REFR Madness

In reply to recent commentary

2010-06-17T20:42:00.004-04:00

$2.85 million

2009-08-03T12:24:00.002-04:00

And no sooner do I decide to put this thing on hold than one of the thing I listed as possible re-motivators, the closing of a new refinancing deal, happens.

"Recent developments have created exciting opportunities..." blah blah can you spare us the marketing speak just once, Joe?

As is the rule these days, the "investors" are unnamed, and will not be sticking around long enough to make themselves known. And the so dance goes on.

In a world where we're spending 1000 times this kind of money to overpay for old cars in the hopes of stimulating something, it's just so hard to get excited about $2.85 million. If Joe has this permanent sucker list that is prepared to hand him a million or so every quarter with no expectations for anything more than happy talk, well good for him I guess.

Me, I'm going back to sleep.

Bored bored board

2009-07-23T15:04:00.002-04:00

The arrival of an alias on the Yahoo! REFR board copying the admittedly obvious pun has prodded me to do one more update. (Incidentally, "refrmadness" is not me. I post on the board as "refrmadnessblogger").

Honestly, even though there's a 10-K or maybe a 10-Q on REFR out I can't muster the interest to even crack it open. If the company itself can't be interested enough to make a press release out of it why should I bother?

I've finally decided there are things in this life that matter and REFR is just not one of them. Let Joe Harary make a fortune on broken promises. He's the one who has to look himself in the mirror.

For now, I'm done. Maybe when REFR succeeds or fails at raising more money I'll check back in, if I happen to hear about it. Until then, I'm pulling down the perfectly-good mechanical shades on this blog.

See ya round.

Stop the presses: Harary gives vote of confidence to self

2009-05-12T09:45:00.002-04:00

Never let it be said that I never give the public what they want.

Back on April 30th REFR filed an 8-K announcing its new employment contract with Joe Harary, who is now the CEO and pretty much every other position that matters at REFR.

Maybe it's just all the medications I'm on for this cold but this doesn't spark any fresh outrage with me. Harary's salary is pretty much in the ballpark of what it's been, and the options aren't out of line with what he's been given in the past. Sure, there's the whole "the company itself has nothing to show for it" business, but that's been true forever.

Let's face it, this company has become nothing more or less than Joe Harary's little fiefdom. Since the trouncing would-be proxy fighters took a couple of years ago, there's really been no sign of any challenge to his authority.

In a couple of days I expect I will feel better, but for what ails REFR there seems to be no cure.

Oh, and I guess another quarter or something

2009-05-08T15:16:00.003-04:00

REFR filed another 10-Q but I can't even muster the interest to even look it up. Something something about a lot of option awards to management but it's really gotten to the point where nobody even seemed interested in defending it. Nothing much else has changed, the glow from the Qantas deal, whatever it was, has faded, and the need for another trip to the secondary market is just a handful of months away.

I honestly don't know how many chapters are left in this story.

Qantas qanundrum

2009-04-01T12:45:00.004-04:00

I've been a little slow to blog this one as I'm not entirely sure what to make of it. It started, simply enough, with an article by Paul Goldberger in Travel & Leisure magazine about a new Airbus A380 put into service by Australian airline Qantas. Towards the end, Mr. Goldberger makes reference to a window in the lavatory with a distinct shading system:

The most extravagant detail of all, however, isn’t in the first-class cabin itself, but in its bathrooms. They are large, with an expansive sink and counter, and there’s a window. When you walk in, the window, the surface of which is covered in liquid crystals, appears to be translucent. (Who could look in from the outside to invade your privacy, I’ll never know.) When you lock the door it transforms, as if by magic, into a transparent surface. Where else can you shut yourself in a bathroom and gaze out at the world from 30,000 feet?

This would seem to have little to do with REFR or SPD, apart from being another scrap of evidence showing that technology was passing them by. Yet, some very vocal commentators immediately began to insist that the shade in question was REFR's SPD, in spite of there being no supporting evidence for that assertion.

Fast forward to April 1st, appropriately enough, when REFR's loyal one-man licensee Inspectech puts out a press release talking about their umpteenth trade show appearance in Germany, and, oh by the way, the Qantas Airbus lavatory window mentioned in that Goldberger article? Ours.

Seriously (and it being April 1st I waited awhile to be sure), they treated the Goldberger article as if that was the first they even knew about it. Perhaps even more dodgily, they chopped up the quote above, carefully removing references to liquid crystal technology (even though that is an integral part of the I-Shade product).

It recalls the Jeep Rescue fiasco of 2004, where SPD was apparently built into the sunroof of this showcase vehicle, but almost nobody noticed it. Likewise, the existence of SPD in the lavatory window, assuming it is in fact there, totally escapes Goldberger's notice, yet the fact that the window gets mentioned in the article at all is portrayed as some kind of PR coup for SPD technology.

Meanwhile, REFR stock, which had a rather big run on the article comments, doesn't seem to have reacted at all to the confirming PR. Maybe April Fools is just running long this year.

Into their own hands

2009-03-03T10:05:00.002-05:00

It's a strange world we find ourselves in these days. People are having trouble finding solace in much of anything, it seems, and some are being led to measures more desperate than they ever consider under ordinary circumstances.

Case in point: Research Frontiers, the company that has made an artform out of outsourcing every possible aspect of its business plan, has been driven to the point of actually promoting its SPD technology itself.

Lacking any images, it's impossible to judge the effectiveness or impressiveness of the "design center" REFR has set up in its headquarters. But at least it presumably answers one long-running complaint about why, if SPD is this revolutionary technology, REFR used none of it in its own office.

As REFR couches it in terms of "hosting events", it tends to suggest that the "display center" will not be routinely open to the general public. Still, it's a start, a "beginning of the beginning" so to speak. The big question is whether there's any time left.

Seeing the light

2009-02-17T10:03:00.003-05:00

More information is coming out on the Indiana Medical Center SPD installation, in the form of an article on one of REFR's favorite uncritical mouthpieces, glassonweb.com. The article itself is the usual fluff rehash of Innovative Glass's PR on the installation (only notable in that it links to an "original source" in Belarus of all places), but contained within is a picture which for once backs up an old adage by being worth at least as much as the thousand words of the article. Witness SPD in action:

No, I don't know what the inset in the corner is supposed to be, so let's focus on the main picture. First question: is this SPD in the light state or the dark state? At first glance it seems to be the dark state, but just look at the sunlight pouring in on the left, from a full room away. This is obviously nowhere near as effective as the mechanical blinds the article naturally denigrates, in terms of darkening a room.

So perhaps it is some kind of intermediate state? But if so, why would they choose such a state to show off, one that is neither effectively light blocking nor resembling of ordinary clear glass?

In fact, it might actually be the "clear" state. Some message board posters have asserted that SPD becomes significantly darker when viewed at an angle, perhaps even the relatively mild angle the photo is taken from. But why would they choose to highlight this "feature"?

Of course, the notion that SPD is "good in theory, not so hot in practice" is nothing new to regular readers of this blog. But it rarely hurts to keep verifying that, no matter what tune the share price might be dancing to, at the company itself, little if anything ever changes.

Update: a commenter has pointed out that the image that appears to be "behind" the glass is in fact almost certainly a reflection of the interior of the room itself. That certainly explains the choice of shot, although this means the only effect being illustrated is that SPD makes it hard to see outside of the room. I suppose they can use the room for focus group meetings or something.

Timely news?

2009-02-11T10:22:00.002-05:00

We may have finally gotten an idea as to what was behind the strange little run, on no news (apart from Harary's long-anticipated promotion) and very little volume, that REFR has had the past two months, from a close of $1.60 last December 5th to over $4.00 today.

The key appears to be a project that had gotten quite a bit of hype on the message boards and which I thought I had blogged about myself, but apparently not. According to the press release from REFR licensee Innovative Glass (true to form as ever, REFR is not a party to the PR, but gets a nice plug for its ticker symbol) they have finally completed the installation of what is apparently the largest SPD-related project ever, at the Indiana University Health Information and Translational Sciences Building in Indianapolis.

The size of the project seems fairly impressive, involving a total of 68 interior and exterior panels (although the average panel size isn't stated). But what sticks out like the proverbial sore thumb was the length of the project -- three years.

Over those same three years, REFR itself burned about $12 million, so unless Innovative scored $120 million out of the whole deal, this doesn't exactly turn REFR into a money-making operation. REFR is simply not going to get rich off this "one project at a time" business, especially if such projects are going to be that drawn-out.

Note that this isn't the first SPD project Innovative has done, and REFR investors are still waiting for the big fat royalty check (not to mention the wave of publicity) from that.

We'll wait and see where this takes us (not very far for very long, so far today), but with REFR's built-in 90-day lag on royalty payments, it will be August before we get any hard data on how, or even if, this impacts REFR's bottom line. By which time, REFR will almost certainly have priced its next stock offering.

And so the music continues on.

And the award for Best Long-Running Fleecing of Investors goes to...

2009-01-13T13:06:00.003-05:00

This one slipped by my radar for a while because our friends at the SEC (Motto: "We Have No Idea What We're Doing") helpfully separated out the insider transaction filings from other filings and put them in a much less obvious location.

But at any rate, as you can see from the link, it was a very happy new year for the gang at Woodbury, as officers and board members alike awarded themselves thousands of free shares for their sterling performance in the collection of back royalties.

25,000 shares went to each member of the board, except for brand-new CEO Joe Harary, who raked in 150,000(!) shares (of which he gifted 36,000 to his children). Non-board members Michael LaPointe and Steven Slovak split just under 10,000 shares.

REFR investors, meanwhile, enjoyed a 78% thrashing of their investment in 2008, with no hope that the profit reported in the third quarter will be repeated in Q4, and the need to issue another secondary at record-low prices in the offing.

Great job guys!

One more step out the door

2008-12-23T14:17:00.003-05:00

"The Enterprise is yours."
"...for as long as she lasts."
-- Jean-Luc Picard and Will Riker, Star Trek: The Next Generation, "Contagion"

REFR shares underwent a mini-rally the past couple of days on word that they were getting a new CEO to replace founder Robert Saxe. The not-so-good news: the position is simply being taken over by Joe Harary, the man who's been running the company in all but name up until now, just making it more-or-less official.

Saxe remains onboard, literally, retaining the title of chairman of the board, but basically this amounts to more chair shuffling while giving Saxe more of the semi-retirement he's probably already halfway into already.

REFR shares, having been pummeled all year, needed little excuse for a relief rally. But in the longer haul, REFR is appears to be more and more resigned to having to make their next capital raising effort at record-low prices in a horrible market for such speculation.

At any rate, I remain with only the best holiday wishes for all readers.

...Or Did They?

2008-12-01T12:36:00.002-05:00

This one leaves me a bit red in the face, as I normally would have done more thorough research on such a thing, or at least gotten around to it within a reasonable time frame thereafter. But instead, perhaps out more out of apathy than anything else, accepted the profit pronunciation for Q3 at face value and wrote it off as a one-time event.

But in fact that may have given REFR too much credit. Message board poster xavierducats uncovered this language in the 10-Q filing:

"The Company's fee income from licensing activities for the first nine months of 2008 was $1,476,131 as compared to $237,810 for the first nine months of 2007. This difference in fee income was primarily due to the receipt of a one-time payment from a former licensee in full settlement of past due minimum annual royalties for several years."

Xavier went on to hint at what I'll say explicitly -- there is a very real possibility that REFR's Q3 profit may be "restated" out of existence in the months to come.

Rather than being a termination fee, the roughly $1 million paid by NV Baekert was now apparently an accumulation of unpaid "minimum royalties" over time. Now, I am not a CPA, but it certainly seems to me that if REFR was truly owed these royalties they should have recognized them at the time they were earned, whether or not they were in fact paid or not. Thus, that $1 million should be spread across however many quarters Baekert was in arrears, thus flattening Q3's revenue spike and negating the standing of profitability.

We shall see what REFR's auditors have to say about that this winter.

As a parting aside, I'll echo the mirth at Joe Harary's latest effort to put a good face on REFR's sorry state, with his latest "Ask Joe" column pointing out the companies REFR has "outlasted" because of the recent carnage in the financial industry. Apparently being Wall Street's equivalent of a cockroach is the new standard of success in Woodbury.

They did it!

2008-11-06T10:31:00.002-05:00

Truly, history was made this week.

I speak, of course, of REFR's first quarterly report in its 43 years of existence to actually shows a profit.

A minor detail, albeit one that may be tempering the excitement somewhat, is that roughly 85% of the revenue for the quarter (the exact figure can't be determined directly) came from the exit fee paid by NV Baekert to discontinue the obligations of their license agreement. Based on year vs. year comparisons the fee appears to have been on the order of $1 million, which rather soundly dwarfs the net income for the quarter of $156,655.

So the irony is, Baekert may have paid more to end their relationship with REFR, than Hitachi Chemical did to make their relationship closer.

It's not known whether there are other such "bombshells" in the offing. For all anyone knows Hitachi might have to pay to not renew their technology sharing agreement, which, to all appearances, has yet to produce a thing.

The practical bottom line is that REFR has been bought roughly another four months of life, which should take the prospect of the dreaded going concern clause for the next 10-K filing off the table.

So I guess we get to stick around another year and see if a new administration means REFR securing some kind of government stimulus grant, or getting slapped around by a less business-friendly SEC. Or, you know, just more meandering.

Never a recession for empty gestures

2008-10-06T10:23:00.003-04:00

Even as business in the real world seems to be crumbling, "business" as practiced by REFR is hopping. First of all was Isoclima's perennial return to the trade show spotlight. The wording of that PR, saying that Smart Glass was "featured" in the display is reminiscent of other showcases where a rather substantial number of items were "featured", such as the Smart Garage, the EPCOT Juno exhibit, the Second Skin art exhibit.

Not content with that, however, REFR today announced a new licensee to replace outgoing NV Baekert, this one being Pittsburgh Glass Works. I'm not sure what this says about progress at REFR's other Western Pennsylvania glass manufacturer licensee (probably nothing we all hadn't already guessed), but I guess when a count of licensees is your biggest asset you get them wherever you can.

I just hope PGW read their exit clause before signing on.

Of course the irony is that the market is selling REFR off with the rest of the world, so this press is all wasted effort. Unless, of course, something actually comes of it this time. Ha ha.

Paying to leave

2008-10-03T10:26:00.003-04:00

REFR filed a very interesting 8-K last night. Longtime licensee NV Baekert, who inherited their license with REFR via their buyout of Material Science Corp. in 2001, had decided to clean house and terminate their license. The license, which was originally drafted in 1997, never resulted in a developed product, much less a product sale.

But what makes this an item of interest is the disclosure that Baekert was required to pay a "substantial" royalty as a condition of the termination. The actual amount was not disclosed (naturally), and, given the scale of REFR's revenue stream, anything from six figures upward might well be considered "substantial".

But if this termination clause is common among license agreements, and the exit fee is many times the annual mininums the licensees are committed to, that would certainly go a long way towards explaining why companies remain licensees for such a long time after they have clearly lost interest in the technology, and why REFR has managed to maintain a trickle of revenue even in years where it was literally impossible for them to have had business activity.

