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Liquidity and Capital Resources We have no long-term debt and continue to operate primarily debt-free. Working capital decreased to $35.2 million at March 31, 2002 compared to $37.0 million at March 31, 2001. This decrease was primarily due to a decrease in cash and cash equivalents due to the EI acquisition. Our days sales in accounts receivable at March 31, 2002 was 49 compared to 47 days at March 31, 2001. While we believe that the risk with respect to collection of accounts receivable is minimized by the creditworthiness of our customers, primarily banks and other financial institutions, and our credit and collection policies, there can be no assurance that we will not encounter collection problems in the future. We attempt to further minimize this risk by performing ongoing credit valuations of our customers and maintaining an allowance for potential credit losses. We believe that our allowance for doubtful accounts and collection policies are adequate. On September 8, 2000, we made a $3 million preferred stock investment, representing a minority interest, in S2 Systems, Inc., a software solution provider in the banking and diversified financial services markets. During the quarter ended September 30, 2001, we determined that our investment was permanently impaired and it was written-down to zero. On June 29, 2001, we acquired substantially all of the assets of Cool Springs Associates, Inc. d/b/a EI, including $412,000 of fixed assets, pursuant to an asset purchase agreement by and among us, EI and certain stockholders of EI (the "Asset Purchase Agreement"). The purchase price for the acquisition consisted of a $2 million cash payment and the issuance by us of a warrant to purchase 300,000 shares of our common stock at an exercise price of $5.08 per share. We paid the cash portion of the consideration for the acquired assets from our working capital. On March 29, 2002, we announced our decision to discontinue the operations of EI because its offering had not met expectations and its operations had a negative impact on our earnings. The disposition of the operations of EI represents the disposal of a business segment under APB No. 30. Accordingly, the results of this operation have been classified as discontinued and interim quarterly periods have been restated. Capital expenditures for continuing operations were approximately $15,000 for the fiscal year 2002, exclusive of the aforementioned expenditure for EI fixed assets, and $246,000 for fiscal year 2001. The expenditures were used primarily for computer and other equipment, software and, to a lesser extent, leasehold improvements. For fiscal 2003, capital expenditures are expected to be approximately $200,000, and will be used primarily for computers and other equipment. We expect that existing cash and cash equivalent balances, together with cash provided from operations, will be sufficient to meet our working capital and capital expenditure requirements for at least the next twelve months. To date, inflation has not had a material impact on our financial results. We lease our facilities and other equipment under operating leases. Rent expense recognized under these leases during the fiscal years ended March 31, 2002, 2001 and 2000 totaled approximately $627,000, $639,000 and $546,000, respectively. Future minimum lease payments due under noncancelable operating leases are as follows:
There were no capital leases outstanding as of March 31, 2002. |
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