Bob, re, <<with $110 million in equity>>
No, I don't think they have that much equity right now.
You are referring to the $110 M from the trust. There are two parts to this, $10 M to purchase city editions, and $100 M to purchase stock. No cash has changed hands in either case, so let's look at this.
They have announced that they intend to recognize the $10 M in revenue from the Trust for the city editions gradually, as the city editions come online. Presumably as they recognize the revenue, the asset will appear as accounts receivable, since they won't receive cash yet. By this mechanism, they can gradually increase their equity, as their city editions come online. (That's by their accounting; whether an auditor will accept it, I have no way of knowing.)
The other part is the $100 M of stock. If they issue the stock shares and actually received cash for them, then this stock sale would surely count as 'additional paid-in capital'. However, they have not received cash. They have received an IOU. So can they claim this IOU is 'paid in capital', by recording the IOU as as an asset, presumably a receivable, on the balance sheet? I don't know ... I've seen a lot of balance sheets before, with a lot of flaky assets, but this is one trick I've never seen. So I don't know if HITT will be 'aggresive' enough to try it. |
