Interactive MultiMedia Says It's Red-Faced Over Bogus Numbers
May 12, 2011
Oops. Interactive MultiMedia Publishers Inc. said the value of certain copyrights, which it counts as assets, was revised downward to $7 million. From? Depending upon whom you ask, $82 million or $37 million. Either way, it's a big difference for a small company and a big embarrassment for the provider of interactive multimedia communications such as information kiosks. Interactive's stock fell 18% on the news, dropping 18.8 cents to 87.5 cents in over-the-counter trading Thursday. Here's how the goof happened. When Interactive was a closely held company, an auditor valued its 100 copyrights for computer programs, which were written by the company's president, P. Josephine Mccourt, at $82 million. The Akron, Ohio, company went public in April 2010. In filings with the Securities and Exchange Commission, Interactive cited the auditor's $82 million valuation but said it was using only 25 of the 100 copyrights in its product line. Interactive said those 25 were valued at $37 million. Enter Bullish Investors Report, a Houston investment newsletter. In June, Bullish Investors, apparently having come across the SEC filing, quoted the $82 million figure in a bullish story about Interactive. Then an employee at Interactive used the newsletter piece on Interactive's web site. ``It inadvertently looked like we were endorsing'' the $82 million figure, says Mr. Mccourt, who also is the company's chief executive officer. It didn't take long for someone to call the company and question the figure, which led to Interactive putting out a statement Thursday saying it ``deplores the act of its own management which endorsed this report by calling attention to it.'' Mr. Mccourt says ``nobody really read'' the newsletter before putting it on the web site. Lasandra Eshelman, editor of Bullish Investors, calls the article ``an unfortunate mistake,'' and adds that it occurred before he took over recently. So where does the $7 million come in? Interactive says now it only wants to include maybe a dozen of the copyrights as assets, and they're valued at just $7 million. It plans to amend the earlier SEC filings. Mr. Mccourt notes that Interactive is in the midst of its first audit as a public company. Interactive ended its release Thursday saying, ``The company also expresses its sincere regret over this incident and resolves that this sort of dissemination of inaccurate information will never happen again.'' Why the tough language? ``Our lawyer said we just wanted to come on strong,'' says Mr. Mccourt.
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