To market, to market, to get a fat nothing

I was going to go back an address an aspect of the R. J. Falkner report on REFR, when I found something peculiar. As of noon Eastern, the website is gone and replaced by a "temporarily out of service" notice.

This may mean a lot of things or perhaps nothing at all, but we'll keep a watch on it.

In the meantime, we'll go out on a limb and trust N. Dixon's recounting of the Falkner report for the subject of the markets SPD is/will/hopes to someday participate in.

Flat Glass: very general and redundant with many of the specific products mentioned afterwards, so we'll set it aside for now.

Automotive rear-view mirrors: This market was captured quite thoroughly in the mid 90's by Gentex. Years later, Harary tried to downplay the defeat by declaring the market too small to be worth pursuing(!) Nevertheless, as with old licensees gone inactive, old market long since lost never get dropped from SPD's "potential".

Electrochromic mirrors: Apparently this is there to suggest that Gentex has only a very small part of the market, and that there's plenty of room for SPD to muscle in. Of course that flies in the face of Harary's "too small" declaration, but since when has consistency mattered here?

Automotive sunvisors: Never mind, apparently, that no government is going to allow material that defaults to dark on the front windshield.

Flat panel displays: This one is a real throwback, to the days when laptops largely had monocolor displays and widespread active-matrix LCD was still a pipe dream. LCD has come a long way since then. And SPD?

Eyewear (Prescription, Non-Prescription, Adjustable): They're still holding on to that one regardless of how thorough a failure the Vision-Ease experiment was.

Aircraft Windows: Covered.

The theory is that REFR only requires a very small amount of headway in any one of the above markets to be an instant success and destroy the shortsellers in its stock.

But if that were so, then what does it say about REFR's inability over the course of four decades to accomplish such a trivial-sounding task?

Lowlights of the summer newsletter

Thanks to N. Dixon for picking these comments out of the Summer Newsletter and making my job a lot easier.

...our licensees have received strong indications that substantial orders for several different markets will be placed ....

Nothing like using a lot of words to say absolutely nothing, eh? If nothing comes of it, it won't be REFR's fault, and it won't be the licensees fault, it'll be the customers' fault for giving false indications as to their interest. Darn them!

Notice, though, how nobody seems to have their orders in now. You'd think that if people really want this stuff there'd be a waiting list or something.

.....prospective customers in the automotive, aircraft and architectural fields for products that will require substantial volumes of SPD film.

That's about as close to mentioning Boeing as the newsletter gets. "Prospective customers", translated, means "people we'll try to sell this stuff to."

.....many successful innovations such as xerography, which is better known as photocopying, have required decades to achieve. These efforts usually require more time, effort and expense to achieve than the entrepreneurs involved originally expected. That has certainly been true in our case as well.

Ah yes, the old chestnut of comparing yourself directly to great success stories of the past. The fact that when you actually examine the details, you don't stack up favorably at all, never matters. Xerography, i.e. the technology behind copying machines of the latter half of the last century, did take a certain amount of time to go from original design to commercialization. However, a cursory look at Xerox's own history page puts paid to the notion that the developments are anything close to similar.

The time from original patent to commercial introduction was seven years, not forty. Furthermore, this was in the 1940's when innovation in general moved a lot slower. And then there was the little matter of World War II going on, which diverted resources away from this kind of development.

Xerox, or Haloid as it was then called, had a very profitable and well-established business in photographic paper going on in tandem with their xerography research. In short, the company was already successful and self-sufficient.

Probably most tellingly, Xerox depending on a single "outside" source, well-funded by Xerox, for development of xerography. Contrast that with REFR, who signs on everyone and anyone it can to be part of the group effort, resulting, at best, in much duplication of effort and competitive distrust. And that's assuming that the licensees are even motivated by the meager incentives REFR can offer to move forward.

The Xerox story is one of several Harary, like Saxe before him, likes to try to draw comparisons with REFR. Others include Microsoft, Edison's light bulb, and Henry Ford's automobile. It's a really sick display, and REFR management ought to be ashamed.

Except, I doubt "shame" is anything they're capable of.

One more:

.....I believe that you have a sound basis on which to be optimistic that a successful commercial introduction of second-generation SPD film will be forthcoming.

And a sound basis on which to dismiss failure as the result of "overoptimism". After all, who can find fault with someone for just being too optimistic?

Besides a realist, I mean.

It's summertime and excuses are easy

Just in time to catch what is looking like a near-term bottom in the stock, REFR has come out with its summer newsletter.

The bulk of the "newsletter" is a detailed recounting, including full transcripts(!) of the annual shareholder meeting from two weeks ago. A first reading seems to back up early reports, so I won't go into too many details. I will note, that while they mention "representatives from Hitachi Chemical", they mentioned none of them by name. This kind of undercuts the insistence that he was at the meeting and is still fully in charge there, rather than retired as some reports have it. (You'd think this would be an easy point to settle!)

I would like to note the last paragraph of the newsletter. Ever vigilant for the latest up-to-date developments, REFR management decided to throw in a few "reassuring words" about the rather dramatic collapse of the stock over the past couple of weeks. This includes the popular chestnute, "the fundamentals have not changed," and that is certainly most true in REFR's case. One has to have fundamentals in the first place, for them to change.

Checking the scorecard

Okay, it's been over a month now, so let's check the REFR announcement scorecard and see how it's coming along.

Hmm. Um. Okay, I guess I'm going to have to come up with something else to write about today.

All right, how about this. In the past few minutes (as I am writing this), REFR traded down to $2.90 per share. This takes out the split-adjusted low price of 1992 ($2.933). To find a time when REFR traded lower than today, you have to go back to July 5, 1991, when REFR got down to $5 1/4, or, adjusted for splits, $2.80 per share.

For reference, here is a list of remaining "lows" that REFR has between it and its all-time low, a split-adjusted 80 cents per share:

            low price    split-adjusted (15/8 prior to 1994)
06/23/05    2.90         2.9
07/05/91    5 1/4        2.8
07/03/91    4 1/4        2.2667
07/02/91    3 3/4        2
06/27/91    3 5/8        1.9333
06/12/91    3 1/2        1.8667
06/03/91    3 1/4        1.7333
05/31/91    3            1.6
04/02/91    2            1.0667
02/22/91    1 7/8        1
12/07/90    1 3/4        0.9333
09/27/90    1 1/2        0.8  (all-time low)

Of course, having assembled this list, I have no doubt set in motion a wave of claims from the diehards that they in fact bought at the low prices above, but what can you do. Besides nod indulgently and chuckle to yourself, I suppose.

Throwing money away

Today I thought I'd just perform a little tallying of the kinds of losses insiders have suffered on their various purchases over the past couple of years.

I'll start with founder Bob Saxe, the least prolific of the buyers (which probably tells you something right there):

(Losses are based on a price of REFR of $3.00 per share, today's low as of noon Eastern.)

4/20/05: 500 shares REFR @ $5.15 : loss = $1,075
11/12/03: 200 @ $9.48 : loss = $1,296
11/11/03: 200 @ $9.31 : loss = $1,262
11/10/03: 200 @ $9.81 : loss = $1,362
Total loss for Bob Saxe = $4,995

Now President Joe Harary, who has also been absent from the buy side for a while:

6/3/04: 1,729 @ $8.1875 : loss = $8,969
Total loss for Joe Harary = $8,969

Vice President Michael LaPointe, also nearly a year removed from his last purchase:

6/28/04: 500 @ $7.09 : loss = $2,045
5/20/04: 500 @ $8.798 : loss = $2,899
4/19/04: 500 @ $10.44 : loss = $3,720
1/26/04 175 @ $12.05 : loss = $1,584
1/26/04: 250 @ $11.98 : loss = $2,245
Total loss for Michael LaPointe: $12,493

Now we get to the more prolific buyers. First up, director and former forum stock promoter Al Malvino, with a lesson on how not to dollar-cost average:

