I do love having a go at deciphering the management bullsh8t when they have dodgy accounts (sorry if you own it). Here is my stab... the stuff in brackets is my deciphering attempt.
Company: Adjustments on the balance sheets to reduce the carrying amount of certain right of use assets and finance obligations associated with leases....
(Overestimated the value of the leases they have entered into. Reduction in size of assets and associated lease expense).
Company: ·An increase in the loss accrual relating to certain service contracts;
(Probably more serious that the above. They have mispriced service contracts and need to account for more losses as a result).
Company: ·Recognition of non-cash impairment charges relating to certain long-lived assets, including certain right of use assets and certain fixed assets;
(Probably the most serious. These assets being impaired are non-cash in nature now... but they would have been cash at some point, e.g. capex to build these assets. At its more nefarious... they paid money or provided capex to customers and they just aren't getting the benefits back).
Company: ·A reclassification of certain costs resulting in a decrease in Operating expenses - Research and development expense and a corresponding increase in Cost of revenue
(Overestimated the gross margin, cost moving from development to cost of service. Therefore less tech spend... more manufacturing and service spend).
....
All in all seems pretty serious to me. That last set of accounts were a big red flag with negative revenue being delivered. In these situations its a good opportunity to scan the last set of accounts... see what you could haven't learnt and what to watch out for.
Submitted March 16, 2021 at 06:32PM by Mortal1ty1337 https://ift.tt/3qPNPGl
