FRISKY EXPLAINS ENRON TO HARTCOURT SHAREHOLDERS
By: frisky
13 Dec 2002, 05:38 PM EST Msg. 189958 of 189960
Read the latest 10Q statement. You will discover that this could be THE scam of this millennium. The company is just a stock certificate printing mill. It had no real business activities and meaningful assets.
(1) Third quarter Sales dwindled from $3,809,526 to $1,044,252. The funny part is that sales revenues were not much greater than cost of sales of $954,311. This could be a sign of shame transactions. In other words, the related parties flipped transactions among each other that did not create any economic value.
(2) Due from related parties of $887,314 was almost the same as due to related parties of $867,868. This means that Fake Doc borrowed money from the assets side to the liabilities side. This implies that Fake Doc switched money from his left pocket to his right pocket. The result is that Fake Doc created a better current ratio and hid the liquidity problem.
(3) Excluding the related party transactions, current liabilities were $5,965,113. Current assets were only $3,736,336. Again this clearly indicated that HRCT was insolvent.
(4) Other assets of $7,012,391 were just garbage. Fake Doc must write them off. The goodwill of $3,336,970, intangible assets of $1,015,529 were worthless. Fake Doc swapped one worthless stock to another worthless stock such as HRCT for ETLK then created goodwill and intangible assets. Under FASB statement 121, when an asset is impaired, companies must immediately write if off. By reporting worthless intangible assets, he over-inflated shareholders’ equity. He had violated GAAP. He could be charged for cooking the book. Moreover, Investment in ENTS of $201,606 and notes receivable of $2,358,286 were worthless. Fake Doc printed stock certificated to exchange these worthless investments, a garbage bag for another garbage bag.
(5) Although Fake Doc reported net assets of $4,546,261, after one removed the worthless goodwill, intangible assets and questionable investment and notes receivable. The deficit was $2,466,670. For a tiny and obscure company with three employees including Fake Doc and David Chen, this was too much.
(6) HRCT did not have cash to pay its expenses. Therefore, it paid $659,653 worth of stocks for consultants, insiders. He also issued $349,909 worth of stock to related parties.
(7) At the end of the third quarter, it only had $40,673 cash left. ETLK will take away $5,965 in the next quarter.
(8) Fake Doc reported $423,101 cash overdraft at the end of the quarter.
Fake Doc is a person that has no integrity:
(a) He purchased a Ph.D. diploma from a notorious mail order house, Sussex College of Technology. He shameless calls himself doc. Shills cheer for his “accomplishment.” They called him doc too. Poor mail order Fake Doc cannot even write Letter to the Shareholders in Standard English.
(b) In 1993, Fake Doc sold harmful products to consumers. Those products could cause cancer. He had no respect for human life. FTC reprimanded him for his disgraceful act.
However, Penny stocks never die. They just fade away. |
