Opinion ID: 198674
Heading Depth: 4
Heading Rank: 3

Heading: The Afina Sistemas Transaction

Text: 110 The Afina Sistemas (Afina) allegation involves two purchase orders totaling $1.14 million issued on September 28. The orders were for 200,000 copies of FTP's Internet browser, custom made for an Afina client. FTP booked the entire amount as revenue on September 29 and carried the amount as an account receivable throughout the fourth quarter. Plaintiffs claim that this revenue was improperly booked because the version of the browser ordered by Afina was then still under development. An internal FTP document indicates that the test version of the Spanish edition of the browser was not scheduled to be completed until late October. Plaintiffs also point to notations reading DO NOT SHIP PRODUCTS on documents attached to each invoice. 111 This transaction is difficult to classify. This appears to be one part of a larger undertaking (the Telefonica project referred to on the Afina purchase order) about which plaintiffs present only fragmentary information. It is not clear that the custom version of FTP's browser referred to in Afina's purchase order is the same as the Spanish version listed on FTP's development schedule. Furthermore, marking DO NOT SHIP prominently on documents seems an odd way to conceal an improperly booked sale from auditors. Finally, the fact that an overseas customer with 90 days to pay has not paid after 94 days is not highly suspicious. It is possible to infer, however -- at least tentatively -- that this transaction should not have been booked as a sale in September. It is a leap from there to a strong inference of scienter. 112