Monday, May 22, 2006
Eternal Technologies (ETLT) 10-K
pink sheets, yahoo, sec, website
(Yahoo news location is temporarily here)
(Pink Sheets location is temporarily here)
2005 10-K
2004 10-K
2005 Q-3
As people who read my writing here know, I tend to account for dilution from stock options by backing out any charges against earnings from options and then assuming that all options will end up turning into shares with zero capital contributed (i.e. I assume stock options have a strike price of zero except in some cases where that greatly distorts the view). My reason for doing that is because I'm only going to be buying stocks that are very cheap... or at least that's my intent. Therefore, most stock options issued are going to be highly dilutive compared to my valuation of the business, assuming that I'm going to invest in it. So if the stock is in fact not cheap, I'll end up being too pessimistic and arriving at a value that's too low, but I don't care because I wouldn't want that stock anyway (this is a case where the grapes really are sour).
The exception is the case where the stock options strike prices are very high relative to the current stock price, which happens when a stock has recently fell out of favor. It's important to watch for those cases. Another exception is toxic convertables, which I've recently received an education in. In that case, I think a fair approach is to guess what price the stock might fall to (or could reasonably be manipulated down to by someone skilled in the art of stock manipulation) and assume a conversion at that price.
So I'd like to come up with my estimate of a totally diluted share count. According to this 10-K, there were 40.6 million shares outstanding on May 16, 2006. There were 39.9 million shares outstanding on Dec 31, 2005. There would appear to be 5.5 million options outstanding on Dec 31, 2005. However, if you read the text on page 43, they say that all 2.5 million options have been exercised. Pause to let that sink on.
These guys get approval to issue 2.5 million options and in less than 6 months
Somewhat toxic convertables are extremely small.
I'm going to assume 49 million totally diluted shares because these people are frickin out of control.
Cash decreased to $18.2 million (from $24.2 million). However, short-term investment appeared in Q4 at $9.9 million. Note that the company never provides any detail about what this short-term investment is, and that bothers me. It makes me slightly nervous that accounts receivable was $9.2 million at the end of Q3 and then this short-term investment of nearly identical size appears in Q4 (while AR drops a bit in Q4). If this was a factored receivable, it should show up as such on these audited financial statements.
According to Wiley GAAP 2002, short-term investments are readily marketable securities acquired through the use of temporarily idle cash. Note that is not cash equivalents which are short-term investments that are 1) readily convertable into known amounts of cash and 2) are so near their maturity (three months or less) that they represent negligible risk of changes in value due to interest rates. ETLT's short term investments are therefore not readily convertable into known amounts of cash and/or have risk of changes in value.
Since the short-term investment on the ETLT balance sheet is classified as current, this means ETLT is willing and able to sell it to meet current cash needs or that it will mature within 1 year. These investments are either held-to-maturity or available-for-sale (depending on obvious factors). ETLT doesn't need to explain the category on the balance sheet. If the short-term investments are in two groups, then the Notes must provide more detail. Since ETLT's notes don't provide this detail, I'm assuming the short-term investment is a single category.
In theory, the short-term investment could be stocks, bonds, warrants, various options. There's $189K of interest income for 2005, $50K of that was in Q4 ($42K in Q3, $48K in Q2, $49K in Q1). So it doesn't seem like the short-term investment is something paying high interest like a junk bond. Whatever it is, it falls outside the scope of cash equivalents.
The first thing I want to do is compare Q3 2005 with Q4 2005.
Balance Sheet
Cash decreased from $24.2 million to $18.2 million
Short term investment appeared at $9.9 million
Cash+short term investment increased to $28 million from $24 million
AR decreased by $2 million
Inventories decreased to $135K (from $375K)
Total current assets increased by $2 million (cash+invest partially offset by AR decrease)
ETLT advanced $520K to distributors, which is non-current.
net PP&E increased to $7.3 million (from $6.9 million, presumably from E-Sea acquisition, partially offset by depreciation)
net Land use rights decreased only slightly (25 year lifetime) to $4.8 million (amortization seems slightly different from the amounts stated in Q3)
Intangible asset from E-Sea of $1.3 million
AP dropped by half to $707K
Amount due related party decreased
The all-important Derivative financial instrument liabilities appears at $563K
Total current liabilities decreased to $2.0 million (from $2.7 million).
