One extra point - on the change to the AP balance in the cash flow.
"Factors contributing to this estimated increase in net loss include (i) an increase in non-Safend stock based compensation of approximately $2.6 million as a result of increased estimated fair values for the 2011 stock-based payment awards, (ii) an increase in non-Safend salaries and related benefits totaling approximately $5.7 million in support of its growing customer base, (iii) an increase of approximately $1.8 million in non-Safend professional services expenses, consisting primarily of acquisition costs, recruitment fees and outsourced engineering services and (iv) the net loss of Safend ..."
We've already discussed the fact that stock-based compensation costs increased (i) and how that affects the cash flow for the Company (ie not being a cash figure, it is added back to the cash flow). Actual cash-based salaries and related costs will likely be paid on a consistent basis and probably right at the end of the month (ii), so I doubt that this cost line will affect the AP balance, which means that the increase in compensation costs will be entirely absorbed in the quarterly loss number which we already know about. Acquisition costs (iii) were probably paid at the same time as the deal went through, more-or-less, so should not have an impact on the change in the AP balance in Q4 either (indeed, these acquisition costs probably appear in Q3 expenses). I'm also not making any projection on Safend monies - we might guess that a loss of $400k won't yield a huge cash outflow for the Group, but cash flows and profits are different enough that one should be cautious (iv).
So none of these things are going to have a substantial effect on the Company's AP balance. And therefore to the extent that AP-related costs have changed, I doubt it is by an amount more significant than one might otherwise expect in previous quarters. And if there is little change in the outstanding AP balance, there's little effect on the cash flow from AP.
Whereas examining the increase in AR last quarter, looks to me like we could see a reduction in the outstanding balance of up to $1m.
Would be amusing if the cash balance increases in spite of a steep loss in the quarter! But it is actually conceivable, beginning with my preliminary calculation of a bank balance of $6.4m, representing the Q4, 11 cf balance before balance sheet changes but after (i) losses are deducted from Q3's balance, (ii) depreciation and non-cash compensation costs are added back, and (iii) BP and warrant inflows are included.
The remaining unknowns relate to the changes in balance sheet balances. And these could move around by the same amount as they usually do and in either direction. But no reason to suppose they will move by larger amounts than usual.
| 