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Technology Stocks : Data Race (NASDAQ: RACE) NEWS! 2 voice/data/fax: ONE LINE! -- Ignore unavailable to you. Want to Upgrade?

To: drakes353 who wrote (29036)	6/30/1998 2:30:00 PM
From: Alan Edgett	Read Replies (1) \| Respond to of 33268

Drakes-- From the Quarterly their cash is at $3.926 M, and you are correct their annual burn is higher; however, of the quarterly burn of $2.328 M that you cited, 400K was for capital equipment. They have recently signed a master lease permitting up to $3M in capital purchases so this (if executed) will provide some room. The rest, is composed primarily ($1.2M) of Sg&A which is certainly flexible to the downside if required. Assuming it remains at $1.8, then they currently sit at $~2.1M in cash rather than the $1.4 you cite, therefore they could "keep the lights on until" end of quarter three. Further, Gov contract revenues are always cyclical and from my contacts with the Air force should increase this quarter (we'll see). It may not be much, but ,might reduce op loss which is the goal. Finally, as you mentioned they have the option of $2M more in additional dilutive financing (please note that last round caused stock to go from $3 to $5) NOT the other way as with RACE. Why? Because dilution CAN be OK if sales are maturing (which WAS NOT the case with RACE). Of course, I realize this is a dangerous game, but the master lease is a good sign that they may be able to secure additional financing through debt markets or a partnership (similar to AMSC) IF sales prove promising. Finally WRT to margins, i think it's unfair to use COGS at $1M as you have no idea what Cost allocation they're using. They've simply listed all costs of commercial revenues in this quarter as $1M, this includes initial start-up costs of their commercial manufacturing facility and may not adequately reflect quarter over quarter costs. Of course, it may, in which case their in deep trouble; however it must also be noted that this was for 11+ filters, while the recent order was for 16 and the facility is "theoretically" capable of 300/quarter so efficiencies may come into play IF sales materialize. Anyways, you gotta love these here start-ups...DO you like ANY companies Drakes?/:-) you must be HELL at Christmas!!!! edge p.s Are you actually short SCON or just testing me?