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Technology Stocks : TAVA Research - No Discussion -- Ignore unavailable to you. Want to Upgrade?

To: CalculatedRisk who wrote (651)	6/30/1998 12:58:00 PM
From: Rick Bullotta	Respond to of 810

One clarification...TAVA has two other products that likely have capitalized software development costs with them, those being the BevOne and Precision Dispensing products, so it is not exclusively the Y2K One stuff in there...

To: CalculatedRisk who wrote (651)	6/30/1998 8:19:00 PM
From: CalculatedRisk	Respond to of 810

TAVA Research: 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