All liabilities are current
39.8 million shares outstanding on Dec 31, 2005 (nearly all were outstanding on Nov 14, 2005), a big jump from the 30.7 million outstanding on Sept 30, 2005.
Additional paid-in capital increased by $2 million (about 22 cents per additional share?)
Retained earnings increased by $1.7 million.
Total equity (including currency translation gains) increased by $4.86 million.
Income Statement for Q4 2005 (vs Q3 2005)
note: some numbers won't add up due to accumulated rounding differences
Sales: $5.74 million (up from $5.03 million)
Cost of Sales: $3.05 million (down from $3.51 million)
Gross Profit: $2.69 million (up from $1.51 million)
Gross Margin: 47% (up from 30%)
SG&A: $1.14 million (down from $2.95 million)
Depreciation and Amortization: $0.27 million (up from $0.19 million)
Interest Income: $49K (up from $42K)
Change in Value of Derivative: $245K (not shown in Q3, although it would have existed)
Net Income: $1.03 million (probably an increase from what might be roughly $0.8 million)
Based on my totally diluted share count of 49 million shares above, which means backing out the $245K of derivatives value change, I'd say the earnings per share for Q4 are 2.6 cents per share, which would tend to portray the shares being worth $1.56 each annualizing it and slapping on a P/E of 15. Obviously, you'd discount that quite a bit for all the issues about China and such. But this doesn't assume anything about the future, it's just a mindless formula that I tend to use for gauging things.
Equity Statement
visual format
Cash Flow Statement for Q4 2005 (vs Q3 2005)
OPERATIONS:
Net income: $1.03 million
Depreciation+Amort: $0.27 million
Derivative valuation adjustement: $0.25 million
Stock compensation for services etc.: $0.25 million
Inventories: $0.25 million
AR: $2.62 million
Prepaid stuff: ($0.14 million)
AP: ($0.91 million)
AP to related party: ($0.18 million)
Cash flow from operations: $3.36 million (remember, this is all for Q4 only)
INVESTMENTS:
Purchased $9.9 million short term investments
It's not clear what happened with capex due to reclassification, it might have been around $400K.
Sold a patent for $321K.
FINANCING:
Sold stock for $1 million
Got $80K from presumably stock options.
The animal genetics business is still competing with Smithfield Foods from the US and Sumitomo Corp of Japan (the 2004 10-K mentioned them as well).
E-Sea has competition from General Electric and Siemens.
ETLT believes their animal business is in compliance with various new regulations from the WTO entry. But the rules are always changing.
E-Sea has a lot of regulation from the Chinese government and exports have regulations by other governments.
68 full-time employees, up from 26 last year.
The E-Sea facility is 120K sq ft. Monthly payments are $4.6K. Lease expires August 2007.
The Western Securities Corp legal proceeding is still outstanding.
ETLT won't be selling hay since there's now a ban on mowing the grasses.
Historically, nearly all revenue was in Q4 with the embryo sales. Q1, Q2, and Q3 in future years will have lamb meat sales, and embryo transplants into dairy cattle (which apparently can occur outside of Q4).
Land use rights are amortized straight-line over the estimated useful life or lease term. They're sending 4% through the income statement per year ($240K, which is only about half of the income the rights generate).
The whole derivatives accounting stuff is mentioned. They're revalued at the end of each quarter, with changes pushed through the income statement just to screw everything up. So when you have a good quarter, the stock price goes up, making the derivatives more valuable, causing the next quarter's results to be worse, causing the stock to decline, causing the derivatives to be less valuable, causing the next quarter's results to be better, causing the stock to go up, repeated forever in an endless loop.
RESULTS
Revenues up 36% ($6.2 million) due to...
Offset by a decrease of $6K in sale of sheep embryos
Lower gross margins (32.1%) are due to mutton sales instead of lamb meat sales (2004 gross margins were 38.8%). Partially offset by the good feeling of slaughtering adult sheep rather than babies.
The higher depreciation is due to E-Sea.
SG&A is up due to a $212K increase in salaries (the top employee salaries were extremely low in 2004, around $20K), $439K increase in professional fees, other increases of $191K. These were slightly offset by other stuff.
The "other income (expense)" decreased by $330K due to the $245K derivative valuation change (vs a gain of $192K), an increase in interest expense of $28K, etc.
They claim capex really was $1.2 million.
Here's an irrational statement worth quoting:
Financial commitments are small.
