Lets take a closer look at the India $124 million deal...
The 8k is important, as its a filed SEC document. OZSC would need to be very careful printing known untruths or misleading statements. The same is NOT true of the PR.. when you read it, always have a critical eye. Read both what its says, and what it does not.
The 8k ( with comments )
Item 7.01 Regulation FD Disclosure.
On September 30, 2020, the Company issued a press release regarding the execution of a Technology Development Agreement and a Sales Representative Agreement between its wholly owned subsidiary, Power Conversion Technologies, Inc., and Precision Power Products (India) Private Limited. A copy of the press release issued by the Company is attached as Exhibit 99.1 to this Current Report on Form 8-K, which is incorporated by reference solely for purposes of this Item 7.01 disclosure.
Comment - OZSC released a PR related to this 8k.. no dispute here
Exhibit 99.1 contains forward-looking statements. These forward-looking statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Forward-looking statements are based upon assumptions as to future events that may not prove to be accurate. Actual outcomes and results may differ materially from what is expressed in these forward-looking statements
Comment - what was written in the PR cannot be relied upon for investment purposes. The assumptions used are not factual.
The information set forth under this Item 7.01, including Exhibit 99.1, is being furnished and, as a result, such information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of such Section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Comment - The PR is NOT part of this filing. As there is no way OZSC would want that seen as a legal document by the SEC. only this 8K should be filed. Further anything in the PR cannot even be referenced beyond what is expressly included in this 8K.
Item 8.01 Other Events.
On September 30, 2020, the Company, through its wholly owned subsidiary, Power Conversion Technologies, Inc. (“PCTI”) entered into a Technology Development Agreement (the “Development Agreement”) and a Sales Representative Agreement (the “Sales Rep Agreement”) with Precision Power Products (India) Private Limited (“PPP”).
Comment - We signed an agreement. No dispute here.
Under the terms of the Development Agreement, PPP shall provide certain specifications and design concepts to PCTI and PCTI shall design, engineer and develop one or more prototype(s) to be licensed to PPP for the manufacture and sale of certain products, which shall be based in whole or in part by the prototype(s). As consideration, if PCTI provides a full design of the product(s), PPP shall pay 100% of the invoice value for the product(s) produced, if PCTI provides a partial design of the product(s), PPP shall pay 50% of the invoice value for the product(s) produced. If jointly designed by PCTI and PPP, PPP shall pay 0% of the invoice value. Additionally, PCTI shall receive an ongoing 10% royalty fee of products it produces for and are sold by PPP.
Comment - It was a Development agreement where stuff PPP designs can be prototyped by OZSC. Those designs will then be handed back to PPP who can sell them. Dependant on how much OZSC adds to the design, they will get some of the profit from anything sold.
Under the terms of the Sales Rep Agreement, PCTI granted to PPP an exclusive right to solicit orders for products it produces for and are sold by PPP in the Indian Subcontinent, the Middle East and North Africa, Southeast Asia, Eastern Europe and the Commonwealth of Independent States.
Comment - OZSC cannot sell these designs to anyone else.
One more comment on this.... Additionally, PCTI shall receive an ongoing 10% royalty fee of products it produces for and are sold by PPP.
For OZSC to get $124 million, PPP would need to make a profit ( not revenue ) of 1.24 BILLION. From a company with a handful of employees and $2 million total funds.
What does it NOT say
No forecast of ANY revenue, just that OZSC would need to create prototypes. No $124 million
No indication what happens if OZSC spends considerable time / money building a prototype, but none are sold. No mention that PPP would provide funding... This is a Major risk for OZSC.. all the costs, potentially ZERO reward. No real risk to PPP. They just offloaded their development costs.
Remember PPP is a Micro company.
Nothing will come of this.. except possibly development costs followed by zero revenue. $124 million is not mentioned in the 8k for a good reason... it will never exist... the 8k tells you this.
