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To: Mr. Jens Tingleff who wrote (4617)	8/21/1999 5:57:00 AM
From: Mad_Mouse	Read Replies (3) \| Respond to of 4715

Jens, I have no idea how the accounting works. But let's just suppose that what you say is actually the case. According to the PRs I listed in post #4607, that would account for the $107,000 in reduced sales. However, net income was reduced by $200,000. How can the return of $107,000 in goods cause a loss of $200,000? I don't want to appear as a basher either. I generally don't do much DD, but I feel that potential investors should not overlook all these discrepancies. They should be made aware of the RISK as well as the REWARD. I really want to believe that this company has made a turnaround. In fact, I almost believe that they're telling us the truth now. It would be easier for me to rah rah this stock because I want to recover my losses, but then I'd be a P&Der. It's good to examine both sides of the story. I hope you keep looking for possible explanations. :) [Edit] I just looked at post 613 on RB and it makes sense to me. Perhaps, the extra losses above the return of sales were from the legal fees. However, I don't remember any mention of these events while they were occurring. I can understand why they wouldn't want to announce negative events, but it creates a lot of doubt concerning their honesty. I also did a quick scan of the thread (last year's posts) and noticed that the PRs up to about 4 months showed record revenues and earnings. At 6 months, there was only mention of record sales with profit/loss to be announced later. At 9 months, they finally admitted to a huge loss. My impression of that transformation of PRs is that post 613 on RB is accurate. So it would seem that they have indeed made a terrific turnaround. But I am still cautiously optimistic. I bet you couldn't tell I was even remotely optimistic about this stock. :) However, this still does not excuse all the deception last year. We were led to believe that there were record profits; that there would be no RS; that there would be no more dilution; that there would be an audit released soon. Most people are more than eager to share good news, but go into denial when there's bad news. So perhaps their only crime is that they failed to communicate to us openly and honestly. Only time will tell. The only question I have at the moment is: what is their explanation for the B & B disaster?

To: Mr. Jens Tingleff who wrote (4617)	8/21/1999 11:27:00 AM
From: Joe Lyddon	Read Replies (1) \| Respond to of 4715

Sales tricks to 'Cook the Books'... In normal operations & using the accrual method of accounting, sales invoiced in a given month are given credit to THAT month. A Credit Memo is nothing more than a reversed invoice; therefore, if a credit memo is issued the following month (or anytime...), THAT month will have the Sales reduced by that amount. I have seen where special deals with very large customers are made for huge sales in one month with the understanding 'all you have to do is return unsold items next month for credit'. And they do it... There could also be other compensation(s) present to sweeten the pot. Now, that is one way the current period sales can be increased. If done legitimately, it's OK... Standard procedure... But, if abused, only to make the books look better, IT IS DECEPTIVE and could be construed as FRAUD. I have seen where fictitious customers were sold merchandise & invoiced (of course) which increases the current sales only to have it reversed the following period. In that case, no merchandise goes anywhere! That is real FRAUD! I have seen companies just plain disappear overnight because the primary principals were convicted of such crimes & sent to prison. So there you have some examples of how it can happen... There is always an end to the line... And THAT is the period that eats it making everyone wonder 'how could that happen?'. I'm in no way saying this company is DOING this. As a normal accounting practice, sold goods are credited to the Invoice-Date period; returned goods or Credit Memos are debited to Credit-Memo-Date period. A good auditor will uncover abusive actions of this type. Joe