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Ray Meadows, CFA
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Ray Meadows, president of Berkeley Investment Advisors, is a CPA, CFA, and an MBA, and also has a Masters degree in economics. Berkeley Investment Advisors provides investment management services for clients with $200,000 or more to invest. In addition, we provide advice on all aspects of wealth... More
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  • Very Strange Accounting 1 comment
    Aug 10, 2010 12:11 AM | about stocks: YONG
    I want to buy Chinese small caps listed in the U.S. but I don't buy unless their SEC filings make sense.  Unfortunately this company, although it has a great story, has a 2009 10K that doesn't make sense.  And KPMG in Hong Kong signed off! One item in particular that's worth noting is that they show a $24 million expense (that wipes out 90% of income) described as increase in derivative liability.  In the cash flow statement its added back so the liability should still be on the balance sheet.  But its not!  If anyone can explain how they made the balance sheet balace without crediting the liability, I'd love to hear it. KPMG Hong Kong - are you there?
    Another thing that looks very weird is that they started 2008 with negative capital but managed to generate $13.3 million of retained earnings anyway - before raising capital in 2009. Perhaps this is somehow related to their complicated reverse merger but it certainly deserves a well written footnote.  Their tax accounting is another area that doesn't make sense.
    Finally I will note that their stock sales required them to hit certain financial targets which they did in 2008 and then in 2009 the drop off in income from the warrant liability charge essentially reversed the income into thin air.  Did they somehow use the warrant liability charge to shift income from 2009 to 2008? 
    In short, I like the story, but their financial statement disclosures raise more questions than they answer.  If you're putting money into this stock I advise you to figure this puzzle out - and educate me.
    Stocks: YONG
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  • Business Economics Analyst
    , contributor
    Comments (2565) | Send Message
     
    Happy to educate you. Send me a private e-mail. When I think of this stock, i think of the song, "just another somebody did me Yong song". Sorry for the bad bun but this company's story is like a bad joke that someone is playing and it is working on some people. Just my opinion.
    20 Aug 2010, 02:42 AM Reply Like
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