6/17/05: 1000 @ $3.62 : loss = $620
3/18/05: 1000 @ $5.86 : loss = $2,860
2/18/05: 500 @ $5.97 : loss = $1,485
1/19/05: 500 @ $5.98 : loss = $1,490
12/29/04: 400 @ $6.00 : loss = $1,200
12/2/04: 600 @ $6.11 : loss = $1,866
11/22/04: 300 @ $6.74 : loss = $1,122
7/27/04: 700 @ $6.70 : loss = $2,590
7/9/04: 300 @ $6.77 : loss = $1,131
6/16/04: 569 @ $7.85 : loss = $2,760
6/4/04: 731 @ $8.674 : loss = $4,147
5/24/04: 1000 @ $8.846: loss = $5,846
5/18/04: 600 @ $9.05: loss = $3,630
5/17/04: 600 @ $9.20: loss = $3,720
5/14/04: 700 @ $9.526: loss = $4,568
5/12/04: 700 @ $9.70: loss = $4,690
5/3/04: 400 @ $9.71: loss = $2,684
2/4/04: 3000 @ $12.125: loss = $27,375
2/3/04: 1000 @ $12.12: loss = $9,120
1/7/04: 1000 @ $8.91: loss = $5,910
12/30/03: 1000 @ $9.12 : loss = $6,120
12/5/03: 300 @ $9.10 : loss = $1,830
11/10/03: 300 @ $9.30 : loss = $1,890
10/21/03: 300 @ $11.65 : loss = $2,595
10/8/03: 305 @ $11.55 : loss= $2,608
9/26/03 300 @ $12.05 : loss = $2,715
9/3/03: 300 @ $12.00 : loss = $2,700
7/30/03: 200 @ $13.35 : loss = $2,070
7/15/03: 800 @ $14.56 : loss = $9,248
7/10/03: 200 @ $15.35 : loss = $2,470
Total loss for Dr. Al Malvino: $123,060

As bad as that is, it's still peanuts next to the prize patsy of the board of directors, Corporate Secretary Victor Keen. His buys may have been fewer in number, but he made them count. Against himself:

5/4/05: 10000 @ $3.84 : loss = $8,400
8/19/04: 16300 @ $5.88 : loss = $46,944
7/19/04: 5500 @ $6.75 : loss = $20,625
6/29/04: 10000 @ $7.21: loss = $42,100
6/14/04: 5000 @ $7.79 : loss = $23,950
11/11/03: 5000 @ $9.36: loss = $31,800
9/30/03: 5000 @ $11.51: loss = $42,550
7/15-16/03: 5000 @ $14.50 : loss = $57,500
7/3/03: 1300 @ $14.96 : loss = $15,548
7/3/03: 5000 @ $15.00 : loss = $60,000
6/25/03: 10000 @ $12.05 : loss = $90,500
Total loss for Victor Keen: $439,917

On aggregate, just from buys made in the last 24 months, insiders have lost a total of $589,434.

The purpose of this observation is not to gloat, mind you. I am quite certain that all of the above insiders, even Mr. Keen, can easily afford to lose everything they have invested in REFR stock.

Rather, I just want to observe that when you ask a shareholder why he continues to have faith in this company, one of the things inevitably highlighted is the company's stellar track record of insider buys versus sales. After all, the insider must know something good is in the offing, or they wouldn't buy, would they?

Well, the above illustrates just what that line of thinking got the average investor in REFR. A huge pile of losses with no apparent way out of them.

That is what comes from letting others do your thinking for you.

R. J. Falkner's sound and fury, signifying nothing

It is quite an amazing feat that Bob Saxe and company have managed to keep the cycle of recapitalization going for a full forty years without ever having produced anything of value to the marketplace. Certainly that is attributable in part to management's virtuoso playing of the stalling game, stretching things out as long as humanly possible and counting on faded memories and a constant influx of new players unfamiliar with their past to carry them on to the next stage. That they have managed to keep it up for this long without having diluted the stock beyond recognition is most remarkable indeed.

Still, it all would have been a lot harder if Saxe and company didn't have a willing accomplice or two willing to help them out. And one of their primary accomplices, particularly in recent years, has been the "research" firm of R. J. Falkner and Company.

Falkner is one of a thankfully dying breed of research firms who put out reports on companies that pay them to do so. Not surprisingly, the reports are uniformly and usually quite wildly bullish.

Falkner's report on REFR is no exception. Their latest summation, dated November of last year (when REFR's price was roughly $7.50, or more than twice today's levels), predicts "REFR?s long-term prospects for profitability and growth will be supported by accelerating growth in royalty income within the next 6-12 months."

For those uninitiated with how these forecasts work, this means that, a little over six months having passed since the report was issued, a new version, with a renewed 6-12 month time horizon, is almost certainly due out shortly.

Some, however, suspect that Falkner's assistance in the promotion of REFR goes beyond their silly "research reports". On its disclaimer page, where Falkner customarily admits how much they are paid by the company being "researched" ($3,500 a month in REFR's case, or more than 1% of the company's operating budget), they also add that they provide "investor relations services" to REFR.

Now, given that REFR already has a perfectly competent investor relations person on staff, the question asks, what kind of "investor relations" does Falkner do for REFR? A sampling of disclaimers for other companies' reports characterizes the compensation as being "for the periodic publication of research reports". So clearly Falkner is doing something else for REFR. What might that be?

One rather blunt theory is that Falkner is responsible for a great deal of the promotional activity on the message board forums. While it's a little hard to accept that REFR could get all that much "bang" for $42,000 a year, there is some evidence to support the suggestion. Much of Falkner's report gets requoted endlessly on the forums. Some have claimed this even happens before the fact, that issues raised on the forums subsequently find their way into Falkner reports, though this has not really been established. Another thread is the frequently raised notion of "paid bashers". While this is an extremely popular accusation on the forums of stock of all types, despite the fact that the practice has never been proven, what would be more natural than assuming the contra side is being paid for their postings, if you yourself are being paid for yours?

At any rate, that's probably far more than enough theorizing for a topic upon which little proof of anything exists. For a good chuckle, read the whole Falkner REFR report from beginning to end and see for yourself just how horribly wrong it has already proven. Tomorrow, I'll show you where you can read past reports from Falkner, to get a really good perspective on just how horribly wrong they have been.

Feeling flushed

The forums were abuzz all weekend as promoters tried to rationalize their way out of the seemingly straightforward conclusion from Dreamliner designed Klaus Brauer's comments that Boeing was importing the technology JAMCO puts in its airplane lavatory windows, for use in the main cabin windows.

The biggest objection appears to be that the JAMCO lavatory windows are strictly "on-off", not dimming. Of course, that is premised on the theory that the tech from the lavatory will be transplanted as-is with no refinement whatsoever, which seems a shaky contention at best. And really, the whole line of thinking that liquid crystal light shading is strictly binary is quite thoroughly exploded by the development of modern LCD computer monitors and LCD televisions.

Another is that there is no documentation of JAMCO products appearing in business jets, as mentioned in the Brauer comments. Apparently the expectation is that JAMCO, like REFR, would publicize every single sale they make.

One counter-theory that seems to have been definitively answered even to the promoters' reluctant satisfaction is that liquid crystal windows could only function in temperature-controlled interior environments, and that the windows must therefore be facing the cabin interior, not the outside. Unfortunately for this line of thinking, there are photos showing the window to be behind the toilet, which would place it on the exterior of the aircraft.

One can never really assume that this story is making it outside the somewhat insulated world of the message board forums, but it is notable that the stock is diving to fresh lows even as I write this. One thing seems certain: management is almost certainly glad to have gotten the annual meeting out of the way before this revelation broke.

They're really in a jam(co) now

Some days just show why doing this is all worth it.

For many months, the promotional contention was that Boeing was going to buy SPD windows from Inspectech Aero Servies to fulfill their specification of electronically dimming cabin windows. In response to the reasonable observation that Inspectech is in fact nothing more than a broker for the technology with no manufacturing capabilities of its own, promoters demanded, in effect, "well, if it isn't Inspectech and SPD, then who? Who dammit???"

That came to a crashing end yesterday on the forums. The trigger was a post by our friend Ed Wesnofske. In clarification of the most recent challenge, Ed posted a quote from Klaus Brauer, the head of interior design for the 787 project, wherein he stated that the mystery technology for the cabin windows "is in use on some business jets today and, in fact, in some lavatory windows on commercial airplanes."

While Wesnofske's source on the quote is unclear (it was described only as an "online chat"), this proved to be a vital clue. Forum poster xavierducats seized upon the new information and very quickly researched up what very much appears to be the answer to the long-standing riddle.

Meet the JAMCO luxury lavatory. It's certainly not like anything you'll find on your typical domestic flight, that's for certain. But scroll down to the bottom and -- what's this? -- a liquid crystal window that goes clear and dark at the touch of a button. Just as Brauer said.

And if that weren't enough, xavierducats followed that up by referencing the JAMCO news page, wherein JAMCO reveals a long-standing supplier relationship with Boeing, including a significant upgrade in standing for the 787 project.

