ALYD 10K: revenue recognition. If I were long, the following change
in accounting for revenues would raise a red flag:
e. Revenue recognition
During 1997, the Company reported revenues from contracts on the
percentage-of- completion method for financial reporting purposes, in accordance
with The American Institute of Certified Public Accountants Statement of
Position (SOP) 97-2, "Software Revenue Recognition". Revenues under these
contracts are recognized based on the proportion of contract costs incurred to
total estimated contract costs. Contract costs include all direct labor related
to contract performance. Provisions for estimated losses on uncompleted
contracts are made in the period in which such losses are determined.
Prior to January 1, 1997, the Company used the accrual method of
accounting, wherein revenue was recognized when the contract tasks were
completed and accepted by the customers.
This change had no effect on prior years, and accordingly, pro forma
results for prior years are not applicable.
I would be more comfortable with the former method.
The Balance sheet shows a significant increase in accounts
receivables. is this a result of a significant portion of the
contracts becoming effective in the last quarter of 97?
ALYDAAR SOFTWARE CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS<CAPTION>
December 31,
ASSETS 1997 1996
------ -------------- ---------
<S> <C> <C> <C> <C> <C> <C>CURRENT ASSETS:
Cash $ 1,526,924 $ 379,382
Accounts receivable, net allowance for doubtful
accounts of $115,000 and $0, respectively 5,150,617 187,500
Costs and estimated earnings in
excess of billings 1,297,986 -
Prepaid expenses 249,801 6,903
Other receivable (Note 3) 435,000 490,000
Deferred tax asset (Note 11) 600,000 -
Loan to stockholder 51,256 51,256
-------------- -------------
Total current assets 9,311,584 1,115,041
PROPERTY AND EQUIPMENT, net (Note 4) 2,919,077 1,694,029
GOODWILL, net of accumulated amortization
of $223,800 (Note 2) 6,494,783 -
OTHER ASSETS 141,030 60,222
-------------- -------------
$ 18,866,474 $ 2,869,292
============== =============
LIABILITIES AND STOCKHOLDERS' EQUITYCURRENT LIABILITIES:
Accounts payable $ 1,005,923 $ 2,028,566
Accrued sales commissions 205,000 -
Accrued payroll 145,000 17,400
Other current liabilities 451,638 138,469
Billings in excess of costs and estimated
earnings on contracts in progress 49,497 150,000
Current portion of capital lease obligations 21,869 -
Loans payable, stockholders (Note 5) 966,700 507,530
-------------- -------------
Total current liabilities 2,845,627 2,841,965
-------------- -------------
CAPITAL LEASE OBLIGATION 101,230 -
-------------- ------------
COMMITMENTS AND CONTINGENCIES (Note 9)STOCKHOLDERS' EQUITY: (Notes 2, 5 and 6)
Common stock, $0.001 par value, 20,000,000 shares
authorized; 17,808,728 and 13,983,282 shares issued 17,809 13,983
Additional paid-in capital 30,113,284 6,311,079
Deficit (14,094,107) (6,296,940)
Foreign currency translation adjustment (26,924) -
-------------- ------------
16,010,062 28,122
Less: treasury stock, at cost (445) (795)
receivable from warrant exercise (90,000) -
-------------- ------------
Total stockholders' equity 15,919,617 27,327
-------------- -------------
$ 18,866,474 $ 2,869,292
============== =============
</TABLE>
From the tight payment schedule shown in their contract (see my
previous post). They should have been capable of getting quite a bit
more cash from their clients. This is not what the statement of
cash flows indicates. cash flows are extremelly poor. Hopefully they will show a significant improvement in Q1 98.
-
1997 1996 1995
---------------- -------------- --------
<S> <C> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (7,797,167 $ (5,132,845 $ (580,148)
---------------- -------------- -------------
Adjustments to reconcile net loss to net cash
used in operating activities:
Stock based compensation 330,500 252,810 -
Allowance for doubtful accounts 115,000 - -
Depreciation and amortization 837,897 349,655 23,203
Deferred tax benefit (600,000) - -
(Increase) decrease in assets:
Accounts receivable (4,963,962) (37,500) 91,650
Costs and estimated earnings
in excess of billings (1,297,986) - -
Prepaid expenses (66,719) (2,760) (4,143)
(Increase) decrease in liabilities:
Accounts payable (1,202,354) 1,986,654 19,161
Accrued sales commissions 205,000 - -
Accrued payroll 127,600 7,702 4,557
Other current liabilities 191,494 (59,274) 176,254
Billings in excess of costs
and estimated earnings (170,495) - -
---------------- -------------- -----------
Total adjustments (6,494,025) 2,497,287 310,682
---------------- -------------- ------------
Net cash used in operating activities (14,291,192) (2,635,558) (269,466)
---------------- -------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (1,664,080) (1,988,666) (33,821)
Increase in other assets (80,808) (52,516) (4,896)
Net cash received from acquisition of subsidiary 1,450 - -
Decrease in other receivables 55,000 - -
Loans receivable (300,000) - -
---------------- -------------- -----------
Net cash used in investing activities (1,988,438) (2,041,182) (38,717)
---------------- -------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuances of stock 16,985,201 4,537,500 353,380
Advances to stockholders - (10,183) (40,893)
Loans from stockholders 1,363,150 503,370 -
Repayments of stockholders' loans (900,000) - (20)
Repayments of capital lease obligations (21,179) - -
---------------- -------------- -----------
Net cash provided by financing activities 17,427,172 5,030,687 312,467
---------------- -------------- ------------
NET INCREASE IN CASH 1,147,542 353,947 4,284
CASH AND CASH EQUIVALENTS,
beginning of year 379,382 25,435 21,151
---------------- -------------- ------------
CASH AND CASH EQUIVALENTS, end of year $ 1,526,924 $ 379,382 $ 25,435
================ ============== ============
Pancho
More later have to go have dinner now. |