Grim jokes are already being posted to the effect that REFR might finally attain profitability on this new "license cancellation" business model. Of course, pretty much every stock's shareholders have something of a gallows mood these days. It's a strange world we live in, and stranger still that REFR still manages to exist in it.

And the winner is...

2008-09-23T13:10:00.001-04:00

So apparently SmartGlass International won that award, making it apparently two years out of three they've taken that award at that show. One wonders who they must know. Anyway, the exhibition website describes this as a "product launch" for SPD-SmartGlass ("100% new", har har). Of course, we've been there before, not to mention how it's a bit odd that these guys have apparently just been sitting on their SPD license for as long as they have and are just now getting around to "launching".

Still waiting to believe it when I see it.

You woke me up for this?

2008-09-15T14:06:00.002-04:00

Just when I thought this blog -- and the company it follows -- might simply drift off into that good night, along comes an event so monumental it actually triggered a "material event" SEC filing from the company.

So you can imagine my disappointment when the hubbub was over -- brace yourself -- yet another trade show display. And not even one sponsored directly by REFR itself, but by REFR's licensee in the British Isles, SPD International.

Even more disappointingly, it's not merely another trade show, but the same trade show that SPD International's very own Technical Director, Bob Hudson, showed SPD off at five years earlier. And not even in the form of a garishly painted automobile this time, but simply four large SPD panels, for all we know the same panels Isoclima showed off in Italy the last time we heard from that licensee.

Still, the SPD display is reported as being on the "short list" for some kind of "innovation" award, which I guess only goes to show that either the show's organizers have poor memories, or the 2003 showing of SPD was just that unmemorable. The latter seems unlikely though; who could forget the paint job on that car?

All of which brings me back to REFR's communication priorities. A trade show overseas that REFR has nothing, directly, to do with, that rates an official communication. Any sort of detail on actual product sales, even in aggregate, on the other hand, was explicitly decided at the last annual meeting as something not to be communicated.

Now back to our regularly scheduled doldrums.

The votes are tallied, and Saxe wins again, but...

2008-08-07T11:18:00.003-04:00

REFR filed its 10-Q for Q2 2008 this morning. No real surprises in the results; Hitachi's payments now comprise about 75% of REFR's revenues (and they're probably more embarrassed about it every day). Oh, and the zero-cash point scooted back to the other side of January 1, 2010.

What looks to be most notable is the results of the proxy battle. To nobody's surprise, Robert Saxe and Robert Budin were easily re-elected, but the number of shares withheld surprisingly (to me anyway) exceeded 10% of the shares outstanding. The auditor, BDO Seligman, came off relatively unscathed, only getting a little under 5% withholding.

But it was the proxy initiatives, the Equity Incentive Plan and the sales disclosures, that were in fact quite surprisingly contentious. Make no mistake; managment was never in danger of not getting its way on both votes, but the final numbers were nonetheless a surprise. For some reason, only 6.6 million shares, less than half of the outstanding and number recorded for the board elections, were recorded for the proxy items. And of those, the results were roughly identical: about a 5-to-2 margin backing management's recommendations both times. Still, that's over a quarter of the voting shares participating in the "revolt", far more than I thought we'd see.

Perhaps that might explain the eerie near-silence on the REFR message boards these days, if the meeting was as contentious as the voting suggests, there may be a lot harder feelings over this than are visible on the surface. And management may well have been shaken up by this after all, even as the leader of the insurgency looks to have trudged away in despair. If nothing else, it looks like they've been given notice that loyalty among the shareholders has eroded quite dramatically, and that next time they might actually be in some danger of not getting their way.

Exuent the indices

2008-08-06T18:43:00.003-04:00

Finally post #200. It took a lot longer than I thought it would, given the pace at which I was going when I started. But when there's really nothing more to say on a subject, there's not a whole lot you can do about it.

Anyway, the news this time is that one of REFR's two largest institutional holders, Vanguard Group, has liquidated nearly all of its REFR holdings. This has significance because Vanguard, along with Barclay's Global Investments, are the two biggest managers of index funds, funds that are supposed to hold positions in everything, irrespective of investment worthiness.

It was embarassing enough that these two far-and-away topped the list of institutional holders, meaning that few if any funds were interesting in a position in REFR on its merits. But with Vanguard giving way (single-handedly reducing institutional investment in REFR by nearly 30%), Barclay's is set to become the lone institution with a position in REFR greater than 40,000 shares (unless some other institution picked up an outsized portion of Vanguard's position).

And so the end comes one step closer. I'm seriously doubting this blog will ever see post 300.

Update: It was pointed out on the message boards that the "mffais" site has Vanguard Group drastically reducing positions in just about every stock it holds. With a lack of news to confirm such action it seems this may not be what it seems after all. Sorry!

Marking time

2008-07-28T14:56:00.005-04:00

It's not that I've not wanted to update this blog in the past month; it's just that there's been nothing worth noting. Sure there's the odd post saying how big next month will be, but it's not as if we haven't heard that one about a hundred times, followed 98 times out of the hundred with a "who cares, so maybe we were a little early". Then there was the brief boost in the stock triggered by... um... let me get back to you on that.

But anyway, the sense of wonderment and excitement, the way shareholders would spend all kinds of time dreaming up theoretical uses for SPD, or searching for companies whose representatives might have had occasion to bump into Joe Harary, or scouring Google for anything that even might be a new reference to their pet company, all of that is just gone. Worse still, some of the formerly regular posters on REFR's board can now be seen posting to other stocks, meaning they've not given up on the stock market, but rather just given up on REFR.

The bullish contingent is as weak as it has ever been (even more so than the depths of the no-supplier era) and the bears seem bored if anything.

Even this blog's "answer" blog hasn't been kept up in nearly three months; admittedly partly because it necessarily can't be more active than this one, but even then, this post makes the ninth post since the last response from my shadow.

Anyway, I'll check back in another month if -- despite the confident predictions to the contrary -- nothing happens before then.

The end of the insignificant rebellion

2008-06-26T09:47:00.002-04:00

We may never know exactly what went down with message board poster stanedel's attempt at registering dissent against REFR management, but based on a post from yesterday one can only presume it did not go well at all.

It's not clear what Stan means by his conclusion that REFR is admitting there won't be sales until at least 2012 (which would be uncharacteristically candid on their part), unless perhaps he's reaching a sort of extended conclusion from the Freedonia survey's five-year projections for the "smart glass" industry in general.

His fellow shareholders, ever the empathetic group (give or take an "em") were quick to give this longtime loyal shareholder a "don't let the door hit you on the way out" sendoff.

And thus, apparently, is the end of the sad, sad tale of a disillusioned shareholder. For the rest, of course, the story has more sequels to come.

Buying and selling

2008-06-20T10:00:00.002-04:00

A quick rundown of the insider transactions that took place this week:

Victor Keen, bought 5,000 shares
Richard Hermon-Taylor, bought 6,525 shares
Marion Philip Guthrie, bought 2,500 shares
Robert Saxe, bought 5,700 shares... from Robert Budin

Not quite Malvino-esque in terms of nickel-and-dime trading, but well within the domain of "token" transactions nonetheless, particularly since, in the case of the newcomers to the board, this represents their initial positions in the stock. But the most interesting one is, obviously, the last one. It speaks to the lack of liquidity in the stock these days that Budin decided he needed to arrange a private transaction to dispose of $35,000 worth of stock, rather than attempt to sell it into the market.

And Joe Harary? No purchase at all. Hunh.

Annual meeting? What annual meeting?

2008-06-20T09:32:00.002-04:00

It seems a practical certainty by now that a substantial number of long-time REFR shareholders bailed into last year's run-up in the stock. No one is more notable by his absence than message board poster "ed_wesnofske", who, while not a frequent contributor to the boards in recent years, still had proven reliable with his summaries of annual meetings in the past. But now Ed has been away from the board for over ten months, and with a week gone by since the meeting the hopes of seeing one of his detailed reports on the annual meeting are fading.

On a related note, we have no word from "stanedel" on how his proposals for management shake-up were received. I have to confess to not holding out a lot of hope for him, and his silence after the fact isn't doing anything to dispel that inclination.

Mind you, a few familiar aliases have resurfaced on the message boards, apparently reinvigorated by something (unspecified) they heard at the meeting, but so far nothing particularly focused has emerged as any kind of selling point.

Apart, that is, from a round of stock transactions, but that's material for another post...

SPD goes YouTube

2008-06-13T16:52:00.003-04:00

Just when it looked like nobody was going to have anything to say about this year's annual meeting, xavierducats spotted this:

To SPD Control Systems CEO John Petraglia's credit, his end of the demo seems to be doing what it's supposed to, limited as that may be. (It's just a pity that it's driving such a sorry display.) But what the heck is up with the department store music?

This is the stuff that's supposedly worth $100 million (as of today's market close)?

Land of the spree, home of the knave

2008-06-12T11:53:00.003-04:00

It's getting close to Annual Meeting time once again for REFR, and there's two items of note this year around. Firstly, we have our fairly regular token shareholder rebellion, as described by a message board poster going by stanedel, who is urging a "no" vote on the re-election of board members (Bob Saxe and Robert Budin this year), and a "yes" vote on a proposal for more transparency on licensee activity, at least in an aggregate sense.

Both efforts are of course doomed to fail horribly, of course (such tends to be the case at most public companies), but as a certain gumball-machine-like automoton once said, sometimes a lost cause is the only one worth fighting for.

For management's part, they seem to be prepared to counter with the latest iteration of the report on the glass industry from the Freedonia Marketing Group (in case you were wondering about the picture, not to mention the article title, they're both from "Duck Soup", staged in the fictional country of Freedonia. Yes, a bit of a stretch, but work with me here) . Freedonia reports have been cited by REFR as evidence of growth potential for quite a while now, and conveniently just prior to annual meetings.

So, even as we head towards summer, the forecast remains one of a heavy snow job with no satisfaction for shareholders in sight.

No shortage of excuses

2008-05-13T11:01:00.002-04:00

One claim that the apologists for REFR keep making (and one I'm surprised that I apparently haven't yet explicitly blogged) is that licensees needs to have massive "stockpiles" of SPD film in place before they can make the first sale. The theory being, that when SPD is finally exposed to public demand, that the response will be so overwhelming that unless the vendor is ready for thousands upon thousands of orders overnight, they won't be able to keep up with demand, and that that would be disastrous. Therefore, the theory concludes, the continued dearth of sales of SPD products is actually a bullish indicator, because the longer the delay, the more film the vendors are obviously accumulating so as to be ready for the demand they're anticipating.

Okay, while 90% of you finish your belly laugh, I'll explain it to the 10% for whom that theory makes perfect sense. The simple truth is that shortages are a problem you, as a supplier, want to have. Look at oil. Look at the iPhone. Look at just about every successful video game console released in the past decade.

It's Economics 101. When demand outstrips supply, you get to raise the price. That would be especially vital to the SPD market, where the number one concern is the ability to find buyers at the price point which production costs dictate.

Of course, I'm probably guilty of taking the argument way too seriously here. Obviously, if a year or more passes after a given claim that "supply concerns" are the reason sales haven't begun, that claim can be dismissed as bogus. Of course, by then, the apologists will retort, such a claim is "past history" and therefore irrelevant to the current state of the company.

And so the cycle continues.

The clock advances

2008-05-08T11:14:00.003-04:00

One more item from yesterday's 10-Q has come to light. The 10-K, published not quite two months earlier, contained this statement:

The Company would have to raise additional capital no later than the first quarter of 2010 if operations, including research and development and marketing, are to be maintained at current levels if its revenues do not increase before then.

Yesterday's filing, on the other hand, reads:

Based upon existing levels of cash expenditures, existing cash reserves and budgeted revenues, the Company believes that it would not require additional funding until the end of 2009.

This distinction is somewhat crucial, as it would mean that, if nothing else were to change, in 10 months REFR would have to include the dreaded "going concern" clause in their 10-K filing. That said, it may only require a trivial cut in expenses to push the zero-hour back beyond January 1st, 2010.

Still, one wonders what's changed to bring the threshold closer than previously expected. Did some anticipated source of revenue not come through for them? Was the $75,000 for SCSC not budgeted for? Are they anticipating new direct expenses from the Equity Incentive Plan? Did the rent on meeting room at the Fox Hollow Inn (site of the annual meeting) go up? About the only thing we can be sure of, REFR will not be forthcoming with an answer anytime soon.

Another 10-Q already?

2008-05-07T19:37:00.002-04:00

Man, where does the time go. $170k in revenues this quarter, more than half of that coming from the Hitachi deal. That's got to make a company feel good, being the source of more than half another company's revenue, especially if you have yet to see any benefit for your money.

Apart from REFR making good on $75,000 worth of its promise to support SPD Control Systems, and managing to shave quarterly cash burn back to the low $900,000s, the only other standout item was a $3 million investment in US Treasuries.

Not to say that's irresponsible or anything, but... you really know you're dealing with a dynamic, cutting edge technology company when they can't think of anything more productive to do with half of their cash than throw it into T-Bills. Again, I'm sure this is exactly the kind of activity Hitachi had in mind for their yen.

Same time next quarter then?

The biggest shafting yet?

2008-04-30T10:34:00.002-04:00

It looks like I may have spoken too soon about us being in a dead spot, as the proxy for the 2008 annual meeting was filed with the SEC today, and boy does it contain a doozy.

It turns out REFR runs its stock options plans on a 10-year cycle, and the last one began in 1998 and thus expired as of the end of 2007. (I'm sure the nearly year-long run in the stock, throughout most of 2007, was just a coincidence.)

The new plan for 2008, as detailed in the proxy, contains quite a few new and innovative features. (If only they put this kind of effort into developing their technology!) In addition to the traditional stock options, there's something called "Stock Appreciation Rights", which bypasses the need to exercise options and sell shares on the market (with all the messy SEC paperwork that goes with that), and just hands out cash and/or stock based on the current share price instead. Then, there's a new class of restricted stock, which the board can (theoretically) control the disposal of, although that has a long history of being abused at other companies.

In other news, a shareholder has taken the initiative to propose that the company be more open in detailing licensee activity. This makes enough sense that it will almost certainly be flatly rejected, or fulfilled in a useless way (see, for example, the plea for hiring of new, younger directors last year, and what investors ultimately got).

Also of note, company founder Robert Saxe is up for re-election to the board, along with fellow septuagenarian Robert Budin. Needlessly to say, they will almost certainly be voted right back in with little or no discussion, but one can dream...

Finally, back on the topic of the stock option, or rather, "Equity Incentive Plan", possibly the biggest insult of all comes in the introduction to the plan:

"The Board of Directors believes that the 2008 Plan is essential to the Company's continued success."

Words, for once, fail me.

ForecloSPD

2008-04-29T10:46:00.002-04:00

Yet another dead spot in the storyline here, so let's take time-out for an amusing if somewhat sad story of SPD on the message boards.

In the never-ending process of combing for any speck of publicity for SPD anywhere on the Internet, one poster found an SPD window in the sales description of a house for sale (see the listings in the middle of the page) for over a million dollars in Los Gatos, CA, near the edge of Silicon Valley.

