There’s nothing intrinsic about the way Trinsic, Inc. is reporting its financial status. Formally known as Z-Tel Technologies, Trinsic is a telecommunications company (powered by Cisco) designed to meet personal consumers’ and business’ tele-tech needs. Whether it’s voice-activated calling, messaging features or the web, Trinsic aims to meet communication needs fast and efficiently. In a prospering industry with technology depreciating by the millisecond, one could imagine this is not an easy feat.
Trinsic reports, “The Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern.” As accounting aficionados, you and I understand that if a company has a “going concern” that is a good thing even it’s not so intuitive for Joe Shmo, yet because such lingo is standard for every company it should be counted as a clear and fair message for readers. However, “anticipate,” “estimate,” “expect,” and “projects” signify forward-looking statements. These statements are not guarantees and are extremely vulnerable to risks. While this is a clear tactic not to scare shareholders, one must wonder whom exactly they are leading on and when will one call their bluff?
Who is responsible to make sure financial status reports are truthful, clear and timely? While many agencies are able to crack the “financial whip”, the SEC is has the most authority. One might wonder if the SEC adopted the FDA standards on “natural” or “organic” foods– looks nice on the label and probably has some truth.
Are management memos and auditor statements too PR and not enough promise? Who exactly is getting hurt in the process? Is all fair in language and accounting? I’ll open that up to you readers!