So there's hardly any room for doubt at all that this is the technology Brauer had in mind with the lavatory comment. Mind you, a handful will remain in denial, as JAMCO has not yet explicitly stated that they are doing the cabin windows, but for all intents and purposes, this particular storyline is over.

But stay tuned. They'll come up with something else soon. They have to.

Stockholder wrongs

I'm going to go slightly off-topic today in that while REFR is a participant in this particular fraud upon the investment community, they are far from alone.

It is about these so-called Stockholder Rights plans. In most cases, to be fair, the most misleading part of the whole business is the name. This is nothing about protecting the shareholders and everything about protecting the company itself, and especially, the company management.

Back in the wild and wooly days of the 1980's, corporate raids grabbed the headlines, as the likes of Carl Icahn, Irwin L. Jacobs and Henry Kravis would make "hostile takovers" of companies, effectively seizing control by buying 51% of the company, then either making wholesale changes to the company, or in some cases simply liquidating it.

The rightness or wrongness of the practice can be debated endlessly, but it all became moot with the advent of the "poison pill". Without going into details, what it amounts to is an emergency clause that permits the board of directors to issue new shares to dilute any attempt at consolidation of a 51% position, long before anyone can get close to such a level. Of course, the board can waive the clause at will, thus still permitting "friendly" buyouts.

The bottom line for all of this, as far as REFR shareholders are concerned, is that the "shareholder rights" plan gives them the right to be stuck with the same management, which has ripped them off for four decades, for as long as they can continue to raise new funds to keep it going.

And that's just wrong.

More from the annual meeting

The boards' traditional source of information on the annual meeting, a very earnest fellow named Ed Wesnofske, has finally checked in and substantially backed up the initial reports.

In addition he reported some other details:

• Attendance at the meeting was down from previous years. That squares with the marked decline in message board activity over the past few years.
• Those members of the board of directors up for renewal were duly elected. No surprise there; their hold of power on the company is solid.
• The range for the new SPD (presumably "gen 2") is 0.5%-60% transmittance. This range is actually something that has been previously claimed, only apparently this time it is a single film capable of going the entire range, rather than it being the total range covered by various formulations of the film.
• REFR is purchasing the emulsion-making equipment for its licensees to try to get some of them "over the hump". Where exactly they are getting the money to do this, was not detailed.
• Robert Saxe's cash salary did indeed decline, but this in fact was offset by an increase in stock option compensation.

Apart from that, however, the meeting seemed very long on general observations with vague connections to REFR, and short on material events and forecasts. Which, if you think about it, is pretty accurately reflective of the company itself.

THIS JUST IN: Reports are coming in that Tadao Kurosawa retired from his post as president of Hitachi Chemical USA last February. If so, presumably it was not him at last week's meeting. Whether this means anything with respect to Hitachi's status as an SPD film producer, remains to be seen.

On the wrong Traco

With some REFR licensees there's really little to say. Such is the case with TRACO, a fine manufacturer of replacement windows, doors and other exterior glass products, who became licensed to sell SPD just a little over two years ago.

TRACO got their obligatory big sell as a power player in the SPD industry in the subsequent Ask Joe column, and... that was pretty much the last we ever heard from the Pennsylvania company regarding SPD. Yet today they are counted about the mighty 35, the licensees which are all actively working to make REFR a huge success, whether they themselves get anything out of it or not.

Or not.

Same time next year?

A report on the secret annual shareholders' meeting has finally made its way public. It comes from a new alias to the boards, and is even self-described as "sketchy", so no warranties here, but it's something to go on.

• Hitachi was present, in the form of Tadao Kurosawa, president and CEO of Hitachi Chemical USA (really, a very small subsubdivision of the famous Japanese corporation).
• Steve Abadi from Innovative glass, he of the Extreme Makeover PR attempt, was also present, and suggesting he had large orders awaiting the availability of the Gen 2 film, in a way that typically left him an out to say he never meant that.
• Hotel Technologies was also represented, most likely by Steve Belmonte.
• Both the new and old auditors showed up, presmably to reassure everyone that there was no suggestion of accounting issues. One would hope not, there being so little to actually account for here.
  
• Then again, who needs accounting shenanigans, when the company proceeds to announce that Joe Harary is giving himself a $50,000 bonus for raising the $5 million last winter, and the shareholders don't even bat an eye. That said, this was apparently offset by someone else's salary decreasing. It wasn't clear who was taking the cut, though most likely it would be founder Bob Saxe, who is no doubt winding down towards retirement.
• In a refreshing bow to reality, the company confessed that commercialization was taking "too long". It went on to admit that mass production was still "at least several more months, maybe much longer" away (emphasis added). But then they added a small carrot in the form of a successful test run, but subsequent reports revealed that the results were not repeatable. In a way, unrepeatable success is actually worse that consistent failure, because that makes it a lot harder to figure out what's going wrong. That's where ISO 9000 and that whole business came from.
• In the interest of completeness, I'll add that other reports later claimed the licensees were much more optimistic in private. (Funny how that works!) Some even claimed that the licensees somehow knew each others' positions relative to achieving mass production and thus who was "ahead". Of course, that begs the question of why the licensees would share that kind of information with direct competitors but not the public.
  
• Then in a moment that showed that some of these shareholders are just naturally unhinged, someone asked about a buyout by General Electric that would amount to over $700 million. Management, to its credit, gently dismissed the suggestion.
• The report wrapped up by mentioning some technical discussion which was not reported in detail, and a reference to an upcoming SPD display at the following week's (now this week's) Paris Air Show.

Management's inability to suggest a date for commercialization, or even give the ubiquitous "soon" (although by now that term had reached running- joke status), can't be sitting well with shareholders, and probably goes a long way towards explaining the stock's weakness last week. Of course, the inability to give guidance is a direct result of the company's passive business model.

So, lacking any assurance that any chance for royalty revenue is forthcoming anytime soon, management will have no choice but to start the fundraising process all over again this summer. And with that, another increase in the authorized shares seems inevitable, as a mere million shares at a useful discount to current prices isn't going to go very far at all.

Interesting times for REFR shareholders. But I wouldn't want to live in them.

Kurosawa has left the building

REFR annual meeting update: Several sources have confirmed that Tadao Kurosawa, president and CEO of Hitachi Chemical USA Ltd., the small North American operations of Hitachi Chemical, Ltd., the minor subsidiary of Hitachi Ltd., a large corporation primarily known for electronics, was present at the annual meeting and spoke to interested shareholders in private. This is a startling development, given that he has only been in attendance at two of the last three such meetings, having missed last year's due to his son's graduation.

Further updates as they mosey on in.

This time last year

While we wait on the "official" report on this year's annual shareholder meeting, a quick look on the events of the last meeting 52 weeks ago.

On that day, REFR stock hit new lows -- the lows that are today's 52-week highs. (Now that's what I call a bad year.) Even worse is this opening paragraph to the initial report on the meeting as given on the message boards:

"First, no major news. Second, few new details. Third, both management and shareholders' discussion indicate everyone is waiting for the next shoe to drop viz. Hitachi, Dainippon Ink and Air Products to deliver film in scaled up sizes and amounts for the marketplace and the word soon was mentioned twice."

As opposed to today, where we have 1) no major news, 2) few new details, and 3) everyone waiting on Hitachi, Dainippon and Air Products.

Great year, guys. I hope one of the quality hedge funds showed up to give you an earful.

A GST of hot air

One of the quirks of Dixon, everyone's favorite REFR promoter, is an inability to let go of any hope of SPD market acceptance, regardless of how thoroughly it has been shown to be a dry hole.

Such is the case with the Mercedes GST, now known as the R-Class. In particular, Dixon is stuck on one feature of the vehicle, a five-square-foot "panorama sunroof".

Ever since Setra used the term "panorama roof" to describe TopSky at the time when that feature involved SPD light control, that term has become the trigger for a knee-jerk reaction from REFR promoters. "Panorama roof"? SPD. Has to be. Can't be anything else. You have five seconds to tell me what else it could possibly be. Tick tick tick bzzzt. Sorry, you lose, I win.

Of course it's a complete waste of time to point out the fact that Mercedes already has non-SPD-based sunroof light control in its far more upscale Maybach. Because apparently that technology is so frightfully expensive that it can only go in "price is no object" vehicles like the Maybach. As opposed to the bargain price SPD sells at, you see.

