On March 31st, 2005, REFR licensee Thermoview filed an amended 10-Q (as well as a notification that their 2004 10-K would be late, never a promising sign). Among the disclosures in the amendment were changes to the company's licensing agreement with REFR, and specifically their schedule of payments, which they say were put into effect on December 31st, 2003. These changes are not presently reflected in any filing by REFR. Their most recent 10-K continues to reference the original 2000 agreement as the effective version.
The amendments substitute a reduced payment in 2003, for additional, larger payments in 2005 and 2006, although, with net tangible assets of around negative $20 million, the question arises as to whether any of this payment schedule will survive long, what with the prospect of a Thermoview bankruptcy looming ever larger.
Nevertheless, the discrepancy between the two companies' stories is disturbing. How can it be that troubled, filing-delayed Thermoview can keep track of changes to its agreement with REFR, while REFR itself, cannot?
Saturday, April 02, 2005
Thermo Breakdown
Thermoview Industries is something of a rarity among REFR's licensees, an actual, established retailer that agreed to sell SPD-based products, specifically, Alterlite-brand variable transparency windows.
The licensing terms were a relative coup for REFR, in that Thermoview committed to paying predetermined minimum royalties even if they never sold an SPD product. Speaking of which...
The "rollout" at at Thermoview was an interesting event in and of itself. The windows were supposed to be on display at various California locations throughout late July and early August of 2002. The official debut on July 15, 2002, was portrayed as a big event. A followup release four days later appeared to confirm that the introduction was a smashing success, with "better-than-expected results" and "accelerated progress".
Oddly, though, on the same day of the followup release, July 19th, the stock of REFR, which had been hovering right at $10, suddenly cratered to $7. The promoters, of course, blamed this on the short sellers, but then again, they blame everything short of rainy days on short sellers.
The truth of the matter came out a short while later, as an SEC filing revealed that none other than REFR chairman and founder Robert Saxe had sold 100,000 shares of stock right into the teeth of that July 19th press release.
Now, one might think that this would raise the ire of even the most loyal of shareholder bases. And, indeed, it does lend a considerable amount of credence to the theory that those posting as longs on the message boards are not, in fact, longs, but simply paid promoters. Oh, but Saxe had an excuse for selling, though. He had a margin call. No, really. The chairman of the board of a public company suffered a margin call on his own personal shares! So he claimed anyway; that contention was never proven. Further clouding the issue is the fact that Saxe never rebought those shares, even at today's prices which are lower than any at which he sold. One might well wonder why.
But all's well if the Thermoview rollout was a smashing success, right? Well, not so much there, as it turned out. Spot visits to Thermoview's California locations revealed no SPD on display. Calls to Thermoview's order line failed to find anyone who knew about SPD or Alterlite. Anticipated royalties in excess of the minimums never materialized. In general, the whole rollout seemed to have been a phantom event and the statements about "better-than-expected results" outright lies.
Over the years that followed, Thermoview's financial state has steadily deteriorated and they have fallen behind even in their minimum royalty payments to REFR. REFR began carrying an allowance for uncollectable receivables reflecting this. Thermoview's recent 10-Q/A filing had further disclosures on their relationship with REFR, which will be covered in part two of this posting.
The licensing terms were a relative coup for REFR, in that Thermoview committed to paying predetermined minimum royalties even if they never sold an SPD product. Speaking of which...
The "rollout" at at Thermoview was an interesting event in and of itself. The windows were supposed to be on display at various California locations throughout late July and early August of 2002. The official debut on July 15, 2002, was portrayed as a big event. A followup release four days later appeared to confirm that the introduction was a smashing success, with "better-than-expected results" and "accelerated progress".
Oddly, though, on the same day of the followup release, July 19th, the stock of REFR, which had been hovering right at $10, suddenly cratered to $7. The promoters, of course, blamed this on the short sellers, but then again, they blame everything short of rainy days on short sellers.
