Stainster, you are completely correct that if compensation not paid until January 2011 that payroll tax liability and any witholding requirements not due until either the end of January or the end of March. Someone with a financial background could answer whether due to amounts involved that payment due at end of January.
With all due respect you fundamentally do not understand accrual accounting or US GAAP. If liability incurred in 2010 when services performed, then the expense and corresponding liability must be booked at that time, regardless of when paid. To use your terminology this is basic accounting 101 and basic business 101.I am not sure why someone could possibly think otherwise if they have any business experience.
1.Employment contract signed in January 2010 for services to be performed in 2010.
2.For some reason contract not disclosed until June 2010.
3.Financial reports do not appear to show the expense and corresponding liability.
4.Payment in form of shares, for which IRS taxes based on fair market value without consideration of standard restrictions, in January 2011 would settle a liability not create one years salary expense in one month. What I don't know and someone with accounting backgroudn could answer, is when the payroll tax liability should have been recorded.
To make it simple to understand if you receive a bill in December for telephone expense , under an accrual system you record expense when that bill received. If paid in February , it would not be an expense in February but recorded as a reduction in the accounts payable. Again with all due respect, if one doesn't have experience in business in any sort of management position, this might be difficult to understand. That is just the way it is.
Why the CFO doesn't know these things a good question.
In any case this is a sub-penny company and sheer speculation. Surely anyone buying shares of this company knows the high risk. If people are gambling on the HIP HOP or the SinoCan deal it is after all gambling. CEO certainly tries hard as every few months another deal appears.The "definitive merger" with SinoCan is certainly exciting ! Just wish CEO would dump CFO !
