Why is a company with this "rosy" outlook trading at over 4 times book value per share as it loses money?
from the 10-Q:
As shown in the financial statements, the Company incurred significant losses from continuing operations of $5.7 million for the three months ended March 31, 2004. We currently fund our operations with our cash, cash equivalents and marketable investments. During the three months ended March 31, 2004 we used approximately $5.7 million in cash to fund our operations. At March 31, 2004, we had cash, cash equivalents, and short-term marketable investments of $17.3 million. We currently require approximately $5 million to $7 million in cash per quarter to fund our operations, and we presently expect that this rate of quarterly cash use to continue through 2004.
The Company has made significant investments in the development of the VantEdge Broadband Remote Access Server (BRAS) product and believes it has significant promise; however it is unclear whether it will be commercially successful and generate sufficient revenue to offset the decline of sales of current products. Presently, VantEdge is in trials at a number of carriers and it is uncertain as to whether it will meet the carriers� performance and cost expectations or whether it will require substantial further development. As a result, the enhancement and commercialization of the VantEdge product might be delayed or might require the expenditure of significantly more funds than currently anticipated, in which case liquidity and capital resources would be adversely affected.
In the absence of increased sales of CopperEdge products, or significant sales of the VantEdge product, the Company may seek equity or long-term debt financing in the private or public capital markets to obtain the funds needed to continue operations and to demonstrate the Company�s future viability as a going concern to potential and existing customers. If the Company is unable to obtain sufficient financing, the Company may have to further reduce expenses through workforce reductions and other cost cutting measures. Management believes that such expense reduction, if appropriate, would need to occur during the third quarter of 2004 in order for the cost savings to be meaningful to us.