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TOPIC: KPMG "going concern" qualification for 2014

KPMG "going concern" qualification for 2014 10 May 2015 10:18 #4463

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I hardly ever read "auditors opinions" in 10K´s of Companies, since I assume they get a "clean opinion", otherwise hell should break loose if this is not the case.

With Cytori however it has been business as usual since early March when the financials were released and no mention was made of the fact that the opinion was qualified. :whistle:

However it was... the famous and feared "Going Concern- subject to" was issued by KPMG... :bang: I just noted whilst starting to look over the prospectus and went back to the 10K to check. :really:

Cannot input the text... more to follow.

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Board moderator and Site-owner. I still regret the day I started analysing the prospects of MacroPore (now Cytori) back in 2004- a left-over from the tech-bubble at that time from the century change in my portfolio- and became addicted to Cytori´s fat cell technology. :cry:

KPMG "going concern" qualification for 2014 10 May 2015 10:59 #4464

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From the 10k

The accompanying consolidated financial statements and financial statement schedule have been prepared assuming that the Company will continue as a going concern. As discussed in note 1 to the consolidated financial statements, the Company’s recurring losses from operations, liquidity position, and debt service requirements raises substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in note 1. The consolidated financial statements and financial statement schedule do not include any adjustments that might result from the outcome of this uncertainty.


From the prospectus..

Our independent registered public accounting firm has issued a “going concern” opinion.

Our ability to continue as a going concern is dependent upon our ability to generate profitable operations in the future and/or to obtain the necessary financing to meet our obligations and repay our liabilities arising from normal business operations when they come due. We plan to continue to provide for our capital requirements by issuing additional equity and/or debt. No assurance can be given that additional capital will be available when required or on terms acceptable to us. We also cannot give assurance that we will achieve sufficient revenues in the future to achieve profitability and cash flow positive operations. The outcome of these matters cannot be predicted at this time and there are no assurances that, if achieved, we will have sufficient funds to execute our business plan or to generate positive operating results. Our independent registered public accounting firm has indicated that these matters, among others, raise substantial doubt about our ability to continue as a going concern.


This is not very good- that means also, that in the conversations by the partner/managers of KPMG, Cytori management was unable to convince the auditors of a lets say "change in fortune" for the business going forward.

But it remains a warning for the owners of course- nothing concrete- nonetheless, not good at all. :evil:
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Board moderator and Site-owner. I still regret the day I started analysing the prospects of MacroPore (now Cytori) back in 2004- a left-over from the tech-bubble at that time from the century change in my portfolio- and became addicted to Cytori´s fat cell technology. :cry:

KPMG "going concern" qualification for 2014 10 May 2015 21:32 #4466

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Even years back on the YMB....I would occasionally caution that this could go to zero. I didn't need a auditor to tell me that any spec biotech ran the risk.

For now, we again have cash. :evil:

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KPMG "going concern" qualification for 2014 10 May 2015 22:01 #4469

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I assume you mean conversations. Hopefully we don't have BORG running around. :grin:

Have they written this text any other time for Cytori, that you know of?

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KPMG "going concern" qualification for 2014 11 May 2015 03:30 #4470

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Have they written this text any other time for Cytori, that you know of?


I would know if this text was ever used. As a former Arthur Andersen auditor (from the time they were No. 1) I would know and would have discussed this with the other CPA´s I know, who are holding CYTX

I also know, you do not give such a "subject to" qualification lightly :KO:

Anyway- last year they had a "except for" on receivables, because of lack of internal control in that area. This must have also effected their Sarbanes-Oxley 404 "seal of approval".

In my judgement - with the last 10K- they are in serious conflict with other parts of Sarbanes-Oxley legislation, for not reporting on off-balance sheet assets in respect of development by third parties, which will ultimately benefit the Company. :whistle:

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Board moderator and Site-owner. I still regret the day I started analysing the prospects of MacroPore (now Cytori) back in 2004- a left-over from the tech-bubble at that time from the century change in my portfolio- and became addicted to Cytori´s fat cell technology. :cry:

KPMG "going concern" qualification for 2014 11 May 2015 13:20 #4478

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fas wrote: Anyway- last year they had a "except for" on receivables, because of lack of internal control in that area. This must have also effected their Sarbanes-Oxley 404 "seal of approval".

Didn't they change the accounting on most of the receivables to make them them on a "recognized on delivery of cash" basis?


In my judgement - with the last 10K- they are in serious conflict with other parts of Sarbanes-Oxley legislation, for not reporting on off-balance sheet assets in respect of development by third parties, which will ultimately benefit the Company. :whistle:


That's an interesting thought. Do you mean things like outside doctors (Cugat, etc.?) Wouldn't there be a great deal of leeway here, since in reality they do not actually control these "assets"? Shouldn't that be more akin to a sort of pseudo-goodwill?

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KPMG "going concern" qualification for 2014 11 May 2015 14:02 #4480

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That's an interesting thought. Do you mean things like outside doctors (Cugat, etc.?) Wouldn't there be a great deal of leeway here, since in reality they do not actually control these "assets"? Shouldn't that be more akin to a sort of pseudo-goodwill?


Less than 12 months ago, nobody knew of scleroderma except the visitors and readers of this board. After screwing around for 13 years not getting anywhere, Hedrick changed strategy, started cutting costs and adopted the work of Guy Magalon sometime in the fall and made it his and Cytori´s. Similar with OA and now we are say 2 years away from market. You think two years ago, this was irrelevant information???? :really:

This was the result of translational work- just one of many clinics- 55 even- which presently are covered with the blanket of "fuck-off" in the 10K. In the past there was at least some bare information about the apps being tackled. How many scleroderma´s are there in case a miracle happens and the funds are available to develop. And also - as a shareholder I want to know whats going on and how the pipeline looks like. Its pretty basic really and has value as the scleroderma example shows.

Maybe not now when Cytori has a bad reputation of screwing up everything, but as soon as success comes, it begs the question what else is there- and than you need to know. At that time , you CANNOT come out of the closet and say- dear shareholders, there is this something else.....that I did not tell you about....

A consistent reporting system should exist at this point in time already. :bang: :bash:

As I said- SOX require off-balance reporting of ongoings in the business which one CANNOT capture under US GAAP . Enron was convicted of not describing in their 10Ks the impact of the business of certain contractual obligations. The SOX law, also refers to off-balance sheet assets of this nature. Cytori simply ignores this part of the SEC regulations.

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Board moderator and Site-owner. I still regret the day I started analysing the prospects of MacroPore (now Cytori) back in 2004- a left-over from the tech-bubble at that time from the century change in my portfolio- and became addicted to Cytori´s fat cell technology. :cry:

KPMG "going concern" qualification for 2014 11 May 2015 14:52 #4481

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That's a bit hard for me to swallow, though. Maybe I'm not understanding something but it seems to me these are just business opportunities and the result of the money that is paid to the CEO...

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