Amended S-3/A is on FreeEdgar at: freedgar.com
I believe it is a requirement to restate the terms of the second round of financing, now that the shareholders have approved the full potential share dilution.
At first glance, no new aspects to the financing were added, and nothing regarding the terms has been changed.
This filing is announcing that CC can now sell, sell short, transfer, etc. the noted number of shares (which may vary depending upon the company's situation at the end of July vis-a-vis its share price).
The descriptions in the original S-3 (dated Dec. 21) remain substantially unchanged. In short, lots of 'caveat emptors,' and statements that 'no commercial product has been delivered off the line for product qualification yet.' These were the same words as back in December, and given the progress reported since then, and that this document is a cut-and-paste from the original, it is highly doubtful that that is the status as of this very day, even though the document is dated Feb. 25. I expect we'll hear from some that will claim that since it is so stated, ipso facto it is true, but all other evidence is to the contrary.
As evidence, here is an extract regarding the production line status:
"We have delivered the first automated assembly lines to the Northern Ireland facility. De-bugging of the lines has proceeded more slowly than expected. The lines' reliability and yield are predictably low, although we believe that we will eventually reach our production goals. We expect this line to complete safety testing in the first quarter of calendar 1999 but there is a risk as to the timing or even the success of this safety-testing process. Upon successful safety testing of the lines, we expect to send product samples to potential customers for evaluation. We have started the first line initially to produce our larger portable-computer cell format (approximately four inches by four inches) battery."
We know from discussions at the shareholders meeting, and the following conference call, that both of the first two lines have already been run at production speed back in January, and we were shown quarantined product (one item being numbered over 115,000 as noted by an observant shareholder). In fact, the *third* line is the one currently being 'debugged.' Further, we know the company has already chosen to take delivery of 'tens of metric tons' of raw materials, preparatory to commencing volume production. Given the simple cash flow situation, it is doubtful that they would have ordered the materials a full quarter prior to needing them.
Another item, which I had not to date reported, was that when I got Lev in a 1:1 after the meeting, I asked him if he was ready to provide product under a purchase order if he were to be given one, and would he accept one. Though he had dodged other phrasings of questions regarding purchase orders, he reflected and said that he could answer that question, and that his answer was YES. He was ready to produce, and he was already at that time comfortable enough with the safety AND consistent quality of the product, to commence production and shipping. This was a highly noteworthy comment, and that in itself proves to me that this document woefully misrepresents the actual status of production, if taken at face value.
Hence, I fully discount the implied timetable in today's S-3/A filing.
If I were to find fault with the company, it is that Lev is still running such a lean operation (which he admitted in those very words, at the shareholders meeting) that his administrative resources are stretched extremely thin. He is still wearing too many hats, and obviously did not visually proof this document. Note the misspelling of the word 'Matsushita' as 'Matouphita,' indicating to me that a secretary (or piece of voice recognition software) typed in changes to the December filing, and Lev did not make the time to proofread the document.
Bottom line: We're still on the path we thought we were before we saw this, nothing's changed, and I expect the first PO before March is over.
Rich |
