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As
many of you Stockprowler.com readers probably know, we had a megabucks
hit on our hands this week with Starbase (SBAS:Nasdaq), but before
we get into that, we have more to report on the continuing saga of Commodore
Applied Technologies, Inc...
Two weeks ago it was reported in this column that it appeared
former National Security Advisor to President Reagan, Robert McFarlane,
would be staying on as a consultant to Commodore Applied Technologies,
Inc.(CXI:Amex) even though the proposed merger between his company,
Global Energy Investors, Inc. and CXI was allowed to expire on
October 31, 1999. Stockprowler.com received a note from Mr. McFarlane
stating such was not the case. Subsequent to that, Stockprowler received
a letter from Mr. McFarlane in which he made some assertions regarding
CXI on a number of issues. Last week Stockprowler.com published
the complete letter because of its obvious interest and importance to
CXI shareholders. Since then, on November 17, 1999, Stockprowler.com
received a letter from Paul E. Hennesson, CEO of Commodore Applied Technologies,
Inc., in which he responds to Mr. McFarlane's assertions. In fairness
to Mr. Hennesson, I am publishing his letter in its entirety herewith.
I am also including Mr. McFarlane's letter once again for the purpose
of reference and comparison. First, Mr. McFarlane's letter:
Thanks
for your note. As you publish your update this week, you might want
to add that there appear to be substantial errors in Commodore's S-8
filed Nov 8. Specifically, in the narrative which provides recent history
of the company, they state that their merger agreement with us was amended
on Oct 25 to provide that the agreement would continue for as long as
they continued to pay us $30,000/monthly. No such amendment was ever
proposed to us or approved. Finally, they fail to note that our merger
agreement expired on Oct 31, thus implying a continuing association
between our two companies. In the course of our seven-month agreement
with Commodore (April 1- Oct 31), we concluded that they have an excellent
technology but terrible management and marketing. Over the course of
the seven-month engagement we developed substantial business for them.
At the end of the seven months, however, Commodore apparently concluded
that they no longer needed us, an act of extreme bad faith, and we believe,
very much contrary to shareholder interests.
Again,
thanks for your consideration.
With
best regards,
Robert
C. McFarlane
...And
now the letter from Mr. Paul Hannesson, CEO of Commodore Applied
Technologies,
Inc:
November
17, 1999
Dear Stockprowler.com:
With
respect to the letter you published from Mr. McFarlane on November 14,
1999, we are somewhat perplexed why Stockprowler didn’t call Commodore
Applied Technologies, Inc., for comment before publishing his assertions.
The facts are these: On November 5, 1999, we issued a press release
via PR Newswire stating that the Global Energy Investors’ Merger Agreement
had expired. Then, on November 8, we filed a 10Q also noting that the
Merger Agreement had expired. Unfortunately, the S8, which had been
prepared in October and was accurate at the time of preparation, went
out on November 10 with outdated information. There was nothing ominous
in this, and we had nothing to gain by it; it was simply an oversight.
The SEC brought this inconsistency to our attention on Friday, November
12, and on November 16 we filed an 8K to rectify the oversight. With
respect to the proposed continuation of the Merger Agreement referred
to in the S8, you will want to know that it was made in writing to GEI,
contrary to the mistaken statement by Mr. McFarlane. Mr. McFarlane’s
long and distinguished career in government has earned worldwide respect
and our highest regard. CXI will continue to focus on increasing shareholder
value.
Very
truly yours,
Paul E.
Hannesson, Chairman, President and CEO
cc:
Robert C. McFarlane
First, as to why Stockprowler.com didn't call CXI
for comment before publishing Mr. McFarlane's assertions...unfortunately,
Stockprowler.com was not aware of a second McFarlane correspondence
in its Inbox until late Saturday afternoon (November 13) ...too late
to call CXI. However, we did offer to publish CXI's response
to the McFarlane letter, and have, in fact, done so. Second, as to the
truth of the McFarlane/CXI matter, I leave it to the reader to
draw his/her own conclusions. However, Stockprowler.com remains concerned
about the effectiveness and leadership of CXI. Missteps like
this, even if it was "simply an oversight", are inexcusable,
and certainly do nothing to bolster investor confidence...especially
in light of other dubious moves by management in the past. CXI
has a great technology here...let's run with the ball.