The truth of the matter came out a short while later, as an SEC filing revealed that none other than REFR chairman and founder Robert Saxe had sold 100,000 shares of stock right into the teeth of that July 19th press release.
Now, one might think that this would raise the ire of even the most loyal of shareholder bases. And, indeed, it does lend a considerable amount of credence to the theory that those posting as longs on the message boards are not, in fact, longs, but simply paid promoters. Oh, but Saxe had an excuse for selling, though. He had a margin call. No, really. The chairman of the board of a public company suffered a margin call on his own personal shares! So he claimed anyway; that contention was never proven. Further clouding the issue is the fact that Saxe never rebought those shares, even at today's prices which are lower than any at which he sold. One might well wonder why.
But all's well if the Thermoview rollout was a smashing success, right? Well, not so much there, as it turned out. Spot visits to Thermoview's California locations revealed no SPD on display. Calls to Thermoview's order line failed to find anyone who knew about SPD or Alterlite. Anticipated royalties in excess of the minimums never materialized. In general, the whole rollout seemed to have been a phantom event and the statements about "better-than-expected results" outright lies.
Over the years that followed, Thermoview's financial state has steadily deteriorated and they have fallen behind even in their minimum royalty payments to REFR. REFR began carrying an allowance for uncollectable receivables reflecting this. Thermoview's recent 10-Q/A filing had further disclosures on their relationship with REFR, which will be covered in part two of this posting.
Friday, April 01, 2005
Foolery of all types
On April Fools' Day, I thought it only fitting to highlight one of REFR's more vocal and frequent critics of recent days. He is Bill Mann, senior editor at the Motley Fool, a long-running website dedicated to financial education.
Mann's interest in REFR appears to simply one of fascination, about how a company with such a dreadful history of performance combined with such a lofty valuation relative to the fundamentals, could have such a zealous following. Indeed, even in articles where REFR is far from the main focus, such as this one, he still manages to draw all kinds of fire from those who seem to have no other purpose than to smear him.
The accusations he mentions hearing that he is part of some vast conspiracy involving short sellers and/or hedge funds are real; I've read them myself. To listen to some of these clowns, citing Manuel Asensio favorably is practically a jailable offense.
Pity they don't have much of a sense of humor. Then they might realize the joke is on them.
Mann's interest in REFR appears to simply one of fascination, about how a company with such a dreadful history of performance combined with such a lofty valuation relative to the fundamentals, could have such a zealous following. Indeed, even in articles where REFR is far from the main focus, such as this one, he still manages to draw all kinds of fire from those who seem to have no other purpose than to smear him.
The accusations he mentions hearing that he is part of some vast conspiracy involving short sellers and/or hedge funds are real; I've read them myself. To listen to some of these clowns, citing Manuel Asensio favorably is practically a jailable offense.
Pity they don't have much of a sense of humor. Then they might realize the joke is on them.
Thursday, March 31, 2005
A quarter to nothing
And so we come to the end of fiscal Q1 2005, with REFR producing nothing but bitter disappointment for its shareholders.
Of course, the promoters on the message boards will tell you now that they held no expectations for this quarter. But that is a lie. See this post for example:
Well, admittedly, the alias sjuan2 has subsequently disappeared from the board, but there is little doubt that person will be or is already posting again under a new alias. And so the cycle continues.
Meanwhile, Joe Harary collects another 100 grand or so for all this failure. Nice work if you can get it.
Of course, the promoters on the message boards will tell you now that they held no expectations for this quarter. But that is a lie. See this post for example:
100% confidence in an announcement, which didn't come. You'd think that just might shake the confidence of those posting there, but no.
Confidence Level on Commercialization
by: sjuan2 (52/M/Fremont, CA)
Long-Term Sentiment: Strong Buy12/07/04 02:59 pm
Msg: 191116 of 195140
For those who like numbers, the confidence level that SPD film commercialization will be announced:
January : 50%
February: 75%
March : 100%
sj
Well, admittedly, the alias sjuan2 has subsequently disappeared from the board, but there is little doubt that person will be or is already posting again under a new alias. And so the cycle continues.