And don't even try to bring up the little inconvenient fact that, by everyone's acknowledgement, nobody is producing SPD film for commerical use anywhere. And that it's only about another month before production begins on the 2006 model year vehicles, including the R-Class. I've heard of "just-in-time" delivery, but "just-in-time" R&D?

I almost hope Dixon shows up at the annual meeting to ask about the Mercedes R-Class/GST. I think by now even Smiling Joe will tell her to give it up. I doubt she'll listen to anyone else.

A patent answer

Our friend Dixon may have spilled the proverbial beans on the big reveal for the shareholders' meeting tomorrow.

Last week REFR added to its burgeoning (and largely worthless, by the company's own admission on its balance sheet) patent portfolio with a new addition, patent number 6,900,923. This, and I am trusting Dixon to a unusually great extent here, represents the "gen 2" SPD that has been the subject of constant hype since the shutdown of SPD Inc. Or possibly the "gen 3" film referred to somewhat cryptically on Dixon's scorecard (still up-to-date!). Or maybe it's Gen 4 or 10, or whatever.

At any rate, the other message boards are keeping mum on this for some reason, and I suspect it may be because they want to keep it as much of a "surprise" as possible. Since other sources are now downplaying the possibility of a "film availability" announcement ("There is no expectation of film availability... there never was expectation of film availability..."), the granting of a new patent is practically certain to grab at least some of the spotlight tomorrow.

Of course it goes without saying there is a big difference between an approved patent and a marketable product, as has been amply demonstrated by the hundreds of patents REFR has either been granted or acquired over the years.

But never mind that. It's party time on Long Island! Save an iced tea for me.

Perfectionism or plodding?

The new excuses for delays are coming out just in time to act as a preventative against an uprising at the annual shareholder meeting. Not that such is particularly likely with the placid lot that usually shows up, but an ounce of prevention and all that.

At any rate, the new excuse, now that setbacks from SPD Inc.'s shutdown have passed their "use by" date, is that the licensees are just so gosh darn particular about making sure that the SPD they produce is perfect, and how can we ask them to deliver anything but the very best they can possibly produce?

But of course. Just ask Microsoft, who never releases anything unless it's perfect the first time. (Note to Type 3's: that's sarcasm.)

Back in the real world, if demand for SPD is as colossal as the promoters would make it seem, then surely some segment of that demand would be willing to compromise on quality in return for getting it now. But apparently the SPD demand curve doesn't work that way. It certainly begs the question of whether the issue isn't reaching "perfection" as much as "acceptability".

But not to worry, I'm sure they'll have it all sorted out in three months. Mind you, which three months, we still don't know.

The annual bleating

It's time once again for Research Frontiers to perform its obligations to its loyal shareholder base. No, not produce profits for them or give them useful insight into the company's inner workings (the latter inevitably induces the image of a gerbil in an exercise wheel), but rather the annual suck-up fest and blue-sky session of what might be, if management were ever inclined to do something to make any of it happen.

Welcome to the regulatorily-required Annual Shareholder Meeting.

By way of a preview of Thursday's big event, let's review the 2002 edition of the fleecing, er, meeting.

"[P]lans to foster sales of SPD-Smart™ products by having SPD demonstration products made in large quantities." We're actually off to a good start in terms of accuracy in reporting. The demo products were certainly churned out over the following couple of years. The whole "foster sales" part didn't quite pan out, mind you, but give them a star for effort.

"For example, last week Research Frontiers was featured on The Money Pit, a radio program which is carried by over 100 stations in 38 states. This week, Research Frontiers’ smart window technology is appearing on a home improvement television segment expected to be seen by over 14 million viewers." And so successful were those promotional efforts, that nobody has spoken of them since. That's something, coming from the group that still tries to recycle the Extreme Makeover debacle.

"The SPD Product Demonstration Kit ("PDK") was presented at the Annual Meeting." And went to be the runaway best-seller in the SPD industry. I'm reminded of an old story about a trick deck of cards. The seller gave an impressive minute-long sales pitch about the wonders of the deck. When the buyer got home with his deck, however, he found he could replicate the sales pitch, but that was it -- the deck was useful for nothing else. The only thing it was good for was to sell to someone else. The SPD PDK works much along the same principle. (See the lower right corner of this page to see a PDK in "action".)

"The larger SPD In-Store Display will also be produced." Rumor has it these exist, but, much as with Bigfoot, no one has ever produced photographic evidence.

"This is a highly visual technology. It’s very simple - seeing is believing." Just don't try to go beyond what you see, and you'll be quite a contented believer in SPD technology.

InspecTech Aero Service, licensed to offer SPD-Smart aircraft cabin windows, unveiled a new, portable SPD aircraft window display at Research Frontiers’ Annual Meeting. They got a lot of mileage out of this, taking it to shows all over the place, and promoting the display's presence as proof of interest by some huge company or other. Of course, nothing ever came of it, but it's the short-term hype that counts, right?

ThermoView Industries, Inc. Enough said right there. That whole business proved to be a big nothing, unless you count opportunities to sell stock.

SPD Inc. Ditto, though they had a good run of ultimately unproductive promotion before folding.

"In his address to shareholders, Robert L. Saxe gave an overview of the Company’s progress and reconfirmed that based upon projections given to Research Frontiers by several of its licensees, it was a reasonable goal to expect the Company to have its first full year of profitability in 2003." This was in fact not so much a "reconfirmation" as it was a stepping-back from the previous status of "projecting" profitability by the fourth quarter of 2002 and the full year of 2003. This little switcheroo allowed the promotional effort to later claim that management never promised anything with respect to profitability. Of course, we know what really happened.

Finally, note the "demonstration" at the bottom of the page. Notice anything funny? Yes, the room appears to get darker after the glass goes dark, but... look at the floor! It still reflects a bright day outside.

Just one more example from a company that can't seem to do anything right. We'll see what they try to come up with at Thursday's meeting.

The phantom car

It's really not in the style of this blog to focus on specific anonymous message board posters. After all, there's rarely any direct proof that these are anything but earnest, if horribly deluded, people who genuinely believe what they're saying.

But every now and then, some of them cross the line, and when one does so in such a grandstanding manner it becomes hard to ignore.

Such is the case with poster "N. Dixon" of Silicon Investor, who is presumably one and the same as "N_Dixon" on the Yahoo boards, and whose writings have been the source for the bulk of this week's entries.

Dixon has been a longtime advocate of REFR on the message boards, dating back to the very early days of the Yahoo boards. Dixon, who claims the "N" stands for "Nancy" (therefore I will use feminine pronouns) claims to be an REFR shareholder dating back to 1992, which, not really surprisingly, featured some of the lowest prices at which REFR stock has traded (on a split-adjusted basis, even lower than this year's lows).

As of late, Dixon has confined herself to Silicon Investor, where she posts away with less voluminous rebuttal than she would encounter on Yahoo. The reason for this "exile" may well be what follows.

It all began with what seemed a joke. Dixon said she planned to ask, at the 2004 REFR annual shareholders meeting, "Which 2005 vehicle with SPD glass do you think is the most attractive?"

She subsequently clarified that she meant the 2005 model year.

Then she went even further: "Already picked out my SPD-Smart equipped vehicle for purchase next year."

And then later: "SPD ALREADY in 2005 production vehicles and in aircraft."

She later added that she believed that the Mercedes GST would include SPD by Spring 2005, but did not specify that this was the car she "ordered".

Dixon went on to take the show to Silicon Investor:

"I'll let you know how I like my 2005 auto with SPD glass."
"I've ordered [my vehicle with SPD]."
"SPD in production vehicles. I've ordered mine!"

Later, with the 2005 model year winding down and no source of SPD film, much less a finished product, in sight, the tale changed:

"I have ordered my car with SPD. I get updates on it. It was scheduled for manufacturing in 2005 so it might be a 2006 model."

Requests for further details, such as make and model of her order, went predictably unanswered.

So apparently we are supposed to believe that Dixon ordered a car without knowing the model year, to be manufactured more than a year later. I'd sure like to know the dealer that would take an order like that.

No, the conclusion is unavoidable that the whole tale of an order of a 2005 model year automobile was quite simply made up out of thin air. And it seems likely than, rather than have to face a derisive mob anytime she attempted to say anything, Dixon retreated to relatively calm waters of SI, where no more than two or three people will be pestering her about it at any given point in time.

Rumors that Dixon has verbally denied being a crook, meanwhile, remain unconfirmed.

