Apertus Technologies Inc has been caught selling off the family silver to pay the rent again and now, with very little left to sell, is make or break time. Apertus, whose revenues have been cut in half in the last 18 months to just $7.2m last quarter, and whose stock price has plummeted to an embarrassing low of just $2, has now sold its Internet Solutions unit for $11.4m cash and the subsequent purchase of the privately owned Carleton Corporation for approximately $5m in Apertus stock (and a delayed $2m cash payment) looks like the final play for this company (CI No 3,277). As its income has slipped away in the last few months, the cash flows have had to be heavily supplemented by the sale in January of the company’s MQView product line to Candle Corp for $7.4m in cash. But the numbers for the next two quarters of trading were still all in the red. More of the company’s assets had to go under the hammer. The internet based business sold to CNT takes with it 70% of Apertus’ 190 employees and fully 75% of existing revenues. This unit had generated revenues of around $25m over the last 12 months and according to Apertus, it was a profitable business segment at the time of sale. But since the figures on this are wholly internal, it’s difficult to confirm.
The private company which has been purchased in its place, Carleton Corp, is turning over just $6m a year and, according to Appertus, it was not making any money. This comes as no surprise when you consider that Carleton’s owners were willing to take Apertus stock in exchange for the business. Once as high as $14, the stock has settled into the $2 range and refuses to budge any way but down. Apertus says the internet-based business was in a declining market and that the purchase of Carleton makes it 100% data warehousing focused, and the only one-stop-shop in the fragmented data warehousing business. The company says it will be profitable at the tail end of its first 12 months but revenues for the first year of combined operations is forecast to be just $12m. Unfortunately, nobody seems to believe in the company’s vision anymore; the shares fell on the news. On the plus side, Apertus is in the fortunate position of not having any serious corporate debt weighing it down. The acquisition of Carleton comes without any material debts, and the $2m performance related element of the purchase price, the only cash consideration payable, doesn’t fall due for at least another three years. Additionally, the performance targets are extremely high and the payment is likely to be scaled down. The largest long term liability will be the company’s on going lease commitments, currently registering at around $7m over the next six to eight years. The new company is expected to have net cash reserves of $20m, which guarantees its existence for at least the next 12 to 18 months, giving it a fair crack of the whip with its new strategies. Since the data warehousing market is set to expand sharply over the next few years, Apertus has every opportunity now of claiming its share. The next set of results are due out on November 10.