Meanwhile, Joe Harary collects another 100 grand or so for all this failure. Nice work if you can get it.
Wednesday, March 30, 2005
Fraud, party of one?
One more promoter canard showed up today for the first time in a while. It's the "innocence by association" argument, that if REFR is in fact committing a fraud of some kind, then all their licensees, including several big name corporations, must be party to this fraud. Thus, if you question REFR's integrity, you likewise question the integrity of GE, Hitachi, DuPont, Air Products, etc.
This is, of course, absurd. The relationship REFR has with these large companies, while technically one of licensor-licensee, is in reality more like customer-supplier. REFR needs manufacturing capacity to produce SPD film, and the large companies are willing to lend it to them. (The fact that, so far, all this capacity has gone unused, is another issue and another post.) As long as the large companies have clear direction on how to make the film, that is all they really need to know. As hard as the promoters attempt to make the claim to the contrary, none of this constitutes any endorsement of the product, the technology, or REFR as an investment.
REFR investors should (read: don't) ask themselves, if REFR should happen to fail to achieve a revenue stream, fail to achieve new financing, and, as a result, fail as a company sometime next year, will that be DuPont's fault? Will they sue Hitachi for misleading them? Will they demand Jack Welch be thrown in prison for GE's complicity in the scam? Of course not. (Indeed, if anyone, they'll go after the shorts and those who warned them about REFR all along. That bit of psychosis is another post topic.)
To say that the supplier-licensees are a "party" to any of REFR's failures is like saying the power plants were a party to the Enron scandal for selling their energy to them. Utterly ridiculous. Much like everything else REFR.
This is, of course, absurd. The relationship REFR has with these large companies, while technically one of licensor-licensee, is in reality more like customer-supplier. REFR needs manufacturing capacity to produce SPD film, and the large companies are willing to lend it to them. (The fact that, so far, all this capacity has gone unused, is another issue and another post.) As long as the large companies have clear direction on how to make the film, that is all they really need to know. As hard as the promoters attempt to make the claim to the contrary, none of this constitutes any endorsement of the product, the technology, or REFR as an investment.
REFR investors should (read: don't) ask themselves, if REFR should happen to fail to achieve a revenue stream, fail to achieve new financing, and, as a result, fail as a company sometime next year, will that be DuPont's fault? Will they sue Hitachi for misleading them? Will they demand Jack Welch be thrown in prison for GE's complicity in the scam? Of course not. (Indeed, if anyone, they'll go after the shorts and those who warned them about REFR all along. That bit of psychosis is another post topic.)
To say that the supplier-licensees are a "party" to any of REFR's failures is like saying the power plants were a party to the Enron scandal for selling their energy to them. Utterly ridiculous. Much like everything else REFR.
Bounce time
With REFR back trading near the $5.00 it is almost certainly time for the hedge funds to stop selling stock and return to support mode, which, if recent history is a guide, will guide REFR back into the $6.00-$6.50 range. (Of course, it might not work out that way -- trade at your own risk.) By tomorrow we should have a fine sampling of chest-thumping from the Type 3 crowd that the coming run-up is "the big one", this time for sure!
The tragendy of Elgindy
This has no direct connection to REFR, but it does provide a further look into the mindset of what I call the Type 3 investor.
Amr "Anthony" Elgindy was convicted last January of exortion, racketeering, and securities fraud, involving his illegal acquisition of confidential FBI data regarding a number of small companies.
The bitter irony is that the truth that Elgindy went over the line to bring out, was promptly roundly ignored by those who stood to benefit most from the information, the shareholders of the companies involved.
Let me quote from a recent post on the REFR board that says it about as well as possible:
Once reasonable doubt is gone, it's too late to sell anyway.