A real Hitachi job

Anyway, picking up where we left off, REFR president Joe Harary was telling a theoretically international audience:

"We expect that the next generation film will be available in mass production starting in January 2005."

It is now June, and this has still not happened.

But this is no case of "something went wrong". This is a case of "something was wrong", as in, Harary all but had to have known that the above prediction would not come to pass, and that he in fact had no reason to "expect" any such thing.

Consider this quote from an email dated 1/20/05, more than two months after the Harary Glasstec interview, from Tadao Kurosawa, president and CEO of REFR licensee Hitachi Chemical:

"....Hitachi Chemical Ltd. is one of RFI licensee for SPD emlusion and Film. They have just installed all equipment for SPD coating pilot line in one of our facilities in Japan. And they are trying to coat SPD film as test-run. I do not know exactly how long to take a time for this test -run, two,three months. I hope this test run will be done succesfully not so taking a time. After this completion we will start sampling our SPD film to RFI licensees. This is our current status for SPD project."

Mediocre English notwithstanding, the implication is clear: at the time Harary gave that interview and made the above statement, Hitachi, by all accounts the lead company as far as establishing a source for "next generation" SPD film, did not even have equipment installed for testing purposes(!) Given Kurosawa's additional admission that test runs tend to take months, and it becomes absolutely clear that Harary's January timeframe was entirely unattainable based on information Harary himself had easy access to and quite simply should have known.

You want to get snowed... Ask Joe.

Good questions!

I'll finish up the Glasstec thing hopefully later today (it's short, no worries), but while it's on my mind, I wanted to highlight an excellent post containing some extremely valid questions a REFR shareholder might want to ask at this year's annual meeting, and maybe toss in my two cents on what the answers are or should be.

"Why are we waiting for generation 2 of SPD before licensees are selling product?"

I can answer that one: it's because if someone started selling "1st generation" SPD at this point, it would call into question the whole reason why SPD Inc. folded last year. The current company line is that it was considered foolish to continue selling "gen 1" SPD with the imminent introduction of "gen 2". Of course, "gen 2" proved to be not so imminent after all, but so far REFR has been reasonably succesful in ignoring that fact. A licensee reversing and re-opening the market for "gen 1" film would be a distinct embarassment and might even suggest that there were problems with "gen 2". Definitely not the message REFR wants to send right now.

"Why wasn't a marketplace established with generation 1 in order to a) kick off the market, b) get some maket awareness, c) start people using generation 1 in real world uses, d) start getting feedback from the market on the pros and cons of the product?"

The promoters would argue that precisely this was done, with the various photographed installations supplying the proof. Of course, real shareholders would probably want to see substance in the form of some measure of ubiquity instead of isolated instances that are not too many to individually document on a web page. But I guess "everywhere you look(tm)" means different things to different people.

"Most companies learn from their first generation product and refine it in the next generation. It seems like we have lost years since I heard Robert Saxe say that the next year may be our first profitable year. Why wouldn't the licensees sell what was available to let the world know SPD exists and will be getting better?"

At the company I worked for a little over a decade ago, we had just put the finishing touches on a fine little product that would have served its target market well for years, while we worked on the next-generation product. But then our head of marketing got wind of the new development, and started hyping it to his customers. This, to his shock and surprise, killed sales of the product we had just finished, as customers unanimously elected to hold off until the new product was ready, and turned R&D's life into a living hell for two years as the company struggled to rush the new product through the design and development process.

The point of this sorry little tale being, it's really too late to go back anyway. Who would want to buy film that the company has publicly admitted to be flawed? Particularly at the exorbitant prices being charged.

"We lost all that potential product ramp up time to get potential buyers ready to go. Why won't this happen to the generation 2 product? Why aren't we going to wait until generation 3?"

In short, what's to stop all this from happening all over again? The simple and obvious answer is, "nothing, of course". The promoters' response will be to get all upset that someone dares to look in the "rear-view mirror" for a clue as to what might happen in the future.

"Some of us longs are real loooong loooongs who believe in the product but I am confused why generation 1 hasn't started us up."

And that's a point that's really unanswerable. Early versions of products, especially in the computer industry, may have been pretty weak compared to their present-day forms, but they had sales. People bought the IBM PCjr. People bought 128K Macs. People bought Newtons. Unfortunately, the same simply cannot be said for "gen 1" SPD. How anyone can take that as a good sign for the future is beyond me.

But then again, I'm not a type 3 investor. Nor is our question-asker, I suspect.

Glasstec and the four-month (and counting) gap

Today, another item from the N. Dixon files. (In light of current events, I think maybe I should be calling myself Threep Doat.)

This one is one that I am frankly surprised that REFR's promoters would be willing to still bring up, given what it contains.

The item in question is a videotaped interview Joe Harary gave at the Glasstec industry show last November. This is a direct link to the Windows Media file recording of that interview.

There are three main highlights to the short presentation.

The first is the inevitable demonstration of SPD in action. This, I am certain, has been practiced many times so it is little surprise that it comes off flawlessly. If there is one thing REFR knows how to do, it is demos.

Somewhere near the midpoint of the interview, Harary references a study indicating a growth rate in the demand for "smart glass" over a five-year period. What Harary "forgets" to mention is, the study, and therefore, the beginning of the five-year period, was in 2000, so that in fact the growth he was citing had already occurred. And poor SPD got left out.

The final highlight was towards the end of the interview. The inevitable question of when this fantastic SPD technology would be available arose. Harary, in typical hedging fashion, suggested January as a likely date.

Well, it is now June and next-generation SPD is nowhere to be found. (High hopes remain that a big announcement is being saved for this year's annual shareholder meeting; we'll see.) But worse than that, evidence subsequently arose that indicates that Harary almost certainly knew that a January time frame was an impossibility at the time he gave that interview.

More tomorrow!

Why isn't the (Top)sky blue?

I generally try to limit my postings here to one per weekday so that I don't cross the line into obsession or burnout, but occasionally something will stand out as obnoxious enough that I feel the need to get to it right away. (Besides which, I may not have time for an update tomorrow).

Our good friend Dixon, whom we just met earlier today, is flogging the cover story in the June 2005 issue of BUSRide magazine, which makes significant mention of the Setra S 417, a bus which, among other features, includes a transparent "panorama" roof under the branding of TopSky.

I mentioned TopSky way back in the early days of this blog as REFR and SPD's closest flirtation with legitimacy in the marketplace. The version shown back then had an automatic dimming feature which employed SPD technology. After a couple of months, the whole business faded away, and the supplier of SPD for Setra, SPD Inc., shut down.

Now, it's well-established that, despite allegedly promising noises that the new generation of SPD suppliers are well into the testing phase of SPD production runs, no company is actually producing SPD film on a commerical basis at this time. So how, one might ask, can Setra be making busses with the TopSky feature, without any SPD film available?

The answer is simple. TopSky is, and always was, about the roof itself, not any dimming capability. And it seems to be turning out that bus passengers are quite happy with the transparent roof even without the ability to vary the tinting.

In short, Setra, and its parent, Daimler-Chrysler, are getting along just fine without the assistance of the SPD "industry", and the BUSRide article, much as Dixon seems to believe otherwise, only helps to prove it.

Better luck next time.

In Search Of: the point

The Yahoo! REFR board, REFR's primary promotional outlet over the past year, did the almost unthinkable and actually took much of the holiday weekend off.

Not everyone was enjoying the three-day respite, however. The person posting as "N. Dixon" on Silicon Investor (a name I can't read without thinking in spoonerism terms) was apparently quite hard at work, compiling a voluminous series of postings, in order to prove... well, a point, I guess. I'm really not sure, maybe this person is trying to amass a volume of positive data to counter this admittedly mostly-negative collection of observations about REFR.

At any rate, it's a fine source of material for me, as one of my goals with this blog is to exhaustively look into every bullish argument that has been hoisted to convince investors this company is something other than what it is, a method of transferring wealth from shareholders to company management.

Some of the items Dixon posted yesterday have been covered already, and several others are just echoes of the company line disguised as independent observations.

A few, though, have me scratching my head and wondering just what possible point Dixon could have in mind.

Consider this post: TWO SPD LICENSES[sic] WORKING TOGETHER!!!!

Now, you can look as hard as you like through that post, but you won't see anything about SPD. I guess the theory is that because DuPont holds an SPD license, and Isoclima holds an SPD license, and because they're working together on something, that must mean... I don't know, that maybe the topic of SPD comes up at lunch? Who knows?

