Valuations and Speculation
I have noticed that the company that I run in my professional capacity has caused a stir since its announced move to the OTCBB.
One of the prime reasons for this move was for complete transparency and a fair and accurate audited book value of our company assets in compliance with Sarbanes - Oxley.
Another was to be listed on an exchange that would better reflect the true value of our assets with the investment community. The overwhelming majority of Pinksheet listed stocks, whether legitimate or not, are viewed with tremendous skepticism.
Much has been speculated, both positive and negative, about what the company I run in my professional capacity assets are worth. Some have argued the point that if we have a valuation of $xxx given, then it is worth $xxx. Some have said it should be $x due to known and unknown factors. Neither is the case. Any asset is worth what it is valued at, less a variety of several factors. Cost of production, depreciation, overhead, insurance, taxes, ect. and also governmental laws and regulations play a major factor.
One example would be an advertisement played on a broadcast station. Most people say "Air Time" is free, and while it costs nothing for the actual "time', there are many factors that go into making it cost something more than "Free". Electricity costs, insurance, equipment costs, labor costs, ect. all are factored in to the actual costs incurred of airing an advertisement. However, it does not mean that the advertisement is worth $0 to a company, or has a negative value either. The value is the difference between overhead costs and the price charged for the advertisement.
Another example would be a gallon of fuel produced. If a company makes and sells a gallon of fuel for $2.50, it does not mean the company makes $2.50 a gallon and it is worth $2.50 of net profit to the company. Production costs, labor, base material cost, insurance, ect all factor in to reduce the actual profit on the product produced. Again, though just because there are costs associated with production, this does not mean that the gallon of fuel is worth $0 to a company.
Precious metals are another example. While a company may have $xxxx of reserves in the ground, it does not mean the company is claiming to have net assets of the same amount of reserves they have. Extraction costs, labors costs, insurance, taxes, and compliance with local, state and federal government laws and regulations all factor into the net value. While it may cost $xx to extract the precious metals out of the earth, it does not mean that the precious metals in the earth are worth $0 to a company.
Also, with respect to any precious metal reserves that a fully reporting company may own, an audit is required to give a valuation for book value. There are accounting regulations and formulations that go into what a company can book the asset for on its balance sheet in accordance with accepted industry standards and GAAP.
Pinksheet listed stocks are ripe with speculation, both negative and positive. At times, neither are anywhere close to the actual truth.
My personal opinion is that when you find yourself in an environment you don't particularly care for, you chose a different environment to work in. It does not make sense to try to change an environment that you ultimately have no control over. If you walk down a dark alley and do not like the circumstances that it brings, then walk down a different alley that has more Light.
Most everyone feels better in the Light. There are those however, who prefer things to be darker than what they really are or need to be. There are also those who will be upset that you have chosen not to walk down their dark alley anymore.
Not me.
I prefer the Light. Light and transparency have a way of bringing clarity to all things. You can build solid, positive, long lasting things with the Light.
As always, don't buy into any Hype, or any Bashing. They are two sides of the same coin.
John