Amr "Anthony" Elgindy was convicted last January of exortion, racketeering, and securities fraud, involving his illegal acquisition of confidential FBI data regarding a number of small companies.
The bitter irony is that the truth that Elgindy went over the line to bring out, was promptly roundly ignored by those who stood to benefit most from the information, the shareholders of the companies involved.
Let me quote from a recent post on the REFR board that says it about as well as possible:
Elgindy was a criminal. He was not lying about honest companies in order to turn a profit. He was using INSIDE information (read REAL FACTS) about CORRUPT companies.My summation: The stock market is not a courtroom, and investors are not a jury. One is not bound to disregard evidence simply because the methods for obtaining it may have been illegal. Investments are not presumed good until proven bad beyond a reasonable doubt.
...I remember when Elgindy was recomending shorting a small corporation based in NJ. They sold medical equipment. When Elgindy was charged, the stuckholders of this company were celebrating on the yahoo message board. I tried to explain to them that the charges were that Elgindy had illegal access to information taken from federal investigations. He KNEW their beloved company was a FRAUD, for a FACT. I got nothing but grief for my attempts to explain this very simple concept to them.
The offices of the company were later raided by the FBI. The company was delisted.
That's when I realized that SUCKERS are beyond redemption. You can show them in black and white that they have been had, and IT WILL NOT MATTER.
Once reasonable doubt is gone, it's too late to sell anyway.
Tuesday, March 29, 2005
The short end of the stick
Although this blog is intended to focus on the company Research Frontiers itself, the discussion elsewhere often strays into tangential topics, frequently at the encouragement of management. One of the most popular side tracks is that of the short position in REFR.
Now, I personally don't think it should be a surprise to anyone that a company trading at over 400 times revenues would have a substantial short position. But of course that doesn't account for the Type 3 mindset, which is constantly surprised that anyone could have the audacity to disagree with it.
Today's post for the dissection table is a more generalized rant against the concept of short selling. It was in response to a question, what would REFR's valuation would be in the absence of a short position.
Value of REFR ? It is in the eye of the beholder.
Well, that's unarguable, if unsubstantive.
There have been stocks that have been viewed to have large potential, that went up to have 100's of millions in market cap.
Yet when the run up was made they had no to little in earnings.
Yes, and then 2000 came and those stocks got crushed.
Look most NASD stocks can not make a profit and yet their Market Cap is HUGE.
Again, the poster appears to be living in the bubble era.
SPD's potential is HUGE,we can see how GNTX using an inferior tech (for large applications) has over 2 bill in market cap.
Amusing. Gentex's tech is "inferior", but it was marketable and SPD wasn't.
The bet is, can RFI's licensees succeed in producing end products using SPD tech.The longs are convinced this will happen!
Aren't they always? The fact that they're never proven right never seems to matter.
The shorts have done harm to RFi's shareholders,by causing dilution & causing RFI to spend money on defending themselves and pursing justice for those who manipulated and libeled the Co.
This is where it gets a little bizarre. The "pursuing justice" part apparently refers to the company's insinuation that Manuel Asensio attempted extortion against them in early 2001. Their "pursuit" consisted of turning their claims over, not to the police or the FBI, but the SEC, an agency with no police power.
But the shorts "caused dilution"? Forced the company to spend money "defending themselves"? Against what, pray tell? Is there some investigation going on that we don't know about?
REFR should be selling for 20 a share IMO based on the markets,the superior tech,the # of licensees,the quality of licensees,the patent portfolio,etc...
The "superior" tech, which the auto companies rejected in favor of "inferior" Gentex, the licensees of which even the company admits the majority are dormant, and the patent portfolio that the company doesn't even carry on its balance sheet as an asset; their most recent patent acquisition was immediately expensed.
Yes,you shorts have tried to destroy this Company but you have failed and RFI will become a large dividend paying machine.
