DD Report # 01 - Cetek History - Part 4 (Rev 11/26/04)

A Comprehensive DD Report on the history of Cetek Technologies, Inc.
For the period from January 1, 2004 - Present

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On January 5, 2003, a poster who goes by the alias of mach1cobra428yes, on the Raging Bull CTKH bulletin board, talked with Hilal about the progress the company was making. Following is a post made by mach1 regarding that conversation.

"By: mach1cobra428yes
05 Jan 2004, 03:42 PM EST
Msg. 19460 of 61160
Jump to msg. #
OK everyone, you ready for this!
I could not stand it any more, I just called CTKH and Optidoc you are the man., my call was at 12:25 Pacific time. My first question to Mr. Hilal was

"question: How many O/s
answer: Can't tell me

"question: News for sure this month
answer: yes sometime this month

"question: buyback in progress
answer: yes

"question: Is there anything you can tell me at all
answer: Better than you can even imagine. this is a
from Hilal himself.
Also he did say O/S amount should be in PR

"I talked to him a little more and that is all he wanted to say, he sounded very very excited and happy.
I told him I owned a fair amount of shares and I wished him the best of luck and what he was doing was exciting. He said thank you very much and once a gain happily said it is better than you can imagine, and than he said to me God bless you, and I told him the same and the call ended.
I have never talked to a CEO that had this much excitement to offer in his phone conversation."

***

As a direct result of that conversation, the stock's prices started going up. It began what can only be described as a turtle run. The stock went up from the mid .002s to the mid .004s over a period of 25 days. This was all in anticipation of the 4th quarter report for 2003. Of course the shareholders could really imagine a great deal, and did, over the next 3 1/2 weeks as they waited for the report. Therefore the report was destined to be a disappointment before it was released.

One thing that none of us had imagined was that they had really only bought back an insignificant number of shares, so that they could say in honesty that the buyback had started. Another thing that we had not imagined was that in actuality Cetek was dumping over 3.85 billion shares on the open market (We found out later that approximately 2 billion shares were a private placement). The initial affect of this dump, when combined with the rumors and the positive affect of the buyback announcement was that the pps ran all the way up to .0074 by January 29,2003. The boards were buzzing with speculation that the buyback was in full swing and near completion, and that the pps was going up because the dilution was going down. But in actual fact, the dilution had been increased 300%.

From Fayiz's point of view, everything was great! The pps was up, and most importantly of all, they had been able to raise over $9 million for DisplayTek, apparently with several $million left over for Cetek. No wonder he said it was better than we could imagine. But at what price? Had we all known the truth, we would have realized that the pps was a house of cards. But most of us had our rose-colored glasses firmly in place, and did not anticipate what was to come.

Finally, on January 30, 2004, the company released the long awaited report. (Business Wire, Cetek Shareholders' Report for the Fourth Quarter 2003) This time we read that the revenues for the year were 185% higher than the previous year's. And once again, no base figure was given to calculate them. The only difference, and of course in retrospect, this was a major difference, was that this time Hilal added that "the fourth quarter of 2003 was the first profitable year in over four years." Of course, he conveniently failed to mention anything about the increase in the O/S to 4.975 billion shares.

He also used phrases like "Cetek made significant advancement during this past quarter, to become established in the nanotechnology field." He then mentioned the nanotechnology bill that President Bush recently signed into law. Without saying a word to confirm or deny that CTKH would benefit from the money provided by the bill, Hilal deftly linked the two together in the same paragraph. The rumor mill immediately went to work. The report went on to say that "Cetek is well positioned in this field, and continued development and progress in this area should be fast and aggressive, both for the company and the industry." Wow! "well positioned," "fast and aggressive." Those words were fuel for the fire. The report could have stopped there, but it went on. It spoke of larger sintering ovens used in the manufacture of the ceramic substrate that would increase the available oven capacity by threefold. It now appears that they originally had two ovens and had plans to increased that to a total of six sometime in the 1st quarter 2004 or soon after, using some of the money received from the sale of the stock.

Then moving to another subject entirely, the report stated that regarding the aluminum reclamation furnaces, the "customer from England...has issued Cetek Technologies more orders for these large furnaces." It went on to say that the product had "generated strong demand in the United States and overseas." And that, "substantial sales for this product line are expected throughout 2004 and into 2005." But once again, no customer names were given.

