I was always a little curious as to why the “magnesium silicate” was only referred to as a “fertilizer asset” on Ybyra’s books. Magnesium silicate has a lot of uses and many ways it can be produced. Why “fertilizer”???
We now know why…it’s steel slag…which can be used as fertilizer
As for the “value”. The auditors did not do any sort of valuation. They relied solely on what the company had provided.
And all they referred to was a “valuation report”…but no details beyond that. When was it done? Who did it? Nothing.
We do know that Ybyra’s auditors were presented with a 2017 valuation report…which they ultimately deemed as insufficient to rely on for the value or even the existence of the fertilizer.
HMBL’s auditors did not need to go that far because the ENTIRE value was reserved against with the offsetting liability. There was zero impact to share holder equity as if the asset never existed.
As for the accounting treatment…there is no actual loan. It is simply marked as an amount owed. There is no sign of any debt instrument. Didn’t it strike you as odd that they didn’t use any sort of promissory note or other such instrument under which the company would have a debt obligation…like your “mortgage” analogy? There is nothing like that.
…and that is the hitch…if there was then the auditors would have had to test the valuation report…and that seems to be where YBYRA ran into problems.
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