This brings up another insidious vision perpetrated by Mr. Harary: his declaration that when REFR becomes profitable, that the vast majority of profits will be cycled back to the shareholders in the form of dividends. Because apparently the company has no actual growth ambitions whatsoever. It apparently plans to be the same 12-person outfit ten years from now, the only difference being that they'll be funnelling hundreds of millions a year in royalty revenues to its beloved shareholder base.
As the Brits say, pull the other one.
However I wonder how many companies you have suceeded in destroying?
How many shareholders have you shafted?
Isn't that always the way? It's never the company failing on its own, or management shafting the shareholders, it's always the fault of the shorts. In truth, the only way shorts can actually destroy a company is through something called a "toxic convertible", which requires the complicity of company management to happen anyway.
Short selling is harmful to the economy and can never stand the test of time.
Why?
Because, when you base a market on anything but successs, it is doomed to fail.
By that reasoning, the insurance industry is a passing fad. After all, isn't it based on the notion that bad things can happen?
Shorting is done all the time in business.
Yes it is,
however the intent is to deliver the product or service.
Short selling in the stock market is to drive the stock (business) to 0.
The poster gets a little incoherent towards the end, apparently thinking that "stock" and "business" are interchangeable terms, and that a short sale can only gain if a company goes bankrupt. Besides that, though, REFR, by its own admission, isn't in place to deliver a product or service, but to just sit there like an overgrown leech, sucking royalty revenue off a technology that other companies (they hope) develop. Where is the economics of that?
Now, I personally don't think it should be a surprise to anyone that a company trading at over 400 times revenues would have a substantial short position. But of course that doesn't account for the Type 3 mindset, which is constantly surprised that anyone could have the audacity to disagree with it.
Today's post for the dissection table is a more generalized rant against the concept of short selling. It was in response to a question, what would REFR's valuation would be in the absence of a short position.
Value of REFR ? It is in the eye of the beholder.
Well, that's unarguable, if unsubstantive.
There have been stocks that have been viewed to have large potential, that went up to have 100's of millions in market cap.
Yet when the run up was made they had no to little in earnings.
Yes, and then 2000 came and those stocks got crushed.
Look most NASD stocks can not make a profit and yet their Market Cap is HUGE.
Again, the poster appears to be living in the bubble era.
SPD's potential is HUGE,we can see how GNTX using an inferior tech (for large applications) has over 2 bill in market cap.
Amusing. Gentex's tech is "inferior", but it was marketable and SPD wasn't.
The bet is, can RFI's licensees succeed in producing end products using SPD tech.The longs are convinced this will happen!
Aren't they always? The fact that they're never proven right never seems to matter.
The shorts have done harm to RFi's shareholders,by causing dilution & causing RFI to spend money on defending themselves and pursing justice for those who manipulated and libeled the Co.
This is where it gets a little bizarre. The "pursuing justice" part apparently refers to the company's insinuation that Manuel Asensio attempted extortion against them in early 2001. Their "pursuit" consisted of turning their claims over, not to the police or the FBI, but the SEC, an agency with no police power.
But the shorts "caused dilution"? Forced the company to spend money "defending themselves"? Against what, pray tell? Is there some investigation going on that we don't know about?
REFR should be selling for 20 a share IMO based on the markets,the superior tech,the # of licensees,the quality of licensees,the patent portfolio,etc...
The "superior" tech, which the auto companies rejected in favor of "inferior" Gentex, the licensees of which even the company admits the majority are dormant, and the patent portfolio that the company doesn't even carry on its balance sheet as an asset; their most recent patent acquisition was immediately expensed.
Yes,you shorts have tried to destroy this Company but you have failed and RFI will become a large dividend paying machine.
This brings up another insidious vision perpetrated by Mr. Harary: his declaration that when REFR becomes profitable, that the vast majority of profits will be cycled back to the shareholders in the form of dividends. Because apparently the company has no actual growth ambitions whatsoever. It apparently plans to be the same 12-person outfit ten years from now, the only difference being that they'll be funnelling hundreds of millions a year in royalty revenues to its beloved shareholder base.
