Replies to post #108916 on Bots Inc (BTZI)

[lesgetrich]

Hey if you have the time, could you explain this GAAP thing OBITX mentions in the PR for their annual filing? It says they had a net loss of 49million and somehow cancelled it and have a net profit of 1million and some change.

I assume you're referring to the roughly $49 million loss on the annual 10-K. From the 10-K...

BTZI 10-K

Operations

We gained $62,838 in cash by operating activities for the year ended January 31, 2021 as compared to using $16,558 for the year ended January 31, 2020. Net cash used by operations consisted primarily of the net loss of ($49,298,590) offset by non-cash activities of $49,204,508 in stock-based compensation, $69,443 of imputed interest and $114,125 in realized gain in cryptocurrency, net. Changes in assets and liabilities consisted of an increase of $830 in prepaid expenses, accrued interest of $90,435, current cryptocurrencies of $40,083 and accounts payable of $3,290, offset by a decrease in accounts payable to related parties of $107,990.

Of the total net loss for FY2021 (ending January 31, 2021) of $49,470,848, $49,204,508 of it came from non-cash stock based compensation. This consisted primarily of one time sign up bonuses to attract the company's new management team. These would not be repeated each year as they would be replaced by much lower (or deferred) salary compensation. At the end of the year, the value of the stock is added to the accumulated deficit according to GAAP rules. The new year (net profit/loss) is then started out with a clean slate.

In their 5/17/21 PR the company stated...

OBITX, INC. FILES ANNUAL REPORT WITH SEC RELEASES ADJUSTED ANNUAL EARNINGS REPORT

OBITX recorded $49 million in stock-based compensation when it reorganized its previous operations moving from an internet marketing company to a blockchain engineer and development company. In addition, OBITX recorded the sale of its proprietary internet marketing software for $1.9 million to a related party as a balance sheet transaction only. The net effects of these two major transactions, when removed from the financials, along with traditional adjusted expenses, such as interest and depreciation, provide for an adjusted from a $49 million loss to a$1.1 million profit.

So they're saying if you discount the non-cash stock transactions from last year (counter to GAAP accounting rules) the adjusted numbers actually show that the company made $1.1 million in profit, thus proving that they aren't in any danger of running out of cash. It is common practice for companies to report adjusted Non-GAAP numbers so that their shareholders can get a better picture of their cash picture by discounting non-cash values/transactions such as depreciation and one time stock compensation.