OK...Updates. Recent Stockprowler.com pick of the week, SBAS,
soared to an intraday high of nearly $4 1/2 this past week before succumbing
to daytraders and profit taking. Stockprowler initiated coverage of
SBAS a few weeks ago when it had closed that previous Friday
at 1 9/32. Lucky readers who bought SBAS at that time, and sold
near the peak this past week, racked up some nice gains for the period...
villa time! And this brings me to the point of discussion for this week...how
does one know whether to hold or sell a stock which doesn't appear to
be going anywhere? Take a look at SBAS.... in the weeks after
the Stockprowler profile it appeared to be going absolutely nowhere...
These little stocks all have the potential to take off at any moment,
just as SBAS did. The companies picked by Stockprowler.com have
either been beaten down in price for whatever reason, and have what
it takes to come back...or are fledgling start-ups showing great promise
for the future. SBAS has got cash...$6 million in the bank. Great
little company...
Another stock I'd like to update this week is QSRI.
Queen Sand Resources, Inc. recently got bounced to the OTC:BB because
of the continued penny status of its stock price. Still trading around
5/8 this stock offers the average Joe a chance to print money. Consider
what precipitated the fall of QSRI from $7 a share about a year
ago to its present status...crude oil and gas prices collapsed to the
point where crude was selling for $8 - $14 a barrel. Presently, West
Texas crude is hovering around $26 a barrel and threatening to go higher...possibly
much higher this winter and beyond. With that as a back drop also consider
this...QSRI has negotiated a new $50 million line of credit to
give it the liquidity it needs to develop and exploit its considerable
existing oil and gas reserves during a period of very attractive oil/gas
prices. On top of that QSRI has just recently announced it has
drilled its biggest producing gas wells ever... By the way, don't forget
ENRON is a 34% stake holder in QSRI...
A quick note here about last week's Stockprowler pick, MINT...the
merger of Micro-Integration Corp. and GeoPortals, Inc. appeared to be
an ideal match...GeoPortals, a privately held company with over 30 Internet
Web sites branded with the Geo domain name prefix and MINT with
its e-commerce technology involving user demographics and geographic
information. Unfortunately, the deal got called off this week because
GeoPortals couldn't obtain the necessary financing. Micro-Integration,
Inc. has been bleeding dollars, and this merger/cash infusion was an
answered prayer. Stockprowler now views MINT as a very high risk
speculation unless Micro-Integration Corp. can quickly find another
match made in heaven. Stockprowler will update further on this as information
becomes available...
OK...a
little drum roll please...the Stockprowler pick of this week is...
DDD (Amex)
- Los Angeles based Chequemate International, Inc. and its subsidiary
C-3D Digital, the world's first 3D television network and Internet media
technology company is potentially Stockprowler.com's biggest pick ...ladies
and gentlemen... 3D television is here! Stockprowler is not kidding...this
is for real. Imagine, if you will, your living room as a transport into
a three-dimensional world... special effects that jump out at you...sports
events that put you INTO the action! Imagine no more... the technology
to do this is here now! Little DDD
has a patented proprietary technology to accomplish all this on ordinary
TV sets found in the average American's home...incredible! DDD
moved from the OTC:BB this past June to the AMEX, and has seen its revenues
increase almost 10 fold this past year...and this is just the beginning.
On November 5, 1999, DDD announced
it had acquired the rights to over 1000 film titles and television programs...these
2D films and videos will be converted... digitized and enhanced to 3D
using the C-3D Digital's patented 3D stereoscopic conversion technology...and
will air on C-3D's own network! Also in the works are plans to release
copies of these films/videos to video stores for rental...imagine, if
you will, renting a copy of your favorite film "Night of the Living
Dead" in glorious 3D... break out the beer and popcorn! All right,
remember you heard about it here first on Stockprowler.com...
Good
trading... Stockprowler
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