AVT Inc. (fka AVTCQ)

[TNGN]

I have been looking at AVT's SEC filings as I got concerned with the sudden increase in accumulated deficit shown in the latest interim report. There are a lot of strange figures that does not make sense but the change in intangible assets caught my eyes.

When you look at their last annual report for 2012, they had $9,936,400 for intangible asset and goodwill combined.

http://www.otcmarkets.com/financialReportViewer?symbol=AVTC&id=103771

According to the most recent interim Financial report there are no more goodwill, and the intangible asset shows only $4,885,168.

http://www.otcmarkets.com/financialReportViewer?symbol=AVTC&id=126902

Looks like they wrote down $5,051,252 with no reason.

Or maybe there is a reason. Most of the assets AVT bought is originally from their "related" company SWI Trading, which is owned by the founder's father. What if they overvalued the transaction and inflated them with intangible assets ? Maybe a proper CPA looked at those inflated transactions and decided that it was way over fair value: leading to the write downs.

Most of these transactions seem to have been paid with common shares and/or preferred shares. I bet SWI trading made a "LOT" of money selling these stocks. It is amazing how SWI Trading can go around insider trading laws like this, but I guess its the privilege you get by having limited reporting requirement as a pink sheet stock !

In any case, I hope these write downs are the main reason for the sharp increase in accumulated deficit, rather than a real operating loss. At least they won't go bankrupt if that's the case;