>>>>Rick--In the BT deal, it would NOT finance more than the 1st stage.< <<
What is the "it" you are talking about?
>>>>Your assumption that BT should be willing to fully finance the CCEE deal is not in accordance with what I have observed in my practice. Moreover, I do not believe CCEE should even desire to have BT, the customer, provide CCEE's full financing, as I explain below. <<<<
Ok that is your experience and your opinion Gary, but I understand the tone you are setting.
>>>> In every deal that my clients participated in with a giant such as BT, it was necessary to prepare business plans and performance data to prove that my client, the vendor, would be able to withstand the rigors of performance. This alone limited our negotiating leverage, regardless of how badly my client's services or products were needed by the buyer. My hunch is CCEE had a similar problem here, and while trying to convince BT it was capable of performing this massive project, it probably did not want to beg for the financing to do allow it to do the work. <<<<
You just described what any company worth its salt should be able to pull out of its top drawer and hand to its --customer--and it's shareholders. It is called "Total Quality Management" ,"Continuing
Process Improvement" or a lot of other names that boil down to --if you don't know what you are trying to do, and if you don't keep track of how you are performing at the effort, then you are on the road to nowhere. Of course if CCEE couldn't pull it out of the top drawer then they would be at an actual as well as psychological disadvantage to ask the customer to assist their performance. You are absolutely right it would be begging rather than negotiation.
>>>>> Your post describes CCEE's burden of performance under the assumed BT contract as if this is a simple licensing deal. I think it will be far more taxing and exacting. CCEE will be obliged surely to create millions of codes and data entries to test its programs, and thereafter to continuously establish the reliability of its results. Since CCEE has never tried to actually use DB Express to manipulate a gazillion records before, CCEE will not know in advance where, and if, bugs will thwart the mission.<<<<<
Their SEC filings keep telling me:
>>>>>The Company has continued to incur significant
>>>>>expenses with respect to the development and marketing
>>>>> of its d.b.Express product technology
In fact since 1989 and even two years before the company was formed.
Their Press Releases keep telling me:
>>>>>Computer Concepts' d.b.Express Internet ServerTM
>>>>>has recently been integrated with British Telecom's
>>>>>Syncordia Services C-View software application
>>>>>which allows BT's customers to access and analyze
>>>>>the high volumes of technical and account information
>>>>>available within BT's Internet-based databases without
>>>>>having to download the data to their own computers.
>>>>>The new d.b.Express Internet ServerTM and JAVA
>>>>>Applet have overcome a major Internet problem, that
>>>>>of high data volume and limited bandwidth, currently
>>>>>responsible for the lengthy delays associated with data
>>>>>downloading.
Now for the purpose of this argument you tell me that you assume that they have to go back and reinvent the wheel that they told me they started inventing in 1987, and have already succeeded in applying to the BT situation. Seems like you are taking the position I have maintained for months. I DON'T BELIEVE IT. BUT.......
You rationalize why they might need money to "invent the wheel they told me they had succeeded in inventing" and I ask why? They had the money from the 240 Million shares they sold before they did a reverse split in 1994 to 60 Million shares AND they had the money from the 60-90 Million shares they have dumped since March of 1996 when they got authorization to issue up to 150 Million shares.
Gary you are the specialist in securities law but these claims sound "MATERIAL" to me and if I buy your argument that they need more money because those "claims" are actually false that spells "FRAUD" to me.
>>>>>>On the other hand, BT would be both a final-product user and a beta version tester. This will put great pressure on CCEE to not run out of financial resources if it needs to create patches, re-code the programs or deal with glitches. Lets face it, the margin of error and forgiveness would seem to be slim, but the stakes are monumental. A big screw up means sayanora to DB EXPRESS and CCEE. On the other hand, success with BT could mean the transformation from a company with a theoretical product to a leader in an new industry that CCEE may itself define. With so much on the table, it would appear to be sensible to have a reserve of millions of dollars in the bank just in
case the money estimated to complete the start-up of the project turned out to be insufficient to cover problems. On the other hand, if BT fully financed the project itself, it could not be expected to also finance the rainy day fund CCEE could anticipate it would need. <<<<<
Same argument from above applies to their need for a rainy day fund to do what they either have done as they say or you sure don't expect me to give them more if I am the victim of "FRAUD".
>>>>> (If in the discussion above I have hit upon the reason why CCEE prefers to do its own financing through the sale of new stock, it would appear that CCEE picked the right course. Admittedly I am not sanguine that I have hit the target though because I am just speculating about the reason since nobody from CCEE has confided in me.) <<<<<
NO DISCLAIMERS please.
