PTK is a small solution provider for advanced semiconductor manufacturing techniques, and is now trading at 11.5x times' Price/Book. The company’s business model is still uncertain as PTK does not generate any meaningful revenue yet. Sales rose in the 2Q, but were still only $177,000. With market cap of $180M, expectations remain exceptionally high here. The balance sheet has net cash of $8M. PTK is still burning cash and issuing shares to fund operations. We consider the name to be highly speculative and volatile with its size and capital risks. We would prefer to wait until the business model has been established and path to profitability becomes more certain. It is currently doing an 'at the market' financing for up to $30M, and this could keep pressure on shares for a while. Yes, the technology has potential, and it has received lots of interest from potential customers. But we would have said the same thing a few years ago, when the stock was 2X or 3X its current price. There has been a bit of insider buying, but we need to see more concrete sales, or at least less negative cash flow. Valuation is too high for us based on what we see. Considering volatility, we think a non-reg account would be better.
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