First Hand Field Report - I just returned from visiting with Mr. Snaper. He said I was the first investor to ever show up. I have nothing exclusive to report, but after reading blog posts for a year, this might be good summary and clarification. At the very least, it's good to know the office is real; even though I saw no product or inventory. Note: roughly half of my statements below are directly from Mr.Snaper, the rest are my personal conclusions from what he said and what I know of business.
Value Proposition – They do not have the disruptive technology I had thought. Their end product is no different than the rest of the market. CTDT's goal is to compete against other industrial diamond producers like GE and Genesis. Their advantage lies directly in their ability to produce diamonds faster and cheaper due to their technological advantages, but it’s not some sort of ‘super’ diamond.
Channels - No concern with finding customers once operational. Ind. diamonds are in short supply and they will be able to undercut the competition with lower prices, if necessary
Stage of Development - They are still in the development stage. He hinted at something that may already be complete but couldn’t disclose it. He has been using leased equipment in Rhode Island to do his tests and research, flying back in forth quite often the past, but has not been back in three months. Again, he did allude that he may resume visits or some further development might come out in the next year but was not at all specific.
The number one thing keeping them from growing and taking off is
financing:
Financial situation – They still need to raise the $3 million. No deal has been made. It is very unlikely he will pursue further equity financing through dilution, but he was not happy about the idea of taking on more debt either. Obviously you have to do one or the other, but for now they are staying afloat through small bits of financing here and there, from small parties. (I assume this is himself and family/friends). I tried to find out what they were doing to actively seek financing but got no specifics. Wayne Prentice and LT are both still involved, but I couldn’t find out what they were doing.
Assets – I asked why they can’t start limited production with the equipment they have to at least get some revenue and grow slowly w/o the financing. His answer was they don’t own any equipment and couldn’t afford to use the leased equipment in that capacity. CTDT’s balance sheet is a patent and a warehouse in Vegas. Getting the equipment (including a sanitized, clean space to produce in) is a major barrier to entry that requires the serious financing.
Communication to share holders – the IPO was to a private, Canadian firm for 50 cents/share. All of the shares we currently own came off the secondary market from them. This company is trying to stay alive and grow, it’s no too their advantage (and therefore, ours), I would argue, to devote resources communicating with us or hyping their company. That will come at a later stage.
Snaper stressed the desire to remain under the radar for now; he even took off the sign at his office for “security” purposes. He said there are people who would like to have his technology. And he is competing against larger entities that would like to see him go away (e.g. natural diamond industry).
LT – LT was brought by the Canadian company that originally purchased the shares. He’s still involved as a consultant. He said he was a SEAL for 22 years. That struck me as odd and a bit of a red flag. I’m in the Navy and know SEALs and their general personality. His style of writing on his blogs (and artwork) does not seem to match up with that. Maybe I’m wrong, but I was surprised by that claim.
Conclusion – Mr. Snaper was very receptive to my request to visit, and welcomed me right in. I have absolute confidence this isn’t a scam. There is nothing to gain at this stage even if it were. This is a start up with great potential. I’m concerned the resources and manpower isn’t there at this point, and I’m no more aware of what’s being done behind the scenes than before I visited. At the current PPS, I see unlimited upside and little downside risk. I’m resolved to continue to hold my 650,000 shares.
