The Australian Stock Exchange has queried several listed technology companies over their financial health after Q3 statements revealed many may not have the capital or the revenue to continue past March 2001.
The companies in question were asked whether they expected to stay afloat considering their current financial positions, what changes they were intending to make to reduce expenditure, and whether the management had been completely honest with shareholders over its spending at the point of listing and in recent months.
Among the companies queried were real estate dot-coms Aussie Online and realestate.com.au, mobile phone and messaging companies B Digital and Pocketmail, gambling dot-com Gocorp, broadcast media and training provider Isis Communications, Online Trading Systems, telephony management company Select-tel, Web developer Spike Networks, Technology Licensing and Net infrastructure provider VivaNET.
The recent quarterly reports indicated several of these companies had very little revenue (such as Select-Tel and Gocorp), and others were posting significant revenues but were lacking the cash reserves necessary to keep the ASX confident that it could continue operations well into next year (such as Pocketmail and Technology Licensing).
The companies replied to the market with excuses ranging from the after-effects of the GST and the Olympics, to unusual weather patterns.
VivaNET executive director Cardy Chung told ARN his partners, customers and shareholders need not be too concerned about the health of the company.
"The VivaNET business model has an overhead cost that doesn't increase as the revenues recur," he said. "It's a snowballing model. Even without any outside investments coming in, we expect a positive cash flow by the end of the first quarter of next year."
Chung also made the market aware that the investment of Wayne Bos' Tomorrow Group had fallen through and VivaNET will now consider other merger and acquisition opportunities.
Select-Tel blamed the poor financial results on its core business change from mining to technology. Its expenses included $251,000 of costs relating to its public offer and $396,000 relating to staff termination payments as it changes its focus. Gocorp also blamed one-off payments such as staff termination payments and a further $1 million buying a database of potential online gamblers.
Online Trading Systems said it was reviewing its cashflow and blamed the GST for a drop in sales, while Pocketmail, Isis Communications and Technology Licensing blamed sales shortfalls on the Olympic Games.
Realestate.com.au has placed its fate in the hands of a potential acquisition by RP Data, which is expected to inject $5 million of further equity into the company, while Aussie Online said most of the cash was used for a nationwide expansion which shareholders were made well aware of. Spike Networks said that, given its recently announced reorganisation, it expects to have enough cash to keep going.
Table-Thrid Quarter Results
COMPANY REVENUE NET NEGATIVE OPERATING CASHFLOW CASH REMAINING AT END OF QUARTERAussie Online $359,000 $1,754,000 $3,354,000B Digital $18,304,000 $15,129,000 $27,315,000Gocorp $67,000 $6,461,000 $10,485,000Isis Communications $4,888,000 $9,465,000 $22,569,000Online Trading Systems $1,671,000 $1,074,000 $2,221,000Pocketmail $781,000 $1,411,000 $82,000Realestate.com.au $712,000 $4,274,000 $5,202,000Select-Tel $27,000 $939,000 $1,960,000Spike Networks $466,000 $4,274,000 $5,202,000Technology Licencing $5,176,000 $562,000 $479,000Vivanet $827,000 $2,573,000 $3,683,000