KGIC Inc LGLTF

Internalaudit68- You said everything that I believe too.

[60606060]

We are on the right track and the Shorts will find out soon enough.

[InternalAudit68]

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[pennylane101]

Internalaudit, I think you're mistaken.   When they credited deferred revenue in current liabilities  for 12 million they debited cash. I assume they received cash if not, it's accounts receivable. When services are rendered they will debit the deferred revenue and credit revenue because that's when revenue will be recognized.   They've already burned the cash

[InternalAudit68]

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[TheRock07]

You are correct in that the negative working capital is a temporary quirk of accounting. It will right side up this quarter. Less than a year ago, normal gross margins were above 40%. Planned cost compression measures and prudent optimization of operations should be able to boost  Gross margins to the 50% level. Given bloated costs during the recent acquisition binge, cost pruning should be

[Trelawny]

TheRock, that working capital deficiency is not some quirk of accounting. They have breached working capital covenants: Which means they owe over $8.9mm right now to the bank. In addition, they have payables of over $6.6mm. There is problem with the deferred revenues currently. The way deferred revenues work is that a client pays for a service or good which will be delivered in the future (a

[InternalAudit68]

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[Trelawny]

Internal, I just posted a response to TheRock - while putting that together I spoke with two analysts to chat about the possible ways of manipulating deferred revenue. The nub of it was this - deferred revenue is when cash is received the balance sheet inputs are: you credit cash and add a deferred liability. If it were only a partial payment then the non-paid component would go to Accounts

[InternalAudit68]

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[TruthLogic]

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[schoolboy]

In this business, unearned revenue is notoriously difficult to calculate accurately, much less audit. Students pay various fees using all methods available. They pay early or late, directly or through agents. Refunds are - or at least should be  - calculated and paid on a daily basis.  Some agents retain their commissions and others don't. It goes on and on.  The only way I

[InternalAudit68]

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[schoolboy]

Very valid point, InternalAudit68. Depending on what they were thinking at the time, I suppose that it could have been either or both.  At the end of the day, however, the numbers could be (and in my personal opinion, probably are) wildly inaccurate.