Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Nuvo Research Inc -- Ignore unavailable to you. Want to Upgrade?

To: Mark Bartlett who wrote (12199)	3/8/2003 7:46:23 AM
From: axial	Respond to of 14101

Mark, without regard to the underlying issue, the conduct of the OSC is highly questionable. I can't believe that the OSC changed the rules the night before - and not only changed the rules, but did it by phone, without formal written notification. Then, took three (apparently) previously-undisclosed issues in-camera? In a meeting known to be publicly attended? Can you say Bush League? This was NOT an informal meeting, requested by the OSC. This was a formal meeting, with a specific purpose, requested by DMX! I'll be writing the OSC about this. This is total BS - I'm infuriated. Jim

To: Mark Bartlett who wrote (12199)	3/8/2003 12:12:09 PM
From: PlayTheKing	Read Replies (1) \| Respond to of 14101

Mark: From what I could gather, the company that provided the opinion of DMX's accounting irregularities was one of their former accounting firms from a few years ago. Would they, as an entity bring forth accounting irregularities on their own? If they would, why did they wait this long to do it? If not, how did they become involved now? Smells very odd to me. "Accounting irregularities" connotes that DMX is misleading us. I think I need to clarify that I do not think DMX has misled the public with their financial statements, but rather that the manner in which they have accounted for the OXO transaction is not "consistent" with GAAP. The accounting treatment for acquisitions under both Canadian and US GAAP are crystal clear. I can think of only 2 likely scenarios in this case: Scenario 1: Schwartz brought up the issue of non-compliance with REK, but REK went ahead anyway with the financials. Scenario 2: Both Schwartz and REK were not aware of the issue and filed the financials and prospectus with the OSC as prepared. Under the first scenario, if Schwartz was aware of the issues and brought them up with REK, from a professional standpoint, they would not be able to sign off on the prospectus as the transaction amounts in question would be material. If discovered, Schwartz potentially could be reprimanded by the governing accounting body in Canada, the CICA, for issuing financial statements that were not in accordance with GAAP. I think Scenario 2 is plausible, that neither of them knew that what they had filed was not consistent with GAAP. Up to Thursday night -- the night before the hearing -- there was only the one issue that was to be resolved between DMX and the OSC. According to what I was told, on the Thursday night before the hearing, at 6:30 pm, DMX received a phone call from the OSC dropping the 3 other issues in their lap. I suspect that they anticipated DMX would request a stay of the hearing, but they said no. Great way to incur further delays -- coincidence? I'm not sure I agree with this statement. First, all concerns and questions communicated by the OSC are in writing. The phone call may have come from the lawyers/auditors...I highly doubt it would come from the OSC. Secondly, the OSC would not deliberately hold off on concerns they have and wait until the last minute to inform the lawyers/auditors. From my experience, a prospectus takes about 3 months to complete. The issues raised by the OSC are for the most part complete; rarely do they come back again to raise an issue, or several issues, they missed the first time - the OSC is thorough. The roadblocks you speak of arise either because the auditors missed something or the lawyers assisting with the prospectus missed something. In this case, the evidence points to the former. ... it would have been much clearer to me just what the real financial situation was...But if transparency and clarity for the average investor are issues the OSC is concerned about, then the way DMX wanted to report it was, in my lay mind, much more clear. Unfortunately, the accounting rules are not intended for the "layperson". Although, REK and Schwartz may have been sincere in their attempts to make the financials easier to read for the average investor, they have both failed to ensure their compliance with GAAP...we are now seeing the results of that decision. If REK and company cannot get a simple RO completed properly, they will be in for a big surprise when they attempt to list on the US exchanges. The SEC is a big 800 pound gorilla that means business and can make life hell if you do not know what you are doing. What this all boils down to is DMX's desperate need to start truly acting like a global company it claims it wants to be, and start working with qualified professionals that have the experience in getting them to that world stage. PTK

To: Mark Bartlett who wrote (12199)	3/8/2003 1:58:43 PM
From: Cal Gary	Respond to of 14101

Third thanks goes to you, Mark for making the effort and taking the time to attend the OSC hearing yesterday. Obviously, accounting is important in the life of all public company. Recall Enron and WCom. Thanks for your opinion that the company is above board with its application of the accounting rules. I digested the news and looked over their May 2002 financials, I conclude too that there is no hanky panky going on. However, when a company takes over another, especially in the case with 100% control, it becomes an asset to the company. Mine, mine, ... all mine, ah haa haa haa. With respect to writing off a liability, I also appreciate and fully understand PTK between the lines assertion of "Mom & Pop" mentality. To me this is a neutral comment, clarity and great observation on his part. Have a great weekend!