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Strategies & Market Trends : Bill Wexler's Profits of DOOM -- Ignore unavailable to you. Want to Upgrade?

To: Bill Wexler who wrote (1614)	7/17/1998 1:20:00 AM
From: CalculatedRisk	Read Replies (1) \| Respond to of 4634

Bill, something is rotten in TAVA's 10-Q. This statement makes no sense: "That value, $315,000, is presented as a discount to the loan and is being accreted as additional interest expense over its term." If it is "additional interest", why is it a "discount to the loan". That is nonsense, but in another note TAVA reduces the loan amount by $315K: "Promissory note payable to an investment company net of a discount of $315,000. Interest at the rate of 11.5% per annum is payable quarterly. Principal is due January 31, 2001. The loan is secured by substantially all assets of the Company and its subsidiaries.(3) 3,685,000" This is all wrong. They have made at least three accounting mistakes: 1) wrong value from Black-Scholes model. 2) additional interest is NOT a discount to the loan. 3) the timing should be over the 9 months, not the term of the loan. Is it possible they are paying the interest with the warrants? Or some other strange arrangement? Or are we looking at "accounting irregularities" and a material misstatement? Regards, Bill