And finally, Hilal stated that the buyback had begun, "for the benefit of the shareholders."

Most of us bought it all, hook, line, and sinker. Only the bashers laughed, and who listens to bashers? Right? Right.

One would have expected such a glowing report to help the run. But by then, the MMs had begun to put things in reverse and the pps began to fall. The smart investors bailed out as it began to drop. Many of them had held since the .0001 and .0002 days. So they were glad to take their profits. But many others had jumped in after the initial increases and they were not in great profit territory yet, so they held. And the pps continued to drop. By the end of March it was in the .0050 range.

The First Quarter Shareholders' Report for 2004, was released as usual on the very last day of April. (Business Wire, Cetek Issues Quarterly Update) In it Fayiz reported that sales revenues had continued to grow, "with this most recent quarter being our strongest yet in production and shipment of our proprietary ceramic substrate product. In particular, the 12-inch substrate material is selling very briskly. Additional production capacity will become available shortly, so as to get positioned ahead of the current, and expected future, significant growth in sales." At the time we did not know what he was speaking of regarding the increased production capacity. And there was much talk about MOT and acquisitions, etc. Many on the boards began speculating how the company was going to increase production capacity. And the subject of acquisitions surfaced again with much speculation that included names like Motorola, Samsung, and IBM. However, we now know that all he meant was that the 4 new ovens alluded to in the previous PR would soon be in operation.

Specifically, for the three-month period ending March 31, 2004, Fayiz reported that revenues were up 116% over the previous quarter. So that was two profitable quarters in a row. Not bad for a pinkie.

He also announced that the company was "beefing up" their national sales and marketing efforts, and they expected to have additional sales personnel hired and trained by the summer of 2004. As usual with Fayiz, that timetable was too optimistic, and as of the date of this writing, it appears that no sales representatives have been hired.

Fayiz then went on record as stating that the long awaited (five years) official company web site was nearing completion, and was anticipated "shortly" but, he did not set a specific date. He did promise however, that a separate press release would be issued once the web site was up and operational. He did not exactly keep that promise. Though he did finally mention that web site in a PR on July 30, 2004, over a month after the site was launched, it was not a stand alone announcement.

The next paragaph in the report caused no end of discussion on the boards. In it Fayiz said that, "From the Company's inception, management has focused consistently on building a company with solid foundations and with state of the art ceramic materials. Years of formulating, testing and proto-typing have taken us far -- and we are now beginning production and distribution of Cetek's proprietary ceramic materials onto a world market." These statement by Fayiz coupled with a comment made by Jim Stock, the company's IR rep, a week prior to the release of the report, led to the speculation that CTKH was no longer involved in R&D.

The report stated that CTKH was "moving forcefully forward on its growth prospects for 2004 and beyond." Specifically, Fayiz went on to say that, "One extremely promising area is in CNT (Carbon Nanotube) technology. Cetek shareholders may recall referencing CNT opportunities in the past." Fayiz then devoted a full 30% of the report to that subject of CNT research. He fell short of actually stating that CTKH was involved in such research. And he made no mention whatsoever of Motorola and the research agreement that the two companies once had. However, a poster by the name of bigpickn2 on the RB bulletin board took a cue from Fayiz referring to the prior reference to CNT, and he found that in July 2003, MOT published a statement regarding their own CNT research. The peculiar thing was that Fayiz's comments in his report echoed the MOT PR almost word for word. That led many, including me, to assume that Fayiz was attempting to tell us, without telling us, that there was still a secret agreement with MOT. Another of his amazing read-between-the-lines PRs. As it turned out, we now know that the actual working agreement ended in November 2000, as stated in Part 2 of this report, and that the only agreement that currently exists between the two companies appears to be the one that allows Cetek, and indirectly, DisplayTek, to use MOT patents.