The focus for 2006 will be...
Ham Langston Brezina, LLP
Houston, TX
I looked at these auditors in a previous post here.
They also audited:
Environmental Safeguards, going concern qualifier in 2003 for good reason, but not in 2002. There were no subsequent restatements of 10-Ks.
Amegy Bancorporation They audited the 11-K issued in 2005 and 2003 (wow, that's one better than a 10-K... actually it's typically an employee stock purchase plan), PWC did the 10-K for 2004, 2003, 2002.
Core Laboratories Again, the 11-K but PWC did the 10-K.
PetroSearch Energy They audited a recent prospectus, unqualified opinion despite massive losses and negative cash flow. Also the 10-K for 2005.
US Dataworks 10-K for 2005 and 2004 and a prospectus (incorporated by reference). The 10-K was amended to remove the going concern qualifier, because subsequent to the end of the year, the company got more funding (Notes 3 and 11). Ok, fine, but they burned up $4 million cash, current assets are only $2.4 million and they only raised less than a million to save the company.
There are others, like North American Technologies Group, FBO Air. They resigned from Endovasc in 2005 with 2 years of going concerns. They were auditors for Trans Max Technologies in 2004, going concern... later the company went bankrupt.
I don't get any bad vibes in the googling for these guys.
They don't show up in the list of biggest auditors.
(Yahoo news location is temporarily here)
(Pink Sheets location is temporarily here)
2005 10-K
2004 10-K
2005 Q-3
Diluted Share Count
As people who read my writing here know, I tend to account for dilution from stock options by backing out any charges against earnings from options and then assuming that all options will end up turning into shares with zero capital contributed (i.e. I assume stock options have a strike price of zero except in some cases where that greatly distorts the view). My reason for doing that is because I'm only going to be buying stocks that are very cheap... or at least that's my intent. Therefore, most stock options issued are going to be highly dilutive compared to my valuation of the business, assuming that I'm going to invest in it. So if the stock is in fact not cheap, I'll end up being too pessimistic and arriving at a value that's too low, but I don't care because I wouldn't want that stock anyway (this is a case where the grapes really are sour).
The exception is the case where the stock options strike prices are very high relative to the current stock price, which happens when a stock has recently fell out of favor. It's important to watch for those cases. Another exception is toxic convertables, which I've recently received an education in. In that case, I think a fair approach is to guess what price the stock might fall to (or could reasonably be manipulated down to by someone skilled in the art of stock manipulation) and assume a conversion at that price.
So I'd like to come up with my estimate of a totally diluted share count. According to this 10-K, there were 40.6 million shares outstanding on May 16, 2006. There were 39.9 million shares outstanding on Dec 31, 2005. There would appear to be 5.5 million options outstanding on Dec 31, 2005. However, if you read the text on page 43, they say that all 2.5 million options have been exercised. Pause to let that sink on.
These guys get approval to issue 2.5 million options and in less than 6 months
- all of the options have been granted
- all of the granted options have vested
- all of the vested options have been exercised
Somewhat toxic convertables are extremely small.
I'm going to assume 49 million totally diluted shares because these people are frickin out of control.
Short-Term Investment
Cash decreased to $18.2 million (from $24.2 million). However, short-term investment appeared in Q4 at $9.9 million. Note that the company never provides any detail about what this short-term investment is, and that bothers me. It makes me slightly nervous that accounts receivable was $9.2 million at the end of Q3 and then this short-term investment of nearly identical size appears in Q4 (while AR drops a bit in Q4). If this was a factored receivable, it should show up as such on these audited financial statements.
According to Wiley GAAP 2002, short-term investments are readily marketable securities acquired through the use of temporarily idle cash. Note that is not cash equivalents which are short-term investments that are 1) readily convertable into known amounts of cash and 2) are so near their maturity (three months or less) that they represent negligible risk of changes in value due to interest rates. ETLT's short term investments are therefore not readily convertable into known amounts of cash and/or have risk of changes in value.
Since the short-term investment on the ETLT balance sheet is classified as current, this means ETLT is willing and able to sell it to meet current cash needs or that it will mature within 1 year. These investments are either held-to-maturity or available-for-sale (depending on obvious factors). ETLT doesn't need to explain the category on the balance sheet. If the short-term investments are in two groups, then the Notes must provide more detail. Since ETLT's notes don't provide this detail, I'm assuming the short-term investment is a single category.
