Friday, April 8, 2011

China Intelligent Lighting (CIL) Appoints New Auditors; Receives NYSE Amex Delisting Notice; Announces Special Litigation Committee's Engagement of Law Firm


China Intelligent Lighting and Electronics, Inc. yesterday announced that the Company engaged Friedman LLP ("Friedman") as its new independent registered public accounting firm. Pursuant to the engagement letter, Friedman will audit the financial statements for the years ended December 31, 2010 and 2009.

The Company also announced today that the Special Investigation Committee has engaged the law firm of Cozen O'Connor to serve as its independent counsel in connection with its investigation. As previously reported, the Board of Directors established a Special Investigation Committee to investigate allegations contained in the resignation letter of its former auditors, MaloneBailey LLP ("MaloneBailey").

On April 5, 2011, the Company received a notification from NYSE Amex LLC ("Amex") of its intention to delist the Company's common stock pursuant to Section 1009(d) of the Amex Company Guide based on a determination that it is necessary and appropriate for the protection of investors to initiate immediate delisting proceedings.

Based on Amex's review of the resignation letter from MaloneBailey, it determined that the Company is not in compliance with Amex listing standards and is therefore subject to immediate delisting.

Specifically, the Company is subject to delisting pursuant to Section 1003(f)(iii) in that the Company's actions and inactions led to MaloneBailey's resignation and withdrawal of its audit opinions casting material doubt on the integrity of the Company's financial statements, which were relied upon by Amex; MaloneBailey's withdrawal of its audit opinions and that its opinions may no longer be relied upon constitutes a material misstatement and a violation of Section 132(e); the withdrawal of MaloneBailey's audit opinions and that there are no current audited financial information available for the Company as a result have caused the Company's filings to be noncompliant with regulations of the SEC and, thus, noncompliant with Section 1003(d); MaloneBailey's withdrawal of its audit opinions calls into question whether the Company actually met the listing standards subjecting the Company to delisting pursuant to Section 1002(e); Amex states that, based on the withdrawal of MaloneBailey's opinions, the Company is not compliant with Section 127; the resignation of Mr. Askew as a member and Chairman of the Company's Audit Committee leaves the Audit Committee with less than the required three independent directors and therefore, violates Section 803B(2);

Mr. Askew's resignation also resulted in the Company having less than majority of independent directors, which violates Section 802(a); and the filed Form 12b-25 indicates that the Company will not be able to file its Form 10-K for the year ended December 31, 2010 within the extended due date and the Company is unable to estimate when it will be able to complete the filing, which violates Sections 134 and 1101 requiring timely filing of such report.

The Company has until April 12, 2011 a limited right to request an appeal. If the Company does not request an appeal by then, then the decision will become final and Amex will submit an application to the SEC to strike the Company's common stock from listing. If the Company requests an appeal, then such request will stay a delisting action.

The Company intends to appeal the delisting determination. There can be no assurance that the Company's request for continued listing will be granted, or even if it is granted, the Company will be able to execute upon such request in a timely manner or to the satisfaction of Amex. The details of the Amex delisting notice is set forth in Item 3.01 of the Company's Current Report on Form 8-K filed with the SEC on April 7, 2011.

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