CTKH apparently spent all of 2003 doing CNT research on their own, trying to beat the competition to the various prototypes. It is unclear whether the big money won the race and CTKH threw in the towel, or CTKH completed their research to their satisfaction and turned their efforts elsewhere. What is known for sure is that CTKH has now made a total commitment to producing products for some 25 different companies. (As stated before, we were told in the shareholders' meeting on September 8, 2004 that Cetek does have prototypes for 6", 8" and 12" CNT FPD)

At the end of his quarterly report Fayiz gave a brief update of their continued commitment to complete the 500 million share buyback, but he again, failed to put it in a time frame. And even more significantly, he neglected to mention that the buy back had actually been suspended for the past 3 months. And in fact, they had apparently not bought back a single share since the end of January 2004. (This information was all disclosed in the September 8, 2004 SHM)

He closed the report with perhaps the most significant comment of all, when he stated that they were "making plans to position the Company so that its common stock can be advanced up from the pink sheet market where it currently trades." Again, true to form, no timetable was established.

Unknown to any of the shareholders, the glowing report was really reflecting the benefits of selling the 3.85 billions shares of CTKH stock between December 2003 and January 2003. DisplayTek was fully funded, Cetek had $millions in the bank. Sales were up, revenues and profits were up. Everything was great, but the pps continued to drop.

By the end of the 2nd quarter the pps had dropped into the .0030's.

In the months following the 1st quarter 2004 report there were several very helpful developments.

For one thing, a poster on the Raging Bull who at the time went by the alias robotlol, discovered a review of CTKH on the knobias.com web site. As a result of the information they presented about CTKH we learned that the Outstanding Shares figure was AT LEAST 1,248,000,000. Even though that figure proved to be inaccurate, it moved the shareholders from the unrealistic position that the O/S was only 740 million shares, a position that had been heatedly debated on the boards for many months.

Then soon after that, a poster by the name of joelotto discovered that Delaware corporate law gives shareholders certain rights. For one thing, they could demand access to the company books and other financial records, as well as the NOBO shareholder's list. As a direct result of his findings, I sent Fayiz a letter demanding access to that information. And to my surprise, they immediately agreed without protest. For full details of my trip you can log onto the PennyFever BB and check out post # 2256.

The short story of the trip is that I was totally unsuccessful. I came home with none of the information that I went for. The only positive thing that came for the trip was that I was able to build a bridge of sorts between the shareholders and Fayiz and Jim Stock. But even that did not last.

A month after my return, on July 30, 2004, Fayiz put out the report for the 2nd quarter. In it he reported that "Sales revenues continue to grow, with the recently ended second quarter being the strongest yet in production and shipment of our proprietary ceramic substrate product. Revenues were up 51% from the previous quarter, and Cetek continues to operate with net positive cash flow and profitably." Unfortunately, he still did not give us any hard figures. But the fact that it was the strongest growth quarter to date was very positive information. And it was hard to feel bad about a 51% increase over the previous month, even without the dollar figures. And a third quarter of profit was certainly welcome news.

Most on the boards were also encouraged by the fact that "production and shipment" were up. That meant that they were not just making products. They were selling all that they made. Proof of that was that Fayiz continued his general statements with, "Additional production capacity is needed, to meet current and future, production requirements." And while that was also a welcome bit of information, it was crying out for details that Fayiz did not supply. He did tell us however, "Management has been working on how best to increase production capacity." That was significant information because there had been a rumor that they had held a 3-day meeting in NY of the BOD to discuss the ways in which they could expand production. I say that was significant because it was rumored to be a turning point meeting. They were going to make decisions that would become the foundation for future activities. "One possibility, being that of acquiring an additional facility or company." Most of us on the boards translated that as Valley Design Corporation in the near term, with others to follow. Though we now realize that the acquisition of Valley Design Corporation may not be a slam-dunk.

Then out of nowhere, Fayiz surprised us all by actually telling us something we needed to know. "Fortunately, Cetek's resources, from previous successful funding activities, will be available to use towards this production capacity issue. Capitalization of the corporation was enhanced in the past year through the issuance of private placement common shares..." A private placement! Great news! Not all of the 3 billion shares were in the float, or at least not in a liquid part of the float. As Fayiz put it, the placement "demonstrates strong support for the management of the company and its technology from the investors' community." To most of us on the boards, we translated that as saying "the people who bought the shares have bought them with the plans to hold for the long haul. They believe in the company and the future of this technology." IMO, that was a great bit of news.

Then, as if to reinforce his last statement, Fayiz once again stated that "we do not anticipate any circumstances that would cause us to undertake a reverse stock split of our common stock."

