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Strategies & Market Trends : Floorless Preferred Stock/Debenture -- Ignore unavailable to you. Want to Upgrade?

To: Roger A. Babb who wrote (185)	11/26/1998 12:50:00 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 1438

Roger, I looked at it few weeks back. It could be a "toothless floorless" if they meet a "material" order before January 27. The only definition of "material" I could find was in essence a bona fide written qualification of their product by a third party with a "promise" to buy. If that is indeed the "material" clause, then it might indeed be a toothless. However, if they do not meet the "material" clause, then it becomes floorless and the party may begin. Yes, they do not have any sales right now, but they are supposed to be "poised" to have sales. If they do, you need, IMHO, visibility of more then $100 MM annual sales within two years to justify the current capitalization of more then $300 MM (if you assume conversion at the ceiling of $6.03/share). Assuming that they meet the "material" issue, it could be hyped to much higher levels, particularly if they have a leg on the competition. They do hope to provide batteries to the cellular phone and the portable computers business. My personal opinion is that they are over valued here, but technically, the stock is breaking out, meaning that they may have met the "material" issue. One would suggest an additional issue of financing their sales, but I believe they have financing for that to the tune of $50 MM or so, if they start shipping (consisting of about $32 MM in grants from Ireland and additional toothless floorless debentures. If you intend to short, I would wait to see a break under the resistance level of 8.75 or so. That would be initial indication that the news are not as good as expected. It is too dangerous right here, IMHO. Zeev