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Microcap & Penny Stocks : DCI Telecommunications - DCTC Today
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To: De Peepster who wrote (7843)8/15/1998 2:36:00 PM
From: Grantcw  Read Replies (1) of 19331
 
DP,

I did a quick scan of the news items for Smartalk. It seems like the main accounting issue over there is the company's treatment of recent acquisitions. There are two ways to account for acquisitions, one is a pooling of interests and the other is the purchase method.

Companies that are buying other profitable companies want to use the pooling of interests method because they then get to mesh the companies together (accounting wise) in the current and past periods. This makes the merged company look more profitable in past periods.

There are many restrictions on when to use the pooling method and it looks like the auditor is taking issue with one or more of Smarttalk's recent acquisitions.

I believe this issue is moot in regards to DCTC. We are aiming at increasing revenues, not accounting trickery to get better earnings. For all we know though, people are treating the whole prepaid card business with suspicion, bringing DCTC's price down.

There may be other issues to that may affect us. I'm pretty sure that I saw something regarding deferred revenue accounting, but it's hard to really get a grasp of what they're talking about from a few news releases.

Hope I'm right and this answers a couple of questions.

Grant
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