Reclassification of production cost of coding in cogsOn the surface that reclassification seems benigne, but for a strategic investor that changed the whole picture for these reasons:
- To make sure that marketing and administrative expenses are under control in absolute and percentage number to sales. Not to give the impression that management travel and spend in international haptic forum as long as the have cash available;
- For an investor who is trying to appraise the value of the company he would be likely to reclassify the haptic production expenses in development cost capitalize as an asset and apply an amotization factor since haptic code have life over 30 years. In that respect i always said that assets are undervalued by 20-25 M or 0.10$/ share to reflect de value of the haptic catalog.
Hopefully the strategic investor will be more comfortable to process with a due diligence and complete its valuation of the company with these numbers.