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Composite Technology Corp. (OTC:CPTC) Files for Chapter 11 Protection

image Composite Technology Corp. (OTC:CPTC) is on heavy decline today following the company’s announcement that they have filed for Chapter 11 protection. The stock is trading at $0.063 per share for a 67% loss.

The company issued a press release announcing that they have filed to reorganize under Chapter 11 of the U.S. bankruptcy code. Their wholly owned subsidiary, CTC Cable Corporation has also filed for Chapter 11 protection. The filings are designed to enable CTC and its subsidiary, CTC Cable, to continue to develop, produce and market their ACCC conductor to the utility industry. On April 5, 2011, the company’s lender served a notice of default and accelerated their loan for $10,000,000. On April 7, 2011, the lender filed an application for an emergency protective legal order which was granted without a hearing on April 8, 2011. The court order provides for the companies to immediately send all remaining cash recently released from the escrow containing proceeds from the sale of the wind division in 2009.

Composite Technology Corporation's patented ACCC conductor technology enables superior performance of high voltage transmission and distribution electrical grids. ACCC conductors use CTC's carbon fiber core which is produced by its subsidiary, CTC Cable Corporation, at their headquarters and delivered to qualified conductor manufacturers who produce and distribute ACCC conductors to operators of electrical grids worldwide.

Obviously with the company filing for Chapter 11 protection, there is an underlying issue with their financial statements. Upon a review of their filings, we found substantial debt and a lack of revenue which helps to explain the current situation.

From the most recent 10-Q filed for the period ending December 31, 2010:

• $27M in assets vs. $55M in liabilities;
• $280M accumulated deficit;
• $5.1M in revenue with a gross profit of $1.4M;
• $3.1M net loss from operating activities.

We hope that Composite Technology can reach an amicable solution to their financial troubles with their lender which could greatly benefit the company as well as their investors as they attempt to navigate through this situation.

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April 24, 2014     10:42 AM ET