to the Securities and Exchange
Commission dated May 29, 2008.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunder
duly authorized.
China
Forestry, Inc.
By: /s/ Yuan Tian
---------------------------------------
Yuan Tian, Chief Executive Officer
DATED: May
30, 2008
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