has chemeq got anything going for it?

OK, so it is no longer a R&D based company but a commercial manufacturing business.

How are they going to cut costs?
What market share are they looking at over the next 24 months and are their market research people incompetent?

Accroding to the new bondholders Stark Trading, if CMQ trades below 60c Stark will own 49.75% of capital, CMQ trades above $1.20 then Stark will own 34.25% of capital.

Stark bought the bonds from Mizuho International with certain requirements:

- Gross revenue must exceed $4 million for the year ending 30 June 2006
- Have liquid assets in excess of $24 million at 30 June 2006.

CMQ has shipped a total of 7,360 litres of their product and have 840 litres in inventory. CMQ stated that by June 2006 130.000 litres will be produced but not necessarily shipped. Question remains on what sort of demand is their product in and what type of inventory build up there is by June 2006?

So CMQ made a $1.4 million sales order to a South African distributor. But reading through the reports, their Malaysian, Thai and Brazilian distributors are finding it difficult to make a sale. The question begs on how good the product is and whether the product is in demand. By June 2006 will management have misread the supply demand equation for their product?

The only upside I see here is that they have not acheived FDA approval but say they are very confident they will in 12-18 months which has potential to crack a $1 billion market.

So, according to Chemeq going forward apart from the FDA approval to sell their product in the U.S., are penetrating the European Union. They have been in Europe and are in a range of talks with potential partners and distributors. The question begs, will they gain a distribution partner in the E.U., and produce sufficient revenue over the next three months to keep bondholders happy?

Time will tell, although technically it is building a base with a wiff of accumulation going on as volumes are picking up. Maybe a change of hands at current levels, keep on watchlist.