Jubilation turned to consternation and embarrassment, however, as other posters dug into the story and discovered that the house, like so many others in California, was both well behind on property taxes (which had ballooned around about 2005) and in default on its mortgage to a tune of just under $600,000.

Now, while the mortgage default doesn't reflect on REFR as such, it makes it unlikely in the extreme that the SPD window would be some brand-new addition to the house. Who spends thousand on "home improvement" for a home they're losing?

Besides that, REFR claims in its SEC filings to this day that there has never been a successful SPD product, so the question arises: where exactly did the window come from, then?

There's one mystery we may never solve.

How dogged can you get?

2008-04-07T10:54:00.002-04:00

This blog has seen a lot of displays of groundless optimism for REFR's version of SPD over the years, but this one may be one for the record books.

As detailed previously, REFR was beaten out (assuming they were ever truly in the race) for the task of placing a variable tint on the windows of the Boeing 787. Despite the seemingly comprehensive statement from all parties concerned, REFR longs desperately held out hope (for more than two years!) that something would somehow go terribly wrong with Gentex and PPG's
implementation and that this would open the door for REFR and (presumably) Inspectech Aero to slap their stuff on the 787.

But as the rollout date for the 787 approaches (despite delays) and even that vague hope fades, the eyes of ever-hopeful REFR shareholders turn to Boeing's rival in the commercial airliner business, Airbus. Specifically, they have set their hopes on SPD finding its way into the next major Airbus offering, the A350 XWB.

But there's just a small problem there, in the form of an article on AIN Online last January, reading:

A350XWB Will Offer Electrochromic Cabin Windows

By Kirby J. Harrison
January 1, 2008
Cabin interior and electronics

Buyers of an executive version of the new Airbus A350XWB will have the option of selecting the electrochromic (or “smart windows”) technology from PPG. The windows, developed by Gentex of Zeeland, Mich., contain an organic di-electric gel.

When a very low electrical current is introduced, the gel will darken, rendering the window opaque. When no electrical current is present, the window allows the passage of approximately 60 percent of outside light.

Airbus claims the windows on the A350XWB will be larger than those of any other bizliner.

Now, granted, an isolated, unsourced article is rather far from definitive, and furthermore only covers a specific sub-model of the airliner, but you might think that this might temper the enthusiasm of REFR's shareholders somewhat. That is, of course, assuming you knew nothing about REFR's shareholders.

The counter-spin on this article was prompt. One post, for example, read into the article that the Gentex windows were strictly going to be an aftermarket option, while REFR's product would be more prominently marketed.

That was by way of build-up to the recent Hamburg Air Expo, where shareholders convinced themselves that Airbus would announce that SPD was their window-dimming technology of choice for the A350. But it turned out -- get ready for a shock -- that didn't happen.

So, the spin this morning is that Airbus for reasons known only to themselves, was staying mum about their relationship with REFR (and forcing REFR to do likewise) and that there was nothing for it but to keep waiting.

At this point I should note that the A350 is scheduled for its maiden flight sometime in 2012. That's quite a wait indeed, for shareholders in a company with only enough cash on hand to make it through 2009. Guess they better start saving up now to absorb the next stock offering!

One for the books

2008-03-14T10:34:00.003-04:00

It was a wild ride for REFR stock in 2007, but in the end, the only thing that had an impact on the income statement was the technology sharing agreement with Hitachi, which looks to have provided roughly half the company's revenue for the entire year (although, as is their wont, the company made no effort to actually break that down in their 10-K filing last night).

The revenue number was just a hair over $400,000, which, in headier times, might be hyped loudly as the 150% increase over last year that it technically is. But that is rather heavily overshadowed by the steeply greater net loss of over $7.5 million, largely due to a huge upswing in stock option issuances during the stocks run in the teens last year.

Other than that, there's nothing much in the report other than a parsing and counter-parsing of the various ways in which the state of licensee activity is portrayed: what they say, what they don't say, what they say they can't say, etc.

Based on the stock's reaction today, I'm kind of doubting 2008 will be anywhere near as fun for the shareholders as 2007 was.

Licensed to tout

2008-03-10T15:10:00.003-04:00

I wasn't even going to bother with this item, but I'm kind of bored and the stock market in general isn't much fun to follow, so I thought I'd mention one item that arose from the text of GKN's license agreement, as related on the message boards:

In addition, LICENSEE shall promptly develop and maintain a web site relating to its business which prominently features LICENSOR's SPD technology and LICENSEE's relationship to LICENSOR, and shall participate at all major industry trade shows and conferences and engage in other marketing and promotional activities reasonably necessary to promote LICENSOR's SPD technology and LICENSEE's business relating thereto.

Now, this was framed in a context of "why would they agree to do this if they didn't really believe in SPD", but an equally valid take could be, the licensees are only carrying water for REFR because they're contractually obligated to do so.

Something to keep in mind, anyway, when you're wondering why, say, Thermoview would keep AlterLite featured on its front page years after its introduction when it was painfully obvious they weren't selling any of it, to say nothing of after the company itself filed for bankruptcy.

Chain, chain, chain of foolishness

2008-03-06T10:14:00.003-05:00

Almost lost in the non-hubbub over the licensing of GKN yesterday was a glimmer of a notion as to why GKN may have gotten into the licensee club at this time. (Yes, I know, Joe specifically said that GKN approached REFR, but that could mean a lot of things, or nothing at all.)

GKN is, and has been a long-time supplier of glass for passenger windows for Boeing aircraft. This is apparently no different for the 787. But wait, you say, weren't Gentex and PPG supposed to supply the windows? Is there a problem? Have those two quietly gotten the boot as a supplier with GKN, backed by their license of SPD, now replacing them?

That's chain the logic intended to be induced, I think, and such was expressed on the message boards yesterday. But, as just about everyone else on the board simultaneously pointed out... there's just one little problem. GKN's license specifically says -- and, to REFR's credit, the press release does mention this -- they're licensed only to put SPD in armored glass. And I can say without fear of contradiction that the passenger windows on the 787? Not going to be armored glass.

The highly likely truth of the matter is that GKN is and always was supplying the glass for the Boeing 787 windows, but rather than supply it directly to Boeing, they are this time shipping it to Gentex and/or PPG for the application of their electrochromatics. That's simple, straightforward, and therefore certain to be rejected in favor of something far more complex that somehow puts REFR in the driver's seat, by those determined to push that agenda. But that's their problem.

The only question remaining, could it be just a coincidence that REFR would choose to license a company working on a project of which their own technology was recently falsely hyped as being a part? Almost certainly not 100% so, but it's not a lock that this was intended entirely as a subtle ploy. It's at least plausible that they wanted to get SPD somewhere vaguely in the neighborhood of the 787 supply chain, "just in case" the whole Gentex/PPG project blows up, even though there's no evidence of that actually happening.

Bottom line, there now seems to be less here than even I had thought.

GKN

2008-03-05T09:21:00.003-05:00

REFR announced the signing of a new licensee last night, GKN Aerospace of Garden Grove, CA. GKN is licensed to sell "armored" SPD glass in various vehicle markets.

No doubt this is about to give the stock another juicing just as last week's effort was in full retreat and on the verge of unraveling entirely. Whether GKN will have any more success in marketing SPD than any other licensee remains highly debatable, of course, but, with the at least theoretical markets GKN may market SPD towards, at least REFR now has something to keep its highly excitable shareholder base enthralled through the annual report and shareholder's meeting.

And so the cycle begins anew.

Update: It looks like the traders in this stock are determined to make a liar out of me, as it didn't take more than a few minutes for the initial enthusiasm to dry up and revert to the recent pattern of downtrending most of the day. Of course, there's the equally patterned final hour surge to come, so shareholder's hopes that they will be able to say something came of this news aren't dead yet. Still, it's a bit telling that even Briefing.com meets with considerable skepticism when it declares REFR "In Play".

Got a match?

2008-02-26T18:50:00.002-05:00

REFR st0ck was up 17% today. In news which may or may not be connected, licensee SPD Control Systems announced that it had received a "matching funds contract" from the New York State Energy Research and Development Authority.

I say "may or may not" because this news has thus far received no publicity outside of the Yahoo! message boards. Additionally, it's a little hard to see just how this directly benefits REFR, since whatever money is collected should supposedly be going to SCSC, not REFR.

The spin seems to be that this contract represents some kind of endorsement by the State of New York of SPD as the Energy-Saving Technology of the Future™, but, given that that the projects SCSC is working on don't actually themselves incorporate SPD, nor are they even necessarily dependent upon SPD, that seems more than a little bit of a stretch.

So basically today's action seems to have as its motivation "It Is News And Therefore We Must Buy". We'll see how far that gets today's buyers.

Did I Limbaugh a long?

2008-02-04T11:31:00.000-05:00

Arch-conservative talk show host Rush Limbaugh often brags about how he can ruin a journalist's reputation simply by praising and/or agreeing with him. Of course Limbaugh, like him or not, is a highly visible media figure, so it was much to my surprise that my humble and, let's face it, obscure blog may have had much the same effect on a REFR shareholder and message board poster.

In my last post, I reposted uncritically a list of demands from a certain message board poster who, while a loyal shareholder, is rapidly running out of patience with this company's management. This morning, I learned indirectly that a certain blog, whose sole purpose seems to be to "shadow" this blog with rebuttals, has directed some very scathing words at that shareholder.

I fear I may have damaged this shareholder's reputation among his peers, and as such hereby give my deepest apologies to him. I'm even considering striking my last post solely because of the extent to which it may have hurt him. It was never my intent to damage innocent parties with my words, and I would like to make amends for that if possible.

Some simple proposals

2008-01-25T12:25:00.000-05:00

A shareholder posting under the alias "threespeech" posted a series of requests of REFR management to help shore up its flagging credibility. This blog wholeheartedly endorses the notion that implementing any one of these suggestions would provide a major reputation boost, and as such hereby repeats the requests unedited:

Someone in this company needs to take charge and here is how:

1) That person needs to call an open uncensored conference call to stand up and face all challenges. To address the issues that are presented on the table. And that conference should not end until all questions are answered. I want someone to look me in the eyes and tell me the truth.
2) I want someone that instead of letting the production licensees dictate what they are going to do, stand up and challenge those licensees to achieve what they set out to do, to inspire those people to produce a new technology that may not only improve the energy problem in some small way but also inspire the people that are depending on them, the shareholders.
3) I want someone that will say, "yeah, we screwed up and this is how we are going to fix it." What I don't want, sorry to all the lawyers out there, is someone that is trying to figure out a way around discussing the problem by blaming someone or something else. Hell, if we all took responsibility for our actions not many lawyers would be needed.
4) This person will also need to take five volunteers, I don't care if four of them are shorts as long as I get to go, and tour Hitachi, DIC and Isoclima's production facilities, as well as AGP's, Laminated Technologies and Craftsman's facilities. Asking a lot here? Damn right, this company has a lot of proving to do themselves for all the delays and miscalculations over the years.
5) And finally for now, from all the production and installation talk filtering out from RFI, public reports of revenues from royalties, not the artificial license fees.

A promotion of another sort

2008-01-02T11:44:00.000-05:00

REFR began 2008 with the dramatic announcement that Steven M. Slovak, previously Director of Film Development, was now Vice President - Technology. Given that there was no such position previously, and that it wasn't stated whether anyone else was replacing him in his former position, it's a little less than clear what, if anything, this actually means. But, since it was apparently worth a press release and a 8-K filing, one has to presume it means something. We'll be sure keep tabs on this vital development as events warrant.

Out with (some of) the old

2007-12-31T17:01:00.000-05:00

As a literally last-minute release for the year 2007, REFR announced the retirement of board member Dr. Al Malvino. Malvino, ironically, despite being 76 according to the release, actually had been REFR's most recent addition to the board until their additions earlier this month. He had also been a heavy advocate of the stock on the message boards up until 2000.

It is of note that Malvino's personal website, which one contained considerable information on SPD technology, has had all those references removal, replacing them with electrical engineering material of the type he used in the various textbooks he wrote over the course of his career.

Malvino did cite health concerns as at least part of his reason for retirement, and although he issued a statement expressing enthusiasm about the company, one is still left to wonder about the fact that, for all the effort he placed into very careful and extensive research into the company, as document on the message boards, none of it actually bore revenue-producing fruit during his tenure there.

With two additions to the board that would seem to imply one more retirement may be in the offing, but apparently that person is not quite ready to take the gold watch just yet. Stay tuned.

The oldest new licensee

2007-12-17T10:17:00.000-05:00

REFR stock got another (very) short-lived bounce off a press release this morning, announcing AGC Flat Glass Europe as the newest name among licensees of its SPD technology. Even better, the headline claims a license was "sold", implying that money changed actually changed hands from AGC/FGE to REFR (though just how much is, as ever, "undisclosed").

Of course, as usual, there's a couple of devils in the details. For one thing, AGC Flat Glass Europe is simply the renaming of Glaverbel SA, which originally took a license in 1992, sold REFR what is now a substantial portion of REFR's patent inventory in 1999, and was bought by AGC in 2002. In other words, it's only a slight variation of the British Isles license shuffle of earlier this year.

But hey, anything for news, right?

Or perhaps I should have said relatively new

2007-12-14T14:47:00.000-05:00

I've had it pointed out to me that the new directors are not exactly spring chickens, Richard Hermon-Taylor being 67 and Philip Guthrie 63 (give or take a year for each). Not exactly what one would think of as satisfying the request for board members "significantly below 70 years of age" from that shareholder proxy, although it does knock down that median age a little bit anyway. Still, it kind of blunts the notion that these guys are coming in to shake things up a whole lot.

New blood at last

2007-12-13T09:18:00.000-05:00

REFR announced the addition of two new board members last night: M. Philip Guthrie, former CFO at Southwest Airlines and Braniff, and Richard Hermon-Taylor, long-time director at Harley Davidson.

The good news is that, at least ostensibly, these new additions are probably not part of Bob Saxe's immediate circle of friends, and therefore may bring a badly-needed measure of independence to the board. The only obvious downside is, it probably won't be enough: friends of Bob and Joe will still hold control, even if a couple of them (possibly including Bob Saxe himself) retire, an event to which I believe this move is a prelude.

For once, it's a move that I don't immediately see a cynical motivation behind, but rather a response to legitimate shareholder unrest as evidenced by the proxy proposal earlier this year.

Of course, it's not an immediate cure for anything but it will be interesting to watch how our new arrivals react to what they find when they assume their duties in earnest.

Kit to be tied?

2007-12-03T14:02:00.000-05:00

An interesting post on Yahoo! today from an alias that had been silent for several months, under the subject header 'Name That Con, Artist':

Catagory: RFI Licensees of the 21st Century

Clue: Letter;

Dear xxxxxxxx,

Please review and sign the Sales Representative Agreement. Keep a copy for yourself and mail back the orginal with your US $995.00 territory fee to us at:

xxxxxxxx xxxxx xxxx
xxxxx xxxx xxxxx
xxxxxx
xxxxxxxxx xx xxxxx

As soon as I get your letter, I will immediately send your Product Demonstration Kit (PDK/Demo window), Salesman's Notebook, and a few business cards to get you started. We will have 500 business cards printed and sent to you within a few weeks. We expect to do a product launch on November, 14th. We will have our web site completed with sourcing information and pricing at that time.

