CYCOMM (CYII)-on aquisition trail Message Board

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Microcap & Penny Stocks : CYCOMM (CYII)-on aquisition trail

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To: Bullseye who wrote (1188)	4/3/1998 5:38:00 PM
From: Robert Morrison	Read Replies (1) of 1800

Bullseye. I only just saw a copy of the 10K on the Edgar database and have downloaded it to my hard disk. Firstly the $5.3M in receivables would be accounts receivable so these would have been booked as revenues in the 1997 year under accrual accounting methods so they won't be counted in 1998. Highlights of the 10K that come to mind are 1) the gross profit percentage for "communications security" devices or the Slice were strong and so were sales at $1.8M for the year...this is better than I thought they would be doing; (2) the gross profit percentage for "secure computing" or Tempest was low as were sales compared to 1996 and it would appear that this division is going to need a big shakeup by Mr Gangemi if were are going to get anywhere (if PC Mobile wasn't performing the group would have shrunk during 1997); (3) serious consideration should be given to moving as much production offshore (a major supplier is LG Technologies which also holds $3M in convertible debentures in Cycomm) as possible to improve the Gross Profit percentage for PC Mobile and Tempest (subject to government security requirements) with production and orders being processed by batch rather than continuous production runs, as the company says in the 10K, the company does not get the economies of scale that other computer producers obtain and so will have a hard time improving its gross profit percentage (as the PC Mobile is usually the highest price bidder in contracts it tenders for it should be the most profitable otherwise it will leave a huge opportunity for a major to move in against it); (4) we had another $1M raised through convertible debentures in February 1998 which hopefully will be the last of these; (5) the only competitors mentioned to the PC Mobile were Badger and Panasonic and now there are rumors that these companies have pulled out of the ruggedized market. Now with supposedly 100% of the market at its feet surely an analyst would be interested in reporting on this stock...$280M market with no competitors!! (6) the only competitor to Tempest mentioned was Wang Laboratories and of course Mr Gangemi is now with Cycomm after years with Wang (see note 5). (7) there were only about 1000 shareholders in the company at December 31st 1997. Maybe some of these were brokers holding on clients' accounts but even then this is pretty low and indicative of how little known the company is to the market. It also means that any debentures converted and sold on the market will have no depth of buyers to absorb the sale...let's face it the XL Vision sale a year ago is what floored the stock price for 1997. These are only some of the points that come to mind. I have to print it out and do some more work in detail. Again the main issue as I see it is gross profit and cost of manufacture especially with Tempest. We need a lift here or it could mean a long wait for significant profits and only after selling huge volumes the production of which will have to financed by diluting shareholders through more debenture issues. Rob Anybody else have some thoughts on the 10K?

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