Replies to post #39006 on Momentous Entertainment Group (fka MMEG)

[Stockcaller]

This company is in turn around mode, building equity through mergers and acquisitions. Profit to be realized in the near future.

Perhaps you should take a moment and drool over this if you haven't already. I don't mean to sound so harsh. Best of luck with $MMEG.
She's humming on all cylinders, enjoy the ride.

http://www.momentousent.com/pdf/Report_MMEG_31517

[RockRoll]

Somebody who's more knowledgeable regarding this, please correct me.

How I understood this, when Momentous acquired a struggling Poolworks, they acquired it with a $40mil "Goodwill" debt. On the books it may show as a loss, this is how a Goodwill debt is handled:

http://financial-dictionary.thefreedictionary.com/goodwill

Goodwill is the difference at a particular time between the STOCK MARKET valuation of a FIRM and the sum of its NET ASSETS recorded in a BALANCE SHEET. If another firm wishes to acquire this firm, goodwill represents the premium which the buyer must be prepared to pay for the firm over and above its asset value, because of the firm's trade contacts, reputation, established BRAND names, management expertise and general ‘know-how’. Where a firm has a poor trading record its market value as a going concern to a potential buyer may be less than the balance sheet value of its assets, in which case goodwill is negative.
Goodwill is an intangible FIXED ASSET and may be shown in a company's balance sheet.** However, many companies write off the goodwill premium which they pay to acquire a new subsidiary company immediately against their current year's profits with the result that goodwill does not appear in their balance sheets.

** which is what you saw as a net loss

So one can deduct this debt against their current year's profits, and a company has 10years to do so.

https://cpawilmingtonnc.org/goodwill-cpa-tax-accountant-discusses-goodwill-amortization-irs-form-4562-depreciation-and-amortization-amortization-schedule-irs-publication-535/

•For tax purposes, Goodwill amortization usually uses a straight line write off; an equal amount every year until the Goodwill value is $0.

In essence, the $40million Goodwill debt, divided over 10 years is $4million. MMEG can write off $4mil against their profits for the next 10years.

Remember, Poolworks wasn't always struggling. In it's early days, it was doing pretty well in Germany - and another young company in the U.S., Facebook, wanted to buy them for $180mil - and the offer was rejected. Facebook built out their product, adapted, grew, and well ... we all know the story. Poolworks had the opposite course, neglected, etc., and MMEG bought them for pennies (or sub-pennies) on the dollar. Poolworks should now receive the attention is desperately needed for so long.