CELZ patents and the 10Q:
What exactly does IT mean? Is there ANY truth to comments about the little value of the patents? Well, if I were just now showing up to the iHub and didn’t know any better and read his post, and then checked the 10Q, I might actually believe if I were a green horn in the patent world. Why? Because the 10Q does say that the ED patent only has a “carrying value” of $75,890. Whoa, that seems very low indeed! Maybe something knows what’s they're talking about after all.
Stop the presses. Let’s make sure to point out the next sentence in that 10Q Note 2 – Licensing Agreements section as it relates to the ED Patent: “The Company expects to amortize approximately $9,972 annually through 2026 related to the patent costs.” Okay, now for a little simple math…what is $9,972 times 7.5 years (remaining patent life)? That be $74,790. That’s close enough to the FV (face value) of $75,890 to be considered a wash.
So, what’s the point here? The point is that all of the patent “values” that are reported in the 10Q are the ACTUAL COSTS they’ve paid to either secure via licensing the patents or prosecute the patent applications. They get to amortize these just like if they bought an SUV to put Realtor signs in the back of to sell a house. Or that dough mixer in a restaurant. This is the dry and boring world of accounting folks. Nothing titillating. If they were to indeed value the patents, it would HAVE TO BE IN GOODWILL as special provisions would have to be taken in the reporting as that is an INTANGIBLE ASSET.
You cannot report according to GAAP (Generally accepted accounting principles) the “value” of an intangible asset as a “hard” asset. Any value associated with a patent is (for better or worse) tied to the revenues it generates. In accounting though, the “matching principle” requires there to be a link between revenue and expenses. In this case, they get to, have-to, do, report the costs of getting the patents but don’t get to report what they consider the “fair” value to be and when you’re pre-revenue with an IP portfolio, you don’t get to be “fairly” valued at all (no revs to support the narrative). It’s an imbalance because it is incredibly hard to say what value an intangible asset has at any given moment and accounting likes everything to be super “accountable” in the reliable measure of a thing.
Last issue…patent’s “ALL EXPIRE SOON” he says…well, fact check says ED has 7.5 YEARS (and it’s they’ve got it commercialized TODAY!), Lower Back Patent is good until 2037 (19yrs), neither of which seem like “soon” to me. Plus, they have filed numerous (I think 13!) pat apps in 2017 that will all get 15-20 yrs of life when issued (I say when, not if..they are an IP A-team).
Fingers crossed we get an 8k or PR soon! Good luck Longz. Go CELZ$$$$
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