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Strategies & Market Trends : Anthony @ Equity Investigations, Dear Anthony,
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To: Force Majeure who wrote (20936)3/16/1999 1:31:00 AM
From: Sword  Read Replies (2) of 122087
 
EFAX: When I said that their financial statements weren't bad relatively speaking, I meant in relation to stocks we normally short like CYOE, PRFM etc. But after perusing them this evening, they look bad, period. I wouldn't be proud to be their CEO or CFO.

But they have more than 420K in capital to work with. They've been putting money in short term vehicles of some kind. Presumably they can liquidate these on short notice. This puts their working capital at about 4.9 million.

They used $400,000 to invest in some other company this year. I wonder what that was all about.

Their operating loss is decreasing on a year over year basis. For the nine months ending Sept. '98 they lost $1.3M. But for the last quarter they had a net gain after interest income.

But they will be increasing their costs because of the stuff they are giving away. So the progress in getting earnings under control could reverse itself.

So far their negative cash flow from operations has been financed by last year's sale of stock. They have enough for roughly 9 months before they need to do another placement. In that time period they have to either (1) get well via an increase in their margins (hopefully along with an increase in their revenues) or (2) convince someone to buy them out or (3) go out and dilute their stock with a secondary or private offering of convertibles or warrants.

Right now the market is betting on (1) or the market is just insane.
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