Questions as quoted by Streetinsider.com
1, How much BOT contract from Shougang Jingtang was included in the reported backlog of $89.4.
The answer is $34.00 because the project has not started yet. Engineering work started in Jan 1.2010 to be finished by Sept 2010. as mentioned in the contract.
How should revenue be recognized?
It will be recognized per % of completion as they did before?
2. Why was SG&Aexpenense unusually low at $2.80 million in 4Q09 vs $6.6 million in the prior quarter
In 3 qtr, there was a charge of 2.6 million non-cash charge related to the changes in the value of warrants.
Please refer to the following link
In 4th qtr, as share price drop, there was a favorable non-cash charge of $3 million related to the changes in the value of warrants
3) With utility expenses accounting for 75% revenue for the operating portion of BOT, how can GM on operating contract be 45%, as indicated by management on the call
I believe there is a misunderstanding about 45% GM on operating contract. However, it will not start until late 2010 with annual revenue of $8.4 miln. I do not think it is a signicant amount worth worrying about.
This is my personal opinion on the questions. I hope it can be verified with management and PR should be released to clarify those questions.
I am a little confused on your explanation of the SGA being for the change in the value of the warrants. It seems you understand this or are very confidnet in your comments.
I see in the 3rd qtr and annual SEC filings the separate entry for the change in fair value of the warrants in in the income statement. Plus the different SGA numbers. Seems to me this is separate entry and not something that is in the SGA.
3rd qtr 2009 SGA 6.615 mil nine month 2009 SGA 14.111 mil
3rd qtr 2008 SGA 4.850 mil nine month 2008 SGA 11.182 mil
full year09 SGA 16.940 mil full year08 SGA 13.883 mil
so 4th qtr09 SGA =2.829 mil so 4thqtr08 SGA = 2.701 mil
so 2009 SGA drops from 6.6 mil to 2.8 mil similar to 2008 3rd at 4.8 mil dropping to 2.7 mil
For the change in fair value of warrants
3rd qtr 09 = (-2.592 mil) nine month change (-4.402 mil)
for 2008 no change in the value of the warants, but there was a stock based compensation of 5.832 mil in 3rd qtr and nine months of 11.666 mil
For the full year change in warrants was an expense of only -0.831 mil, so 4th qtr was a gain of 3.57 mil on the warrants.
For 2008 the stock based compensation full year looks to be a 17.68 mil expense which would be an increase of 6mil for the 4th qtr 2008.
Okay so why does SGA drop in 2008 as well.
Also the stock price of RINO on 6/30 was 9.80
on 9/30 = 21.14 and 12/31 = 27.65.
Think you stated the price dropped in the 4th qtr to explain the value of the warrants. But that doesn't make sense in that the stock price increased every qtr, shouldn't the change in value of the warrants also increase every qtr. The expnse was increasing in each of the 3 qtrs and then in the 4th it reverses to a positive, I am puzzled.
rahlisd and rrch,
look at the 10K and 100Q,
the numbers from my prior post here, show that what the charge for the warrants was for the 3rd qtr, for the nine months and that what it was at year end. The difference between the 3rd qtr and year end was a positive charge of 3.57 mil that was mentioned in the footnotes.
As for the stock price going up from 9/30 to 12/31 and this charge reversing. I can only assume that the older warrants alone would have created a larger negative charge. While the warrnats issued in Dec at a hgiher strike price than the sotck closed 12/31 at, must have created a large enough drop in value of the warrants that there was credit of 3.6 mil, after being a -4.4 mil on 9/30 to end the year at -0.8 mil.
SEC stipulated that the difference between current stock price and exercise price should be booked as charge.
If share price is smaller than exercise price of warrant, it became an negative charge to your expenses and decrease the S&G expenses. It is a non-cash one line item. Most company report the charge on a separate line . Apparently, rino buries them as S&G. Correct me if you can prove that I am wrong.
I believe the company can look at the stock price by the report date in determining value of the warrants. It doesn't have to take place as of 12-31.
In 2008, there was a one time credit to SGA that reduced SGA. I can't remember what it was though.