Monday, June 13, 2016
Clarification: The ESB rent problem.
Thank you, Ed Manfredonia, for the following submission.
I would appreciate it if you would print this explanation as a separate post on your blog. I possess an MBA in Finance and had been a member of the American Stock Exchange. I made a market in derivatives- options and index options.
There appears to be a fundamental misconception of WBAI’s Income Statement. I must make a correction to R Paul Martin’s financial analysis. In his Treasurer’s Report Martin expounds:
Again, it must be noted that a significant amount of WBAI’s deficit is the result of the accrued difference between the Empire State Building (ESB) rent and the $12,000 a month that WBAI is actually paying.
But here is the error. The rent for the Empire State Building is $55,000 per month. This sum of $55,000 must be entered as an expense on the Income Statement. Berthold Reimers is only paying $12,000 per month. This leaves a liability of $43,000 per month, which must be transferred to the Balance Sheet as an accrued liability, which is the rent owed.
This deficit for nonpayment of rent is approximately $516,000 per annum or $43,000 per month multiplied by 12 months. Please note that in a three year period this deficit amounts to approximately $1,548,000. But let us say $1,500,000.
That is an accrued liability of $1,500,000- just for the Empire State Building rent and this sum must appear on the Balance Sheet. And this sum of $1,500,000 does not include interest on the sum owed and penalties for late payment.
Thus a Balance Sheet and a Cash Flow Projection are meaningless because the numbers on the Income Statement are meaningless- actually fraudulent.
Since 2011 I have been pointing out that the financial figures are imaginary numbers and that these figures have nothing to do with the catastrophic financial situation of WBAI. It does not matter that the assets owned by Pacifica can be valued at $100 million; Pacifica (especially the jewel in the crown WBAI) is losing money on assets worth $100 million. Pacifica (and WBAI especially) does not know how to earn money on its assets. And the solution is not by selling Gary Null’s products.
Thank you. Ed Manfredonia