Best regards,

xxxxxx
xxxxxx xxxxx

Two things are obvious: first, if anything happened on November 14th with respect to SPD, we certainly haven't heard about it, and second, the writer, a longtime booster of REFR and SPD, sounds just a wee bit angry. Whoever this is probably wishes they'd listened to what this blog had to say about those PDK's.

Between this and the continued weakness in the share price, now into its sixth straight week, solidarity in a group for whom solidarity is its primary strength, seems to be fracturing a bit. No doubt, if this person continues in this vein the stalwarts will quickly encourage him or her to go away and simmer in silence, so I don't expect this to set off any wide-scale dissent, but once again, these little outbursts are still of interest. One never knows how many others feel the same way.

Update: In a followup, the poster in question indicated that he or she never signed the agreement (and presumably, never forked over the $995). This person also made reference to an "extensive file" that the above letter is a part of. This may not be the last we hear of this after all...

The debate in capsule form

2007-11-21T16:33:00.000-05:00

One of the more amazing aspects of the argument over REFR is the degree to which facts can be agreed upon, yet completely opposite conclusions drawn. For example:

Generally agreed-upon premise: "The success of SPD technology is entirely in the hands of REFR's licensees."
Bulls' conclusion: "It's in the hands of big companies, big enough to have the power to make it succeed."
Bears' conclusion: "It's in the hands of big companies, too big to care whether it succeeds."

Happy Thanksgiving, America!

Into the abyss

2007-11-15T13:48:00.000-05:00

I don't normally comment on stock price movements without any sort of news trigger, but today's drop, especially in the context of the tumble this stock has taken since the Tokyo auto show, is just breathtaking. It's not an effect you normally see outside the world of unlisted penny stocks whose issuers are flooding the market with shares. Which might be partially the case: REFR did indeed issue quite a large number of options based on the expense they represented, but somehow I think even that is not enough to explain the implosion we're witnessing.

Even some the biggest bulls on the message boards were invoking $6.00 as an average-down point, a level that would have seemed laughable just last week.

In a way, there's a kind of symmetry to this whole mess: up big on non-news, down big on no news.

In other news: Gene Marcial, call your office!

An early morning quarterly

2007-11-13T09:23:00.000-05:00

The third quarter 10-Q came out very early this morning, bolstering the notion raised by some cynics that the failure of the company to file on the accelerated schedule deadline of Friday, might have been the result of an administrative snafu. (Monday, the SEC was closed for Veteran's Day, so this morning was the first opportunity to file after the 5:30pm Eastern deadline last Friday.)

The points that stand out from an initial reading:

Revenues were up, pretty much as expected, almost entirely as a result of the Hitachi "guaranteed access" deal. There had been a few questions as to whether the payments were truly guaranteed, but they seem to be at least being recorded on schedule. Although, given the rather similar bulge in receivables, it appears Hitachi had not, as of September, actually gotten around to cutting REFR a check as yet.
Losses for the quarter, however, were way up, mostly due to the company seemingly giving out stock options like candy to its employees. No less than $1.78 million worth of options expenses were recorded under operating and R&D expenses in the quarter, actually dwarfing all other expenses under those categories. One might well ask if a factor in the sharp decline of the past few weeks wasn't the result of employees cashing out some of these options!
On the licensee front, we learned that AGP has renegotiated some terms of its license. The only change spelled out in the filing was that REFR's royalty cut tripled from 5% to 15%. Why AGP would agree to such an arrangement, which would only hamper its competitiveness if there is to be a marketplace for SPD products, is something of a mystery. One gets the feeling the answer lies in the "other things" the filing did not specify.
Finally, were there product sales? This blogger has read through the filing twice and didn't find any definitive language one way or the other on the subject.

In summary, while not 100% business as usual this past quarter, the bottom line is that REFR remains nowhere near a profit. Better luck next quarter!

Update: A poster on Yahoo! came up with a theory on AGP that rings so true I'm surprised I didn't think of it. It makes perfect sense that each end-product licensee would be able to "buy" a lower royalty rate by agreeing to a minimum royalty payment. So, the increase in the rate strongly suggests that AGP is greatly lowering, or very likely, eliminating, its "minimum". Draw your own conclusions about AGP's confidence in the market for SPD products from that.

Has the cap come off?

2007-11-12T15:35:00.000-05:00

In the early part of this decade, when REFR roared as high as $40 a share and hung around in the $15-$30 zone for quite a long time before the end of the SPD Inc. era flushed the stock, a rather hefty amount of focus was placed on the size of the short interest. Even though the total shares outstanding were well over 10 million even in 2000, the short interest seemed to hit a hard cap right around 2 million shares. A lot of comments about how "the shorts were out of ammo" could be read, and predictions of a massive short squeeze were made almost daily.

Actually, in that last bit, little has changed since that time, but one relatively new development is that short interest has broken through the barrier that had been just over 2 million shares, and has reached 2.5 million and is still climbing.

So how is that happening? Well, for lack of a better theory, the diagnosis of "what's changed" points a finger at the listing of options on REFR a few months back. The basic idea seems to be that, by purchasing put options, you buy the right to sell REFR at a given price and time, and this right seems to circumvent the borrowing restrictions that kick in whenever the availability of shares to short runs low. Thus, short interest is allowed to increase more freely, with brokers now having to extract borrows after the fact rather than preventing the trades up front.

Now, for all I know that could be all hooey, but it's really the only working theory either side of the debate seems to have come up with. All we know for sure is that the short interest is reaching records highs, and in the meantime the stock, ever since the Hino show announcement, has been in free fall, and those two items are probably not 100% coincidence.

In other news, REFR, which for the past few years has been filing quarterly reports 40 days after the end, did not do so this quarter. This might be because the status of accelerated filer no longer applies to it for whatever reason. Assuming that is so, the filing will most likely come on Wednesday instead. Because goodness knows, REFR is such a complex organization that those extra five days are vital to putting out a proper report on the company's finances.

Marketing worldwide, but not to you

2007-10-29T19:13:00.000-04:00

You might think that with the amount of self-marketing REFR does, that they would one day they or one of their licensees would come out with a release that didn't contain a clear howler in it somewhere.

Today, with the release by licensee American Glass Products, is not that day.

To be sure, it starts out promisingly enough, talking about the launching of a new product line, complete with a global marketing campaign. It certainly sounds like REFR has finally gotten a licensee to step up and take the lead in presenting SPD to the world.

But then you get into the details. The campaign kickoff, which one might expect to be a big, splashy affair to really get things going... is in fact a trade show. Yes, another one.

But all right, you might say, a campaign has to start somewhere. At least they're getting out there in front of the public and... oh, wait:

The SEMA Show is for automotive industry professionals and is not open to the public.

So once again we have an example of SPD "marketing" seemingly designed to be as obscure as possible to the general consumer, while showing up prominently on the radar of what seems to be their true customer base, that of the speculative investor.

Welcome asensio.com readers

2007-10-29T19:05:00.000-04:00

This blog is honored to have been mentioned in an asensio.com release on REFR today. As the author of this blog I have attempted to provide as much insight into this, well, unique company, and am proud to see my efforts recognized.

The entry referenced in the release regarding the Setra demonstration may be found here. But I encourage you to browse this site at your leisure for all kinds of little nuggets on Woodbury's longest-running profitless public company.

Is SPD a "concept" technology?

2007-10-25T19:24:00.000-04:00

Is REFR getting typecast?

Between the Jeep Rescue, the Juno, let's throw in the Kabura even though it was never established as SPD, and now the Hino S'elega Premium, SPD is establishing a considerable track record as a demonstration technology. But, with its subsequent failures to cross the gap into the real market, one has to wonder if it can ever do so.

Certainly, anyone considering SPD technology and researching it would have to be well aware of both SPD's proliferate demonstrations and dearth of market applications. Just as certainly, they could not be blamed for thinking to themselves, "SPD gets evaluated a lot, but never makes it into the market. Does that mean people are finding something wrong with it?"

That actually might partially explain the almost immediate reversal of the news that SPD is in yet another concept vehicle. Is there not a growing risk that prospective customers going to start thinking that maybe demonstrations and concepts are all SPD is actually good for?

Maybe SPD has reached that point and maybe it hasn't. But that's a concept Joe Harary and company really ought to consider carefully, before hauling SPD off to the next trade show demonstration.

Bus-ness as usual

2007-10-25T18:52:00.000-04:00

Relentless rumormongering that REFR and SPD were going to make a big splash at the Tokyo Motor Show this month proved accurate... sort of.

According to a REFR press release, SPD glass was a feature in one of four concept vehicles unveiled by Hino Motors, a subsidiary of Toyota.

For Hino's part, their announcement of the display does eventually get around to mentioning glass with variable transparency, though for some reason it is referred to as "photochromatic", which SPD definitely is not.

Perhaps something was lost in translation, but what is most emphatically not lost, is the uncanny resemblance to the Setra rollout of four years ago, with the primary difference being that the Hino bus is a clearly labeled a concept vehicle, while Setra's bus supposedly had a small production run. (Although if so, REFR is still waiting for its royalty check from that.)

The market in REFR being what it is, of course, the stock instantly soared more than 10% to multi-year highs on the release. But a funny thing happened on the way to the $20 level that seemed inevitable early on this morning. Very quickly, the sell-the-news reaction kicked in. Rather startlingly, the stock gave back the whole rise inside of two hours, and actually finished in the red for the day. Maybe the investors with longer memories recalled that right after the Setra announcement, REFR stock hit a peak that it would go on to crash 75% from, and not recover for years.

One thing seems certain, the actual event paled in comparison to the months of endless message board hype that preceded it.

The newest licensee

2007-10-19T09:02:00.000-04:00

Apparently Joe Harary's two-day swing through Texas had a purpose after all. What appeared to be a complete non-event (and was reported as such by attendees from the message boards) had a bit of a sting in the tail in the form of a new licensee in the Houston area, Craftsman Fabricated Glass.

A quick browse of the company site shows that Craftsman isn't so hot in terms of web presence. Their website, dated with a 2005 copyright, still has many "under construction" page stubs. This of course does not automatically mean they're not competent at their core business, but it definitely suggests they're not exactly a big time player, more like on the order of a Custom Glass, only in a larger local market.

Of course, the market, as is its wont these days, has just gone nuts on the news, running back up near the highs after a fairly steep pullback over the prior few days.

What must surely frustrate the shorts in this stock is how the stock just gaily runs up to the moon with no apparent expectations of the company actually producing any kind of revenues, much less profits. BUT... there may be a end to this tunnel vision in sight. At the Dallas luncheon Wednesday, Harary is reported to have announced a "small amount" of royalty income for the third quarter of this year, a "large amount" for the fourth quarter, and big-time growth through next year. So it's basically on the fourth-quarter report in February or early March to show something, or REFR will have finally, officially disappointed.

The blog plans to be here to see it happen. How about you?

Asensio back on the scene

2007-10-17T18:46:00.000-04:00

Manuel Asensio, high-profile critic of REFR in years past, came back to the topic after a year's silence, with a release slamming Gene Marical's hype-ridden article from last summer. Asensio makes up for the relative tardiness of his response with some interesting information about the relationship between Marcial and REFR, specifically the fact that Marcial wrote about REFR back in 1995, then hyping licenses Japan Steel Works and Sanyo, and forecasting a buyout by General Electric.

Marcial and his employer Business Week are the focus of the release, but the article is still a good read for anyone looking for insight into stock promotion in the press.

The great debut... again

2007-10-01T11:18:00.000-04:00

Never let it be said that Research Frontiers is not a green-conscious company.

In addition to the number of ways in which they attempt to cast their technology as environmentally friendly (as well as nanotechnological, security-enhancing, or whatever the hot trend of the day is), they walk the walk as well, being very heavy into recycling. So much so that it even extends to their licensees' press releases.

Today Isoclima announced they were taking SPD on the trade show circuit. Now, my question to you is, does this sound familiar at all?

It should.

To Isoclima's credit, the new PR doesn't entirely come off as a copy-and-paste of the one from two years ago, even though there are some aspects of it that are very similar: they specify the size of the sample being toured (larger than the one two years ago), and mentioned their future plans for film width (surprisingly, smaller than two years ago). In other news, they seem to have settled on a spelling for their brand name: the no-H version.

One sidelight of interest is the insight into the process this PR provides. Dainippon, though licensed to sell film and emulsion, is only sending Isoclima the raw production chemicals, an activity that doesn't even make use of their license. One might well gather from this that Dainippon is not as committed to the SPD infrastructure as some licensees.

But of course none of this matters a whit as REFR soars to new multi-year highs on this recycled news. That's life in the world of stock promotion for you.

The Beechcraft boondoggle

2007-09-10T17:56:00.000-04:00

REFR's stock has made a full recovery from the faceplant of a few weeks back, spurred on at least in part by its appearance on the Nasdaq SHO list, which, in some circles is apparently used as a speculative list of potential short squeeze targets. So we wish the would-be squeezers rotsa ruck with that endeavor.

But in the meantime, on the home front, an interesting new development is coming to light with regard to the after-market SPD shades from Hawker-Beechcraft (then Raytheon Aircraft) whose announcement spurred the stock into the tizzy it has remained in to this day.

It started fairly innocuously with a post by "rikes_of_hell" claiming to have contacted Beechcraft and found that the shades were unavailable. Now, normally this would devolve into a "he said, he said" that proves nothing either way, but a funny thing happened on the way to the denial. Posted "spd_where_you_look", (obviously) a big REFR bull, actually confirmed the shades' unavailability, by way of making the excuse that film was being diverted to other, more important (yet somehow entirely invisible) projects, and that film for the shades would come available sometime this month.

Now, if the diversion excuse rings familiar, it should -- it was used to excuse REFR/Inspectech's failure to win the Boeing 787 business, even though, as we now know, there was no film production at all, much less massive amounts being diverted to projects more important than the 787(!!)

Still, it's a rather amusing state of affairs on a lot of levels. The entire current run in REFR's stock was kicked off by the Raytheon/Beechcraft announcement last February, and was the target of article after article highlighting how this was REFR's big breakthrough into the market. And now we learn that the shades were not, in fact available and have yet to be?

Fortunately for shareholders, with the latest run propelling the stock back near its highs, there's no need to apply for a refund when you can still cash out almost certainly with a healthy profit. Or... you can hold out for the Next Big Thing, a rumor of an announcement at next month's Tokyo Motor Show, which may, or, given even the most recent track record of this company, may very well not happen.

It's your call, shareholders!

Options revisited

2007-08-28T12:50:00.000-04:00

I'm sure almost nobody among the few people reading this blog is really into the minutiae of options. I personally find the topic a combination of boring and mystifying, and I consider myself more into things involving numbers than most people. Still, with the alternatives being lapsing back into radio silence or dissecting the message board's collective inability to parse the latest short interest figures properly, there really are no attractive options (pardon the expression) here.

But I do have to say that I find it a little odd that, even though the stock is trading around $11 at the moment, thus making the nearest strike price $10, there is zero activity on current options at the $10 strike, with $12.50 being the "mainstream" price instead.

