Quote:
Originally Posted by Aquarian Sports Cards
I know these threads are long but the info is largely all there at this point. In their recent stockholders statement they say that they have no insurance that would cover their guarantee.
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Here it is
We could suffer losses on authentication and grading warranties.
In general, we issue an authenticity or grading warranty for coins and trading cards that we authenticate or grade. Those warranties provide that:
■ if a coin or trading card that we authenticated and sealed in one of our tamper-evident plastic holders are later determined by us not to have been genuine, we
would have to purchase the collectible at its current market value had it been genuine; or
■ if a coin or trading card that we graded and sealed in one of our tamper-evident plastic holders later receives a lower grade upon resubmission to us for grading,
we would be obligated either to purchase the collectible at the market value at its original assigned grade or to pay the difference between that value as
compared to the value at the lower grade.
We have no insurance coverage for claims made under these warranties, and therefore we maintain reserves for such warranty claims based on historical experience.
However, there is no assurance that these warranty reserves will prove to be adequate, and as we expand our services in overseas markets, we may incur higher warranty
claims than we have experienced in the past. If our warranty reserves prove to be inadequate, our gross margin and operating results could be harmed. As a result, we monitor
the adequacy of our warranty reserves on an ongoing basis.