MedGen Inc (MDIN)

[Jammin1]

I'm just catching up with messages from the weekend, and finally found one with an original and valid point:

If you look at MDIN's last quarter's Balance sheet, you will see that this is heavily unbalanced.
Does 733K = 232K + (-670K)?? NO!!

Yes, this seems to be a mistake, but it's easy to see what happened. It's not a matter of money missing, just a matter of a wrong calculation for stockholder's equity.

Here's what they listed:

Liabilities 232,371
-----------------
Stockholder Equity [blank]
Par values of
Preferred, 2,000
Common 402,319
Treasury 33,333
----------------
Total Stockholder Equity (670,023)

Essentially, 670,023 is all the liabilities and stock par values added together and listed as a negative number. This is not what should be listed as Total Stockholder Equity. It shouldn't include liabilities in it, and it should add in an "equity" amount which is calculated from everything else to make it all tie out.

In other words, they should take Assets of 732,977 and subtract that 670,023 number (liabilities and par values), to get 62,954, and list that as "Stockholder Equity", which was a blank line above the par values.

Then "Total Stockholder Equity" becomes that equity number plus the par values, or 500,606.

Then Liabilities plus Total Stockholder Equity is 232,371 + 500,606 = 732,977, matching assets.

This should be fixed up and restated during the audit.