BlockQuarry Corp (BLQC)

[loanranger]

I could only stomach bits and pieces of it....if any actual shareholders say something interesting I'll look a little closer.

Your glance on the phone wasn't misleading. Here are the REPORTED revenues for the first three quarters plus a footnote:

Q1: $3,600
Q2: $27,620
Q3: $--0--

Bear with me for some magical, if boring, accounting:
With just $31,220 in revenue in the last 9 months ($35,900 in the last 12) you wouldn't expect the balance sheet just filed as of 9/30 to show much in the way of unpaid bills due from customers, AKA Accounts Receivable. Yet the ISBG Accounts Receivable balance as of 9/30 was reported as $330,140. How could that be?

The explanation requires an understanding of a statement that first appeared in the September 30, 2016 notes:
"Product sales are generally recognized upon shipment of product. However, the Company defers recognition of revenues from sales to stocking distributors until such distributors resell the related products to their customers. The Company has deferred recognition of revenues amounting to $310,680 as of September 30, 2016."

NORMALLY, a company recognizes revenues when it ships product to a customer. At the same time it records the amount owed by the customer as an Account Receivable.
ISBG offers their customers (liquor distributors who then sell to retailers) a special arrangement and with it comes some special accounting. They GIVE them the product and don't treat that as a sale until the distributor ships the product to THEIR customer. Odd, but not illegal....kind of like a consignment sale.
The accounting is the questionable part. Instead of recording the original shipment to the distributor as revenue it records it as deferred revenue. That's okay. The problem is that they call the amount of the wholesale sales value as Accounts Receivable which it obviously isn't....the distributor doesn't owe them anything yet by the terms of the agreement.
So basically the company overstates its assets by recording an Account Receivable and overstates its liabilities as Deferred Revenue.
Obviously it's complicated...I've explained it before and I don't expect it to be embraced this time either. But thankfully it's not the most interesting part....

The company is telling us that in the 3rd Quarter of 2016 they shipped $300K+ in wholesale value of merchandise to its distributors and at the end of the 3rd Quarter of 2017 those distributors have yet to move any of that product into the hands of any of THEIR retailers. Their financial statement numbers and footnotes both tell us that all of that product has been sitting in ISBG's customers' warehouses for a full year.
That's the most interesting part.

Nobody (especially me) wants to see me do this again. The best way to avoid it would be for somebody to copy and paste that last paragraph and send it to Alonzo with a request for an alternative explanation. Or better yet, send it to the SEC and let them ask him for an explanation.