...GAAP reasons why GOSY is undervalued:

1. Compliance with Federal Accounting Standards Board's (FASB, http://www.fasb.org/ ) Generally Accepted Accounting Principles (GAAP) distorts the true economic condition and performance of the company.

This is due to the requirement to expense 100% of all R&D in the year incurred. Hence a complete writeoff of all R&D expenditures, regardless of present and/or future value to ZERO.  This required compliance with GAAP forces the Development Stage company to place no assets on their Balance Sheet on the proprietary Intellectual Properties (IP) regardless of the level of probability of future revenues from their R&D activities.

2. Federal and state tax laws also distort the true economic condition and performance of GOSY.

This is due to the requirement to prepare financials in accordance with FASB 's GAAP for tax filings.  This required compliance with GAAP forces GOSY as a Development Stage company to place no assets on their Balance Sheet on the proprietary Intellectual Properties (IP) regardless of the level of probability of future revenues from their R&D activities.

3. European Unon (EU) accounting standards, if applied to GOSY's financials, would portray the true economic condition and performance of the company much more realistically.

This is due to the requirement to expense only 50% (not 100%) of all R&D in the year incurred. Hence since not a 100% writeoff, 50% is carried as assets on the balance sheet. This fairly reflects the net worth of a Development Stage company from the EU perspective. The EU requires only a 50% writeoff of all R&D expenditures. This simple accounting change would dramatically flip GOSY's net worth and stockholder equity deep into positive territory.

This required compliance with GAAP forces GOSY --as a Development Stage company-- to place no assets on their Balance Sheet on the proprietary Intellectual Properties (IP) regardless of the level of probability of future revenues from their R&D activities.

4. Ignoring discounted cash flow (DCF) analyses of GOSY's financial pro formas lowers the net present value (NPV) of future net profits of GOSY regardless of hurdle rate (minimum ROI) determined as sufficient for the level of risk.

Ignoring increased stockholder dividends due to significant tax loss carry forwards (which reduces taxes due for several years and hence increases the aftertax income available for distribution as stock dividends to stockholders) distorts by lowering the net present value (NPV) of future dividend payments to GOSY stockholders regardless of hurdle rate used.

The long and short of it all?

GOSY's $8,000,000 in expenditures the last 15 years does not show up on the Balance Sheet due to compliance with GAAP.

NOT because GOSY's IP has little or no value.

That reality definitely undervalues GOSY's IP!

Now, with a $5M JV contract....

mo-

Mech