Ann: Integration Stage Update, page-31

Ha! How easy it is to justify being a pessimist. Fear is always the first response when people feel something might be a threat. The person who runs away shouting "tiger!" always boasts about how smart they were in managing to get away. Who can blame them. Its better to be safe than sorry eh? But living like that all the time has a cost.

However I note that every share dumped today at a big loss was bought by somebody else who saw things differently. What was it Buffet said about being bold when others are fearful?

The announcement brought bad news for sure. But it was not unqualified bad news, that is also for sure.

1. We now have confirmation that apart from an unwelcome delay the wafers gave an acceptable product. i.e. the proposed solutions worked, and they have wafers that in other respects work. That problem is solved.


"... Post‐process testing of completed wafers (that) substantiated our solutions for the “dissipation layer”..."

"... The imperfection of current fabrication process does not reflect on what was a fairly successful fabrication run, nor does it diminish from our fabricator’s ability or commitment to deliver wafers that meet the most stringent of standards. ..."

2. Yes there is a problem, and a new unexpected problem at that, but both we and the FAB are on to it.

"... "Upon discovery we immediately identified and rectified the root cause and have expedited new fabrication runs that will deliver wafers to specification as soon as possible,” says a Senior Executive from our fabrication partner.

NB: all actions in response are all past tense: identified; rectified; expedited.

3. Yes there is a problem, but the revised and delayed time to deliver finished product has been quantified, but an even faster short term fix may be possible.

"... our fabrication partner has revised its guidance on to the delivery time of wafers meeting the required specifications for completion of the company’s final phase of its commercialization plan. ..."

"... Having just completed physical testing that demonstrated promising results, every effort is now being made by the fabricator to rework some of the existing wafers in order to hopefully bring them to proper working order within a matter of three to four weeks.

4. We also have what sounds likely to be a reasonably conservative timeframe for completion of final (wafer) product made using updated processes, i.e. the process that has been shown to have addressed the previous fault, and the new further modified process to overcome the new problem. We also appear to have a growing recognition by the company that they need to provide better and more timely communications to a necessarily frustrated group of owners, many of whom are saying and showing that they have lost patience.

"... The company will update the market once it has received conclusive results of the rework of the already completed wafers. The company will further inform shareholders as to the estimated delivery of newly fabricated wafers, which the fabricator partner currently forecasts to be in the latter part of Q1‐2018. ..."

From this we can expect to wait 3-4 weeks (Dec 29?) for another announcement on the "patched up" devices, and all being well, another announcement when the next round of production scheduling is known. Finally we have been promised proper milestones!

Is this good news? Well it sucks of course, but it does give clarity, which is what I have been asking for. It also lets us know that the company is expressing confidence of ultimate success in a short timeframe. Should we believe this? That is up to each investor to decide. But this is a decision to be based on solid info, not simply fear and paranoia.