A proxy upon thee

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

...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

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

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!

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

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?

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!

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

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?

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

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

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?

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

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

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.

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...

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

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

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!

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

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

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!

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

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

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

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?

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

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

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

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?

Boeing Boeing Gone... this time for good

The mystery of the Boeing 787 dimmable windows is over. The funny thing is, everybody was wrong. But it is the shareholders of REFR that wind up with coal in their stock(ings), as ever.

Neither Jamco, nor the University of Washington, nor REFR will be seeing their product take flight on the windows of the Dreamliner. Rather, PPG Aerospace has been selected to provide the windows, much as they have provided windows for prior incarnations of the 7x7 aircraft series.

No doubt, supporters of REFR are working on some way in which REFR might somehow get in on the action, but, given that PPG surely has demonstrated the technology they will use, and that they are most definitely not one of REFR's licensees, it appears that this avenue of promotion for REFR is once and for all time closed.

Reaching new pinnacles

I know I haven't been here to update in a while, but frankly, there hasn't been a whole heck of a lot going on with REFR lately, despite what the recent surge in its share price to near $7 might suggest. There is one development of some interest, though, involving REFR's latest effort at a pilot project for SPD.

The Church at Pinnacle Hills of Rogers, Arkansas, up in the Ozarks of northwestern Arkansas, is in the process of building a grand new worship center. It's a pretty big deal in that region, and very much a 21st century project. There are even webcams that allow you to view the progress of construction.

REFR's interest in this project is revealed through contractor Brawner and Associates. The large window facing the main worship center is expected to have "smart glass" in order to control the level of light. An article (PDF) included on Brawner's website goes on to state that technology used in the "smart glass" will be SPD.

Assuming nothing changes (and naturally, the message board mavens are assuming exactly that), it will be a nice feather in REFR's cap. Relatively speaking, of course. In the bigger picture, needless to say, they remain a public company dealing in terms of individual, one-shot projects, which, any way you cut it, is far from a truly desirable state of affairs.

Still, it will be interesting to watch and see how this develops. Will SPD remain the technology of choice for this project? Will film of adequate quality be available? Will the price tag be reasonable? Will REFR step in to make it reasonable? So many questions for a company so reticent in providing answers. But maybe we'll get them this time.

All hail SPD (insert rest of company name here)!

In a sign that REFR is not yet willing to depart from its old reliable SOP, the company announced the signing up of a brand-new licensee. The new company, SPD Control Systems, is so far basically indistinguishable from every other REFR licensee whose name begins with "SPD".

SCSC's chairman and founder, Jay Moskowitz, does have the distinction of actually having a track record as a businessman. However, his most recent company, Wireless Marvels, appears to have gone nowhere after producing its only material product a combination golf ball/FM radio. (Not kidding.) His biggest success story, per his bio, appears to have been selling his RTS Wireless company for a healthy $111 million. Not too bad, but one has to keep in mind that valuation dates to 2000, when company values were just a wee bit inflated. Not to mention that the acquiring company, Aether Systems, went into a bit of a nosedive shortly thereafter, and has since abandoned the wireless sector entirely. (Yes, it is the same company, see Aether Holdings' Yahoo profile.)

All in all, Moskowitz seems to fit the profile of a prospective REFR licensee, as in, being willing to try just about anything once. With the kind of money he has in the bank, he can no doubt well afford to have whatever he puts into this come to nothing. If only the REFR investors who giddily bought up shares during the recent rally could say the same.

Boeing, Boeing, gone

After literally years of demands from REFR promoters that any viable alternative to SPD that could be used in Boeing's Dreamliner's advertised smart window shading system, they have finally gotten what they "wanted" as the technology supplier for the 787 window shades has at long last stepped forward.

In the October newsletter of the University of Washington's college of engineering, it was announced that a chemical-reaction based technology called "redox switching" developed at the college's Center for Intelligent Materials and Systems was to be the active technology in the windows' ability to become gradually more transparent or opaque at the touch of a button.