Now, I'm sure there's a hundred different ways to spin this phenomenon, many of them directly contradictory, so I'm far from suggesting my personal take is the "correct" one. But it seems to me that the stands being taken are kind of a reflection of the contrast in styles of the opposing sides of this stock. The bears are content to sit back and exert whatever influence they have from a distance, accepting that any further decline in this stock is likely to be gradual (the events of the week before last notwithstanding), and that little is to be gained from placing a bet that can be lost by running out the clock.

The bulls, in contrast, are going all out, betting strictly out of the money and willing to lose their bets if the stock doesn't rebound and soon.

And yet, basically, the stock itself meanders.

I think that might say a thing or two about the direction of the path of least resistance right now.

Gagging on something

2007-08-16T17:48:00.000-04:00

You don't need me to tell you the stock market's been shaky the past few weeks to say the least. But today REFR got hit particularly hard today, down as much as 22%, and did not entirely rebound with the market, finishing down 13.6%.

Stranger still, the usual message board catcalls that this is all pressure from shortsellers, while not entirely absent, was considerably muted. In its place was this oblique complaint from one poster:

"HAVE YOU SEEN THE CRAP THAT SPD'S COMPETITORS ARE TRYING TO SELL ??? HAVE YOU EVER SEEN A CAR WITH PUKEY WHITE WINDOWS? THEY ARE CALLED GAG MOBILES SINCE YOU WANT TO PUKE WHEN YOU SEE ONE. DON'T WORRY THEY WILL NEVER SELL IN A MILLION YEARS."

No one else on the boards is admitting to having much of an idea what this was about, and this blog has so far struck out as well. But if it's some kind of competition for SPD, that may have even gained traction with an auto maker, that certainly spells trouble for REFR, and might help explain the heightened panic today.

Anyone out there have any idea what these "gag mobiles" are actually called? Support your local blog and give me a heads up!

The latest 10-ZZZZ filing

2007-08-10T18:57:00.000-04:00

Or at least that's the form the SEC should require REFR to use, as yet another quarter of complete uneventfulness is officially put on the books, hype regarding production at Hitachi notwithstanding. Income was actually slightly down from the second quarter of last year, although operating expenses were also lower, resulting in a loss of only about $735,000, REFR's narrowest quarterly loss since 2000.

Of course, before any shareholder preens over this success, it bears pointing out that REFR's net margin for the quarter remains at -1285%. Coincidentally, REFR's price/sales ratio is in the same ballpark on the positive side, most recently pegged at 1298.

None of these results come as a surprise to shareholders, at least as far as they will admit, as the "production delays" at Hitachi, which were of course all their fault and furthermore in no way reflect adversely on demand for the film, nosiree, apparently made the realizing of revenues in the mere five months since film production was announced, a virtual impossibility.

It will be interesting to see what the rationalization will be for similar failures in the third quarter. Will the royalty lag time be stretched out to eight months? Will the "technology subscription" payments from Hitachi be used to mask the lack of revenue from product sales?

Will someone, anyone, step forward and offer an SPD-based product for sale to the general market?

I wouldn't bet on it.

Now if you'll excuse me I think I'll go back to bed.

Options update: 11 more lots of calls opened today. 10 March 17.50 calls at the ask (money in the bank to be sure -- but for whom?), and a single December 15 call at the bid. So apparently at least one REFR shareholder is sophisticated enough to be familiar with the concept of writing covered calls.

Weighing the options, finding them lacking

2007-08-09T10:50:00.000-04:00

The Chicago Board Options Exchange, which has been phasing options contracts on all manner of listed symbols that previously did not trade options, has added options on REFR starting today.

What seemed at first blush to be an intriguing twist in the trading strategies surrounding this tightly-controlled stock, however, has, at least in the early going, proven to be a complete bust. The spread between bid and ask on all contracts, excepting those with zero bids, is at least 75 cents, and volume is a flat zero across the board.

There had been hopes on both the bullish and bearish side that the listing of options might add some much needed liquidity to this stock, but clearly the verdict today is, not so much.

Until Yahoo! add options for REFR to its quote pages (shouldn't be more than a couple of days, based on other recent CBOE option listings), you can check activity on the CBOE site here. For now, at least, there's very little to see. We'll be checking back later to see if a day of greater stock activity has any residual effect in the option exchange.

Update: The first trade in REFR options came just over two hours into the first trading day, a trade (presumably a purchase) of two August 15 calls at 65 cents each. As options represent 100-share blocks, that's a $130 trade. The following two hours have been silent on the options front, presumably to recover from that blistering flurry of activity.

The media blitz continues

2007-07-31T08:46:00.000-04:00

Any doubts that REFR is in a deliberate attempt to get noticed and get noticed quickly have now fallen by the wayside with yet another puff-piece article about them, this time by Emily Pickrell in New York Newsday.

This particular article is really quite amazing, as it seems almost carefully written to include as much stock-promotional hoohah as could be fit into the column space.

"It's a thrill," said Saxe. "If you spend 40 years of your life building something and it does not work out, people will say you're a stubborn fool...."

Aw, poor guy. If this doesn't work out, all he'll be left with is a long career during which he made anything up to nearly a half-million dollars a year in just salary alone, and that doesn't even include profits from options.

"SPD glass is the holy grail of glass that architects have been clamoring for for years," said [Steve Abadi].

I guess it does have one thing in common with the legendary vessel, in that few ever even get to look upon it.

Abadi goes on to claim SPD as a "green" technology, whatever they or anyone else means by that anymore, and then, hilariously, the article plugs the Popular Science award from 2002, without mentioning how all that applied to the old, failed, SPD Inc. version of the technology.

At this point, the article moves on into it's "cautionary" section, making a threadbare attempt to not look like the puff piece it is. REFR, per the article, has "annual operating expenses of approximately $3 million", and "operating losses of roughly $4 million per year." That's a heck of a good trick, managing to lose more money on operations than you spend on operations. Summing up: "lack of sales until recently means the company is still waiting to see a profit." Wow, there's some brilliant analysis.

But enough of that, back to the laughable stock promotion cliches! "If SPD glass is were used for even 1 percent of world glass sales..." It's at this point that I suspect Ms. Pickrell must be a highly inexperienced reporter to have not heard that old saw, a suspicion that seems to be the case. Given that my heart goes out to her, being used in such a way so early in her career.

Moving on, the Beechcraft arrangement is of course plugged, minus the fact that Raytheon is no longer associated with that company.

Ms. Pickrell does note that the message board chatter on REFR is "mixed at best", but the only specific criticism she cites is delays in getting product to market, not the myriad misrepresentations the company has made over the years.

Possibly saddest of all is a shareholder she managed to find, who is quoted as saying, "I wish I had more money to buy more stock."

Cashing in again

2007-07-27T13:06:00.000-04:00

Once again REFR CEO Joe Harary has collected another sweet paycheck over and above the rather substantial salary he collects for running this nearly operations-free company. This time the score was over $350,000, and could have been more had he not generously gifted 7,000 shares, about another $100,000 worth, to an undisclosed party.

The timing of this option exercise and sale, literally days after a mention in Gene Marical's Inside Wall Street column bounced the stock as much as 15% on the day of its online release, naturally raises a couple of eyebrows, even as the general population on the message boards seems congratulatory if anything. Of more interest is the fact that the AP even found the sale worthy of mention. For a company that has made a living flying under the radar this may prove to be some unwelcome attention, particularly if the current prices fail to hold at some point in the near future.

The Marcial Plan

2007-07-25T09:31:00.000-04:00

A lot of focus has been placed on the nature of the column penned by Gene Marcial, such as this week's entry featuring REFR. Now, normally, such analysis smacks of attacking the messenger and doesn't have much of a place in serious discussion, but in Marcial's case the consensus is so clear and uniform it's worth nothing.

Marcial's column, by reputation, is the modern form of the old "tip sheet". It basically gives a "quick hit" on a stock, either as a growth story or an acquisition target. Frequently, the stock, like REFR, has already made a big run, but the suggestion is inevitably made that "it's not too late to get in". And, almost without exception, the featured stock makes a big run on Friday, the day after the article comes out. Again, REFR follows the model to a tee.

Subsequently, the performance of the stock is, sadly but not surprisingly, not so hot. To be sure, Marcial does pick the occasional true winner (blind squirrels and all that), but on the whole, one day after a Marcial column has the reputation of being one of the worst times to buy a given stock.

So far, as I said, REFR is acting little different, running up big on the Marcial article and then subsequently going nowhere. We'll of course be watching to see how things unfold.

I've had it suggested to me that Bob Saxe arranged for last week's article, but the fact that Marcial managed to find a portfolio manager willing to sound enthusiastic about REFR suggests to me that the article is at least partially not his doing. Others have suggested that this might be a cynical ploy on Robin Manners West's part to get out of an ill-thought-out position in one piece. That would be rather blatantly unethical if true, to the point where the SEC might even notice, so I tend to doubt it, but it should be noted that other fund managers have done exactly that in the past, so the possibility can't be completely discounted.

Comment lines are now open!

2007-07-24T10:03:00.000-04:00

What with REFR now breaking into the "big time", at least for the moment, I figure it's about time to let the world have its say. Try to keep the comments thoughtful; I don't need this turning into a clone of the Yahoo! board where the standard response to everything is to claim to know everything but say nothing.

Apart from that, have at me!

Getting down to Business Week

2007-07-23T15:11:00.000-04:00

Just as the momentum behind REFR's precipitous rise was flagging, out comes a very timely article in Business Week by Gene Marcial in his "Inside Wall Street" segment. The article appears to be essentially the result of an interview with Robin Manners West, portfolio manager of the New Mexico State Investment Council, and a frequent subject of his column.

Marcial's article cites nothing that has not already been noted in this blog, which already drove the stock from $5 to $15, yet forecasts a $35 price target and profitability by the January 2009 on expectations that licensees Air Products and DuPont will "sign up", whatever that means. The best that this blogger can guess is that West expects to fund itself solely from licensing out subscriptions to its technology. The cited 18-month time frame is also an interesting one, in that it is one favored by long-time REFR promoter R. J. Falkner.

The article does admit that there remains no analyst following for REFR, although it does list Fidelity among "early" investors, even though their position does not as yet appear on the Nasdaq website.

Looks like it game on, as far as the war over the stock goes. As for the company itself, that remains to be seen.

Hitachi on the hook, stock price off the hook

2007-07-10T11:49:00.000-04:00

REFR actually managed to come out with some moderately surprising news this morning, announcing that they had, effectively, sold a subscription to Hitachi Chemical for two years' worth of upgrades to SPD technology.

Never a company to ever play it completely straight, the deal was announced as being valued at "96 million yen", forcing the reader to go find a conversion table and discover that that comes to a bit under $800,000.

While this is by no means REFR's ticket to profitability in and of itself, it does show that REFR has managed to gain Hitachi's trust to the point where they are willing to give them an advance on future technology upgrades.

It's frankly a little mystifying that a company like Hitachi could view the rate of progress REFR has dragged through over the course of over 40 years, and expect the next two years to produce advances worth paying for, but then again REFR's having lasted this long in such a way is no minor miracle in itself.

At any rate, the stock is reacting as you might expect, attaching as much as $20 million in value to REFR for an $800,000 deal. But such things are liable to happen when you are in your own private market bubble, as REFR seems to be.

Notes from the Fox Hollow Inn

2007-06-18T16:32:00.001-04:00

Long-time message board poster "ed_wesnofske" posted his report today on last Thursday's REFR annual meeting. The full text of his notes can be found here and here.

In addition to John Petraglia's presentation, there was a slide show presentation by Steve Abadi of Innovative Glass. Essentially, this consisted of a visual tour of that company's facilities, as well as two SPD projects it has reportedly completed.

Now, granted, two projects is better than none, but we've seen projects from this company before (viz. the Extreme Makeover link above) which have utterly failed to even show up in REFR's income statements, so we'll remain skeptical of the significance of this one as well, until proven otherwise.

Since Jim Lang of Inspectech apparently couldn't make it, it fell to Joe Harary to deliver the report on the aerospace market. Apparently the reason shades are only available on King Air is because SPD is not certified for any other models at present.

Harary's "speculation" on the royalty rates for different applications is of interest. Apparently the outsized expenses in developing an aircraft window would translate into outsized royalties for REFR. This is a double-edged sword, of course: it makes the aerospace market quite potentially lucrative should it catch on, but at the same time, the huge royalty upcharge will hamper that market's viability.

On to the questions from the shareholders. First, someone wants to see another SPD Industry Conference. Given that the last one was hastily put together in order to start things from square one in the wake of the collapse of SPD Inc., I'm not sure why.

The second one inquired about the architectural market. The posted Ed posted doesn't seem to actually answer the question, but whether that's a transcription glitch or a company evasion can't really be determined.

The last one invoked accountability for last year's projections, and was met with the predictable "it's not our fault" response. And with the the formal portion of the meeting concluded.

The trailing (informal) notes were of passing interest. Hitachi's samples have been used for testing; nothing new there. Isoclima currently plans to get back in the game later this year -- what, exactly, have they been waiting for? And Dainippon is using "toll coaters", a fancy way of saying they're outsourcing all SPD production work. To whom, exactly, wasn't specified.

Now, granted, this is a rather cynical summary of Ed's postings, but experience has shown the cynical view to be an excellent starting point in parsing the comments made by this company's management. That said, the stock market has taken a decidedly non-cynical view since the meeting, but that is what it is.

Private equity shutout

2007-06-15T10:44:00.000-04:00

I've already made plenty hay over SPD Control Systems's scrambles for operating capital, but I wanted to share this presentation I came across from last year. The link is to an HTML representation of a Powerpoint slideshow presented by SCSC at "Private Equity XVI", a dog-and-pony show for venture capitalists and their would-be fundees, which took place back on June 22, 2006. So if nothing else, this shows that the licensee with the brightest spotlight in the REFR universe has been on the fund-raising trail for quite some time, without much success.

And you will note that this presentation, like the one from the annual meeting, is easily available for public view despite being labeled "confidential". That doesn't seem to speak too well of their security policy.

Mum's the word

2007-06-15T10:18:00.000-04:00

The shareholders came back from yesterday's annual meeting and the reviews are... rather few and far between actually. The only thing of substance reported is the presentation by the man we can only presume was the keynote speaker, John Petraglia of SPD Control Systems. You can actually find what is apparently a transcript of his speech (along with select "confidential" Powerpoint slides) from yesterday on SCSC's website (PDF format).

Yes, that's the same SPD Control Systems that recently completed a round of financing from "close friends, family, and colleagues" , with another $150K to come from REFR pending the fulfillment of certain milestones. One can't help but wonder if the speech wasn't one of the milestones.

No word yet on the fate of the shareholder proposal to get fresh blood on the board of directors, although presumably it went down to massive defeat. After all, who in their right mind could possibly be dissatisfied with company performance like this?

