I don't know if the non-valuation of their equity assets is a "can't" or "don't want to" situation. We've certainly seen many companies put "intellectual property" such as a trademark or trade secret, as an asset on their books. Valuation of a trade secret is an estimate. VSTR could certainly estimate what a company like Rivetz might be worth. I don't know accounting law and practice. But this statement in their filings leads me to believe it's their choice
"When the Company acquires equity in another entity in exchange for consulting services, the Company only recognizes consulting revenues on its income statement and the cost of the investment on its balance sheet in instances where the value of the early-stage company can be determined through publicly available evidence such as audited financial statements or a market value on a trading platform. The Company recorded a valuation loss on investments at April 30, 2018 and 2017 of $0 and $6,000, respectively."
Note it says "the company only recognizes..." If it said the "company CAN only recognize..." That would tell me it was a requirement. So I think it's their choice to leave those potential assets off the books. They do, however, book the loss when one of their investments fails:
"The Company recorded a valuation loss on investments at April 30, 2018 and 2017 of $0 and $6,000, respectively." It's not much money compared to 2017 but note that in 2018, under new management, losses on investments were 0.
As to the upcoming 10k, it will show financial results through April 30, 2019. Anything after that is unlikely to be included but might be found in the "subsequent events" section, if they so choose. We'll see results as of July 31 when the quarterly 10q report comes out in early September.
So when filings have months-old financial results I compare quarters looking for trends. Increasing revenues without a corresponding increase in SG&A expenses, stable margins, lack of unusual expenses, no meaningful increase in accounts payable, etc. VSTR has done well there, and with the favorable debt reductions, and for multiple quarters able to pay normal course of business expenses without having to borrow money, VSTR is well on their way to being profitable. All it would take is an increase in consulting revenue while maintaining their very high margins. Meaningful profits will come very quickly.
The wild card is the equity stakes. Rivetz buyout, Zelgor's new game going viral would spike the stock unbelievably. All in my opinion.
It's nice to have a lot of horsepower in the engine room but you need some in the wheelhouse too.
