Dig that kooky business model

One of the more amazing things about REFR is its almost completely passive business model. By design, they take no part in the design, manufacture, marketing or sales of any SPD product.

Have you ever seen those ads for "turnkey businesses"? The one running right now is for wireless Internet hotspots; in the past it might have been pay phones or coffee and snack machines. The idea, we are told, is that once you're up and running, all that you have to do is show up and collect the cash from the machine. Easy money! (I'm being slightly unfair in my facetiousness here -- I know people who can, and have, made such businesses work for them. But they're definitely not for everyone.)

That's basically what REFR is: an overgrown turnkey business masquerading as a public company. Their business plan -- and, make no mistake, they're proud of this -- is for other companies, their licensees, to do all the work necessary to develop, market, sell, and support (to say nothing of accepting full liability for) products using SPD technology, while they sit back and collect the royalty checks.

Nice work if you can get it. Of course, looking at REFR's bottom line, you might conclude that it's not working out the way REFR would like. In a sense, you'd be both right and wrong.

It's not that companies based primarily around a licensing model can't work. Qualcomm, for example, makes millions licensing its CDMA technology. Of course, Qualcomm takes an interest in its licensees' activities, helping them to design their products, keeping the standards up to date, even helping licensees raise capital if necessary.

REFR, of course, does none of this. (They did have an investment in SPD Inc., but that licensee no longer exists.) No, they literally plan to just sit back and wait for the cash to start rolling in. Failing that, they're content to sit back and let their investor-funded salaries roll in.

But that gets us into a topic that deserves its own post.