While reaction from promoters is still pending as of this writing, it seems that this is the final proof that Inspectech and SPD are not going to be suppliers for the Boeing 787, despite the bulls' previous insistence that Boeing had no feasible alternative to use.

Perhaps most troubling of all to REFR shareholders: the developers of redox switching indicated ambitions far beyond the aeronautical sector in the UWash newsletter article. Dr. Minoru Taya, directory of the CIMS, indicated commercialization was likely to begin within a few months. That right there puts it right about level with the claimed progress of SPD, with the main difference being that Taya's group does not have a multiple-decade track record of miserably failing expectations.

(Update, 7:18PM: REFR bulls did come back with a pretty fair rejoinder, in that the UWash article does not appear to square with Klaus Brauer's earlier descriptions of where the 787's window technology had been used earlier. Regardless, this still appears to be quite unwelcome competition for the gang from Woodbury.)

What the H?

(This post originally stated in error that Isoclima's Chromalite trademark was registered. It is in fact not, a trait common to many if not most or all trademarks related to SPD.)

A rather amusing sidelight has arisen from Monday's "blockbuster" Isoclima/REFR press release. In the main text of the release, Isoclima General Director Alberto Bertolini talked about REFR's SPD-Smart Glass, "which we market under the trademark ChromaLite(TM)." However, at the end of the press release, the disclaimer reads: "CromaLite(TM) is a trademark of Isoclima S.p.A."

Okay, you say, so somebody made a typo, so what. Admittedly, not a whole lot but... what is the correct spelling of Isoclima's trademark? If one went to the Isoclima website, one might come across their R&D page, which includes a picture of a "test on electrochromic CromaLite® glass". But if one looked up REFR's most recent 10-K, one would find in the licensee trademark list (about five screenfuls down) that Isoclima's trademark name is given as "ChromaLite".

Now, maybe it's just me, but if I had this product which was supposed to be busting into this brand-new, multi-billion-dollar market for switchable glass, I'd think I'd make sure I knew how to spell my product's name. It certainly does leave one to wonder just how much thought Isoclima is really putting behind this whole marketing campaign.

Regardless, as the Vitrium show closes and REFR stock slips back in the direction from whence it came, leaving behind a brand new group of bagholders in the hole on their purchases of this stock, the fact that the press release that triggered their purchases at $4.70 and above contained such a basic error simply adds the insult to the injury.

The great debut

Good morning!

The Red Sox are in the playoffs, Bush has made a new Supreme Court nomination, but who cares about any of that because ISOCLIMA IS SHOWING GEN 2 SPD AT A TRADE SHOW IN MILAN!!!!!!!!!!!!!

At least that seems to be the proportion of reaction as REFR, in the $2's last week, soars over $5 (though perhaps only momentarily) this morning.

To be sure, there's some big-sounding talk in the release. Isoclima "plans" to introduce films more than four feet in width into the market. Isoclima is "working with" companies in the automotive industry. The film was "produced on large-scale equipment", though whether the equipment was actually used for large-scale production is another matter.

One thing shareholders can be legitimately heartened by is, at least REFR has not yet given up entirely. Now, whether this is a last gasp and last chance to get out, or REFR has more aces up its sleeve, remains to be seen.

One thing seems clear from the level at which the stock momentum washed out: at least one shareholder appears to be selling first and asking questions later.

Strap in. This may get good.

Thermo goes cold

Yes, I know I said I would discuss REFR's presentation at the Long Island Investor's Conference last week, but frankly, no one I've talked to has had anything to say about it, and I haven't gotten around to listening to it for myself. Whatever they said seems to have attracted some tepid interest based on the subsequent price action, but with Stark Investments sitting there taking whatever they can get for their mountain of shares, this thing is not going anywhere fast anyway.

But meanwhile, one of REFR's more infamous cohorts, Thermoview Industries, filed for Chapter 11 bankruptcy earlier this week. Thermoview was the architect of the "rollout" in 2002 into which REFR founder Bob Saxe sold a significant chunk of stock. To this day Thermoview carries a link to a page describing "AlterLite" windows based on SPD, but apparently sales from that miracle product weren't enough to turn the tide for the struggling home improvement company.

