Harry Greaves' Response To Francis K. Zazay
I read Mr. Zazay’s diatribe, “LPRC’s
Third Quarter Financial Results: An Element of Departure
from Full Disclosure” with some amusement.
About the only criticism Mr. Zazay makes that has any
merit is the one about the lack of a statement of cash
flows. That is something we will produce in the future.
His comment about the absence of a "cost of sales" betrays a lack of understanding of LPRC's business. We are not a manufacturing company or a retailer. Therefore, cost of sales does not apply. It is irrelevant. I was in the newspaper publishing industry in the United States for 10 years. Let Mr. Zazay read the published financial statements of the Washington Post or New York Times, for example, and tell me whether or not he sees any "cost of sales" figures in their financials. He will not. Why? Because they are not manufacturers or retailers. There are countless other businesses that don’t have a “cost of sales” figure to report. He needs to go back to his textbooks to educate himself as to circumstances under which "cost of sales" and "gross profit" are determined.
How did he arrive at the conclusion that our balance sheet cash figure was overstated by $124,716? He offers narry an explanation. And why is he making assumptions and then questioning why our financial statements do not support his assumptions? Stick to the facts.
Liberia operates a dual currency system. Businesses are free to buy and sell in Liberian dollars or US dollars. So, why is he asking us to produce financial statements in Liberian dollars? In fact, in LPRC’s case, we bill all of our customers in US dollars, we pay 99.99% of our bills in US dollars, our bank account is a US dollar account. So why would we be mucking about with conversion from Liberian dollars to US dollars and vice versa?
The $500,000 he refers to is a dividend. A dividend is an appropriation of profit, not a cost. What is he talking about?
Summary financial statements (such as the ones we are publishing) are not the appropriate medium for lengthy dissertations on our strategic plan or business model. If he were looking at financial statements published in Britain, he would see an income statement with only 5-6 lines, much briefer than ours. Income statement and balance sheet formats vary from company to company, circumstance to circumstance.
How Mr. Zazay concludes that LPRC might have liquidity problems, when we have gone from $50,000 in bank at the end of January to $1.6 million at the end of September, beats me. He should ask LBDI if we have liquidity problems. We borrowed $1 million from them for our severance program. The loan terms called for repayment over 24 months. We repaid it in 8!!!
Harry A. Greaves, Jr.
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