Last night Riley posted the following e-mail that he had received. I only had time to respond that this was wrong! I will expand after re-posting the e-mail.
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Date: Tue, 21 Oct 1997 23:49:52 -0400 (EDT)
To: nhcom1o@empire.net
Subject: 14 million
Even on GAAP standards, RMCW still have to put the value of 14million on
their books, because this is what is owed. No matter what the price of MVPH
is, the value is still 14million. They still have to pay this back to RMCW,
whether the stock price of MVPH is .25 or less.
If you borrow money from a bank for $10,000, you dont pay them back with only
$1000.00 just because your stock price went down. It is not recognized that
way.
Bottom line is, MVPH still has to pay RMCW 14million and this is recognized
on their ASSET side which is ACCOUNTS RECEIVABLE. It is a receivable based on
a formal agreement between the two companies. And there is no way in court
that MVPH will get away with it.
AGAIN, it is on their Accounts receivable side which is an ASSET to the
company.
I verified this myself.
I hope this clears the issue.
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Response:
First of all, this is not an accounts receivable item. It is not even shown that way on the 8K financials. It is shown as an investment, which is proper. A company (now RMIL) that owns stock in another company (PRTI) shows this as an investment. My point was only that if there is some question about the validity of the investment they should footnote this as an issue. The similarity with the accounts receivable line of the balance sheet is that one of the most common entries in a balance sheet is the line item called "allowance for doubtful accounts" which recognizes that not all of the receivables will be collected. In this case, the $14 million of investment should be footnoted to indicate that there is some degree of risk in suggesting that all of the $14 million will be "receivable" by RMIL via PRTI. In my mind it still remains a mystery as to how much of PRTI owns and therefore how much of the $14 million they can claim anyway. But that is a different issue.
It seems interesting that the senders of this e-mail claim (in their following e-mail to Riley, which he also posted....and which I responded "absolute BS") that they are accountants and financial types from Intel, MSFT, etc. I hope their boss(s) read this post.
Sorry for the late response, but I have a day job.
Good try Riley,
TC |