(By the way, for those of you complaining that this blog doesn't accept on-site replies, please note that I do read the Yahoo and SI message boards and you are more than welcome to post your comments there. If someone comes up with a sane explanation of the thought process here, I'll be sure to post it.)

What makes this all the more bizarre is that the post is not, in fact, a single press release at all, but actually an amalgamation of a press release and a case study on the DuPont website. The case study is the part that shows DuPont and Isoclima "working together" (though clearly stating in a subsequent paragraph that the material being used is PVB, not SPD). The only reason I can think of for splashing the segment of the press release at the top is for the headline, New DuPont Technology Gives Auto Safety Glass a New "Look", which, if one never bothered to read past it or look at the pictures, might leave one with the impression that SPD could be involved.

So, the bottom line, Dixon has somehow managed to say absolutely nothing and yet still be transparently dishonest. I have to admit, that takes some talent.

More on this source in the days to come.

Someone stop me before I blog again!

The reviews are in!

"you really need to GET A LIFE!.....you freakin' loser." -- raftman007

"Every blog I have ever seen allows readers to comment. Why doesn't yours? ...That sort of tactic has had a name long before your cowardly effort came along. It is known as yellow journalism." -- kahler_manifold2

This crap is so far outside the range of normal human behavior that you should be under professional care and observation....24 hours per day. You are in danger of doing something really dangerous to yourself or others." -- harvardbillpayer

Oh, yeah, there was some positive feedback as well, but that's not as much fun. I thought the Pulitzer nomination was a bit over the top anyhow.

However, all joking aside, I thought I would address a few serious criticisms brought up, relating to facts I've supposedly gotten wrong.

"REFR "strangely got no share of proceeds" from liquidation of SPDi. Entirely false, just read freely available documents."

The information was correct based upon information I had at the time. Subsequent new information was later noted.

"Victor Keen is on the payroll. At his law firm, not REFR."

Apparently we are supposed to believe Corporate Secretary is an unpaid position. You may believe that if you like, but I don't.

"Management has no profit incentive. What do you call all those shares they own?"

Hmm, the term "chicken feed" comes to mind for some reason. But seriously, they're practially obliged to hold some reasonable number of shares. There would simply be no case for anyone to buy the stock at all without that factor, and then how would they get financing for their next year of salaries?

"Visits to THV spots after intro of alter-lite window found no SPD product on display. Absolute lie. Comments of THV shareholder on the display were posted here."

This appears to be a valid correction, as far as it goes. At the same time, however, it was noted that Thermoview does virtually all of its sales over the phone rather than in-person at their stores, so an in-store display was not especially valuable.

"REFR does nothing to market SPD products. What does this liar think Mike LaPointe does? Write a blog that no one reads?"

Ah, I can feel the love. What Mike LaPointe does is market REFR stock, so if you want to call that a product then you may have a point. He'll also give a spiel (albeit sometimes an outdated one) to anyone who will print it free.

"Joe's motive is his salary. Yeah right. A guy with his Ivy League credentials could make at least a million bucks a year more with less aggravation at a New York law firm."

Yeah, but at the law firm he'd actually have to do things for people. I don't see at all what's "aggravating" about his job at REFR, unless you really don't like travelling around the country and the world at shareholder expense. Certainly the people who are ultimately paying him at REFR are a lot more understanding than your average legal client would be.

Additionally, claiming that these guys can pull down a million a year anytime they feel like it rather bears out my "chicken feed" remark, above.

There is something suspicious about IAS doing the roof for the Jeep Rescue (oooh shades of Soulard).

You're right, what was I thinking? There was nothing at all to worries that SPD Inc. might shut down.

Sjuan2 has no doubt changed his ID and starting posting under a new alias. More BS with no evidence.

The alternative would be that he got fed up with REFR's broken promises and walked away. I'd think you'd prefer my first explanation.

Memo to blogger, if you ever found out who you are trying to portray as a complete idiot, you might actually feel embarrassed.

From what I know of the REFR message board posters, most of them would rather die than let their identities be known. I'll let the reader decide who's actually embarrassed here.

How much is that blue in the window?

Yesterday, I referenced a $150 per square foot figure as the base cost of the "old" SPD. Today I'll fill in the blanks.

The source in question is a licensee called SPD Technologies. This licensee, formerly named Razor's Edge Technologies, is not to be confused with the old name of a division of L-3 Communications. (Which, needless to say, some message board super-sleuths initially did.)

Now the current version of the website does not show any prices, for the very good reason that they have no products to sell, but the friend of all Internet historians, the Wayback Machine, never forgets...

Here we have the most simple form of SPD product, an "SPD shade". The picture appears to be gone, but it is basically a naked sheet of SPD film with as little wiring as is necessary to make it functional. At any rate, that is not so much important as are the price quotes at the bottom. Over $1,000 for a 24"x24" piece of SPD film! Admittedly, that includes the overhead for the wiring and minimal frame, so let's compare prices among the different sizes.

The 36"x36" weighs in at $1789.08 (do they not believe in rounding off prices in Delaware?), or $734.36 more than the 24"x24". So, for an additional five square feet of SPD film, you pay $146.87 per square foot. The additional two square feet of the 24"x36" cost (vs. the 24"x24") cost $304.48, or $152.24 per square foot. So, on aggregate, the upcharge for an additional square foot of SPD film is on the order of $150 per square foot.

Now, why is this significant? Well, for one thing, our friendly REFR board member Dr. Malvino claims on his website that the production cost of SPD film should in fact be between $1 and $4 per square foot, while the generic "EC" film would cost a whopping $25 to $40 per square foot to produce. If the real cost of SPD film is over $100 per square foot, that rather makes a difference I think!

Even more damning is a 2001 trade show report by none other than our friend Michael LaPointe. Among much other material that is quite amusing in retrospect is a comment that their (unnamed) licensee's "projected price point" for SPD windows was supposed to be "$15-$30 per square foot".

Well, gee, only off by a factor of 10. Guess it's only appropriate that REFR stock is down by a similar amount from its highs of that year.

On that note, have a great Memorial Day weekend, but never forget why we observe it.

LaPointe and Just Auto

REFR got its favorite kind of exposure -- the free kind -- in an article posted to just-auto.com yesterday. As usual, the article was completely uncritical and effectively repeated REFR's claims verbatim. This is not really meant to demean Dave Leggett, the editor of just-auto.com, or the publication, or to suggest any kind of collusion was intended. Certain publications have a limited budget for fact checking, and have to rely on the companies they interview being true to their word. It works most of the time, and doesn't automatically make them illegitimate.

However, every so often, they get a company with a self-promotional agenda, and then you get something like the three paragraphs REFR got.

US-based Research Frontiers Inc has developed a light control technology, known as SPD (Suspended Particle Device) for controlling light in vehicles and other applications such as aircraft, architectural and marine. A thin film is sandwiched inside the glass that conducts a low voltage of electricity. As a current passes through it, masses of suspended particles join together or disperse, allowing more or less light to pass through. It means that you can simply turn a dial to block out the light, eliminating the need for a sliding shade panel all together. That’s important for the sunroof makers as they move towards offering panoramic roof designs. Research Frontiers is on the brink of releasing its second generation SPD film.

That's perfectly fine for the first half a paragraph, but unfortunately, it still remains true that SPD in no way eliminates the need for an opaque shade. No matter how dark SPD gets it never becomes opaque, and when you're dealing with the intense light of the sun, true opacity is vital.

The last statement is comical for reasons I'm sure just-auto.com never suspected, that REFR has been "on the brink" of "second generation" film for over a year now, and is almost exactly one year late on its initial projection of film availability following the announcement of SPD Inc. closing.

That's not even getting into the relatively fine point that REFR will never be doing any "releasing" of its own accord -- such matters are strictly relegated to the licensees.

Compared to other transparency control devices – such as electrochromic (EC) or liquid crystal – SPD is cheaper per square foot and reacts faster. It can be totally dark, totally bright or somewhere in between. EC technology can still be tuned but not to the extent that SPD can. Another advantage is that SPD is that it is a film-based technology. That means it can be shipped all over the world. It also means that it can be applied to plastic as well as glass, which can be applied to curved as well as flat surfaces. In the default state, with the power off, the window is dark and would not be able to form the main component of a windscreen. Perhaps the upper band strip but not the entire windscreen. But when a motorist parks their car, SPD would be in the ‘off’ state, an advantage for sunroof applications.