He then bragged on the unbraggable. He told us about the new web site that had been launched on June 23, 2004. He also stated that it would be updated regularly, which of course, as anyone who knows Fayiz can imagine, has not been the case. In fact some of the information wasn't even current on the day the site went up. LOL

He then spoke of an ever-growing client base, which also was good to hear about, but begged for details that did not come.

It was then that Fayiz tossed in a couple of bones without fanfare; electron emitters for FPDs (flat panel displays), "nano emissive display" (NED) technology, and a wonderful little statement at the very end of the PR that, "CNT technologies are currently being researched and co-developed for various applications, including fuel cells."

Specifically he said, "We continue to view the CNT (carbon nanotube) area as a dynamic business segment for the future, one that may hold much promise," I liked the wording here because it tells me that CNT is not the area that has given them the most help to date. Most of their income has been from sales of substrates. I was especially interested in the "may hold much promise" phrase. In other words it is future and it is an unproven source of income. He followed that with, "including electron emitters for FPDs (flat panel displays). In addition, "nano emissive display" (NED) technology, which enables a manufacturer to design large flat panel displays that exceed the image quality characteristics of plasma and LCD screens at a much lower cost, is extremely exciting in our niche of the industry, and could potentially be one of Cetek's applications in the future."

Notice that Fayiz included the electron emitters, FPDs, and NEDs in his "our niche of the industry" comment. And he said that those things "could potentially be one of Cetek's applications in the future." Could potentially be? In the future? Those are things that we have all thought were a major part of their current efforts. And yet they are apparently icing on the cake. In other words all that has happened, all the positive things that we have been discussing, were not related to or caused by work related to electron emitters, FPDs, and NEDs. WOW! If we have done this good without them, what will we do with them?

We now know that their primary emphasis has been manufacturing and marketing thin film and display quality substrates of all sizes, thicknesses, and shapes. That is where Dr. Gordon love helped out so much when he joined the company after the acquisition of MultiLythics Inc. of Greenville, S.C. Now they are getting ready to add another major piece in that effort to become a major player by going after Valley Design Corporation. VDC was founded by one of the world's most renowned experts in the field of polishing, grinding and coating ceramic substrates and other such hard surface sheet material, Mr. Gunar Ingars. And although Mr. Ingars will probably not be coming with the acquisition (he is over 80 years old and apparently retiring), his son may. Certainly his company will add a wonderful depth to Cetek. Unfortunately, Fayiz is playing hardball in the negotiations over money, and the deal may fall through. It would not surprise anyone who knows Fayiz, to see him shoot himself in the foot and loose $millions just so that he could save a few dollars in the negotiations.

I was personally frustrated to see that Fayiz failed to announce the 40" x 40" substrate in the PR, even though he knew that everyone already knows about them. IMO it further demonstrates the need for him to turn over the PR end of the business to a professional. There can be no rational justification for this oversight. It may point to some deep-rooted issues in his character that does not allow him to respond when threatened or forced to do something. It was almost as though he said by this omission that "I will leave it out BECAUSE everyone is TELLING me that I MUST put it in." Unfortunate and foolish, IMO.

It was interesting to note that he ended his PR by saying that, "In addition, CNT technologies are currently being researched and co-developed for various applications, including fuel cells." "In addition"? IMO, he was trying to tell us that this is separate from the first general mention of the CNT that we read above. This reference is special. What is special about it? Well, for one thing "CNT technologies are currently being researched." Wait a minute, I thought that all R&D had ended. NOT SO. CNT technologies are still being researched even as you read this. And who is doing the research? Are we still alone? NO! The CNT is being "co-developed for various applications, including fuel cells." As I stated before, we now know that they are being co-developed with none other than General Electric. WOW!

Interestingly, even with all of that great information, the pps immediately began to drop again. This declined continued for the next three months, reaching a low of .0008.

On November 8, 2004, over a week late, Fayiz finally put out the quarterly report for the 3rd quarter 2004. It was slightly different in tone from all previous PRs, which led many to conclude that Fayiz did not write it. Some believe that Fayiz's son, John, wrote it.

