IMHO that statement was always and still is... False. In fact their financial statements are misleading. The reason why they are doing this is that they are out of "cash". I would expect that over the next few months you will see executives transfer to the new entity (uWink Interactive) or quit. They must do that to reduce the payroll to sustainable level.
Of course, one has to agree as to what "cash" means. To a reasonable person, cash is really Working Capital. Cash usually means anything with a maturity of less than 1 year. I would think it means ST Assets minus ST liabilities then, which I think is Working Capital. Anything else is meaningless. I don't think they can meet payroll over this next quarter anyway.
I would think that their financial statements are misleading in that they do no represent uWink as a Going Concern. I actually looked this up in my MBA Accounting text.
Principles of GAAP:
Materiality
Revenue Recognition.. etc.
One of them is Going Concern. Representing the entity as a Going Concern indefinitely. Showing them as having no Working Capital to sustain themselves going forward is in my view, a misrepresentation of financial condition and risk to investors. I would criticize the statements on those grounds, although i am not an accountant. I just think they are misleading. The cost cutbacks they talk about are really inconsequential. The only cost cutbacks that have any effect are headcount reductions. They do mention losing the contractors, but that is it. They could have got those cost reduction ideas from the receptionist (except they cannot afford one).
In my observations of released financial statements from companies like this, statements like this are all rosy until things get critical, when suddenly the tone changes. Usually immediately before or just after the release of nonsensical financial statements like this, reality is released in the form of a Trading halt, news like this, or news of cost cutbacks and restructuring..
But, this is IMHO. I am not an accountant, just an educated observer with an accounting courses and text. Just my view.
So I am all posted out for this weekend. It has been an interesting ride for me. I am most curious what happens in the markets for uWink tomorrow.. i think it will slide down to a residual value of a few cents..
