Its official — China Expert Technology has blown its extended deadline to file its quarterly report with the SEC, so the ticker has changed to: CXTIE.OB. On August 17, I wrote that if the company blew the deadline, “we could see $2.50 again.” I still think that is in play, and it could even go lower if the situation drags on.

Investors need to weigh two possibilities. On the one hand, the filing could be delayed only by the transition in the CFO post. That’s the benign scenario, but it still does raise concerns about management credibility. After all, Tao told us in the conference call that financials would be filed on time, and then in an SEC filing stated that the company expected to have the filing completed within the 5-day extension. The other possibility is that the filing is held up by accounting problems, which would also explain Simon Fu’s departure.

Bottom line: China Expert’s failure to file is disappointing, regardless of the reason. I expect that this will take a while to sort out, and until it does, shares will continue to fall. That said, I do still have a small long position that I will trade around.

DISCLOSURE: Long CXTI.OB CXTIE.OB.

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