According to the report "Sales revenues continue to grow, with the recently ended third quarter being the strongest yet in production and shipment of our ceramic substrate product. Revenues were up approximately 100% from the comparable quarter in 2003, and as has been the case of the past three quarters, Cetek continues to operate profitably." IMO, the fact that the comparison was to the same quarter from a year ago rather than to the 2nd quarter of 2004 was no accident. By comparing it to a year ago, they were able to show a 100% increase in revenues. Had they compared the 3rd quarter with the 2nd, they would have only been able to claim a 28.89% increase. It works out the same, but it may have been a deliberate attempt on Fayiz's part to use the more psychologically appealing figure.

Fayiz took this opportunity to announce the addition of Mr. Gabriel Cohen to the Board of Directors. This was no small thing. He is the CFO of DisplayTek. IMO, that is an indication of just how important DT will be to the company in the future.

For the third time in as many reports, Fayiz once again stated that they do not expect to have to do a reverse split. I am convinced that they intend to complete the buyback, so that a r/s will be unnecessary.

I was personally encouraged by the statement that "Operationally, demand for Cetek's proprietary ceramic material is increasing as never before..." IMO, it is obvious from this statement that Cetek is now reaching its stride within its market. They are no longer at the mercy of companies like MOT that may or may not wish to continue using Cetek ceramics.

He went on to say that "additional production capacity is needed, so as to get positioned ahead of the current, and future, production increases." This was a very positive forward-looking statement. Fayiz told us at the SHM that they had room for 6 more ovens in the current 19 Commerce St. facility. There are rumors that they have added some or all of those. But it is clear from the next statement that adding ovens will not be enough. That is very exciting news, IMO.

"One solution, as presented in past status reports, is to acquire one or more existing companies that are in a similar infrastructure as
what Cetek's requirements demand." We know about Valley Design Corporation out of Westford, MA. There are rumors of at least 2 more
companies that are being considered. Because the Cetek Process does not require extraordinarily high tech equipment or even a clean room
environment, there are many companies that could fit the bill from strictly a manufacturing arm perspective. IMO, Valley Design Corp would be especially nice, in that it would also add the dimension of "value added ceramics" to Cetek's product line.

Fayiz then dropped a nice bombshell when he mentioned that, "Cetek is developing a new marketing plan that includes the launching of a new division called "The Ceramic Store." This will be an Internet-based business serving as an online outlet for ceramic thus responding to the needs of researchers and other engineers where demand is often for low quantities, and where order flow may not be consistent. We expect "The Ceramic Store" to be operational by the end of the year. Additionally, the present homepage at www.cetektechnologies.com will be upgraded, making it more "search engine friendly" and accessible to a greater audience of potential customers."

This is a MAJOR shift in Fayiz's thinking. He told me just a few months ago that he had never made a dime off of the Internet site. This is great news IF he will take the Ceramic Store seriously enough to have the site designed by professionals. If he does it in house again, like he did the company web site, then it will be a disaster, IMO. Frankly, my problem with the current site has not been that it was not search engine friendly. It is just that it looks like an elementary school computer class project. And it provided almost no significant information anyway.

"Cetek Technologies is exploring the potential use of the company's ceramics in fuel cells, as this is an example of another growing industry wherein high grade ceramic material has future commercial application. The ability for the Company to produce ceramic plates in very large pieces places Cetek in a very promising position in this, and other, industries going forward." IMO, they would not have mentioned this in two PRs if it were not already a major deal in the works.

Once again he mentioned in passing that Cetek has "an ever-growing client base." That sounds good, but...it begs the questions, How big? How
many clients? Who are they?

Fayiz closed the report with the statement that, "We could not be where we are today had it not been for the investing public, over the years. As the saying goes, "Rome was not built in a day." We are making good progress, each quarter, towards our corporate objectives, this is for certain. In closing, I thank all shareholders for their continuous support, as we strive to build shareholder value for all of our stockholders, both recent and seasoned. The best is yet to come!"

We certainly hope so.