REFR's latest great investment

2007-05-10T17:04:00.000-04:00

So REFR files another quarterly report, and, surprise surprise, for all the hype about production and products, the revenue meter remains planted firmly on "minimum license fees only" mark. On this occasion, the number happens to be $29,792. Interestingly, the company also recorded "investment income" of $56,834, meaning, it would seem, that the company's money is bearing more fruit elsewhere than at the company itself. There's a lesson for investors, I think.

But REFR's successful investment streak probably won't last much longer. Buried on page 10 of the quarterly report (yet somehow pinpointed almost instantly by supposedly casual, unconnected investors), REFR mentions an investment of "up to" $150,000 in one of its licensees, SPD Control Systems.

SPD Control Systems is a rather unusual licensee in a lot of ways. For one thing, there's no obvious reason why they would need a license. Their devices appear to be of their own making, and certainly not connected to any SPD patent. So it's not at all clear what SPD Control Systems is licensing here.

Another oddity is the company's location, in the "Long Island High Technology Incubator" on the campus of SUNY-Stony Brook. Is this a corporation or an academic research project?

Despite these obviously humble digs, SPD Control Systems makes some very weird claims in an edition of the company newsletter, seemingly not coincidentally published to coincide exactly with REFR's quarterly filing. So much so that they actually reference the filing in mentioning the investment from REFR. Way to keep up a pretense of independence, there.

Among the claims are "facilities in over 22 countries and 50+ locations, any of which can be utilized as a manufacturing site for product delivery in regional markets." Really, now. If SPD Control Systems has facilities in "over 22" (so, 23?) countries, you'd think that they could use one of them for office space, rather than having to mooch off a local university.

No, much more likely this claim is akin to the completion centers claimed by Inspectech as a way of making themselves seem a lot larger than they actually were. Inspectech, as we know, was a two-man operation that soon after became one-man, yet still boasted "hundreds of completion centers" as if the company had any kind of ownership relationship to any of them.

Also of note is the headline of the funding announcement: "SCSC Receives RFI and Angel Venture Capital". One might be led to think that "Angel" refers to some kind of institutional name. Because otherwise, why capitalize it, right? But in fact, the paragraph below defines the "angels" in questions as "close friends, family, and colleagues". Sounds like they learned their fund-raising techniques from Woodbury.

A proxy upon thee

2007-05-01T18:04:00.000-04:00

A sidelight of note in the notice for this year's annual meeting is a proposal made by a shareholder, to have the board of directors expand to add two new members, preferably ones significantly below the board's median age of 71. The proposal, admittedly a bit naively written in some ways, is opposed by the board, and as such is almost surely doomed.

That said, the language in both the proposal and the company's response do provide some interesting insight into the mindsets of both parties.

The shareholder proposal, at times, reads like something crafted by stock promoter R. J. Falkner, stating, "It is expected that the licensing revenues generated over the next year and beyond will grow significantly," a statement far bolder than the company has produced in recent years. Still, the overall sentiment of the proposal is a reasonable enough one, a demand that the board, for once, get off the dime and get some fresh blood that will be able to manage the "expected" growth.

The company's response primarily takes issue with the six-month time frame suggested for the board augmentation, as well as the vague guideline of "significantly below 70 years of age" for the new board members. The company complains of the "increased difficulty in finding qualified people", saying they have been searching for two years for new directors without success, and that six more months is simply not enough time to guarantee locate two suitable candidates. (Then again, the way this company moves, six months may not be enough time to make coffee.) And I would additionally point out that, what with the state of EEOC regulations these days, it may not even be legitimate to screen new directors by age.

On the other hand, a seemingly overlooked aspect of the proposal is that its language is distinctly non-binding, merely "advising" the board augmentation and that the new directors "should" be relatively younger than most of the current ones. Then again, this company doesn't seem to have much of a track record of being amenable to advice anyway, given how little about this company has changed over the past couple of decades.

Bottom line, we have the overly optimistic shareholder, still on board with the notion that good times are right around the corner for the company, but simply wanting a little accountability, and the company board and management, quite satisfied with the status quo and not particularly interested in input from the shareholders.

To be continued at the annual meeting.

Another year in the books

2007-03-28T00:09:00.000-04:00

...and yet another year of nothing notable in terms of results. For all the excitement generated by the Hitachi and Dainippon presentations back in June, results have, to put it kindly, completely failed to reflect any change from the status quo established over the past four decades. The only thing different is the share price, and that's different every year anyway.

But not to worry, REFR fans! This year is the year! Again.

The newest old licensee

2007-03-21T16:55:00.000-04:00

REFR stock got another juice Monday on the news of a new licensee: SmartGlass International. That is, except for the "new" part.

Perusing past the main text of the release, under the heading "About SmartGlass International, Ltd.", wherein one normally finds a bland boilerplate company description, one here find this interesting note:

"The company was founded after meeting at the first Research Frontiers Licensees' Conference in 2004 when the Directors of Vision (Environmental Innovation) Ltd., based in the UK, and Smart Glass Ireland decided to join forces to launch a global SmartGlass product range for the end-user architectural market."

If one of those names seem familiar to dedicated readers of this blog, they should. Relative newcomers can simply follow the link embedded in the above paragraph. And needless to say, SmartGlass Ireland was, like Vision, already an SPD licensee prior to the merger.

So, in fact, this event is nothing more or less than the consolidation of two licenses into one. And for that the market rewarded REFR with a 15% share price boost. Which certainly makes one wonder about the intelligence of the market currently in this stock.

As an addendum, the licensee list on REFR's website was shortened by another entry sometime in the not-too-distant past. General Electric, a ballyhooed licensee from the mid-90's, which has been dormant for a full decade, no longer appears on the list.

The secret of their non-success

2007-03-02T10:57:00.000-05:00

An enterprising fellow on the Yahoo! boards recently reveals a scan he made of an estimate received on SPD "ThermaLite" window from Thermoview. It really kind of speaks for itself...

... but to review (and in case the print is too small for you), that's a hair under $21,000 (plus sales tax), for ten 24" x 36" SPD windows. Not particularly big windows! Oh, and that doesn't including shipping. From Korea. (Because it's not as if Thermoview believed in the product enough to keep an inventory on hand). And best of all, installation? That's your problem! Good luck finding someone to do it.

Small wonder, then, that sales of Alterlite windows were, shall we say, less than robust.

The question arises, therefore, whether the current offering of SPD shades from Raytheon Aircraft is in fact any more affordable. Unfortunately, that's a question currently without an answer. Though you'd think at least lip service would be made to the idea of improved affordability, were that in fact the case.

Payday!

2007-02-27T15:01:00.000-05:00

Yesterday, in the middle the mild camouflage of a renewed flurry of tiny purchases by board member and former SPD message-board evangelist Al Malvino, REFR president and COO Joe Harary cashed in quite lucratively on the recent surge in the share price of his company's stock.

Per the SEC filing on the transaction, Harary exercised just over 100,000 options, using the proceeds from the majority of the shares to leave himself with 34,792 shares free and clear, which he promptly proceeded to sell at about $10.10 per share, thus pocketing a neat little bonus of just over $350,000. A sum that, it bears noting, is more than the company earned in license fee revenue (to say nothing of earnings) from the years 2004 and 2005 combined.

Meanwhile, today, investors in REFR (and to be fair, almost everywhere else) are taking it on the chin big time, as the offering price of $9.75 appears to have been decisively breached (not that there was any real support at that level anyway).

If nothing else, it sure tells you where this company's management's priorities really lie.

The other shoe drops

2007-02-14T10:53:00.000-05:00

Another group of anonymous "accredited" investors, apparently acting upon an urge to pay as much as they conceivably could for shares of REFR, gave Joe Harary and company and big "I Love You" this Valentine's Day by gifting the profitless company another $6.65 million, by purchasing nearly 700,000 shares at $9.75 each. Given that that is a price level reached last week for the first time in almost three years, and that REFR's price was barely more than half that just over a month earlier, and that the events leading to the sudden spike in price are far from guarantees that anything will change with regard to REFR's profitability, it's hard not to conclude that this is more about keeping REFR solvent at any cost than it is about actually making money on the shares purchased.

Regardless, the check's been cashed and REFR will be with us on into the next presidential administration. I tend to expect that there won't be much to report now that the mission has been accomplished, but just in case we'll keep an eye on things.

A Raytheon of hope?

2007-02-12T15:21:00.000-05:00

If you've been following REFR this past week you don't need me to tell you that the stock's had a lot of action in the past week, soaring to price highs not seen since the beginning of this blog almost two years ago. Just as the momentum was fading from the prior week's news regarding delivery of an unspecified amount of film to a small licensee, up pops a new release (links to PDF) from no less than Raytheon Aircraft, saying that they will market Inspectech's shading systems to their base of 6200 King Air private aircraft owners.

Needless to say, the notion of "Raytheon's selling SPD!" has invigorated the longs and spooked the shorts and long story short the REFR's share price has more than doubled from the beginning of the year -- all before the first sale has even been made.

And therein lies at least the beginnings of the catch in this tale. Splashy PR's aside (as one source noted, somewhat suspiciously including REFR's stock symbol in the text of the release itself), there's no way of knowing what kind of actual sales effort is going to go to a market that caps out at a few thousand installations. Now, you might answer by suggesting that this might only be a prelude to a wider-scale rollout, but if that's the case, then why not be upfront that this is a test market? (Not to mention how REFR needs cash now, and can't be comfortable waiting for the results of a test marketing effort to come in.)

Another point of interest. While Raytheon Aircraft carries a splashy name, it won't for long. Raytheon Aircraft is in the process of being sold to Onex Partners, a Toronto holding company, whereupon the company will change its name to Hawker Beechcraft. (A name, as an aside, which leaves one to wonder about the future of the King Air product line.)

At any rate, with an imminent merger and subsequent reorganization looming, there's really no assurance that this arrangement will even survive more than a few months. But of course, that message is completely lost in the middle of the mini-mania going on over the shares of this tiny patent company in Woodbury, NY. Such is the way of the world, I guess.

Morning!

2007-02-01T13:51:00.000-05:00

The story of Research Frontiers, which frankly had been getting intolerably boring as of late, sprang to life this morning as the company issued its first press release in many months.

Actually that's not quite accurate. The press release came from REFR licensee Innovative Glass, in conjunction with its film supplier, Hitachi Chemical. The big news? Hitachi shipped some film to Innovative. That's it. Oh, to be sure, it was puffed up with a lot of long-winded comments about how great the film is and what might be done with it and so on, but the substance of the PR was nothing more than an unidentified amount of film being shipped from Hitachi Chemical's Silicon Valley plant to Innovative's Long Island location. Given the past history of such shipments, (viz. the entire sorry SPD Inc. saga) there is little reason to get excited at this point.

So naturally, this drove the price of REFR shares up as much as 51% to a peak of $9.75 late this morning. This may have been abetted by a piece on a non-coincidentally timed piece on Briefing.com that stated, in effect, "we've never heard of this company, but this news sounds great to us!" Sounds more like a reason to cancel my subscription to them, frankly.

Private board engages in auto fellatio

2006-12-01T11:54:00.000-05:00

A new clue may have surfaced in response to the mystery of the newsless spike in the price of REFR stock a month ago, by way of explaining the similar short-lived spike experienced this week. Apparently someone with a bearish view of the stock has managed to infiltrate one of the "private boards" REFR shareholders use to share "information" (read: rumors and speculation) free of annoyances such as requests for supporting evidence and other fiendish acts of skepticism.

This infiltrator came public with information that the most recent hype on the board related to the Los Angeles Auto Show, where, the rumor had it, an auto manufacturer was going to unveil SPD as an official feature of one of their vehicles. Details were sketchy, and there remains the open question of how this would be any more of a big deal than the last time SPD showed up at at auto show, but expecting strong logic from this company's shareholder base has long proven futile.

Shortly after that report came out, another poster quickly noticed that the last spike coincided with the SEMA show in Las Vegas, another ostensibly likely forum for SPD automotive technology making a debut. Of course, it did not happen there either.

But no matter, I'm sure the regulars on the private board are quietly telling themselves. There's always the NAIAS in Detroit next month after all.

It's really a devilishly tempting logic behind the whole cycle of rumor. The key is that the rumors are always made big enough that, if they're actually borne out, it would render irrelevant the entire history of failed rumors of the past. Thus, we have a group of shareholders constantly on the hook, just one tantalizing rumor away from enormous wealth, constantly exciting themselves and each other over the possibility that the next one just might be the one that comes through for them.

P. T. Barnum would be proud.

So what was that all about?

2006-11-07T16:04:00.000-05:00

REFR longs and supporters were feeling their oats for much of the past week as the share price surged past the momentarily stable level of around $5.50 up to a high of $6.82 on Friday. Since there were no new reported developments on any front, the assumption was that there was a leak of some kind of something that would be officially released in short order.

Then, one uneventful weekend later, the stock suddenly throws it into reverse, dropping as low as $5.55 on the following Tuesday.

So what was that all about? Darn good question. One clue is found on the REFR website, mentioning how Joe Harary had made a presentation to the Susquehanna Financial Group Emerging Trends Conference on Wednesday the 1st. That would certainly account for the timing of the spike but not really the magnitude. Supposedly these were somewhat sophisticated attendees ("fund managers, analysts, and others") at this conference, who you would think would hardly be the types to chase the stock up 25% on nothing more than a presentation from the CEO.

Were there false rumors of new releases? Were the Susquehanna attendees really that ham-handed in their buying of REFR? Were there some kind of expectations for the upcoming quarterly report that were remanded over the weekend? These and other questions... probably won't ever be answered fully. But it's still fun to ask them.

Back for seconds

2006-10-19T22:59:00.000-04:00

REFR actually managed to pull of a bit of a surprise last week with their latest press release. Not with the subject referred to in the headline, which actually took second billing in the text of the release proper. Though I have to say I find it interesting that Joe Harary will spare no expense to go overseas and check up on the film supplier licensees, even though they have rarely if ever been the problem with the overall business model, yet apparently getting any kind of status update from end-product licensees like Steve Abadi's Innovative Glass, just a few miles down the road, is not within the company's budget.

No, the real highlight of the PR, smartly placed first despite not being the "headline" subject, is the decision of some of the investors from the August placement to step up and drop another $700K into REFR's coffers. This no doubt had to be a bit of a demoralizer for short sellers in REFR, who are now faced with unknown, anonymous benefactors who, for all they know, might be of a mind to fund the company indefinitely out of nothing more than spite for those betting against it. This, in my view, may have triggered some taking of profits on the short side, and the resultant upswing in share price. We will know more next week when the updated short interest figures are published.

Still, REFR officially has only one year of cash remaining as of now, meaning that if they want to avoid the "going concern" clause in the upcoming 10-K this winter, they need to find a home for about another 150,000 shares between now and December 31st. Just how willing and able are our new investors to keep things propped up? Only time will tell...

Getting under Second Skin

2006-10-02T17:35:00.000-04:00

So SPD is getting shown off at yet another show. I suppose it's comforting to know that, in these times of financial uncertainty at the company, that management still knows how to stick to what works. That is, if you define "works" to mean, "doesn't trigger immediate public scorn or lead to the creation of new enemies of the company".

What's interesting (for relatively lax definitions of the term) about this particular display is that, rather than placing SPD as a technological marvel, as with the Smart Garage and Juno exhibits, this one caters to the arts crowd.