This, coupled with Infinitint (f/k/a Razor's Edge and SPD Technologies) appearing to have repackaged itself once again, this time as PrivaSee Glass, selling a decidedly non-SPD-based product, and the decline of the REFR "empire" is becoming more and more evident by the day.

Get thee to the small cappery!

In a rather unexpectedly swift rendering of judgment, the NASD has denied REFR's appeal of its delisting from the Nasdaq National Market to the Nasdaq Small Cap exchange, less than four weeks after the company announced the filing of its appeal.

In past years, the delisting process would often take months. One possible explanation is that the NASD has suddenly gotten much more efficient. This is a little iffy, but strictly speaking, the NASD is not a governmental body, so it's just barely possible that they've allowed some efficiency improvements to creep into their system.

Regardless, there seems little scope for there to have been a great deal of deliberation over this appeal. Was it that REFR's case for continued listing was so weak that it got laughed out of the room? Or did they not even try to make a case, but rather simply filed an empty appeal as a naked attempt to stall for time. If the latter, it doesn't seem to have worked very well.

This comes at an inconvenient moment for REFR, what with their plans to make their pitch to the Long Island Investor's Conference next week. The distinction between National Market and Small Cap may be all but transparent these days, but it will still be one more embarassing issue, out of an extremely long string of them, Joe Harary may have to contend with. Assuming he even opens the floor to questions.

But at any rate, that's for next week. REFR has promised the whole thing will be recorded and kept for posterity's sake, so stay tuned. We may actually have something to talk about again!

R&DD

The latest REFR gambit being flogged on the boards stems from an article in the Billings (Mont.) Gazette regarding Volkswagen's research and development work on SPD shading in windows. The article references an experimental Touraeg... Torueag... Toerag... that new SUV model, with windows that can change from a clear state to a dark state yada yada yada we've heard all this before.

Oh, and someone found a video which mentions just about everything the VW research center is working on, including, if you sit through enough of it (I had to resist the urge to click the back button when the Segways showed up), the switchable windows.

Okay, first of all... Billings, Montana? As best as we can tell, this appears to be the only newspaper in the country to pick up this story. Can it be that the rest of the country has already been saturated with "first impressions" of SPD?

Secondly, this represents no advancement at all for SPD. The big Setra rollout that ultimately went nowhere for REFR and SPD Inc. is several steps down the road from where SPD is with Volkswagen. Even if this was destined to be SPD's long-awaited big breakthrough, it's several years and at least one significantly dilutive refinancing away from bearing fruit from REFR.

But none of this matters to the people that uncovered this little nugget. It's become clear that finding "something new" has become its own reward, and that actually evaluating the information is something best left to the pedants.

That is what passes for "due diligence" these days.

The receivables conundrum

My general disinterest in REFR's most recent quarterly report notwithstanding, one item of interest has come to light, even if it more of a curiosity than anything else.

For the first half of 2005, REFR has recorded revenue of $78,242. Over the same six months, REFR's accounts ("royalty") receivable has increased by $110,750. Now, for those not familiar with accounting practices, receivables are money the company has earned but not yet been paid. They are recorded as revenue, but are carried as a non-cash asset on the balance sheet.

But if receivables have increased by over $110,750, how is it that there isn't at least that much in revenues? Did REFR somehow have negative payments from its customers?

The answer appears to be in the "deferred revenues" line of the balance sheet. In the past six months, deferred revenues have jumped from $10,000 to $90,000. Deferred revenues are, in a way, the opposite of receivables, in that they represent money paid to REFR but not yet earned by the company. So, reducing the increase in receivables by the increase in deferred revenues, the increase in receivables drops to $30,750, which is at least within the realm of mathematical possibility.

Mind you, it is widely considered a red flag by company watchers when receivables increase faster than revenues. Of course, in REFR's case, revenues aren't increasing anyway. Besides, what is one more red flag among in a company with so many you'd think it was the Chinese embassy?

