Wow, what a lousy few months! I saw the some convertible debt in the May 10Q, but I thought that was manageable. Unbeknownst to investors there were several convertible loans. Although the daily tiny purchases by Bibb were a hint. When he started buying those daily shares in May he knew what was coming, but I bet they didn’t know how much it would hurt. At the time since several insiders had made large purchases (> $100K) in Feb I figured they were using the time of no news from Feb to Aug to invest in the company and get ready to commercialize the mobile generation and pumps. In fact I bought some stock as it dropped based on Hassett’s detailed blogs in Dec and the insider purchases. I believe these guys are not the best leaders of a company, but they are high performing, innovative engineers. And I frankly don’t think these type of guys lie….at least not outright. They just make poor business decisions and overstate status. I also felt the insider purchases in Feb and Bibb’s buying as the dilution progressed could of been intended to be a signal to the market that they were still putting skin in the game. But again, I thought they were doing research and development during this period. I was floored when the Aug 10Q came out and it said nothing happened of business interest during that entire period of dilution and that all they were doing was shredding shares to pay off debt. I would love to know why they took out such short term debt with such high penalty for failing to pay. Either they were short-sited or they thought they would be profitable in July or Aug.
Once the Aug 10Q came out and I saw the total cluster F they had gotten themselves into I started trying to figure how much debt was left. It was a considerable amount so I continued to buy occasionally as the price dropped, but I was expecting it to hit the sub penny levels so I held back. If your wondering why I was buying it was because how close Hassett indicated they were to bringing their product to market back in Dec. I figured even if they went to double or triple zero land, they always had the option of giving an outside investor a heavy percentage of ownership to get this back on track and as long as I bought as it dropped I could be part of that. Obviously I believe in them as engineers and the product as revenue generator.
Then the 8K hit which showed they had borrowed an amount exactly equal to the amount of convertible debt they had left. Yes, if investors read the SEC filings they would of known this in late Aug and wouldn’t of needed the PR. Of course the PR is misleading. They retired pre-existing convertible debt, but the new lender can dump 1/2 of what was borrowed before 9/30/16. They good news is that from what I can tell from daily trades that amount is likely already dumped and there isn’t much dilution left from here.
But what the PR did let us know is that they are are finally going to have a legitimate demonstration vehicle (as long-term investors know, while they never claimed to have that previously, they sure led us to believe they did….but because their brochures and presentations never showed the actual working technology we should of known better). The only thing left to add to the demo vehicle is the interface and controls. That is good news because it means the hardware has passed the needed testing. The interface and controls are not a technical hurdle that must be overcome, just a milestone that needs to be worked through. It can’t fail.
I think we could get a P.R. in the next month or two announcing the demo vehicle and providing video of its operation. Whether they can translate that into sales is an unknown. But for those who read the recent 8-K, they have a deal with an investor such that if they sell 1000 units to 1 or 4 large manufactures, OEMs, in the next 100 days (i.e. by end of Nov) then that investor has to much a set amount of stock at a set price. Basically I think this is their ensuring that if they make those big sales they have the cash on hand to deliver them. Now, based on their history of overblown expectations, and possible intentional misleading of investors this could be a pie in the sky unattainable goal. But if it is possible and only 250 sales happen by Nov I think share price will respond very positively. The unit price of their smallest kits is in the $25,000 to $35,000 range.
Bummer items, in the Aug 10Q they said they needed 6.5 million dollars for the year and were trying to borrow this amount. That could mean one or more of the following…generator technology has a costly technical problem that needs money to resolve (remember last Dec’s test), the cost of getting the pumps to market is in the multi-million range, and/or the mobile generation needs more investment on top of what they have already done to bring a sellable product to market (versus what they are calling a demo vehicle…a demo vehicle could be short-cutting tests and validation they must do before selling something).
Regardless if Hassett follows through on regular updates then this has the potential to become a viable company. Oct 11 will be an interesting date. They way they had their convertible debt expiring after July 31 (the date it looked like the SB debacle would end) there could be a generator or pump license agreement that hinges on getting that SB mess cleared up.
AI
