Peregrine Systems

(PRGNE)

, struggling with a cash crunch andfacing a

Securities and Exchange Commission

investigation,announced Thursday that it has sold off part of its business for $35million and that its stock is facing delisting.

The San Diego-based company said it plans to appeal the delisting, scheduled for July 5 by

Nasdaq

, which added an "E" to the company's ticker as part of the move.The delisting was prompted because the company is out of compliance withrules requiring a company to file SEC reports with the exchange on atimely basis.

Earlier this year, Peregrine launched an internal investigation afterauditor KPMG, hired to replace Arthur Andersen, discovered accountingirregularities that led the company to announce it would restate $100million in revenue for fiscal years 2000 and 2001 and the first threequarters of fiscal year 2002. Since then, Peregrine has changed auditorsagain and has said the SEC is investigating the company.

On a conference call Thursday morning, newly named Peregrine CEO GaryGreenfield said the company has closed on the sale of its supply chainenablement business for $35 million. During the call, investors andanalysts peppered him with questions about the company's cash flow.

The company said it hopes to be cash-flow positive by the end of theyear, but declined to disclose its current cash balance. CFO Ken Sexton,named this week, said the company has been burning cash during the lastfew months, and the company's cash balance dropped below targeted levels.Greenberg explained that by targeted levels, Peregrine was referring tohis "general philosophy" that a company has one quarter's worth ofexpenses in its cash reserves.

Peregrine previously has said it had just under $100 million in cashas of March 31, but its balance sheet also includes $270 million inconvertible notes due in 2007. The company laid off nearly 50% of itsstaff to stop the bleeding.

In addition to the $35 million sale announced Thursday, Peregrine hasreceived a $50 million loan. In an SEC filing Wednesday, Peregrine saidit also has reached an agreement to receive a revolving loan aftervarious conditions are met. The covenants of that loan require thatPeregrine report $12 million in EBITDA earnings for the quarter endingSept. 30, according to the filing. The SEC filing also revealed moredetails about the $50 million loan, including the interest rate, set at5% above the prime rate, or 9.75%.

In his opening statements, Greenfield sought to assure investors thatnew management was moving ahead with plans to right the company, whosesoftware is used to help manage IT resources. "I want to assure you thatgoing forward Peregrine can be a company that can be trusted," he said.

But investors did not seem assured. Shares of Peregrine plummeted 22cents, or 26.5%, to 61 cents in recent trading.