Giving shareholders no quarter

With the release of second quarter results (via 10-Q, as per usual), REFR has given shareholders a good idea of just what it intends to do with the $5 million dollars it raised last February.

That is to say, they intend to continue their policy of collecting paychecks, as SPD technology collects dust, while making a handful of purchases of stock just to give the marks a cue to follow.

Second quarter revenues of $36,992 are down from the same quarter last year, while the net loss is lower due to a cut in "research and development" expenditures. But who cares. Bottom line, another million in cash was burned, give or take a hundred thousand, leaving them with a bit over five quarters' cash left (as of June 30th). Meaning, the proxy to increase the share authorization by another couple million (because just one million shares at this price level will be a waste of time) should show up just about any time now.

Really, the biggest accomplishment for the quarter was a 30% decline in the share price, to multi-year lows. And even then, the legwork on that was accomplished the quarter before (in the form of the issuing of the shares for the aforementioned fundraising).

Move along, there's nothing to see here.

The Jamco Email

I have to hand it to the REFR promoters; they never stop trying. Last week one of them produced evidence which they say proves that JAMCO cannot possibly be behind the windows of the Boeing 787 Dreamliner.

The evidence comes in the form of an email exchange which went as follows:

Dear Sir or Madam:

The specifications for the new Boeing 787 call for the passengers and crew to
adjust the transparency of the windows electronically.

Does Jamco manufacture a variable tinting window product for aircraft
that Boeing could use?

Thank you for your attention.

XXXXXX XXXXXXXXXX

------------------------------------------

Dear Sir,

First of all, we are sorry for late response.

In regards to the your inquiry, JAMCO does not have such product, which can be used
on window, in our current product.

With best regards,

Tsutomu Tadokoro
Manager, Marketing & Sales
JAMCO Corporation, Aircraft Interiors Company

Now, this email may or may not be valid, but then again, that sort of uncertainty can be laid upon nearly anything posted to the message boards. So for now, we'll give the poster the benefit of the doubt.

But then, what does this mean for REFR? Good question. To answer that, you have to go back to the chain of reasoning the promoters are using.

To listen to the promoters' own arguments, the case that SPD is the technology of choice is not based on any positive evidence directly implicating REFR or, their (only?) licensee in the aeronautical industry, Inspectech, but rather the lack of evidence implicating anything else. No, seriously. The primary argument leading to the conclusion that SPD is Boeing's technology of choice begins with the question, "what other commercially available technology could it possibly be?" This is followed by a flat dismissal of the numerous answers to that question, and eventually winds up with a conclusion that SPD is Boeing's choice by default.

In effect, because it cannot at this time be proven that the Boeing 787 windows are something else, REFR longs are supposed to assume that they will be SPD.

One might think that another multi-year low this morning might jolt a few of them out of the complacency of that line of "reasoning". One would be wrong.

Time's up

Just felt like making a couple notes. Today is the 10th day before the August 4th deadline for REFR to avoid removal from the NASDAQ-NM to the NASDAQ-SC, so if REFR does not close at $3.62 or higher today, the delisting will go forward. Unless of course they'd like to waste time and effort (whose, exactly, is not clear) appealing the matter.

In other news, let's review the announcement scorecard. Well, at least it's low-maintenance.

Over on the message boards, scandal is hot and heavy as the promoters are demanding to know what the critics theorized about Lang and Inspectech and when they theorized it. The point being, I guess, is if they can catech them wrong enough times about details regarding Inspectech, that will suddenly transform Inspectech into an entity worthy of doing business with Boeing. Or something.

Hey, cut them some slack, it's not easy making a bullish case for this company anymore. Just think if they didn't have the Internet as a buffer and had to vocalize these opinions, and keep a straight face in the process!

Getting testy

Even as REFR dips again towards $3.00 this morning, many longs remain confident. You might ask why, though if you're a regular reader of this blog you probably have a pretty good idea already.

Nevertheless, it's always "something", and in this case it's the "fact" that all they have to do get is through product testing, and then the licensees will announce film availability, and then products will become available, and then look out world. Or something like that.