***

SEC Filings:

During the calendar year 2000, CTKH filed:

a Form 10SB12G/A, on 6/23. This is the company's first amendment to the General Form for Registration of Securities of Small Business Issuers that includes consolidated financial statements. Included with that form were copies of the company's Certificate of Incorporation, its By-laws, and a summary of the Corporation's financial information.

a Form 10QSB, on 8/21. This is a Quarterly Report for the quarterly period that ended March 31, 2000. Included with the report was summary financial information extracts from the company's financial statements for the same period.

a Form 10SB12G/A on 8/21. This is the company's second amendment to the General Form for Registration of Securities of Small Business Issuers that includes consolidated financial statements. Included with that form were copies of the company's Certificate of Incorporation, its By-laws, and a summary of the Corporation's financial information.

a Form 10KSB on 8/21. This is the annual report for the fiscal year ended December 31, 1999.

a Form 10Q on 8/21.This is a Quarterly Report for the quarterly period that ended June 30, 2000. Included with the report was summary financial information extracts from the company's financial statements for the same period.

a Form 10SB12G/A on 10/6, This is the company's third amendment to the General Form for Registration of Securities of Small Business Issuers that includes consolidated financial statements. Included with that form were copies of the company's Certificate of Incorporation, its By-laws, and a summary of the Corporation's financial information.

and a Form 10QSB on 11/13.. This is a Quarterly Report for the quarterly period that ended September 30, 2000. Included with the report was summary financial information extracts from the company's financial statements for the same period.

The full text of each of these Forms can be found at: http://www.sec.gov/cgi-bin/srch-edgar?text=Cetek+technologies%2C++inc.&first=1993&last=2004&mode=Simple.

Each of these SEC filings have been reproduced in this series of DD reports.

***

Here are the post numbers of all the individual DD Reports in order. Unfortunately many of them are no longer accessible on the Raging Bull BB. But they can be accessed on the PennyFever board.

Posts # 56084, 56658, 56125, 56126, 56128, 56129, 56091, 56095, 56097, 56101, 56103, 56130, 56106, 56110, 56113, 56115, 56116, 56119, 56121, 56123, 56124, 56249, 60147

***

Here are some of the most important DD links and posts of the last 11 months. Again, unfortunately many of them are no longer accessible on the Raging Bull BB.

16028 (MOT & CTKH display prototype), 16261 (magic1usa summary of 8/03 s/h meeting), 16262 (CTKH's 3 product lines), 16513 (CTKH & smooth ceramic substrate), 19460 (mach1's "Better than you can imagine" interview with FH), 20476 (mach1 followup interview w/FH), 20479 (Jim Stock interview w/audit ref.), 21610 (roundmot comments on Institutional buyers), 2441, 24454 (nanotech the next dot.com article), 24472 (comments on superiority of Ceramic substrate) , 24912 (Bus/Wire report on 1st Quarter 2003 S/H report) , 24915 (Old news about MOT license), 15141, 25282 (MOT & FED panels), 25290 Nanotech Grant bill), 25325 (MOT & CNT displays), 25354 (smart flat panel video displays), and 25405, 27976 (E-mail from MOT regarding CTKH license), 33696 (2002 buyback & R/S), 35154 (burlaptocashmere post on 4th quarter s/h report) , 54459 (hajinator post on CTKH process), 54636 (MOT & CNT), 54654 (nanotubes in alumina), 54802 (incredible article on nanotechnology), 54944 (FED and Gov't R&D support), 54979 (Cetek & acquisitions), 55437 (, 55286 (the science of small things) 77579 ( Japanese companies produce 25" CNT screen), 57784 (CTKH and university labs), 57786 (CTKH announces 500mil buy back in 2002), 58066 (pictures of Cetek), 58156 (comments on q reports), 57447 (smoothtransaction's interview with Jim Stock), 58824 (nanotech and secrecy), 59297 (link to article about 3 companies involved in CNT research), 59819 (List of 20 nano leaders), 59994 ( links and comments on nanotech bill and CTKH, 147 (wmo767 to az6fan re: annual meeting), 60919 9(article on Cetek ceramics)

I also humbly include one of mine as a summary statement. - 28215,

For additional information be sure to check out this link: http://www.allstocks.com/stockmessageboard/ubb/Forum8/HTML/002416.html

***

This is all I have been able to find out so far about the Cetek's Technologies, Inc. for the timeframe specified.

If you are aware of any additional information on this subject that is not included in this report please e-mail it to me at roundmot at cableaz dot com. Thank you.

I sincerely hope this information has been helpful.

Richard
aka roundmot_2