In theory, the short-term investment could be stocks, bonds, warrants, various options. There's $189K of interest income for 2005, $50K of that was in Q4 ($42K in Q3, $48K in Q2, $49K in Q1). So it doesn't seem like the short-term investment is something paying high interest like a junk bond. Whatever it is, it falls outside the scope of cash equivalents.
Q3 vs Q 4
The first thing I want to do is compare Q3 2005 with Q4 2005.
Balance Sheet
Cash decreased from $24.2 million to $18.2 million
Short term investment appeared at $9.9 million
Cash+short term investment increased to $28 million from $24 million
AR decreased by $2 million
Inventories decreased to $135K (from $375K)
Total current assets increased by $2 million (cash+invest partially offset by AR decrease)
ETLT advanced $520K to distributors, which is non-current.
net PP&E increased to $7.3 million (from $6.9 million, presumably from E-Sea acquisition, partially offset by depreciation)
net Land use rights decreased only slightly (25 year lifetime) to $4.8 million (amortization seems slightly different from the amounts stated in Q3)
Intangible asset from E-Sea of $1.3 million
AP dropped by half to $707K
Amount due related party decreased
The all-important Derivative financial instrument liabilities appears at $563K
Total current liabilities decreased to $2.0 million (from $2.7 million).
All liabilities are current
39.8 million shares outstanding on Dec 31, 2005 (nearly all were outstanding on Nov 14, 2005), a big jump from the 30.7 million outstanding on Sept 30, 2005.
Additional paid-in capital increased by $2 million (about 22 cents per additional share?)
Retained earnings increased by $1.7 million.
Total equity (including currency translation gains) increased by $4.86 million.
Income Statement for Q4 2005 (vs Q3 2005)
note: some numbers won't add up due to accumulated rounding differences
Sales: $5.74 million (up from $5.03 million)
Cost of Sales: $3.05 million (down from $3.51 million)
Gross Profit: $2.69 million (up from $1.51 million)
Gross Margin: 47% (up from 30%)
SG&A: $1.14 million (down from $2.95 million)
Depreciation and Amortization: $0.27 million (up from $0.19 million)
Interest Income: $49K (up from $42K)
Change in Value of Derivative: $245K (not shown in Q3, although it would have existed)
Net Income: $1.03 million (probably an increase from what might be roughly $0.8 million)
Based on my totally diluted share count of 49 million shares above, which means backing out the $245K of derivatives value change, I'd say the earnings per share for Q4 are 2.6 cents per share, which would tend to portray the shares being worth $1.56 each annualizing it and slapping on a P/E of 15. Obviously, you'd discount that quite a bit for all the issues about China and such. But this doesn't assume anything about the future, it's just a mindless formula that I tend to use for gauging things.
Equity Statement
visual format
Shares at start of year ****************************** 29.9 million shares
stock issued for services +
stock issued to employees ++.
E-Sea acquisition ++++++
reclassification of unregistered stock +
Shares at end of year **************************************** 39.9 million shares
Cash Flow Statement for Q4 2005 (vs Q3 2005)
OPERATIONS:
Net income: $1.03 million
Depreciation+Amort: $0.27 million
Derivative valuation adjustement: $0.25 million
Stock compensation for services etc.: $0.25 million
Inventories: $0.25 million
AR: $2.62 million
Prepaid stuff: ($0.14 million)
AP: ($0.91 million)
AP to related party: ($0.18 million)
Cash flow from operations: $3.36 million (remember, this is all for Q4 only)
INVESTMENTS:
Purchased $9.9 million short term investments
It's not clear what happened with capex due to reclassification, it might have been around $400K.
Sold a patent for $321K.
FINANCING:
Sold stock for $1 million
Got $80K from presumably stock options.
Description of Business
There are some minor changes to the text from last year, plus the addition of E-Sea stuff. The Inner Mongolia farm now truly has impediments (the text changed "may have" to "have). They leased out the farm to a tree farming business for $572K per year for 15 years. Considering that the land use rights cost ETLT $6 million covering 25 years, that averages out to a cost of $240K per year. This means ETLT is making a profit by leasing the property out to the tree farm. So the land use rights deal in 2000 was not a bad thing.The animal genetics business is still competing with Smithfield Foods from the US and Sumitomo Corp of Japan (the 2004 10-K mentioned them as well).