Reports on the state of testing are secondhand at best, but the consensus is that while each of the production licensees is working on some sort of problem, no two licensees are experiencing the same problems.

The question is, is that a good thing for REFR, or a bad thing?

It's easy to think it could be good. After all, if no two licensees are having the same problems, then every problem is solved at every licensee but one. So, all that has to happen is to have the licensees get together and they'll easily have the solutions to all the problems between them.

But is it really that simple?

Talk to anyone who's ever worked in quality control, or anyone who's managed to stay awake through one of those training films on the topic of quality, and they'll emphatically answer that question "no".

To cover one obvious possibility, a fix for one problem has this tendency to cause other problems. If one licensee were to apply another licensee's "fix" for their problem, there's every reason to think that "fix" would cause the problems the other licensee was having.

But beyond that lies another annoying question. Why is it that no two licensees can replicate the same results? Are they not following the same process for producing film? Is there a fixed process for producing film? If not, why not? And furthermore, if not, how exactly are the licensees ever supposed to get on the "same page", when they're reading from different scripts, so to speak?

REFR likens its business model to that of Qualcomm, the company that owns the CDMA standard for cell phones. But Qualcomm got where they are today by actually spelling out that standard very specifically, and making sure anyone who licensed the technology followed the standard to the letter. There is no indication REFR is making any effort to do that at all, which, given their minimalist approach to the licensing model, should come as no surprise.

This is a recipe for chaos. Film that Hitachi produces may be entirely different from film that produced by Air Products, or DuPont, or Dainippon. And in the event any one of them hits upon a winning formula, are they going to be eager to share it with their competitors? Doubtful!

One promoter on the message boards is trying to get over the catchphrase, "I would not bet against Hitachi". (At least it's a step up from "Bang! Bang!" -- was this supposed to be investing or wrestling?) But by betting on Hitachi, are you also betting on Air Products, DuPont and Dainippon... or against them?

Besides which, I'll bet against anyone I damn well please, if I don't think they care about "winning".

A small problem

Short sellers in REFR got to see that magic word many of them have been waiting to see for years.

Yes, REFR has been delisted. Sort of. Technically, what has happened is that REFR has "phased down" from the Nasdaq National Market to the Nasdaq Small Cap Market.

(Editorial note: Actually, the notice of delisting was given today. Research Frontiers can avoid delisting by reaching a market cap in excess of $50 million, roughly $3.62 per share, for 10 consecutive trading days between now and August 4th. This probably explains in part today's uptrend in the stock.)

What does that mean? Well, as with so many other events related to REFR, it actually means very little in a substantive sense. REFR will remain REFR, and most people with positions in the company, long or short, will notice no direct changes in the way REFR trades.

One distinction that used to put some dread in the hearts of naive shareholders was the removal of the "bid test" for short sales. In other words, assuming that borrows were readily available, short sales could go off just as easily as any other sort of sales. Contrary to prevailing "wisdom", however, this omission did not open the floodgates for abusive short selling of small cap stocks.

However, that distinction has been removed with the implementation of Regulation SHO, so in fact there is no practical functional difference between the two markets.

Lack of substance notwithstanding, this event will no doubt be an irritation to fans of the stock. What it signifies is that REFR is roughly among the lowest sixth of market capitalizations among Nasdaq-listed companies. This is not necessarily a mantle of shame for new, small companies still on the ramp-up. For a company with two decades of history of public trading, however, it can be rather humiliating. If nothing else, it will be another negative factor for the inevitable next round of capital raising.

Promoters will doubtless downplay this development, and perhaps in a strict sense be right, but it's at least worth bringing up that REFR seemed to think it meant something when it first joined the National Market in 1997.

Apart from that, just another milestone on the road to blue oblivion.

R-Class dismissed

Another door was quite firmly shut in REFR's face as Mercedes Benz announced the specifications for its new R-Class SUV/sedan hybrid. Originally known as the GST, for Grand Sports Tourer, their mention of a "panorama" roof, invoked memory of a similar term used by Daimler's Setra division, and led many to jump an automatic association of "panorama roof = SPD".

