China Sky One Medical - is the cash flow matching Asset values ?

China Sky One Medical - CSKI

The Cash flow statement of this company does NOT seem to match the assets reported... What am I missing ?

Cash flow for six months ended June 2011 shows investment of $ 8.38 Million. However Gross assets have NOT increased by 8.38 Million from end 2010 to June 2011

Why ?

Cash flow as reported in 10 Q - June 2011

China Sky One Medical, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited, $ in thousands)

		Six Months Ended June 30,
		2011				2010
Cash flows from operating activities
Net Income		$	12,225			$	24,830
Adjustments to reconcile net cash provided by (used in) operating activities:
Depreciation and amortization			3,021				1,919
Change in fair value of derivative liability			(1,591	)			(7,013	)
Net change in assets and liabilities:
Accounts receivable			(1,335	)			(2,719	)
Inventories			(4,196	)			(3,124	)
Prepaid expenses and other current assets			1				50
Accounts payable and accrued expenses			4,007				3,487
Taxes payable			882				1,838
Net cash provided by operating activities			13,014				19,268
Cash flows from investing activities
Land and construction deposits			(6,281	)			(7,316	)
Purchase of property and equipment			(96	)			(407	)
Purchase of land use rights			(1,986	)			-
Purchase of intangible assets			(4,389	)			-
Purchase of construction in process			(20	)			-
Net cash used in investing activities			(12,772	)			(7,723	)
Cash flows from financing activities
Proceeds from warrants conversion			-				94
Net cash provided by financing activities			-				94
Effect of exchange rate changes on cash and cash equivalents			929				261
Net increase in cash and cash equivalents			1,171				11,900
Cash and cash equivalents at beginning of period			43,124				52,756
Cash and cash equivalents at end of period		$	44,295			$	64,656
Supplemental disclosure of cash flow information
Interest paid		$	-			$	-
Income taxes paid		$	3,840			$	4,942

Assets as reported in 10 - Q - June 2011

10.	Property and Equipment, net

As of June 30, 2011 and December 31, 2010, Property and Equipment, net consist of the following:

		($ in thousands)
		June 30,				December 31,
		2011 (Unaudited)				2010
Buildings and improvements		$	25,730			$	25,185
Machinery and equipment			6,126				5,961
Transportation equipment			1,272				1,188
Furniture and equipment			404				392
Total Property and Equipment			33,532				32,726
Less: Accumulated Depreciation			(4,642	)			(3,766	)
Property and Equipment, Net		$	28,890			$	28,960

Source : company's 10 - Q published here http://www.sec.gov/Archives/edgar/data/798985/000114420411045037/v228796_10q.htm