Admittedly, I am less than an expert on what excites the people who will go to this
kind of a show, so I can't assert positively that this is a bust in the making, but to my layman's eye, the SPD exhibit is pretty bland relative to some of the really off-the-wall stuff being paraded around at this show. Follow this slideshow to see what I mean.

Still, if the person who decided to sink $2 million to give this company one more chance at life is happy with how his or her money is being spent, who am I to argue?

A message board revolt?

2006-09-20T15:59:00.000-04:00

Has something changed on the message boards? As one poster has just noted, the regular "strong-buy" contingent has not yet come back from the weekend. And it's not for a lack of anything to say -- that has certainly not stopped them before.

But even more striking was the appearance of an alias claiming to have participated in the group effort of promoting REFR on the message boards, not merely returning as a critic, but actually providing information on some of the happenings that went on behind-the-scenes among many of the shareholders closest to the company.

Most striking was the mention of a "letter of protest", dated just less than two years ago, with a litany of complaints about managements actions or lack thereof. Quoting the letter (my annotations in italics):

September 29, 2004

(Via E-Mail, Facsimile, and U.S. Mail)
Board of Directors
Research Frontiers Incorporated
240 Crossways Park Drive
Woodbury, New York 11797

Re: Shareholder Suggestions and Inquiries

Dear Directors:

As you are aware, Research Frontiers Incorporated ("RFI") benefits from a core group of extremely loyal shareholders who collectively own a sizable amount of the company's stock. These shareholders have communicated with each other over the years through a variety of forums to share perspectives and analysis of the prospects of the company and their investment in it. Forty-two of us, representing 725,357 shares and many more actual shareholders, are "co-signing" this letter. Should you require a detailed listing of us, we are amenable to providing that under separate cover.

For a considerable period of time, there has been a tone of ongoing frustration with the lack of discernable progress with the core technology and quantifiable progress with sales. This is only made worse by the ongoing oppression by short traders who appear to manipulate the stock almost at will.

As a result, considerable thought has been given to the formulation of a short list identifying our suggestions and inquiries for the company. The following represents a summary of the items that received widespread support from the group.

- RFI should provide a meaningful update on emulsion and/or film production.

(The updates came, in the form of dates of expected delivery, but these came and went with neither action nor explanation; if anything, beyond the date, was another date.)

- RFI should solicit acceptable, printable comments from any and/or all of its licensees relative to their work with SPD.

(That would probably have been amusing had it been done. I suspect the result would have been a medley of "Who are you again?", "Are you ever going to get back to us on...?", and "Kiss off!".)

- RFI should set realistic goals with estimated timelines for accomplishment, state these publicly, and base future compensation for key employees, at least in part, on measurable results.

(That would presume they had any control over the progress of any "accomplishments", or any desire to do so.)

- RFI should differentiate between income from license fees and income that is actually attributable to sales in excess of minimum fees. RFI can do this anonymously.

(In a way, they were already doing this. In the fourth quarter of 2002, REFR "recorded a small amount of royalty income related to sales of licensed products by its licensees ... which exceeded their minimum annual royalty payments." Since this language has not been used since, by implication, this circumstance has not recurred.)

- RFI should publicly declare its intentions to generously reward shareholders through future dividends A) as incentive for current shareholders not to sell, and B) to stimulate new investors to buy.

(This one is rather comical on the letter writers' part. Tell us what we want to hear, even if you don't really mean it, they seem to be saying.)

- RFI should offer a private placement to shareholders in lieu of continued dilution through Ailouros as we believe this practice risks making shares available to shorts in addition to diluting the value of our investments.

(At least there was no further dilution through Ailouros, as they, like Ramius before them and Stark afterward, declined to be the front for any more stock sales. And REFR had the built-in excuse of regulatory issues related to such a sale.)

- RFI should explain what actions, if any, have been taken regarding the investigation of illegal shorting of its stock and the current status of those efforts.

(It's actually a bit surprising that REFR has never attempted to hop back on that bandwagon, given how much press that group has been getting lately. I guess it just goes to show that some things are too low even for this group.)

We hereby formally submit our concerns to the company and hope to receive the courtesy of a thorough and prompt response. You may do so by e-mailing such to the attention of . The response will then be forwarded to all co-signers of this letter.

We wish to congratulate the company on its recent license agreements and look forward to announcements of actual and significant implementations of SPD technology in the near future.

Thank you in advance for your attention to this matter.

Sincerely,

Concerned Shareholders

In the words of our correspondent the letter "didn't do squat. Harary just spewed the same old BS non-answers the company always has." As I have noted, they did get a little bit of what they asked for, but of course, not what they actually wanted.

Stay tuned for the reply from REFR's message board supporters, if and when they ever show up again.

Lowering the bar on raising funds

2006-08-28T20:55:00.000-04:00

No doubt Joe Harary would have liked to wait longer before pulling the trigger on the latest round of financing. Selling just over one-quarter of the two million registered shares, yielding only about seven months' worth of additional capital, has to be more than a little embarassing. But with cash having dwindled to approximately $1.5 million, and no institutional interest whatsoever, it basically came down to "take what you can and hope something develops soon".

It's really almost a case of "why bother". REFR still had a million shares (give or take) left over from the last round of financing, meaning that the current round of registered shares effectively went completely unsold. Meanwhile, the cash infusion puts them back to where they were at the start of last February, meaning they're essentially right back on the fund-raising trail almost right away.

Then again, if you could find people willing to front you $2 million no matter how abysmal your track record and regardless of your complete and utter lack of plans for the money other than "pay yourself a mid-six-figure salary while waiting for someone else to make money for the company", would you turn them down?

See you in October for the ramp up of film production at Hitachi... whether it actually happens or not. Bulletins if anything happens in the meantime, of course. But I wouldn't count on it.

The Falkner Follies; Stark Exits Stage Left

2006-08-14T14:58:00.000-04:00

This blog last mentioned R. J. Falkner and its research relationship with a number of rather dubious public companies in June of last year. For over a year afterwards, no updates had been forthcoming on Falkner's coverage of REFR. Given the policy as stated on Falkner's research front page that updates typically occur about 3-9 months apart, it seemed reasonable to conclude that Falkner and REFR had had a parting of the ways.

Then last week, a message board posted stumbled across links to a new Falkner research report on REFR. You can scan the content of the report for yourself if you like; it's mostly a regurgitating of every self-promotional effort REFR has made over the past ten years. But what is interesting is the fact that this report is not as yet linked to the website's front page as the other companies' reports are, while the old report has been taken down in place of a stub that gives an executive summary of Falkner's ever-glowing evaluation of REFR, but with next-to-nothing in the way of detail.

One item of interest in the as-yet-unlinked report is a revamped list of the top institutional investors. Most of these are institutions with total-market index funds, meaning they invest in just about anything on the listed markets, which, as of yet, still includes REFR. But the list is already out of date: the top institution on the list, Botti Brown, just reported having sold 150,000 shares, more than half their March 31st position, dropping them to third on the list, while the #4 top holder, Stark Investments (they of the placement in February 2005), has sold out their position entirely. Rather pathetically, only ten institutions now report holding more than 1,000 shares of REFR, and of those, only three have fewer than 2,500 positions (in other words, the other seven very likely hold REFR as part of an indexing).

With apparently less than six months of operating capital left, it's really starting to get down to crunch time in REFR's efforts to gain new funding. Will Falkner's report help them out? We can only wait and see...

Go in peace. SPD no more.

2006-08-01T17:00:00.000-04:00

Remember the Church of Pinnacle Hills, the showcase project that was supposed to kick off frenetic demand for SPD in the architectural market?

Well, apparently the fine folk of northwestern Arkansas have given SPD a "get thee behind me" and elected to use electrochromic glass from SAGE Electrochromics instead, as per a recent article on the construction project.

This is not a huge surprise given the revelation that SPD film products had only started in June and even then only in trial amounts. Nevertheless, it must grate long-suffering shareholders to see the feather in the cap go to a rival that not long ago they had dismissed as hopelessly behind them in terms of reaching commercialization.

Meanwhile, back on the message boards, promotional activity has seemingly dwindled to just a very small number of aliases. Furthermore, the ratings from the new "star" system for posts skew dramatically in favor of bearish posts, strongly indicating that the bears hanging out on the board now heavily outnumber the bulls. (Either that, or most of the bulls haven't yet figured out how to enter ratings.) And the one promotional poster that is remaining active is frankly going just a little off the deep end, forecasting, for example, a buyout in excess of one billion dollars for REFR (more than 15 times the current market cap).

Is this a sign that the whole operation is quietly winding down? Stay tuned.

Production confirmed... yawn...

2006-07-21T16:48:00.000-04:00

Frankly I didn't think the presentation at this year's annual meeting contained anything even worth a post to this blog, but the sheer determination of a handful of people to make a big deal out of it has been impressive enough for me to make a note of it.

So. Annual meeting 2006. June 8, 2006. Attending the meeting are Shigeo Sase, a general manager at Hitachi Chemical and Anthony Pirro of DIC Trading, the sales/marketing arm of Dainippon Ink and Chemical. (This Mr. Pirro is not of any known relation to the Pirro brothers of NYC-area tax evasion infamy.)

Mr. Pirro revealed an extremely minimal SPD production installation at Dainippon, with "plans to increase production". Mr. Sase's presentation was somewhat more specific, advertising "plans" for production capacity increases in October of this year, and much larger increase in October of next year.

Of course, plans are nothing if not subject to change. No doubt SPD Inc. had big plans in its day.

But what should have struck observant viewers was what was not said, and who was not there. Where, one might ask, were the representatives of the companies actually licensed to sell products based on SPD to the general public and/or companies outside REFR's immediate sphere of influence? Where were the plans for products once all this film is available? Who's placing the orders for this film?

A month and a half has now passed and still nothing has surfaced indicating that anyone has anything they particularly want SPD film for, other than make sample kits that show off how neat SPD is. Which you would not think would bode well for REFR, as its cash slows bleeds away, mostly into the pockets of the management that has been living off it for decades.

So we continue to wait for something, anything, to happen.

Having more un than a blogger should be allowed to have

2006-05-18T11:45:00.000-04:00

Just wanted note the coining of a new term to describe companies that, despite having no track record of earnings whatsoever, paradoxically get promoted on the basis of their "fundamentals".

The term is "undamentals", and credit goes to the person postings as xavierducats on the Yahoo! REFR message board. By xavier's own admission, the term was born of a typo, but is such an accurate description I heartily advocate its adoption for broader use.

Just goes to show that you never know where the next source of entertainment from this stock's story will come from.

Beyond the mountains, more BS

2006-05-09T11:52:00.000-04:00

One enterprising reader with more tolerance for empty rhetoric than this blogger recently pointed out a particularly strained analogy in the latest REFR annual report. Quoting the correspondent's account of the report (the actual report is, almost predictably, not yet available on the REFR website):

"There is a Hatian(sic) proverb: "Beyound the mountains are more mountains." This proverb applies to most companies involved in bringing a new technology to market. In R&D, after one issue is resolved, others sometimes arise. It is appropriate to note that Haiti is an island nation, so that eventually, with perseverance and hard work, the mountains will end, the goal is reached, and smooth sailing across the ocean of opportunity can begin."

Notice how Harary actually turns the proverb completely on its head. The proverb speaks to how life always has another challenge to throw at you. Harary's vision is one of a switch flipping someday (soooooon!!) and all of REFR's challenges suddenly coming to an end, replaced by effortless perpetual cash flow.

Sorry, but that's the talk of a shyster.

Theoretical down-the-road challenges for REFR are legion. Conventional electrochromics by such companies as Gentex have already beaten SPD heads-up in the automotive and aeronautical market. Liquid crystal-based technology is always lurking. And there are plenty of wildcards out there like the material the Huskies are developing.

Then there's REFR's patent protection, which grows more questionable by the day. Shareholders have often been heard gloating at other companies receiving patents based on Harary's old patents (or in some cases, merely mentioning SPD in passing as a theoretically possible component of their invention), calling it proof of how interested in SPD companies are. Not occurring to them, apparently, is how those patents give the companies receiving them a nominal claim on the technology itself. And then there's the matter of whether REFR can even afford to fight a patent dispute. The upshot of all of this being that REFR may in fact have lost control of its own technology.

Of course, all that would remain to be seen in a patent court, and that won't happen until there's actually something to fight over.

As an amusing footnote, another correspondent produced a quote from Robert Saxe, citing the exact same Haitian proverb with the exact same twisting into the opposite meaning, dated 1993. Thirteen years later, and REFR's still sitting on the same mountain.

Give a hoot, don't dilute!

2006-05-08T17:59:00.000-04:00

REFR bowed to the inevitable Friday, filing an S-3 with the SEC to register another two million shares of common stock for sale. In combination with the one million shares unsold from the previous filing, that represents more than 20% potential dilution to its investors, should REFR successfully recapitalize themselves in the next eight months. Of course, if they don't, that will be even worse for its investors.

Of course, whether there will be any takers this time around is another issue. In REFR's favor, there's a better economy about and investment dollars are flowing a bit more freely. Against them, their track record of failure is a little bit longer and a little bit more public. Fortunately for them, the recent high volumes suggest that they have successfully moved Stark Investments out of the picture and thus set up a clean slate for the next suc... er, institutional investor.

As P. T. Barnum would put it, an institutional investor is born every minute, so hope remains that Bob and Joe will find someone out in the big, wide world sufficiently naive to the REFR story that they will be reeled in. (Even though Stark seems to have made out all right in the end, it's unlikely we will see them coming back for seconds, especially after the 50% haircut they were staring down at one point.)

Time will tell.

A paucity of capacity

2006-04-20T18:31:00.000-04:00

In an uncharacteristically helpful gesture on their part, the mangement of REFR issued an 8-K filing presenting the highlights of this afternoon's conference call. Specifically, they pointed out information that could be considered "new" for disclosure purposes. All of it, interestingly, concerned the progress of film licensee Hitachi Chemical, which had not been officially heard from in some time, despite being touted as being in the lead in terms of production progress.

Hitachi was reported to have a production line capable of producing film about 19 inches in width (narrower than the film Dainippon was reported to have produced), with a second line due to be activated later this year. The second line was said to be planning widths "in excess of one meter", with an expected capacity "measured in the tens of thousands of square feet per month".

Wow, that's... not very much. Let's run a little math, shall we?

We'll start by making some very generous assumptions:

End-product licensees will be able to command $30 a square foot for the film, and sell out the full capacity of the new line.
The capacity of the new line is 50,000 square feet per month (it could easily be half that and the announcement would not be misleading)
REFR will collect royalties on 10% of the cost of the film (on most products the royalty cut is 5% of the sale price, we'll be generous and assume SPD to only be half the cost of the product).

Given that extremely favorable set of assumptions, the annual revenue to REFR would come to $1.8 million a year, or less than half the company's expenses. Throw in the original line, whose capacity is presumably not "in the tens of thousands of square feet per month", and you get to maybe $2.2 million a year.

Naturally, the mathematically-challeged SPDiots are already counting their cash dividends.

