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Technology Stocks : The Panda Project (PNDA) -- Ignore unavailable to you. Want to Upgrade?

To: dumbmoney who wrote (1262)	5/21/1998 12:43:00 AM
From: Mike Farmwald	Read Replies (2) \| Respond to of 1521

Panda had $2.1M on March 31, with Net Tangible Assets (as defined by the NASDAQ) of $5.0M. If they had counted the preferred stock as debt as it appears that they should have done, the Net Tangible assets would have been -$1.0M. NASDAQ will delist them when they drop below $4M. So, what Panda did was (retroactively) change the terms on the preferred and call them equity. I.e., the terms were changed in May 1998, so that they could claim they met the requirements on March 31. I don't really know if this is legal, but probably without some complaint NASDAQ will never know. In any case, they're still burning $1M/month, and have about $40K/month in revenues (and they're losing money on the revenues!) So, a simple table of cash-on-hand can be generated: March 31 $2.1M April 31 $1.1M May 30 $0.1M ~June 5 death In fact, it will happen somewhat sooner as they admit that they have increased spending because of Rock City. They can probably borrow more money from Helix, but it's more difficult since now they can't pledge the patents (due to covenants in in the preferred agreement - the preferred get first call on the assets and they must agree to anyone getting ahead of them or to any significant disposition of assets.) They clearly don't meet the terms to get the additional $4M (stock has to be above $6 for 20 days in a row). Even with a miracle (they actually sell some Rock City computers) they are still losing money on each one (with low volumes prices on components are much higher - from the 10Q it appears they don't have any inventory of Rock City computers ready to ship. It appears they are going to take the orders and then build the machines later! It appears that the convertible preferred holders have barely begun to short the stock. Given the fairly draconian terms of the preferred (they are on EDGAR) I don't see how Panda can raise more money until they converted all of the $6M - and they can't afford to wait. Mike