The Most obviously fake financial statement I have ever seen, courtesy of $FRTD

There are few words that can adequately describe this quarterly report from non-SEC reporting company Fortitude Group (FRTD), which is currently suspended from trading after their absurd buyout press release. Read the 1st quarter report at OTCMarkets.com. There is so much idiocy in this report that I cannot do more than scratch the surface. But take a look at the cash flow statement for a start (on page 3).

The cash flow statement has the number of shares issued to pay for services as the dollar value of those shares, which of course don’t even belong in the “cash flows from operating activities.” The two acquisitions mentioned in the “cash flow from investing activities” section are just as nonsensical: it doesn’t matter that FRTD thinks those investsments are worth $38 million and $24 million — Fortitude Group didn’t pay those amounts in cash so they do not belong on the cash flow statement. The best part is that the “net increase in cash” of $63,194,456, when combined with the cash at the beginning of the quarter ($153) should add up to the “cash at end of period”; this is a very, very basic principle. But somehow FRTD only ended the quarter with $412,162. In other words, the company is off by over $62 million in its “net increase in cash”.

The balance sheet is just as bad: “stockholders equity” is, by definition, total assets minus total liabilities. But it also must equal the sum of paid in capital and retained earnings / accumulated deficit. For an example of how that works, look at the balance sheet of Livedeal (LIVE). The total stockholders equity is equal to the sum of the par value of all shares outstanding, the paid in capital, and the accumulated deficit. However with FRTD the resulting sum is $3,541,332 (and not $62,791,956).

[Edit 2014-6-9]: See George Sharp’s article on FRTD.

 

Disclaimer: I have no position in any stock mentioned. I have no relationship with any parties mentioned above. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

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