Here's more news on CyberGuard "SEC probes leader in Net" securityhttp://dailynews.yahoo.com/headlines/business/msnbc/story.html?s=n/msnbc/business/19980825/19980825601
Yesterday I spent some time pouring over the footnotes to the financial statements for the SEC filing 10Q for the March 31,1998, quarter in an effort to determine how much of the foreign sales were to Asia and what effect the sales adjustment in yesterday's news might have.
The news report referenced above states:
<The accounting dispute puts Cyberguard in a cash-pinch. The company reported sales of $5.2 million, and an operating loss of $1.6 million, in the quarter ending March 31, compared to sales of $4.1 million and a loss of $892,000 in the previous year. But cash and cash equivalents totaled only $4.6 million at the end of the quarter, while current liabilities amounted to $4.3 million. The company said that the accounting dispute will prompt it to restate financial results for the March quarter, potentially eliminating up to $2.5 million of sales. The restatement may also reduce sales in the December quarter, and the June quarter. As a result, Cyberguard faces "significant pressures on the company's liquidity," the company said in a statement. Rifenburgh declined to comment on how long the company's cash reserves can hold out. But he added that a key to surviving the crunch was collecting money owed from distributors, resellers and customers. Those "accounts receivable" totaled $7 million at the end of March. James, the acting chairman, told Reuters that Cyberguard was negotiating with Asian investors for a cash infusion. But he added that the accounting dispute could derail a deal. Rifenburgh said he couldn't comment on the report. >
According to 10Q March 31, 1998 footnote number 7 "International sales represented 47.9% of the total security product revenue......{further down they add}since the introduction of the Company's "software-only" product {72% of the sales during the quarter}, the Company's sales in Asia which represent 48% of the Company's revenue, have been almost exclusively "software only."
This makes me wonder if it is reasonable to believe that at least 2.4 million of that 7 million is owed from Asia (7 million times 72% times 48%)? Asia is a big place. Not all companies are faltering but the comment <Cyberguard was negotiating with Asian investors for a cash infusion> does not give me a warm fuzzy. Is the cash infusion needed because the receivables are uncollectable or do they think that the Asian companies will give them an investment because they are a significant supplier of services to them?
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