It actually gets worse.
As I noted in my post, the company's financial statements (Statement of Shareholders/Stockholders Equity) say that 4,500,000 shares were sold at .001 per share in Q2, 2013 to generate $45K of cash -- but I now realize that is a mathematical impossibility. Hard to know which is the wrong number, the pps or the $ raised (I am assuming that 45,000,000 shares were not issued, as that would have caused the company to exceed the number of authorized shares).
Note that .01/share -- if that is a corrected number in the equation -- is well less than half of the average trading price during the quarter.
A least, we can solve the mystery of where the new equity comes from. Recall that in prior quarters, stock was issued for professional fees at $.001 per share, an amount questioned by PPV and myself as inappropriate since it could be sold on the public market at a much higher amount.
It is now in fact being recorded as a much higher per share level, with retroactive adjustment. So, in Q2 2012, a quarter which previously showed a profit, we now see $700K of 'paid in capital' spent on professional fees and services, which if reported that way at the time would have more than wiped out reported profits.
But there's more -- these fees are not going into an increase in accumulated deficit, they are being considered 'Unidentified and Intangible Assets.'
Also, the 5,000,000 shares issued the ice cream company for distribution costs are now shown as an 'asset purchase' at .10/share, and are part of the 'Unidentified and Intangible Assets.' There are other 'asset purchases' using shares, now shown at a higher valuation, not sure what they were for -- perhaps related to Montana store purchase?
Note there is also a change in the paid in capital related to shares issued for extinguishment of debt, now reported at a higher pps. Hard to see how this goes into the 'Unidentified and Intangible Asset' category, but it appears to have done so (caveat: I could be wrong on how to report this, have to go back to old financials which I do not immediately have).
The number of common shares outstanding at the end of prior quarters has also been restated, without explanation -- you think they would know how many certificates were out there at a given point in time. And, 5,400,000 preferred shares put on the books at $5,400 for extinguishment of debt in Q2 2012 seem to have disappeared altogether, as preferred shares outstanding have dropped from 6,860,000 on March 31, 2013 to 1,460,000 with no corresponding increase in common shares.
Net, an audit is required to determine whether $8M of assets have been created, or whether some of these amounts would best be added to accumulated deficit as a result of value impairment or use for "expensable" (versus "capitalizable") items. Plus, the holders of the aforementioned 5.4M preferred shares might like a recount.
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