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Sunday, November 12, 2006

Results 3

Previous Results:
5/28/2006 Checking back with Mr. Market: 1

5/29/2006 Checking back with Mr. Market: 2

10/13/2006 Results 1
BFTC, BKBO, LVWD, LCLG, BRSI, BSPA, BSOG, BOJF, BAYN (Oops, I already did these!)

10/21/2006 Results 2

New Results:
CBBT (now CBAK, sec)
First looked at it here. My notes only say that it wasn't cheap at the time. It's selling today for around the same price: $6.66.

Here's something you don't see very often: stock options cancelled at the request of the employees.
The optionees requested the Company to terminate their options, so that they could avoid adverse tax consequences under applicable Chinese law.
A patent infringement lawsuit was filed against CBAK. Conference call transcript for Q3 2006 results. Revenues down:
Hindsight always being 20/20, we conducted a detailed postmortem on the quarter. Historically, BAK had always found itself with more potential demand than we had the manufacturing capacity to serve. So in previous years, we only felt a very minor impact from a seasonal slowdown that occurs in our businesses between April and July. In 2006, we entered the quarter with ample capacity of 22 million per month and therefore, felt the full impact of this year’s seasonal decline in demand.

I’d like to point out that we did not lose any customers and we did not experience any work stoppages or suspension of production from quality issues. We do not believe that we lost any market share. Our customers simply sold less due to a general seasonal slowdown and in turn, they ordered less from us.

Another reason behind the drop in demand is that we believe that our customers reduced their inventories over the past few months. In the past our capacity and therefore our flexibility to ship additional orders or to react to emergency shipments was extremely limited. This was due to our limited capacity. We believe that our customers, therefore, protected themselves by maintaining a safety stock of our products in their inventory.
10-Q for period ending June 30, 2006. AR up, inventories up, PP&E way up. Reasonable balance sheet. Gross margins aren't so great for the business, but operating margins are ok. Earned 9 cents diluted (31 cents for 9 months). Operating cash flow bad due to AR and inventories. Was great last year. Huge capex above depreciation (I seem to recall they're in investment mode). Some net borrowing.

So far, I'd say that I called this one reasonably well (although the stock is down because they've had a bigger than expected slowdown).
Grade: B

CAPS (stock, sec)
First looked at it here. Neutralizing medical waste into normal waste. Not a mousetrap. Got regulatory approval. Good characteristics. Terrible P&L but increasing revenues. $10 billion TAM dominated by waste haulers. That was Aug 2005.

Later in Oct 2005, I said that their P&L was terrible and revenues were actually shrinking.

Ok, let's see what happened. Q3 10-Q for period ending June 30, 2006 shows increasing revenues again (although not all that much for 9 months). They still have a massive operating loss much greater than revenues. Balance sheet is solid with big net cash (of course they issued a big chunk of convertable preferred stock to raise a ton of cash). Cash flow is terrible.

Ok, so how about the stock price? Down from about $2.00 to about 60 cents.
Grade: easy A

Ok, so I always considered this a horrible company and they proved me right by going bankrupt and issuing a joke of a financial statement (gone now).
Grade: easy A

CCCI (stock, old sec)
First looked at it here. In the China cable TV market, they were in a great starting location, but they only had hopes of success. I know that TV is big in China. But I stopped following the company here due to huge losses and terrible balance sheet. They ended up going AWOL, Pink Sheets can't find them. No news. Stock is selling for about half a cent. Their website expired. Only 3K shares shorted. I wasn't fooled by stuff like this.
Grade: easy A

MANS (stock, sec)
First looked at it here in August 2005. First looked at it here. I said they were a mousetrap and serial acquirer. They claimed to be "focusing" on being a leader, but they weren't and were losing money to boot.

Ok, so how are they doing now? They just got a new CFO. Dismissed the auditors.
10-K for period ending June 30, 2006:
New CEO. Private placement (tough terms?).
They bought the assets of ITF Optical Technologies in April 2006 for cash and stock. Serial acquirer? Check! Although they were very closely intertwined with MANS.

Risk Factor 1:
There exists substantial doubt about our ability to continue as a going concern
To be fair, revenues nearly tripled during the last year (due more than entirely to their acquisition). Gross profit went up to $3 million from $1.3 million! However, operating expenses went up from $6.3 million to $11 million. Goodwill and other intangible impairment.

Ok, so how about the stock price? Long slow decline. Currently 24 cents at the ask. Was about 40 cents when I first looked at it.
Grade: easy A
OT: drainspotters

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