E-Sea has competition from General Electric and Siemens.
ETLT believes their animal business is in compliance with various new regulations from the WTO entry. But the rules are always changing.
E-Sea has a lot of regulation from the Chinese government and exports have regulations by other governments.
68 full-time employees, up from 26 last year.
The E-Sea facility is 120K sq ft. Monthly payments are $4.6K. Lease expires August 2007.
The Western Securities Corp legal proceeding is still outstanding.
The Company believes that this matter will be resolved during 2006 and that the Company will prevail on all counts.The Bristol Investments legal proceeding was dismissed. Bristol re-filed the lawsuit with no changes.
Management's Discussion
ETLT won't be selling hay since there's now a ban on mowing the grasses.
Historically, nearly all revenue was in Q4 with the embryo sales. Q1, Q2, and Q3 in future years will have lamb meat sales, and embryo transplants into dairy cattle (which apparently can occur outside of Q4).
Land use rights are amortized straight-line over the estimated useful life or lease term. They're sending 4% through the income statement per year ($240K, which is only about half of the income the rights generate).
The whole derivatives accounting stuff is mentioned. They're revalued at the end of each quarter, with changes pushed through the income statement just to screw everything up. So when you have a good quarter, the stock price goes up, making the derivatives more valuable, causing the next quarter's results to be worse, causing the stock to decline, causing the derivatives to be less valuable, causing the next quarter's results to be better, causing the stock to go up, repeated forever in an endless loop.
RESULTS
Revenues up 36% ($6.2 million) due to...
- E-Sea ($1.2 million), only since Oct however
- Cattle embryo transfers ($1.7 million)
- Sale of live sheep ($141K)
- Sheep embryo transfers ($253K)
- Transfer service ($438K)
- Sale of mutton, i.e. smelly ugly mature sheep ($6.2 million)
Offset by a decrease of $6K in sale of sheep embryos
Lower gross margins (32.1%) are due to mutton sales instead of lamb meat sales (2004 gross margins were 38.8%). Partially offset by the good feeling of slaughtering adult sheep rather than babies.
The higher depreciation is due to E-Sea.
SG&A is up due to a $212K increase in salaries (the top employee salaries were extremely low in 2004, around $20K), $439K increase in professional fees, other increases of $191K. These were slightly offset by other stuff.
The "other income (expense)" decreased by $330K due to the $245K derivative valuation change (vs a gain of $192K), an increase in interest expense of $28K, etc.
They claim capex really was $1.2 million.
Here's an irrational statement worth quoting:
Although the Company has a cash and cash equivalents balance of $18,224,488 and short-term investments of $9,909,084, management believes that the best return for such cash and short-term investments is in the People's Republic of China. Therefore, if the Company is to expand outside the PRC, as it anticipates doing, it will have to sell additional shares of its stock or borrow funds from third parties. However, because of the loosening of currency restrictions in the PRC, it can pay its non-PRC obligations from its funds held in China. Therefore, in the opinion of management, it has sufficient funds to carry out its business plans for the next twelve months.Ok, so the best place to utilize the cash and short term investment is within PRC. However, the company will invest outside of PRC. Therefore it will need to sell shares or borrow money to do so. But wait! Because PRC is loosening currency restrictions, it can use the funds held in China, so it won't need to sell shares or borrow money. So everything is fine. The big news here is that the cash is not restricted to investments in China. So that net 65 cents per share of cash and short term investments looks a lot better, doesn't it?
Financial commitments are small.
The focus for 2006 will be...
- Acquiring a cattle facility in the PRC to increase embryo transplant revenues from cattle and to produce cattle for sale.
- Acquiring a facility in the US to harvest dairy cattle embryos.
- A possible acquisition similar to E-Sea
A U D I T O R S
Ham Langston Brezina, LLP
Houston, TX
I looked at these auditors in a previous post here.
They also audited:
Environmental Safeguards, going concern qualifier in 2003 for good reason, but not in 2002. There were no subsequent restatements of 10-Ks.
Amegy Bancorporation They audited the 11-K issued in 2005 and 2003 (wow, that's one better than a 10-K... actually it's typically an employee stock purchase plan), PWC did the 10-K for 2004, 2003, 2002.
Core Laboratories Again, the 11-K but PWC did the 10-K.
