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GSCP (sec) cute-FTP data transfer software client, expanding into server and other software areas. Revenues really jumped in 2005.

Revenues/Net Income
2001: $5.3 million / ($0.3 million)
2002: $5.3 million / ($0.5 million)
2003: $4.8 million / ($0.6 million), 75% CuteFTP
2004: $4.9 million / $0.2 million, 69% CuteFTP
2005: $6.7 million / $1.4 million, 51% CuteFTP

10-K/A: period ending Dec 31, 2005
14.3 million shares on Mar 6, 2006. 2.4 million options.

2/3 of revenues in the US, the rest is in Europe/Anglosphere. Software license and support. CuteFTP is shrinking as a percentage of total sales (good). Regular CuteFTP sales dropped 22%, while CuteFTP Pro increased 18%, the total for these increased by 1%. The FTP server and enterprise level enhanced file transfer stuff grew at 14%. There's also web content management software (PublishXML) and some other stuff. Feb 2005 they announced a vertical Enhanced FTP product for healthcare organizations.

Number of licenses sold decreased to 124K from 170K, but the ave license price jumped to $59 from $40 due to increased sales of higher end products (enhanced file transfer stuff for enterprises).

They use some open source software. I'm not sure if/how they deal with the GPL license issues.

Competition is harsh. R&D costs have been fairly flat over the years, increased in 2005 due to outsourcing to deal with lots of releases during the year. No customer concentration (none more than 2.7%).

41 full-time employees (up from 36, but down from 45 in 2003). Sales=10, Marketing=7, Mgmt/Admin=7, Customer Support=6, IS=5, R&D=4, QA=2. That's a little light on the QA side.

Fianncial results had to be restated (deferred revenue issue of some sort). Revenues/earnings dropped.

Balance sheet is very strong. Net cash of $1.7 million with total assets of $2.9 million (but keep in mind their burn rate is over $5 million per year, so this is like a 17 week cushion). PP&E (the usual office stuff) is almost totally depreciated.

21.6% net margin.

Cash flow from operations is hurt by AR and helped by defered revenue. Overall, free cash flow matches net income fairly closely over the last 2 years (it's better in 2003). Very little else going on with cash.

Q1 2006:
14.4 million shares on May 12, 2006. 2 million options.

Balance sheet: cash is up even more, but so is AR. Deferred revenue liability increased. Equity increased by over $600K. Net cash if $1.33 million.

Income statement: Revenues are way up: $2.4 million vs $1.4 million in the prior year's Q1. SG&A increased by $237K. R&D increased by $50K. Net income is $549K.

Cash flow from ops looks similar to 2005 full year above: hurt by AR increase, helped by deferred revenue, but in this case there's a $155K liability for taxes. I'd say free cash flow looks like about $426K.

CFO resigns! New CFO joins

Conclusion: This is a gamble on the future of this team and their products: present and future. I'd assume about 19 million totally diluted shares, which may be a bit optimistic. If the gamble is correct, the stock is worth a great deal. If the results going forward are mediocre, the stock is worth perhaps $1.30. Worst case is very bad, given the industry, but they do have something along the lines of 9 cents of net cash per share. The shares are selling for $2.95, which is a reasonable price.