Bottom line, even making an almost comically optimistic set of assumptions, there is still no apparent path to break even cash flow in the foreseeable future for REFR. And when you add a dose of reality to the mix, in the form of management's chronic tendency to grossly underdeliver, and it quickly begins to resemble business as usual in Woodbury.

Stop and go trading

2006-04-17T16:10:00.000-04:00

Just wanted to remark on the heavy trading volume in REFR, the largest in ten years, over one million shares. Clearly something is up, but what exactly that is remains a mystery. At least for three more days, as the "big news" triggering today's upsurge was the announcement of the company's annual conference call, scheduled for this Thursday afternoon (a full three weeks after the filing it is supposed to discuss).

Even more odd is the intraday trading pattern. Effectively, there was basically no volume until just a little before 10:00am ET, a half-hour into the session. Then the price spiked in a matter of moments, only to quickly settle up about 10% up from the previous close. Then heavy trading kicked in for about 90 minutes, after which, just as suddenly, the trading all but came to a halt. No, it was not an official halt; rather, it was just the traders in the stock spontaneously walking away from it. About 45 minutes later it resumed, only to take another 15 minute break a half hour later. After that came relatively steady trading through to an active close.

To the casual observer, who in a couple of weeks will only have access to the daily volume totals, this will no doubt come off as an establishment of widespread bullish interest in REFR. But between you and me, reader, this "interest" is about as natural as Velveeta.

Regardless of what I think, one thing is clear, and that is that something of interest to REFR, one way or another, is going to come out on Thursday. I'm staying on record that it's some kind of upper management change, most likely the very-due retirement of founder Bob Saxe, but I admit that's more gut instinct than anything else. At any rate, whatever it is, we shall soon see.

Uh oh, Asensio!

2006-04-09T13:36:00.000-04:00

As if the past week were not eventful enough for a company notable primarily for its dormancy over the past couple of years, an old acquaintance of REFR's, the research firm Asensio and Company, has broken a nearly four-year silence on the company's continued failure to produce results of any kind. The firm, which, depending on who you talk to, may or may not maintain a connection with its namesake founder, controversial short-seller (a phrase about as redundant these days as "tall basketball player") Manuel Asensio, issued two brief reports Thursday summarizing the total failure the company has been over the years, referencing, as noted here first, the questionable lack of a "going concern" clause in the recent 10-K filing, and hypothesizing that the company's ability to raise funds to pay its management's comfortable salaries may be nearing an end.

Reaction to the reports was swift and predictable. It was noted that the report stated that REFR has been trying to sell SPD glass for years, when in fact it has not been trying to do any such thing. So apparently the primary objection to the report is that it gives REFR too much credit.

Other various charges were hurled at Mr. Asensio himself, none worth the dignifying that spelling them out here would give them. Suffice it to say that even asensioexposed.com, your one-stop shop for ad hominem attacks on various short-sellers including Asensio, is thus far not touching them.

Seems like everything old is new again, in REFR land.

Stock rally -- some assembly required

2006-04-08T11:53:00.000-04:00

Normally, when a small, unregarded company suddenly releases "BIG BIG" news in the morning, the result is a giant upsurge in volume and large run-up in price (at least in the near term).

Leave it to REFR to put even that basic process into slow motion.

On Monday, REFR announced that licensee Dainippon had updated their license to include production of film (previously, they were only licensed to produce badly-outdated SPD emulsions). This astounding developement led to a large upsurge in volume... on Tuesday, and large spike in the price of REFR... on Wednesday.

However that managed to happen, the whole effect comes off as hideously unnatural. Furthermore, with the tight wraps the company keeps on its stock, it's all but a lock that the company has a good idea who was involved in all that trading on Tuesday. Will the rest of us ever be let in on the secret? Your guess is as good as mine.

Regardless, yet another rally has been blunted right at the $5.00 mark that has dominated this stock since last February's offering. So some things, apparently, have not yet changed.

Meanwhile... an old acquaintance has returned to the scene after a lengthy absence. More on that Monday.

BAMASS Surprised at Latest REFR PR

2006-04-04T10:14:00.000-04:00

The Bashers' and Manipulators' Association (BAMASS) announced that it was surprised by Research Frontiers, when the latter put out its first news release in five months this morning, announcing that Japan's Dainippon Ink and Chemical had expanded its license to produce SPD emulsions, to include production of SPD film.

Bill Asher, spokesman for BAMASS, announced, "This PR was rather startling. We had previously thought that Dainippon was already fully licensed to produce film. We now have our researchers scanning the licensee lists for other instances of licensees with outdated licenses whose updating could presage further press releases." There are currently no other licensees listed as being licensed for emulsion but not film.

Asher went on to add, "I have full confidence that Dainippon will make just as much use of their new license as they did with their emulsion license."

Eight weeks a month

2006-03-31T17:05:00.000-05:00

REFR bulls have rallied behind a CNET News.com article by editor at-large Michael Kanellos. The article heavily quotes John Petraglia, CEO of SPD Control Systems, noted previously as yet another in a line of cookie-cutter REFR licensees which come out of nowhere, make a little noise to get a few people excited, then vanish to leave nothing but their name on REFR's burgeoning list of licensees. In a shocking development, Petraglia spoke optimistically of the technology his company is licensed to sell.

Besides the amusingly obscure mention of Leminur, which apparently does exist after all, only now under a different name, and no particular favoritism to SPD or REFR, the highlight of the article appears to be the very beginning of the article, wherein Kanellos writes: "Smart Glass, which will be shown off and discussed more fully in about eight weeks...".

Bulls in REFR have gone nuts trying to parse exactly what that refers to. So far the consensus on the message boards appears to be that the article foreshadows a major development of some kind within the next month. (Hey, eight weeks, one month, who's counting?) Critics responded by yawning and hitting the snooze button, knowing full well that asking any of the bulls for any sort of clarification on what they mean is a waste of time.

Meanwhile, with only nine months or so before the cash runs out, the heat is decidedly on for REFR to find some source of cash infusion to keep the lights on. Given the usual regulatory hurdles that need to be cleared, things need to start happening pretty soon if they're going to make it. So next month way well be interesting to watch. Unless, of course, it isn't.

Out with the old?

2006-03-30T11:59:00.000-05:00

Research Frontiers, ever full of surprises (or full of something, anyway), submitted its 10-K for fiscal year 2005 yesterday, a full two days ahead of the deadline. For the year, they amassed $138,742 in "fee income", the lowest level since 1999. (Ironic that the stock should have done so well that year!)

One point of interest that has come up is the assertion that REFR will have sufficient funds to make it into Q1 2007 without additional funding (a necessary assertion to avoid the dreaded "going concern" clause in their filing).

But elsewhere in the filing, the numbers don't quite add up to support that claim. Cash as of the end of 2005 was pegged at $3,644,685, while "net cash used in operating activites" for 2005 was $3,920,835. The same figure in 2004 was slightly less than $3.64 million, but that included a non-repeating cash gain from the remnants of SPD Inc.

Any way you cut it, the company, as it is, seems to come up a little bit short of being able to make it to years' end solvent. Presumably, then, REFR has some kind of plan to cut costs to allow themslves to stretch their cash out until December.

Given that the details of how REFR spends its cash are a bit murky to say the least, it's hard to speculate just where the cuts might come, but one sizeable item suggests itself.

Chairman, founder and director Robert Saxe has devoted 40 years to... well, whatever it is REFR does, and by all standards figures to be ready to move on to an enjoyable retirement. (Paid for by... well, let's not go there today.) If Saxe were to announce his retirement at the annual meeting this year, that would, based on his 2004 salary, trim roughly $250,000 from REFR's expenses for the year. In and of itself that's still not quite enough, but that gets the target into range, wherein a simple matter of deferring a couple of payables by a month or two, or maybe a handful of exercises of cheap stock options, gets them across the December 31st finish line intact.

So could that be it? Could this be Saxe's last ride? Will this officially become Joe Harary's company before the year is out? And if so, will Harary display the same kind of, er, patience as Saxe has over the years? Stay tuned.

A message board retrospective

2006-01-29T19:24:00.000-05:00

Bill Wexler, longtime follower of what he bluntly refers to as "the REFR stock fraud", is back with a new retrospective on the follies posted to the Yahoo! REFR message board.

By way of editorial comment, I should note that there really is not much remarkable about overly optimistic posts from the year 2000, particularly during the spring and summer, when the reality of the bear market hadn't really set in yet.

What is remarkable, though, is that even to this day, you see the same kind of talk, from mostly the same people (even as the aliases have changed over time), backed up by the same utter lack of results from the company. The only difference, really, is that the stock has not gotten crushed as badly in more recent years. Time will tell if the line can continue to hold long enough to the company to place the next round of shares at a useful price.

Anyway, with that as prologue, please join me at the summit as we ski down REFR Hubris Mountain. Take care though, it does hit double-diamond in spots...

"Buy REFR, it's the best buy on the market and has more potential than any other stock I know of..."
-- February 17, 2000. REFR closing price: $38 5/8 (all-time high close)

"I just wish REFR would pull back one more time (maybe mid 20's?) so I can pick up another few thousand shares. Then it's off to the outer-banks for unlimited Coronas and hot crab balls..."
-- February 22, 2000. Closing price: $37

"I'm going to buy waterfront in the islands with all the money I'm gonna make on REFR..."
-- March 28, 2000. Closing price: $34 1/2

"There are not a whole hell of a lot of customer sell orders out there, people are holding..."
-- March 30, 2000. Closing price: $31 1/2

"I think we bagged the elephant..."
-- March 31, 2000. Closing price: $29 1/2

"This stock is headed to the moon soon..."
-- April 7, 2000. Closing price: $27 3/4

"There are no shares for sale - you are a dead duck..."
-- July 28, 2000. Closing price: $25 1/16

"There are no shares for sale - you are a dead duck..."
-- August 2, 2000. Closing price: $23 1/16

"Recent scale up by emulsion suppliers, advanced commercialization by licensees and hiring of new employees to handle new licensee applications all points to this occurring. That is why longs are not selling..."
-- August 15, 2000. Closing price: $22

"I bought 1000 additional shares this morning...I have been accumulating since 1998...The company has never looked better or more grossly undervalued..."
-- August 21, 2001. Closing price: $20.80

"NO ONE is selling! Too many GOOD things happening with licensees..."
-- January 7, 2002. Closing price: $19.00

"Why the Shorts will lose a lot of money..."
-- February 22, 2002. Closing price: $17.30

"SHORTS PANIC!!!"
-- April 8, 2002. Closing price: $16.80

"Shorts Defeated Again..."
-- May 15, 2002. Closing price: $15.29

"The LONGS aren't selling!!!"
-- June 1, 2002. Closing price: $13.81

"There's no fundamental reason to sell. SPD products are still coming out..."
-- July 9, 2002. Closing price: $12.50

"But if I were a trader where do I see the biggest gain? LONG!"
-- August 22, 2002. Closing price: $11.35

"Asensio and his CONSPIRATORS are going to be here until LONGS decide to sell.
...and THAT doesn't look like ANYTIME BELOW $50 a share!!!"
-- August 23, 2002. Closing price: $10.35

"LONGS ARE FEEEEEEEELING THEIR POWER!!!"
-- September 9, 2002. Closing price: $9.60

"YOU are TRAPPED IN REFR, because YOU CAN'T get LONGS to sell!!!"
-- January 10, 2003. Closing price: $8.60

"Where are the promised windows? What kind of stupid question is that?"
-- January 31, 2003. Closing price: $7.34

"REFR SHORTS FAIL TO GET LONGS TO SELL!!"
-- February 28, 2003. Closing price: $6.70

"Longs are BUYING, NOT SELLING!!!"
-- March 19, 2003. Closing price: $5.66

And now a lengthy coast to the lodge and the present day, where we see...

The price going down represents to us just one more (maybe the last) opportunity to own one of the great technologies of all time at a bargain price.
-- January 26, 2006. Closing price: $4.99

Do tell.

Kooks and Kabura

2006-01-22T16:45:00.000-05:00

Ostensibly, it has been a dormant start to 2006 for our favorite patent licensing company. No new licensees, no public announcements, and still no word on when the big-name licensees would be ready to produce second-generation SPD film in quantity.

But you would not know this from reading the Yahoo! REFR message board.

The titter all this month on that board has been over a description of the 2006 Mazda Kabura concept car which included the statement, "Overhead portions of the glass have adjustable tinting so that the driver can twist a knob on bright days to change the roof’s opacity, as desired, from clear to completely opaque."

Well our favorite investors put two and two together and -- news flash! -- decided that the adjustable tinting material in question must be SPD. Never mind small details such as the windows being reported as going "completely opaque", a characteristic never ascribed to SPD.

Eventually, however, it was confirmed that the material in question was in fact SPD. And when I say "confirmed", I mean that an anonymous alias posted a message asserting, without evidence, that it was confirmed. Meanwhile, someone posted an article from the British Channel 4 website which asserted that the Kabura's roof was in fact "electrochromatic". This all led to an amusing discussion over the distinction between "electrochromic" and "electrochromatic", whether those terms were inclusive or exclusive of SPD, and which of them was the proper expansion of the shorthand "EC". Needless to say, nothing was resolved on any of those scores.

What we do know is this: neither Mazda nor REFR nor any source outside of the message boards has ever once mentioned any relationship between SPD and the Kabura. Mind you, all of those can and have been rationalized away: Mazda is being secretive (about an auto show display?!), REFR may be contractually barred from publicizing (people are on to them!), and the press is lazy (somehow it became their job to do REFR's publicity for them).

But by this time it's a moot point. By the time you read this, the Detroit International Auto Show will have closed. Any press release at this point asserting that the adjustable tint material was in fact SPD will be completely after the fact and therefore ineffective for publicity purposes.

Worse still, such a release would call to mind the Jeep Rescue debacle from the 2004 Detroit auto show. It would mean that twice in a span of two years, an auto company was so underwhelmed by SPD in practice that they deliberately avoided reference to it even
though it was in plain sight. The last time that happened, the major supplier of film shut down a few months later.

Frankly, were I a REFR shareholder, I'd rather forget the whole thing.

New Year's scorecard review

2006-01-02T10:30:00.000-05:00

2005 proved to be an active year for REFR after (by REFR's standards), as progress was arguably made towards no less than two of the twelve items on the REFR announcement scorecard. "Plans" were announced by Isoclima to introduce film into the market, in conjunction with their demo display at an Italian glass show in early October. Then, soon thereafter, details came to light regarding a church construction project in Arkansas, which, as things stand, is currently slated to incorporate SPD window shading. Whether that actually comes off as planned remains to be seen, and then there's the question of what qualifies as a "major" architectural project. Since there has been no announcement as such, we can't really give them a "yes" on that one yet anyway, but it is something that may be showing up in the coming weeks.

On the downside, the jumbo jet announcement looks dead, and the marine and automotive markets look very distant. And of course, as things stand, the money is scheduled to run out just about one year from right now, so more share dilution is on the way, assuming they can find someone to front for them for the next round. But that's the fun of this: even with a company as predictably unproductive as this one, there's still so much that manages to remain shrouded in mystery. Let's watch and see what 2006 brings to Woodbury. shall we?