Ann: 2011 Preliminary Final Report results , page-13

Andy, yours is a very nice observation. Not many people bothered read footnotes and shame on me, I did not bother to read them as well. I am not an expert on accounting, so do not take my words seriously on your questions.

1. I personally do not believe JIN overstated revenues. In accounting, one of the most important things is consistency. It really does not matter if JIN reports gross revenue or net revenue; what matters is JIN needs to make clear how it intends to report its revenues and stick with it. So in my view, there is nothing wrong with the reporting. At least, we all know the 76 million is gross revenue.

2. Intangibles are tricky. But in this case, I believe JIN's accounting is conservative and appropriate. Of course, this is my personal opinion. It would be fruitless to argue from the accounting perspective because there is not a right or wrong answer. What I am trying to do is to point out a few things from the economics' perspective.

JIN has an incredible business. In my opinion, its online business deserves at least 25x NPAT if the condition is normal, i.e. the revenue side is in JIN's control. It has negative working capital, strong cash flow generation and astronomical returns on capital and equity. Better yet, it sells non-tangible goods and this fact makes its business very scalable. Last year, JIN earned 60% in ROE. It implies there are hidden assets on JIN's balance sheet. If you add that 5.7 million back to equity, JIN's ROE would still be around 40%. It tells you JIN's intangible assets might be underestimated.

It is very true that those costs like web development or marketing could be expensed in conservative accounting. However, I believe a fair and informative accounting is the right one. In fact, both conservative and offensive accounting distort economic reality. In other words, they are all "bad" accounting practices. For example, if JIN spends money on marketing and get people on board. How likely and how often does a customer leave its website to use a competitor's service? If that is one year based on statistics, JIN definitely should expense those; if it is around 3 years, JIN probably should add it to intangible assets and expense it over 3 years. This is economic reality.

JIN carries domain names on its balance sheet for 816K. It definitely worth millions more. Can you imagine JIN would see its domains for 816K to anyone? So the accounting principles allow companies to amortize intangible assets but do not allow them to write the value up. This, in fact, is a distortion to the economic reality. JIN did not disclose how often the customers leave the website, it says on the page 33 of AR that it amortizes this cost over one and a half years. As to web development costs, JIN expenses it over 3 years. It sounds very reasonable to me.

I was attracted by JIN risk/reward profile. I think many people on this board are overly optimistic about JIN's prospects overseas. But who knows? Tipp24 was banned in Germany and its business thrived in UK in just two years and replaced any lost revenue in Germany. In the online business, anything can happen.

The bottom line is, assuming JIN is going to liquidate itself when the contract expires without renewal, the shareholders would probably get more money back than current price implies. It is this extreme cheapness that makes this bet possible and potentially extremely profitable.