>>>>> If as you suggest, BT normally would be expected to finance its own DB Express project Your assumption that BT should be willing to fully finance the CCEE (which is an assumption arguendo that is bereft of any factual support), the financing BT would provide would not be free. In the usual case, when the customer finances fully the work performed by the vendor, the vendor's profit margins are rendered nugatory, yet the risk of loss and the burden of paying the overhead to perform the contract the vendor must suffer, remains the same. The result in a customer financed deal usually is hasta la vista to the independence of the vendor. (Just look at the many vendors Microsoft captured for peanuts after financing the projects where Microsoft was the customer or look at those vendors that were never seen again after
Microsoft financed their deals but no longer needed them). <<<<<
FIRST NO WORDS IN MY MOUTH THAT I DID NOT SAY. I never said they WOULD
NORMALLY BE EXPECTED TO FINANCE. I said it is done and our only remaining disagreement is your body of experience vs my experience. That it is done is established the issue is should it be. Your argument for why it should not be done is the profits and control aspects are not good. The problem with your argument as well as the experience bank you apply seems to be that of the old fashioned "zero sum game". This is not the game of "monopoly" Gary, we have moved into a new era where business schools are teaching and the giants are the first to apply the concepts of TQM and the need to out source and "partner" and the caveat don't eat your partners. Bill Gates is
the exception that proves the rule. He wants to rule the world--that's a different argument.<|;o)
>>>>> Actually, contrary to what you imply in your post, there not only is nothing sinister that must be read into the lack of full financing by BT hypothesized in my earlier submission to this thread, it could very well turn out to be a raw deal for CCEE if it allowed BT to become its banker.. BT would be getting the bargain since it would pay a lower price, but more importantly, it would become CCEE's creditor--with all the power over CCEE such a relationship would be likely to generate. <<<<<
MORE WORDS that I didn't say. Nothing sinister either way. Only a possibility for real advantageous WIN-WIN partnering IF ccee has something worthwhile.
>>>>> In a normal vendor deal, BT would provide a purchase order and pay in advance for the portion of the product that would be delivered in the first segment covered by the Purchase Order. However, as noted, CCEE would have still have excess costs in the form of start-up, ramp-up and contingency expenses and reserves that would far
exceed the amount of the advance-stage-payment BT would make. Consider this illustration: Lets assume arbitrarily an advance-stage-payment by BT of $5 million for the first segment of work detailed on the P.O., and assume further that this money came to CCEE 6 months before it was obliged to make any delivery. If in actuality it would cost CCEE $15 million to deliver the $5 million worth of work, it would need some source of funding outside of the contract. Hopefully, the contract would allow CCEE to catch up, and to recoup its start-up and ramp-up costs in subsequent segments. (This is normally the way things are done.) The proceeds from the sale of the newly authorized stock would appear to be, in this illustration, a cheap way to finance these costs. <<<<<
I understand the concept Gary what I don't understand is your 10 Million which you originally snatched out of the air and have used so many times you have convinced yourself but not me. Just remember YOUR thesis is that they only need help at the beginning (well plus the rainy day fund) My thesis is the cost of obtaining it from BT makes the most sense and the least cost if ccee HAS A WORTHWHILE PRODUCT that gives them the power to negotiate to WIN-WIN.
>>>>> On the other hand, to demonstrate the flaw in your assumption that BT should be willing to offer CCEE full financing, ask yourself how could BT justify to its own shareholders paying (using my hypothetical numbers) the full $15 million needed by CCEE to start up and deliver the first $ 5 million segment of the P.O. when DB Express is still in beta form, and CCEE has no track record of performance? To be deemed reasonable by its own shareholders in providing the full financing you argue is expected from BT, what would BT be obliged to demand as collateral for non-performance of CCEE, the failure of CCEE to pay back the financing or the failure of the product? The answer is that CCEE could offer BT as collateral virtually nothing since CCEE does not have liquidity to offer such collateral. <<<<<
NOW YOU HAVE PUT THE WORDS IN MY MOUTH SO MANY TIMES THAT YOU
HAVE REDUCED THEM TO MY ASSUMPTION.
First my" is this REAL OR IS THIS FRAUD" ARGUMENT STILL APPLIES HERE.
At any rate even using your figures the question is why do it and is it justifiable. The answer is do it if it is WORTH buying, because in a WIN_WIN situation BT gets the price break that represents the saved financing costs that you want ccee to incur from outside sources. In fact BT can finance it cheaper than an outside finance source because banks (sources of financing) don't know what to do with software products. (Apply for a mortgage and tell the banker if you don't pay he gets your house and he may decline the loan cause he doesn't WANT YOUR HOUSE. He wants his money back plus interest.) If BT has to foreclose it is on something they want anyway. If ccee can deliver
the BT financing is repaid out of the very contract that it supports and there is no problem with their shareholders anymore than the initial deposit of 5 million used in your model it is merely a matter of degree, 5 vs 15, rather than one of substance.
>>>>>In short, your thinking is not in accord with some of the factors that I have found to govern similar transactions. <<<<<
Well that is the key and at least you modified to the use of the word "Some". I have found them to govern in "Others". I believe if this is REAL that I have shown the preponderance of reasons to support this possibility of a WIN-WIN situation. MY win-win is far less risky for the shareholders
==========================
This is still on the table from my post to you.
That exception which nobody would touch when I first brought it up months ago is
this:That patent ownership and the intellectual property it represents is a big unknown.
This latest filing suggests that Dan Sr. and Pellecano may still own it and thereby hold
another implement of rape for use on the shareholders, down the road. Or it may be
vulnerable as I believe SOFTWORKS is vulnerable to being whicked away in a BR
proceeding. And, Bankruptcy is the one thing that we also know this company knows
how to do, and do stragely well. see CCEL.
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