As the Brits say, pull the other one.
However I wonder how many companies you have suceeded in destroying?
How many shareholders have you shafted?
Isn't that always the way? It's never the company failing on its own, or management shafting the shareholders, it's always the fault of the shorts. In truth, the only way shorts can actually destroy a company is through something called a "toxic convertible", which requires the complicity of company management to happen anyway.
Short selling is harmful to the economy and can never stand the test of time.
Why?
Because, when you base a market on anything but successs, it is doomed to fail.
By that reasoning, the insurance industry is a passing fad. After all, isn't it based on the notion that bad things can happen?
Shorting is done all the time in business.
Yes it is,
however the intent is to deliver the product or service.
Short selling in the stock market is to drive the stock (business) to 0.
The poster gets a little incoherent towards the end, apparently thinking that "stock" and "business" are interchangeable terms, and that a short sale can only gain if a company goes bankrupt. Besides that, though, REFR, by its own admission, isn't in place to deliver a product or service, but to just sit there like an overgrown leech, sucking royalty revenue off a technology that other companies (they hope) develop. Where is the economics of that?
Monday, March 28, 2005
Asensio angst
It can be a hazardous thing, at times, to write critically about a company with as zealous a group of shareholders and/or promoters as the one REFR enjoys.
Take for example the case of Manuel Asensio. An outspoken critic of companies to say the least, Asensio turned his wrath on REFR for about six months in 2001, writing a scathing series of articles (acceptance of site agreement may be required to view) about REFR and its activities at the name.
In the intervening years, two things have happened. One, Asensio was proven correct on virtually every score (apart from his $1 price target for the stock). And two, the shareholders of REFR have never forgiven him.
The enduring hatred that REFR's shareholders have for Asensio is partially incited by the website AsensioExposed.com, a website dedicated to destroying Asensio's reputation at all costs. They do this not by attempting to refute any of his criticisms of companies, but rather by making hay over his battles with the National Association of Securities Dealers (NASD, from which is derived the name of the Nasdaq Stock Exchange), leading to his eventual disbarrment by that association.
It is not my desire to get into the details of what Asensio has or has not done right now. But the fact the the posters to the REFR board still enthusiastically revile the man four years after he penned his warnings about REFR, at prices three or more times today's levels, only goes to show that this is a lot that does not have their collective head on straight.
Back in 2001 and 2002 there just might have been a sort of point to attacking Asensio, in order to discourage people from believing what he had to say about their favorite company. But with everything he has said about so many companies, including REFR, having been borne out, what seems to be left is nothing more than hatred for its own sake.
Take for example the case of Manuel Asensio. An outspoken critic of companies to say the least, Asensio turned his wrath on REFR for about six months in 2001, writing a scathing series of articles (acceptance of site agreement may be required to view) about REFR and its activities at the name.
In the intervening years, two things have happened. One, Asensio was proven correct on virtually every score (apart from his $1 price target for the stock). And two, the shareholders of REFR have never forgiven him.
The enduring hatred that REFR's shareholders have for Asensio is partially incited by the website AsensioExposed.com, a website dedicated to destroying Asensio's reputation at all costs. They do this not by attempting to refute any of his criticisms of companies, but rather by making hay over his battles with the National Association of Securities Dealers (NASD, from which is derived the name of the Nasdaq Stock Exchange), leading to his eventual disbarrment by that association.
It is not my desire to get into the details of what Asensio has or has not done right now. But the fact the the posters to the REFR board still enthusiastically revile the man four years after he penned his warnings about REFR, at prices three or more times today's levels, only goes to show that this is a lot that does not have their collective head on straight.
Back in 2001 and 2002 there just might have been a sort of point to attacking Asensio, in order to discourage people from believing what he had to say about their favorite company. But with everything he has said about so many companies, including REFR, having been borne out, what seems to be left is nothing more than hatred for its own sake.
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