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Biotech / Medical : Chromatics Color Sciences International. Inc; CCSI
CCSI 28.05+5.2%Oct 30 3:59 PM EDT
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To: Bob Trocchi who wrote (5643)11/16/1999 6:08:00 PM
From: BelowTheCrowd  Read Replies (1) of 5736
 
When they announced "mass manufacturing" a few months, the release specifically noted that they had found a contract manufacturer which was not named.

Message 10105491

In a contract manufacturing situation, I would not expect WIP or raw materials to be carried on CCSI's books. The whole point is to outsource the process and cost of dealing with all those issues.

What this tells me is that CCSI has a bunch of FG inventory on their books. There could be a lot of reasons NOT to ship it immediately, none of them really good:

1) Orders have been cut back (really bad, impacts top line)
2) They manufactured more than was ordered (reveals poor control and planning)
3) They manufactured it too soon (ditto)
4) Economy of scale in manufacturing dictates the need to make a lot all at once, then sell it slowly from inventory. (Reveals the need for ongoing capital to support inventory.)

Realistically, a bit of 2 & 3 is not entirely out of order for a startup manufacturing organization. However, this seems to be more than "a bit" and the details of their initial contract seemed fairly explicit in terms of the numbers that would be delivered.

As always, my primary concern here is their unwillingness to discuss and explain the details of their financial statements, their expected margins and their sales/returns policy.

None of this necessarily indicates that they are hiding something, but it certainly seems that they don't want to talk about it.

No current position.

mg
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