Balance Sheet jitters.
This is my response to a few accountant types who would pass on TPRO because of its balance sheet, (it's not very impressive right now.)
I'm not going to go into responding to postings one by one. That simply bores the hell out of me and usually proves nothing. But the balance sheet of any company is not necessarily reflective of its worth, you have to look at all the footnotes, know the unwritten story and know how "Accounting" works. A few examples:
I happen to belong to a country club that is owned by its members. Since assets are kept on the balance sheet at the cost of acquisition, the land we own is valued at $190,000. This is 320 acres of prime residential property inside the Dallas city limits, it was purchased for $190,000 in 1954. A conservative appraisal of its market value would be 50 million dollars. Nowhere on our club balance sheet will you, or should you, find that 50 million dollars.
More to the TPRO point, the Disney company owns all right and title to a little character named Mickey Mouse. Probably the most recognized character in the world, the market value of Mickey Mouse has to be measured in billions. The value of Mickey on the Disney balance sheet is........zero. Nowhere to be found. Why? Because Disney developed Mickey internally and never paid a cent to anyone else for the rights. So according to GAAP (Generally Accepted Accounting Principles), Mickey is not an "Asset" of the Disney company. Can you value Disney stock by a balance sheet that ignores Mickey?
The PlantY2KOne(TM) CD and TAVA Database do not show up on the TPRO balance sheet. They have been developed internally, and the costs for the most part have been expensed against other revenues. Now I won't pretend I know the value of PlantY2KOne in terms of short term revenue generation or future business building, but I will hazard a guess that it is worth more than all the other "Assets" you will find on the TAVA balance sheet. Can you value TPRO by a balance sheet that ignores PlantY2KOne? Sure you can try, but if you think that reading financial statements is more than just a small part of due diligence, you are in for a rude awakening, and a missed investment opportunity.
I like to find a company with unrecognized value and invest before the true value can figured out by any college kid with a Hewlett-Packard 10B and a quarterly report. Don't get me wrong, I agree that anyone who cannot properly interpret a P&L or balance sheet should stick to mutual funds. It's just that the financials are only a part of the total picture, and they always reflect the past, not the future, of a company.
IMHO by the time the value of PlantY2KOne is recognized on the TAVA balance sheet there won't be much of an investment opportunity, as the stock will then be fully priced.
Zebra
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