Is Cal Nano (CNO) Selling Vaporware?

Disruptive technologies such as 3D printing, nanotechnology, alternative energy, and graphene generate a great deal of excitement among investors because they promise loads of growth potential. For retail investors, the appeal of a good story or promise can often mask the real potential of a company. More often than not, these companies are micro cap or OTC companies with little meaningful information available, but that claim a great deal of potential. A company covered in an article by Azonano yesterday, Cal Nano, announced an order from Adidas for components that will be used in the world’s lightest commercially available track and field shoe.

About California Nanotechnologies

Click for company website

California Nanotechnologies (CVE:CNO) describes itself as a world leader in the development and production of nanomaterials and superior performance components. Little is known about the history of this company since the company website does not provide such information. This California company trades on the TSX Venture Exchange commanding a minuscule market cap of only $1.5 million. Over the past 5 years, the stock has lost over 70% of its value. No information on the website is given about the management team but the press releases and contact information cite an individual by the name of Christopher T. Melnyk who is the Vice President of Operations. The “investors” section of the website also lists the CFO as an individual by the name of Tim Wang. In this same “investors” section it is stated that “in this section, you will find links to all of the latest press releases, financial reports, media, and analyst coverage”, none of which seems to be available.

Customers, Products, and Revenues

According to the company website, Cal Nano’s customer list is impressive including the likes of General Electric, Adidas, Siemens, Boeing, Pratt & Whitney, and Arm and Hammer. The company’s stated product list includes precision forged components, thermal spray powders, nano light alloy powders, nano superalloy powders, and cemented carbides for oil and gas drilling. As of February 2013, the company’ had revenues of $256 thousand, an increase of 86% from the year prior but still incurring a loss of $523 thousand. At this same point in time, the company had $4.7 thousand cash on hand.

Yesterday’s news article from Azonano stated that Cal Nano received an order from Adidas which was over three times the size of previous orders for product and will generate revenue for the Company of over $89 thousand. Based on Cal Nano’s product descriptions it would seem that this order is for track spikes to be used in the lightweight Adidas shoe.

CalNano_Teaser
Source: Cal Nano Website

While the revenue growth and orders from Adidas show promise, the company needs to provide some transparency into its inner workings, particularly bios of the management team, detailed financial reports, and media/analyst coverage. Only then can investors make an informed investment decision as to the future growth prospects of this company.

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