Ok, I will not comment on the validity of the fin's anymore, everyone knows I believe them to be incorrect/incomplete.
But let's now do a little deep dive into the fins.
1. Centaflix generated $927,274 in revenues for the three month period. $844,155 (91%) were generated via Web Operations. Now in the cash flow statement, A/R (a use of funds) grew by $844,194. What this shows is of total sales for the three month period, Centaflix only collected 9% of its sales. What are the payment terms? Net 120, 150, 180??
2. So realistically, the company collected $83,080 in cash from its sales. Total expenses were $428,511 for the three months. So how did they pay for the expenses? Well they hit up trade creditors for an additional $359,491 (cash flow page) and Centacom loaned them $32,418 and someone else loaned them $34,197.
3. Then they purchased some equipment for $67,359, which Ironically and getting to the "start up" concept is the only fixed asset on the balance sheet.
4. Then you look at the cash balance, $17,123. Ironically, on the cash flow page, $17,123 was what was generated in cash flow. Meaning, at 12/31/10, the cash balance was zero.
5. Finally, a tour of the equity section reflects beginning equity of -$1,808 and retained earnings of -$2,258 for a grand total of negative $4,066. Equity improves substantially with quarterly profit of $499,000.
The above are factual statements taken directly from the "audited financials" that have no basis of presentation, no comments on revenue recognition, no description of the business, no analysis of the loans (particularly inter-related), no FASB rulings, no mention of depreciation methods, no tax liabilities, etc.
PS: I will stop short of saying "sponges anyone"?
