Re: Latest 10-Q
Syquest's latest 10-Q is out and now available at your local EDGAR site. As usual, the filing provides the standard array of cautions and warnings, and serves to reinforce my bearish opinion of this stock. FWIW, here are a few things I found interesting:
52,201,513 Shares Issued and Outstanding - As of June 30th, 48,006,170. Added to that are 1,382,716 exchanged on August 8th and another 2,812,627 converted from the remaining Series 1 preferred.
Increasing Authorized Shares Beyond 120 million - Syquest makes is quite clear (repeating statements 4 times throughout the filing) that they will need to seek shareholder approval to once again increase the number of authorized shares. They have now accounted for virtually all of the existing 120 million shares and also state their intentions of continuing to convert vendor notes to shares and pay preferred stock dividends with shares.
Legend Equity Investment - The Legend deal negotiations are still halted with no projection as to when or if they might begin again.
...and here's one I had to chuckle about, (typical EdHead stuff):
Shortages of Critical Components - Syquest mentions a number of times that "shortages of critical components" have been a major problem for the company. When you read the detail as they explain it however, you'll discover that a main cause of this "shortage" is their stated admission of a "shortage of cash to pay suppliers". One can't argue with the fact that cash is a "Critical Component!"
Other Comments - A friend of mine also pointed out to me a few other observations: Raw Material inventory remains unusually high, hinting at difficulties with either parts availability or manufacturing, and affecting borrowing capabilities under their line of credit terms. Syquest states that they generally can't see order rates and demand beyond 30 days, signalling that their huge SyJet backlog may no longer be so huge. Continued losses are expected for the current quarter ending in September, and they could be large because of the 3GB deal and the increase in SG&A costs associated with their stepped-up marketing program.
Regards - Dale |
