DRGI (Diversified Resources Group) Message Board

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Microcap & Penny Stocks : DRGI (Diversified Resources Group)

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To: Buckey who wrote (571)	7/31/1999 2:02:00 AM
From: Jim B	Read Replies (1) of 818

From RB: Must read: ------- By: PETTYCASH Reply To: 2187 by floorplanman Saturday, 31 Jul 1999 at 1:15 AM EDT Post # of 2211 CPA flap and Audited financials... First let me state my background... I am a cpa, though not currently licensed (too expensive for sole practioner) I have worked for BDO Seidman in the Eighties and have owned a small accounting practice for ten years... The relationship between The auditors that signed the opinion letter and the "6th largest firm" is as follows: it is a joint venture where they share education, referrals, multi-location audits, and other resourse, etc... unlike an Auther Andersen that is just one huge firm...That is why you have a different name on the op letter..The op letter is extremely important... If their was any monkey business going on the accounting firm would be held liable.... Much like a doctor can be sued for malpractice.... Income from the debt restructure is in accounting lingo an "extraordinary" item... meaning simple that investors should not rely on it for future earnings because by definition it is a one time occurance.. unlike income from operations which would be ongoing from year to year... The calculation is made like this (numbers are not real just pulled from thin air) CO X owes CO Y 8 mill and can't pay... Co Y takes 2 million shares of co X stock with current market value of $1. On their financials, CO X wipes out the 8 mill in debt, transfer 2 million to stockholders equity to record the new shares and the 6 million remaining goes into income as "Income from Debt REstructering" an extraordinary item... Hope this clears the air, their is no phoney baloney numbers or "creative" accounting going on.. Everything was done according to GAAP (generally accepted accounting principles) just like the auditors said!!!

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