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Technology Stocks : TAVA Technologies (TAVA-NASDAQ) -- Ignore unavailable to you. Want to Upgrade?

To: Q. who wrote (19816)	6/30/1998 10:27:00 AM
From: CYBERKEN	Respond to of 31646

Y2K minus 549 days...

To: Q. who wrote (19816)	6/30/1998 10:45:00 AM
From: Rick Bullotta	Respond to of 31646

Thanks for posting the cash flow statement...a couple items jump out at me immediately. First is a shift from unbilled revenues to AR of nearly $3MM (usually a good thing - it means that you're more likely to get paid!). Not a big effect on net cash flow, but a shift to "more easily collectable" state. Second was a $4MM shift in A/P, meaning that they must have paid down a lot of outstanding bills to vendors. Last was a $1MM turnaround in doubtful accounts (for the bad).

To: Q. who wrote (19816)	6/30/1998 10:52:00 AM
From: Alastair McIntosh	Read Replies (2) \| Respond to of 31646

JohnG - I don't think that you will get much of a discussion about financial statements involving negative cash flows or lack of earnings from the longs on this thread. TAVA is a "cult" stock and such discussions don't sit well with members. I questioned the negative operating cash flow a while back and got only one response. Message 5017548 The reasons given to buy TAVA: 1. All companies must fix their embedded systems by the year 2000 or go out of business. 2. TAVA is the only company that can perform this fix. There is no competition. 3. After the year 2000 TAVA will have leveraged itself from its Y2K business into a systems integrator producing profits of $25,000,000 annually. Al

To: Q. who wrote (19816)	6/30/1998 11:28:00 AM
From: JDN	Respond to of 31646

Dear John G: Yes, I seem to have slipped a gear there somewhere but it doesnt change the basic fact that finances have improved not weakened and a lot of the operating cash went into those areas that TYPICALLY increase on a GROWING business. I will let TAVA's MD&A letter regarding cash flow speak for itself. Excerpt follows: JDN CASH FLOW. During the nine months ended March 31, 1998, cash increased by $5,224,000. Funds used in operating activities were $7,949,000. Cash in the amount of $1,855,000 was used to reduce accounts payable and other accrued expenses. Operating funds were also used to finance the $1,401,000 increase in costs and estimated earnings in excess of billings and the $5,098,000 increases in accounts receivable. Investments were made in capital equipment of $467,000 and capitalized software development costs of $2,148,000 for a total use of funds for these activities of $2,615,000.

To: Q. who wrote (19816)	6/30/1998 8:17:00 PM
From: CalculatedRisk	Read Replies (1) \| Respond to of 31646

Negative Cash Flow Last quarter, TAVA reported earnings of $301K, but their cash flow (excluding financing) was a whopping negative $3,405,000! Wow! How can this be? Accounts Receivable A/R increased $1,410,000 to $11,180,000 . This represents 87 days outstanding, even though revenue only increased $700K from the second quarter. And buried in the A/R numbers is the "Allowance for Doubtful Accounts". Doubtful Accounts (i.e. uncollectable) increased almost 1 Million Dollars in just this quarter (actual increase is $977,000). Unbelievable. Accounts Payable TAVA used $1,044,000 in cash to pay down their A/P. A/P now stands at $5,618,000, representing 79 days of payables. Horrible. This is a business in trouble! Software Capitalization Software Capitalization was $306,000 for the quarter. Conservative accounting would argue that this should have been expensed, not capitalized! Estimated Earnings in Excess of Billings TAVA estimated earnings of $218,000 in excess of billings for the quarter. TAVA books revenue on a percent completion basis and bills the customer later. Percent completion is a standard method of recognizing revenue from consulting contracts, BUT it is highly unusual to NOT bill for the consulting work. Other Items Equipment purchases increased $190K, inventories increased $111K and prepaid expenses increased $102K. Bottom Line For small companies, cash is king. And TAVA is rapidly burning cash! This indicates that the quality of their earnings is very poor. Regards, Bill