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To: peter michaelson who wrote (2367)	10/22/2000 9:09:33 PM
From: Tom Hua	Read Replies (1) \| Respond to of 19633

That's great and thanks Peter, at this time we have a staff of 4. I hope to have 10 or so. I'll ask for your help very soon. Regards, Tom

To: peter michaelson who wrote (2367)	10/23/2000 11:19:08 PM
From: Tom Hua	Respond to of 19633

Peter and thread: Research Project #1 Stock: CATS (Catalyst Semiconductor) Catalyst for breakout Earnings mid Nov. Target: $12-15 by 11/30, current price $8. Background: Dale Baker has a nice summary at streetsideinvestor.com Basic data: - Outstanding shrs: 16.5 mil, 20 mil fully diluted - Float: 9.4 mil - Cash: >$20 mil, or $1/sh - Debt: $2 mil, minimum required by credit line. - Insiders ownership: 45% - Inst. ownership: small, few % of OS. Results of Operations, past 4 Qs: 10/31 1/30 4/30 7/31 Rev ($MM) 10.7 12.6 17.1 25.4 Netinc ($MM) 2.0 2.3 4.9 8.2 EPS 0.10 0.12 0.23 0.40 Results have been impressive for several consecutive quarters, particularly sequential growth rate. Flash memory is a hot commodity and I think the company's performance will extend for a few more quarters at the minimum. Continued next post....

To: peter michaelson who wrote (2367)	10/23/2000 11:19:21 PM
From: Tom Hua	Respond to of 19633

Research Project #1 (cont'd) Taxes: The company paid little income taxes last quarter (only 5%) because it had about $23 mil of tax loss carryforwards which will expire in 2004. As a result, EPS was higher than it would have been if it were fully taxed. I'm most interested in the tax rate for current quarter, investors only look at the bottom line and don't pay much attention to the tax issue. Per 10Qs: As of April 30, 2000, the Company had available net operating loss carryforwards of approximately $22.8 million for federal tax purposes, which begin to expire in fiscal 2004. If the net income before taxes of the Company for the quarter ended July 31, 2000 remains at that level for the balance of fiscal 2001, the remaining net operating loss carryforwards will be minimal. My interpretation is that the company will utilize the tax credit to the maximum extent for current quarter, so EPS will benefit again. I raised that question with Tom Guy, CATS CFO, and that's basically his expectation although he didn't give me a detailed answer on how much credit can be applied. I suspect he didn't know either, the company relies on its accounting firm to calculate the numbers. Business: Per the CFO, the company's sales were limited by production capacity. Demand exceeds supply. High demand allows CATS to negotiate favorable pricing last quarter and most likely current quarter as well. Prices were high enough to absorb the higher costs of wafers due to short supply. CATS recently signed an agreement with Oki Electric to expand its wafer capacity which took effect in Sept. According to the CFO, the company would see impact of increased capacity in Oct, adding volume to the third month of current quarter, and in future quarters. According to Guy, CATS expects double digits sequential increase (this was before reg FD took effect) 2/3 of sales were international, paid in US currency thus avoiding the impact of currency conversion. International sales were mostly to the Far East. Insiders ownership and selling: This company was in a terrible mess a few yrs ago, new management was brought in to rescue and they've done a good job. When they came on board they were granted few millions of options at $0.13/sh when stock was trading at $0.35 on bulltentin board. Insiders are cashing in. This is probably the largest impediment to the stock now. Although the amount being sold is a small percentage of total, they no doubt put pressure on the stock. Selling has stopped since late September. No telling when it'll resume again. continued next post....

To: peter michaelson who wrote (2367)	10/23/2000 11:19:29 PM
From: Tom Hua	Read Replies (1) \| Respond to of 19633

Research Project #1 (continued): Homework: 1. TA analysis, support, resistance ... 2. A second/third opinion on the tax issue. 3. Balance sheet, cash flow. 4. Insiders stock options, ownership breakdown, tabulation of how much has been sold. 5. Competition, and market valuation of competitors. 6. Understanding of flash memory industry, projected demand in the future. 7. 10Qs, 10Ks. 8. Yahoo message boards, summary of sentiment, what pleases or pisses investors (good contrarian indicator from Yahoo), also any good info there? 9. Raging Bull message board, same as #8 10, 11, 12... ? Feel free to make suggestions To avoid duplicate of efforts, please indicate which task you'd like to take on. We still have plenty of time until earnings date. I've eased into a 50% position over the past month or so. Decision to add rides on this research project. Thank you all in advance. Regards, Tom