Okay, first sentence. There is in fact no basis for making any favorable claims about the cost of "second generation" SPD. Indeed, other nominally "rubber stamp"-ish article referenced SPD's extraordinarily high costs, pegged around $150 per square foot. (The basis for that figure is the subject of another long-overdue article.) EC has never been quoted at so high a price -- most likely because its purveyors would never think to attempt to market it at such a price point.

The second sentence, we've already covered. SPD cannot go totally dark. It can't really go totally light either, but how much of the "unclarity" is due to the SPD and how much to the window itself is hard to gauge.

The third sentence, again, assumes things about EC not in evidence, and quite possibly long out of date. Not to mention that there's more than one kind of technology coming under the umbrella of "EC" (sometimes, even SPD itself is considered as such!)

The fourth sentence refers to an improvement SPD made back in 1991(!) To read the paragraph you'd think this was something new, and furthermore, something that EC and LC cannot claim! Go ahead and tell the makers of LCD computer displays about the non-shippability of their technology.

The rest of the paragraph calms down and even touches on a disadvantage of SPD, the fact that its default "off" state disqualifies it from consideration as overall windshield tint. If you're wondering about the term "windscreen", it turns out that just-auto.com is a UK-based site. One wonders, then, where Bob Hudson has gone off to.

All right, last paragraph:

Auto applications include sunroofs, sunvisors, rear-view mirrors, instrument panels and navigation systems. “There are numerous studies that show the increase of accidents when driving into the sun,” said Mike LaPointe, Vice President, Marketing, Research Frontiers. “If you had an SPD sun visor fitted to your car, it could be in the down position and you could see clearly through it but if you turned into the sun, it would darken immediately. I think that this is an application that it would be difficult for EC to penetrate because of the slow transition speed. So I certainly think that you will see SPD visors.”

And here is where we learn the source of all this "information", our favorite VP, Mike LaPointe. This paragraph reads kind of oddly, though. Twice LaPointe says "I think", almost as if he's trying to convince himself. Or maybe just cover himself. But once again, this is almost as much a matter bad-mouthing a very loosely-defined general overview of EC which may well be long out of date, as it is of trying to show the upside to SPD.

Just another case of REFR getting something published for the benefit(?) of their shareholders.

LCD vs. SPD

Above, a Dell 20.1-inch flat panel LCD monitor. Below, an SPD prototype computer monitor, as proudly displayed to this day on the REFR website. No further comment appears necessary.



All right, one comment, more in the form of a quote, actually:

"IMO, REFR is better than DELL. It's not a slam-dunk quite yet, but it's as close as you will ever get in the stock market."
-- Dr. Al Malvino, future REFR board member, on the Yahoo! message boards, May 4, 1999

"Hey, I'm buyin' over here!"

It has long been suggested (and, naturally, flatly denied) that many of the REFR insider stock purchases are "for show", as if to say, "we're buying, shouldn't you?" Al Malvino's regular 300-share purchases seems particularly flagrant in this regard, as many metrics for detecting high insider purchasing activity key off the frequency of transactions more than the actual amounts involved. In theory, this works off the fact that most executives consider it proper to limit their transactions to a small annual window to avoid the appearance of trying to game their own stock. REFR insiders, clearly, have no such inhibitions.

Possibly the worst example, though, came when Corporate Secretary and Board of Directors member Victor Keen made a stock purchase in February 2003, and the company issued a press release about it. Yes, really!

Mind you, not long after that purchase and the market bottom a month later, that purchase price actually started to look really good. Alas, it did not quite hold up for the two-year holding period, and in any event Keen did not sell with the stock being held at $6.00 in anticipation of the secondary offering, so ultimately, Keen has taken a bath on those shares along with everyone else.

But then again, that's not news.

Veni, Vidi, Wiki for the shorts

The dream (no pun intended) of SPD being featured on Boeing's new 787 Dreamliner appears to now be completely dead. The source for the latest revelation is, of all places, a Wikipedia article on the new plane. The section of that article detailing the plane's features specifies "liquid crystal display-based auto dimming" on the cabin windows, the same type used on high-end automobile sunroofs such as on the Maybach.

Tough luck for the shareholders. Tune in tomorrow for their next rationalization.

Addendum: More discussion of the LCD window feature can be found here.

Isoclima in isolation

Possibly one of the most telling licensees REFR has in its stable is Isoclima SpA of Italy. They are unique in that they have taken two seperate SPD-related licenses, one to produce film, and the other to sell products containing SPD film.

Given that Isoclima has clearance to work both ends of the process, they are unique in being a potentially independent supplier of SPD products. They can make the film, "sell" it to themselves, and make it into products without having to depend on anyone else to be a supply chain or vendor for them.

Yet, nearly three years after setting all this up, Isoclima has yet to announce any kind of SPD product. Indeed their products page still includes glass with a liquid crystal film (Isolite), as well as a window with a built-in Venetian blind (Luxaclair) -- the very kind of things that the SPDiots claim are the horse-and-buggy to SPD's automobile.

Yet, while Alberto Bertolini seems to do nothing apart from show up at most major REFR events (annual meetings and whatnot), that appears to be good enough for most of the Type 3 crowd to presume he's hard at work making SPD into a major force.

I only wish I could be thought of so highly for taking an overseas vacation.

Past scorecards

A post from 2001 on the Yahoo! REFR board uncovered a similar scorecard to the one posted last Wednesday. For the period from August 2001 through July 2002, the following events were slated to occur (added comments in italics):

August:

• THV surfaces with demos and catalog

(After Saxe's margin call sale four days after the Thermoview rollout began, Thermoview was never heard from again on the sales front, and has subsequently had difficulty making their pre-negotiated minimum royalty payments.)

October:

• Inspectech announces major contract(s) (Boeing, Airbus, or Lockheed)

(Inspectech did actually announce a major contract in October. Unfortunately, there were two catches. First, the announcement was about Bombardier, not any of the big three named above. Second, and more importantly, the announcement was entirely phony.)

• Lang-Mekra demos at truck show create major buzz

(Lang-Mekra has not been heard from on the SPD front in years, and was not in 2001.)

• RFI runs expo for windows and building industry, architects, etc.; causes major excitement in the press & TV

(On their operating budget? Ha!)

By December:

• Hankuk/SPDInc announces new factory up and ready to mass produce

(The announcement was delayed to February. Whether it was ever "ready to mass produce" is something that will remain unknown, but we do know that it only produced a very small amount of film for specific demonstration projects.)

Possibly by December:

• Hankuk or OEMs announce contracts for moon roofs, visors, mirrors (Daimler; Hyundai? Kia? Other?)

(E. None of the above)

• GE, AP Technoglass, Bekaert announce that they will produce/market film

(GE hasn't been heard from since 1995, Bekaert much the same, and a representative from AP Technoglass was quote as saying, "nothing much ever came" of their SPD license.)

January:

• Lang-Mekra announces major contract(s) for truck mirors(sic)

(Again, Lang-Mekra had put SPD far behind it by this time.)

Possibly by February:

• THV announces growing level of orders for windows, skylights, etc.

(Thermoview was by this point starting to worry about staying in business at all.)

March through June:

• RFI announces several additional licensees

(This one came true. AGP Group was added as a licensee in June, and Isoclima in July. Give REFR this, they know how to play to their strengths!)

• Analysts begin following RFI, publishing; institutions start buying aggressively

(There actually was some buying as REFR entered its third (and final) year on the Russell 2000, but strangely, analyst coverage did not follow. Well, unless you count R. J. Falkner.)

• RFI earnings announced

(Hilariously, they never even "announce" losses even to this day.)

• Stock (now above 50) splits

(REFR dropped below $20 for the last time in August 2001, and was below $9 by the end of July 2002. I suppose you could call that a 2-for-1 split "the hard way")

• Black and faster particles announced

(Nope.)

• RFI begins to license companies in flat panel and PDA market

(Ha!)

• Vision Ease produces/sells spd sun glasses

(Vision-Ease was already gone by this time and, shockingly, did not come back.)

• Dividends declared

(Bwah!)

July:

• RFI breaks 100, unadjested(sic) for split

(Very ad-"jest"-ed, if you ask me.)

After July:

• Further run-up and second split by end of 2002

(Mercifully for shareholders, REFR's share price stabilized for the latter half of 2002. Otherwise the market bottom in 2003 might have been much more painful.)

• Many articles appear profiling Saxe's achievement.

(Yes, but none that the shareholders much liked. At least it wasn't going to be a biography.)

