Anyone read the SYQT 10-Q filing from the other day? Here are a few bits that I thought might be relevant:
<The Company has experienced delays in development of the SyJet product and anticipates a continued decline in selling volumes and average selling prices of its other products. As a result, the Company is in the process of reviewing its operations with the objective to reduce its internal cost structure. However, there can be no assurance that the Company will be successful in overcoming the delays in delivering the SyJet product, competing against the product offerings of companies with greater cash and operating resources, or in securing the resources to aggressively ramp production of the SyJet. The Company requires additional cash resources in the near future to fund working capital requirements, meet its debt obligations and to fund incurred losses. Management's plans with respect to meeting these cash needs include additional equity funding, expansion of the asset-based loan facility and restructuring of notes payable.>
<Revenues to date for the Company's second fiscal quarter ending March 31, 1997 are significantly below the levels experienced in the prior quarter over the
same comparable time period. The Company believes that this is attributable to a number of factors including its inability to meet the demand for its new SyJet 1.5 Gigabyte removable hard drive product, due to unexpected delays in ramping up production, and a reduction in sales of the Company's mature products. Should the current sell through rate continue, the revenues for the second fiscal quarter will be adversely affected.>
<Absent a substantial increase in sales of the Company's products prior to the
end of the second fiscal quarter, the Company will incur losses in excess of
those incurred in the first fiscal quarter. Lower than expected revenues have
resulted in a reduction in the availability of cash reserves and will
necessitate that the Company raise additional equity capital in the near future.
There can be no assurances that the Company will be able to raise the capital
required. Additionally, factors such as the sell through rate in the channel,
price pressures on the Company's products, and the inability to ramp SyJet
production will have an adverse impact on revenues.>
<Accounts receivable aggregated $34.9 million at December 31, 1996 compared to $30.3 million at September 30, 1996, an increase of $4.6 million or 15.1 percent. The increase in accounts receivable is primarily due to an increased in the aging as a result of slower collections. The
Company has instituted an aggressive collections program. Inventories, net
of reserves, aggregated $22.3 million at December 31, 1996, an increase of $11.8 million, compared to the $10.5 million at September 30, 1996. The increase in inventories is primarily attributable to production of the EZFlyer 230 and work in process on the SyJet products.>
<The Company has deferred further negotiation of an equity investment with the Legend group as further documented in the Company's annual report on Form 10-K, as amended, for the year ended September 30, 1996.>
< The Company's product is subject to increasing competition from several other removable-media data storage devices. Consequently, in order to secure adequate market share, the Company must ensure that the functionality and quality of the product is effectively communicated to the marketplace. As a result, the Company needs sufficient capital to implement a marketing strategy that will adequately address the appropriate markets. The Company is also dependent on the successful production and sale of the SyJet product line. Additionally, the decline in volumes and pricing on mature products will have an impact on the Company. The Company must also continue implementing an operating cost structure that will ensure spending levels consistent with revenue expectations. Critical to each of these factors is the Company's ability to attract additional investment capital. There can be no assurances that the Company will successfully achieve these objectives.>
<FUTURE PROFITABILITY
Although the Company continues to execute its turnaround plan, adjusting
operations to reduce losses and rebuild the business, the Company does not
expect to return to profitability in the near future. Although the Company
believes it will ultimately be successful in its turnaround attempts, and that
the Company will return to profitability in the future, there can be no
assurances that the Company will be successful or that it will have, or be capable of obtaining,sufficient capital to withstand prolonged operating losses.>
<As of January 3, 1997, the Company had obligations to issue additional warrants for approximately 23,426,247 shares of Common Stock, in aggregate for certain outstanding warrants and options. While the number of shares of Common Stock issuable under certain of the Company's obligations is fixed, the exact number of shares of Common Stock issuable upon conversion of Preferred Stock and exercise of warrants issued pursuant to such conversion cannot be estimated with certainty. Generally, such issuances of Common Stock will vary inversely with the market price of the Common Stock at the time of such conversion, and there is no cap on the number of shares of Common Stock that may be issuable. >
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