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Microcap & Penny Stocks : CYCOMM (CYII)-on aquisition trail -- Ignore unavailable to you. Want to Upgrade?

To: Ahda who wrote (1193)	4/8/1998 2:00:00 AM
From: Robert Morrison	Read Replies (1) \| Respond to of 1800

Darleen Don't get concerned about the standard going concern clause the auditors have included in their report to shareholders. Where companies are making losses every auditor includes this disclaimer to cover their butt should the company go belly-up. I would be surprised not to see it if a company is making losses...it's that much of an accounting standard which is endorsed by the professional accounting bodies of every western country. The loan to directors/employees to buy stock isn't too much of a concern if it was new stock being issued. In other words the money went out as loans and came back in as cash for shares. This must be the case as I would doubt the money would be lent to buy shares on market. This is really a balance sheet entry and the debt should be real no matter what the share price. The remuneration of Corstone was $26750 for the twelve months to December 31st 1997. This is nothing compared to previous years. On the face of it Bud Hawk must be sweating blood to get the profitability started or he is on a salary which I can't find being mentioned anywhere so I guess he is living on his Visa like everyone else. The spotter's fee of $150000 was for XL Computing 2 years ago and is history. The 20 to 30% discount given to resellers raises a big point and that is why Cycomm isn't acting as the lead manager in putting in data systems for law enforcement agencies so it can sell its computers at full price (gross profit would explode if this was the case). Maybe as the company matures it can look at this but only at the risk of turning off its resellers. Maybe joint ventures will be the best way to do this. These Panasonic and IBM "rugged" notebooks at half the price are totally different products so can't compare other than to say that the lack of economies of scale in Cycomm computer manufacturing are a disappointment...either automate the assembly, increase volumes or charge accordingly for the extra service if we are to get gross profit closer to 40% or at least past 30%! The improving trend is there in the 10K but again it is Tempest not performing like it did in 1996 which has kept up where we are today along with lack of promotion etc etc. The only thing to watch for coming out of the 10K are the convertible debentures in particular the $1M in 10% conv deb's issued in February 1998 ($900K net after $100K commission). These are convertible at 25% in 30 day cycles from the end of May. Hopefully the debenture-holder will convert and hold and not convert and sell should the stock lift. The conversion changes to 10% of holding in 30 day cycles if the price is $1.50 (an ominous figure). Still the money had to come from somewhere to pay for inventory (and hopefully not losses) so as long at the company can do better than the interest rate and commission with inventory sales then we are better off even though it is very expensive finance. Rob