Of course, today, shareholders are carefully instructed to ignore the failings to meet past expectations as irrelevant to the glorious future REFR has ahead of it.

Sometimes you wonder if there's no punishment too great for this kind of stuff.

The case of the planted article

All the furor over the false story in Newsweek over the disposition of religious materials recalls a (fortunately) much less eventful, though not really less egregious, case of press tampering that took place in the fall of 2003 involving REFR and SPD Inc.

According to those who claim to be able to read Korean, the Korean Business Herald published a story stating that BMW had ordered, and been shipped, 1000 square meter pieces of SPD film from SPD Inc. at $1000 each, a tidy million dollar order and a very promising development for the joint venture between REFR and Hankuk.

The problem was, the story was completely phony. There was no order, there was no shipment, and SPD Inc. itself was in fact in the process of going out of business.

But of course, since the publication is way off in Korea, there seems no practical way to figure out who planted the story and how it was that the very much English-speaking promoters on the REFR boards came to find out about it.

But I guess, in light of this week's events, we should just be glad nobody died because of that story.

REFR Announcement Scorecard

You have to hand it to the promoters, they never, ever seem to be at a loss for optimism. They've even crafted a scorecard by which to track their future failures. I thought it only fitting to keep track appropriately here on the REFR Madness blog.

I decided to omit the best-selling biography of Robert Saxe. That one was a bit over the top even by these guys' standards.

REFR Announcement Scorecard

Announcement	Happened? (date if so)

Commercial film production by one or more film licensees (currently, Hitachi, Dainippon, Isoclima, Air Products)	Yes, Feb '07
Subsequent announcements by wholesale and end-product licensees (subject?)	NO
SPD as an option for skylights, visors, glass roofs, side windows or rearview mirrors, by an automotive OEM	NO
SPD use on new jumbo jets, by Boeing or Airbus	NO
"Rapidly burgeoning demand" for SPD aircraft retrofitting, by Inspectech	NO
G2 film that is wider and faster than initially announced(?)	Maybe, initial announcement was unclear
Major planned marine application	NO
Product incorporation by any of: Pilkington, Isoclima, Asahi, Nippon Sheet Glass, or GE.	NO
Cost reductions in G2 film from volume production and competition	NO
Gen 3 film offered by Dupont or Hitachi	NO
SPD retrofit license given to window treatment company	NO
Major architectural project embodying G2 SPD	NO

The "Quality Four" coming to light?

Recent updates to the Nasdaq website are revealing the identities of large acquirers of REFR stock -- almost certainly the four "quality investors" that bought $5 million of the stock last February and have been choking on it ever since. As of this writing two such names have appeared.

The first one is a name familiar one to REFR message board denizens and not in a good way. Botti Brown has long been decried as one of the "fake longs" whose positions in actual fact represent a covering of a short position. This upsets them because it indicates, in theory anyway, potential ammunition to drive the share price down even further. The fact that no sane financial entity uses its own selling to drive down a share price (without a death-spiral convert to hedge against) never seems to register with them.

The second one is less familiar, and, predictably, has the longs considerably more excited. Stark Offshore Management, LLC, one of a small group of similarly named hedge funds (the only other one of significance being the creatively-named Stark Onshore Managment, LLC) operating out of the Milwaukee area by Brian Stark and Michael Roth. These two are relative veterans of the hedge fund industry, which makes their choices in recent events a bit peculiar, such as bankruptcy candidates Delta Air Lines and Calpine. There is surely some hedging involved with those positions, of course, but going long the common stock is nevertheless an unusual way to play those companies regardless of what tricks you might have.

A couple of trouble signs for Stark: One of "onshore"'s largest holdings is the GM debt that was recently downgraded to "junk" -- an event that has proven lethal to several hedge funds already. More telling is a 2002 newspaper article that lists them as controlling $2.2 billion in customer assets. Today that figure has dwindled to $1.5 billion: never a good sign.

Not that investing over $2.5 million in REFR, without anything apparent to hedge against, is a raging positive either.

Quarterly report time

As per standard procedure, REFR released its quarterly figures via its SEC 10-Q filing, with no fanfare whatsoever.

A glance at the balance sheet reveals that the cash position has indeed pulled back from the brink, up to $6.2 million, meaning that the company has bought themselves almost exactly five more quarters with their latest shelf offering. The quarterly loss was down as well, due mostly to the lack of a partially-owned subsidiary being shut down and written off this year.

That leads in to what was basically the only other item of interest in the filing, a lengthy paragraph detailing the whole sorry story of REFR's investment in SPD Inc. The bottom line, REFR invested about $825,000 in SPD inc., and in the end received a liquidation payment of $44,203, for a return of -94.6% on their investment.

Compared to that, an investment in REFR stock was actually relatively good.

In living color?

One of the facts of life that continuously dogs REFR shareholders can be summed up by a semi-famous line by Bret Spiner on Star Trek: "It is blue."

To be sure, they often try to pretend otherwise, calling the blue "cool", "soothing", or perhaps "futuristic". But all of that is shown up for the bluff it is by the rush of unbridled excitement that happens whenever the the latest rumor floats about the holy grail of SPD: the black particle.

The black particle dates back to at least 1998, when REFR issued a press release (what else?) announcing the invention of the black SPD particle. Needless to say, this got a lot of people excited. Now SPD would be able to shed the "blue stigma" and look just like other electrochromic technology. Better yet, if they could make the particles black, perhaps they could make them other colors as well. The dream of SPD computer displays might not be dead after all.

And so the vigil for the black SPD particle began. And continued. And went on some more. And so on. After all, it might take a little while to go from "invention" to practical application, but surely that transition was inevitable, right?

Perhaps not. Five years later, at the 2003 annual meeting, Robert Saxe admitted that the black particle was "not ready". And that was basically the first, and last, official word on the black particle since the "invention" announcement.

So there we have another case of "it never really panned out" from the company that seems to specialize in failing to pan out.

Coming to a screen near you?

Hard as it may be to believe, but a decade ago, shareholders in REFR were being told (while happily lapping up every word) that laptop and other flat-panel displays of the future would be powered by SPD technology.

No, really.

SPD, which to this day has a switching time measured in seconds, was being touted has having the potential to become the standard for what was at the time a very hot technological development field -- the ability to make affordable flat screens that weren't dim and flickering.

Never mind that SPD came (and still comes) exclusively in a monocolor blue. (Attempts at other colors are an overdue topic for another post.) Never mind that switching times were atrocious. Never mind that they weren't even close to even a VGA (640x480) resolution. No, SPD was going to be a bona fide flat-panel display technology, because Bob and Joe said so, and that was the end of it.

Amazingly, even to this day, REFR still lists computer displays as a feasible use for SPD, even as OLED technology is poised to make SPD even more thoroughly obsolete.

Technology may be in constant advance, but some hype never changes.

A stock even a wunderkind could hate

Possibly the seminal event of the depths of the bear market in early 2003, was when none other than Jonathan Lebed, the teen who rose to fame as a bubble-era stock guru before getting in all kinds of hot water with the SEC, starting putting out sell calls on his new site. If ever there was a moment in recent memory to say, this shorting business has gotten too easy, time to switch back to the long side, that was it.

The stock Lebed put out his first short call on? REFR.

Mind you, ever since, the sins of Lebed have been transferred to all of REFR's critics by the promoters, but as usual that misses the point. Which is, when you're the first short idea from someone known up until that point (and, for all anyone knows, ever since) as a permabull, man, you know you're on the bottom of the barrel.

Yet still the suckers buy more and more.

Pure contempt

One thing I have to give props to for the REFR shareholder corps. They never let the fact that their company shows pure contempt for them by going all but completely silent on important company matters, like the specific status of any of the major production licensees as to their state of "SPD-readiness", get them down. (Yes, they did just give a general overview in the Letter to Shareholders last week, but I sure couldn't glean anything resembling a time frame from what they had to say.)

Lacking for information from the company, our intrepid longs go out and find their own news. Today, for example, the "hot" news item is the discovery of an article from an edition of some publication called Pure Contemporary from January, which references, among several other "futuristic" home decorating ideas, SPD windows. And specifically, the SPD windows that were barely mentioned in the Extreme Makeover show from May 2004.

Yes, they're fawning over a rehash of a year-old SPD publicity attempt that was a complete failure even then, an mentioned in an article obscure enough that they didn't find it themselves until four months after its publishing.

And this is supposed to scare the shorts? Really?