I drafted the partial post quoted below some months ago, but never finished it, as my general posting hiatus hit. Anyhow, I just thought of ANTs again, due to a LinkedIn request from an exec, and it came back to mind. Subsequent news includes that the product had to be temporarily pulled from the market (what a shock), there was $200,000 of IBM revenue through the end of 2010 (by ANTs’ standards, that’s a lot), and at some point three Sybase-to-IBM product sales actually got closed.
ANTs Software recently came (back) to my attention when, ego-surfing, I saw they had made up some falsehoods about me and posted same in their blog. So I posted about ANTs Software. Now that the ANTs Software blog is on my radar, I see there’s another post from CEO Joe Kozak stating his case that ANTs Software is a good investment. I also notice that there’s an active S-1 to sell ANTs Software stock, dated two weeks before the blog post. Frankly, it surprises me that it’s legal to recommend your own stock that emphatically while you’re in registration — but hey, I tend to be on the side of favoring more communication over less.
According to the ANTs Software 10-Q for the quarter ended June 30, ANTs Software has >$2 million in negative working capital — which this offering apparently won’t change (it’s for a shareholder to sell stock, not for ANTs to raise more money for itself).
Actually, ANTs did manage to get its working capital positive again. The key paragraph from the 10-K linked above, emphasis mine, is
The consolidated financial statements contemplate continuation of the Company as a going concern. However, the Company has had minimal revenues since inception, suffered recurring losses from operations, has generated negative cash flows from operations and has an accumulated deficit of $156.97 million as of December 31, 2010 that raise substantial doubt about the Company’s ability to continue as a going concern. The Company also had significant near-term liquidity needs as of December 31, 2010, including $0.25 million currently due on a line of credit and $2.00 million in notes payable due January 31, 2011. Subsequent to December 31, 2010, the Company received proceeds from a $3.00 million subscription receivable (less $0.39 million in fees, including $0.24 million in dispute) for the sale of 5.18 million shares of common stock pursuant to the BRG Agreement, $0.06 million in proceeds from the exercise of warrants covering 0.13 million shares of common stock and gross proceeds of $0.75 million from the Note and Warrant Purchase Agreements. The outstanding balance on the line of credit was subsequently repaid and the notes payable were subsequently deferred until January 31, 2013. The Company’s ability to continue as a going concern is dependent upon management’s ability to generate profitable operations in the future and obtain the necessary financing to meet obligations and repay liabilities arising from normal business operations when they come due. The Company anticipates generating profitable operations from marketing and sales of ACS and the growth of our Professional Services offerings for ACS implementations. If the Company does not generate profitable operations or obtain the necessary financing, the Company may not have enough operating funds to continue to operate as a going concern. Securing additional sources of financing to enable the Company to continue the development and commercialization of proprietary technologies will be difficult and there is no assurance of our ability to secure such financing. A failure to generate profitable operations or obtain additional financing could prevent the Company from making expenditures that are needed to pay current obligations, allow the hiring of additional development personnel and continue development of its software and technologies. The Company continues actively seeking additional capital through private placements of equity and debt.
Bottom line: $157 million in losses have produced 3 sales (with more presumably coming) of a product that isn’t that important in the first place (it just helps you move from a perfectly decent DBMS to one you might like better while saving on migration costs). That makes almost any other failure in software industry history look like a rousing success by comparison.