PetroSearch Energy They audited a recent prospectus, unqualified opinion despite massive losses and negative cash flow. Also the 10-K for 2005.
US Dataworks 10-K for 2005 and 2004 and a prospectus (incorporated by reference). The 10-K was amended to remove the going concern qualifier, because subsequent to the end of the year, the company got more funding (Notes 3 and 11). Ok, fine, but they burned up $4 million cash, current assets are only $2.4 million and they only raised less than a million to save the company.
There are others, like North American Technologies Group, FBO Air. They resigned from Endovasc in 2005 with 2 years of going concerns. They were auditors for Trans Max Technologies in 2004, going concern... later the company went bankrupt.
I don't get any bad vibes in the googling for these guys.
They don't show up in the list of biggest auditors.
Financial Statements
I already covered much of this above in the Q3 vs Q4 section.
Balance Sheet
Income Statement
Cash Flow Statement
The numbers in the cash flow from investing activities don't add up. If you add the individual entries up, you'll see the result understates the cash used by $63,473.
The cash flow from finance activities shows $1,000,000 proceeds from the sale of stock along with $410,399 capital contributed. The equity statement shows $1,200,000 from "Common stock issued for cash and as compensation to employees". They issued 2.5 million shares (options which seem to have vested immediately) supposedly at 40 cents per share (which would have raised $1,000,000). These probably would have been exercised in cashless transactions in late 2005, which would explain the stock drop during that time. I'd label this corporate abuse.
The "Reclassification of unregistered common stock to paid-in capital" resulted in an increase in equity of $563,991 and an increase in shares of 790,827. This is part of the restatement in Note 20. This all pisses me off because it's extremely difficult to follow. It doesn't help me as a shareholder because it creates an area where bad stuff can hide.
NOTE 1:
Essentially identical to prior year
NOTE 2:
Identical to prior year
NOTE 3:
Details of the actual bank account holding the cash removed.
Still no allowance for doubtful accounts: I'm more bothered by the reason stated than the fact that the allowance is zero.
I already covered much of this above in the Q3 vs Q4 section.
Balance Sheet
Current Assets
Cash and equiv ******************
Short-term investments **********
Accounts Receivable *******
Inventories .
Prepayments etc. .
Total Current Assets ************************************
Advances to Distributors *
PP&E, net *******
Land Use Rights *****
Intangibles (E-Sea) *
Total Assets **************************************************
Current Liabilities
Notes Payable .
Accounts Payable etc. .
Amounts Due Related Parties .
Derivative Liabilities .
Total Current Liabilities **
Equity ************************************************
Income Statement
Sales **********************************************
Cost of Sales *******************************
SG&A *****
Depreciation and Amort. ***
Net Income ********
Cash Flow Statement
Operations:
Net Income ********
Depreciation +++
Derivative Valuation Adjust +
Stock Issuances +
Inventories +
Accounts Receivable ----------
Accounts Payable -
Misc -
Net cash provided by ops .
Investing:
Short Term Investment --------------------
Capex --
Purchase of E-Sea --
Sale of Patent +
Financing:
Sale of Stock ++
Capital Contributed +
Net Decrease in Cash <--------------->
The numbers in the cash flow from investing activities don't add up. If you add the individual entries up, you'll see the result understates the cash used by $63,473.
The cash flow from finance activities shows $1,000,000 proceeds from the sale of stock along with $410,399 capital contributed. The equity statement shows $1,200,000 from "Common stock issued for cash and as compensation to employees". They issued 2.5 million shares (options which seem to have vested immediately) supposedly at 40 cents per share (which would have raised $1,000,000). These probably would have been exercised in cashless transactions in late 2005, which would explain the stock drop during that time. I'd label this corporate abuse.
The "Reclassification of unregistered common stock to paid-in capital" resulted in an increase in equity of $563,991 and an increase in shares of 790,827. This is part of the restatement in Note 20. This all pisses me off because it's extremely difficult to follow. It doesn't help me as a shareholder because it creates an area where bad stuff can hide.
N O T E S
NOTE 1:
Essentially identical to prior year
NOTE 2:
Identical to prior year
NOTE 3:
Details of the actual bank account holding the cash removed.
Still no allowance for doubtful accounts: I'm more bothered by the reason stated than the fact that the allowance is zero.
No allowance for doubtful accounts has been established, as management believes all amounts are collectible.