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Friday, February 07, 2014 8:52:11 PM
Company shows income on its unaudited financials because it is does not properly record expense related to share issuance.
They were recording expense at the par value of the shares issued (.001/share), then realized (as part of auditing process? don't know) that this was incorrect.
So, that was reversed, and so -- voila -- $7M of 'unidentified and intangible assets' appeared on the books after Q2 2014. For example, some of these dollars relate to the payments made to the ice cream distributor, which under GAAP should have been expensed -- as they originally were, at .001/share -- not capitalized as they are now. Making lemonade out of lemons, the company noted the huge increase to 'shareholder equity.'
But should auditing be completed, all (or almost all) of these assets will be written off, reducing shareholder's equity. And this write off will dwarf the (since inception as a coffee kiosk company) REVENUES of BCCI, much less the profits.
And this is to say nothing of the $1.7M of advertising bought on October 1 (and therefore not accounted for until CY 2013 financials are published in April or whenever) -- a huge number for a company with less than that in annual sales. The company has not yet disclosed how many shares (common and/or preferred) were issued for this advertising.
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