AKLM- This from their most recent 10K dated 1-16-2002. This stuff goes beyond "boilerplate". Looks to me they have some real profitabilty issues. Not saying they did anything but when a company gets desparate to survive it's good to look deep into the finances. Although the information below is fairly current, It appears that some changes are being made to "fix" things. I don't have the time nor interest to go very much further in research so I'll leave this at that. The company is insolvent (liabilities exceed assets)so there is no debt to equity ratio and "current" liabilites exceed their last quarter sales and are about 75% of 2001 sales. That's alot of "current" debt that needs to be turned into long term in my opinion. All in all in this market this stock could triple! LOL! Joe
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At December 2, 2001, the Company had a working capital deficiency of
approximately ($24.3) million as compared to ($43.1) million at August 31,
2001. The improvement of $18.8 million in the Company's working capital
deficiency during the quarter ended December 2, 2001 is mainly attributable to
a $33.9 million increase in accounts receivable, net, which resulted from the
seasonally higher level of net revenues the Company experienced in the quarter
ended December 2, 2001 as compared to the quarter ended August 31, 2001. The
increase in accounts receivable, net, was partially offset by increases in
operating liabilities associated with the higher level of net revenues. See
"Factors Affecting Future Performance: Liquidity and Cash Requirements are
Dependent on Achieving Timely Product Releases and Sales Objectives; If Cash
Flows from Operations Are Not Sufficient to Meet the Company's Needs, It May be
Forced to Sell Assets, Refinance Debt, or Further Downsize Operations".
The Company's working capital and stockholders' deficits at August 31,
2001, and the recurring use of cash in operating activities raise substantial
doubt about the Company's ability to continue as a going concern. Short-term
liquidity in fiscal 2001 was addressed by the Company receiving additional
interim borrowings under a revolving credit and security agreement (the "Credit
Agreement") with the Company's primary lender (the "Bank") and with short-term
financing from affiliates of the Company, which was borrowed and repaid in each
of the second and third quarters of fiscal 2001. In addition, during the three
months ended December 2, 2001, the Company received advances from the Bank
under its Credit Agreement and under certain International Factoring Agreements
(defined below) of $10.0 million. To enhance long-term liquidity in fiscal 2001,
the Company implemented targeted expense reductions, including a significant
reduction in the number of its personnel, and raised $31.5 million (net of
expenses) from sales of common stock in the Private Placement, $4.8 million from
other sales of common stock and $9.5 million from a loan participation
transaction (the "Participation") between the Bank and certain other lenders.
In January 2002, the Bank agreed to loan the Company up to
$5.0 million (the "Second Overformula Loan") which is required to be repaid by
February 28, 2002 (see below).
AND__________________________________________
If the Company does not substantially achieve the overall projected
revenue levels for fiscal 2002 as reflected in its business operating plans and
does not receive the ongoing support of the Bank and its vendors, the Company
will have insufficient liquidity in fiscal 2002, and either will require
additional financing to fund operations or will need to make further
significant expense reductions, including, without limitation, the sale of
assets or the consolidation of operations, staff reductions, and/or the delay,
cancellation or reduction of certain product development and marketing
programs. Some of these measures will require third-party consents or
approvals, including that of the Bank, and there can be no such assurance that
such consents or approvals can be obtained.
and........................................
As of December 2, 2001, the Company received waivers from the Bank
with respect to those financial covenants contained in the Credit Agreement for
which it was not in compliance. The Company is presently negotiating with the
Bank amendments to the Credit Agreement, including, the financial covenants
contained in the Credit Agreement. The Company cannot make any assurances,
however, that the Credit Agreement will be amended, and if amended, that the
Company will be able to comply with the amended financial covenants. If waivers
from the Bank are necessary in the future, the Company cannot assure that it
will be able to obtain waivers of any future covenant violations as it has in
the past. If the Company is liquidated or reorganized, after payment to the
creditors, there are likely to be insufficient assets remaining for any
distribution to its stockholders. |