That assumption got it's answer today as Mercedes made its milestone announcement just weeks before production is slated to begin. The "panorama roof" is in, but no mention whatsoever is made of variable tinting. They do mention "privacy glass" on side and rear windows, but if there is one thing SPD is unambiguously not, it is privacy glass.

Of course, you won't find a promoter who will act like this matters one whit. All that matters is Hiatchi is working on production, and when they get there, VOOM!

And yes, I was trying to invoke the John Cleese rejoinder there.

Doubtless, they will come up with other tacks with which to keep flogging this horse, and when they do, I will be here to give them the coverage they richly deserve. However, today marks the end of the daily frequency of posts to this blog. New responsibilities figure to cut into the time I can devote to this journal, and in any event I feel the backstory of this strange, strange company has now been fairly told.

So with that, have a great Independence Day, and I'll be seeing you soon.

Where'd the short interest go?

From mid 2001 through much of 2003, the short interest in REFR was a very large, albeit rather stable, two million shares. (For no apparent reason, promoters at the time chose to make up their own number, insisting that there was an additional half million "invisible" short interest. Today these same people will latch on to any excuse to declare the critics to be liars. Go figure.)

In theory, this represented a potential powderkeg for the shorts. If REFR were to suddenly achieve the success that had eluded them for decades, the wave of resulting buying from the short covering alone would lead to huge run-ups in the stock. But then again, we're talking REFR, so shorts were rightly unworried about that eventuality.

Nevertheless, the promoters were unperturbed that, as delay built upon delay, a golden opportunity to catch the shorts off-guard might be slipping away. Why? Because, they said, the short interest wasn't going anywhere. There was no way for the shorts to cover their positions.

It's unclear how they arrived at that conclusion, given that the claim was more sloganeering than debate. But whatever the thought process was, the shareholders were completely convinced. The shorts can't cover and that was all that needs to be said. If REFR took a month, or a year, or ten years to finally succeed, it wouldn't matter because the short interest would still be stuck where it was, waiting to be squeezed to infinity and beyond.

Today the short interest holds steady, at a bit less than one million shares.

Since we'll never get a mea culpa or other explanation from the promoters regarding how they wound up being so wrong about so many things (they're too busy asserting how they will eventually be proven right -- yeah, I know) it falls to the rest of us to piece together what happened.

Two major events appear to have made the difference. The first and easiest one was REFR's delisting from the Russell index. Index funds dumped over half a million shares, and while this weighed heavily on the stock, the stock never quite "broke". It was by and large an orderly decline, with trading volumes increasing nicely to accomodate the mandatory selling by the funds. Where were all these buyers coming from to cushion the fall? It was the short sellers, of course, capturing very nice profits from shares shorted from anywhere from $12 to more than $30.

But prior to that came a rather mysterious occurrence. During one relatively uneventful month, the short interest dropped by more than half a million shares between two reporting periods. There had been a small rise during the period in question, but one that soon fell back, and in any event there was hardly enough volume for that many shares to have been covered in the open market.

So what happened there? Apparently some entity or other had a very large "boxed" position, one hedged against a long position or something equivalent. In the most common cases, such hedging involves options, or shares of a company the shorted company is acquiring, but neither of those applies to REFR.

We may, in fact, never know exactly what happened, but some have strong suspicions. One involves REFR's financier of the time, Ailouros Ltd. While they were supposedly barred from shorting REFR stock in their agreement, it always felt odd that they seemingly had no problem with REFR continuously selling them shares even as they continued to fall. In a few cases, REFR was rather embarassingly found to have been buying the shares right back from Ailouros, at a loss to REFR. But it never seemed right that Ailouros would continue on as they had without some kind of ace in the hole. Could a short position of over half a million shares have been that ace?

Regardless, the shorts today are manifestly in superlative shape, with a relatively mild million shares to worry about covering, and with the stock hovering around 14-year lows. Those still long remain defiant, insisting that one day the shorts will get theirs.

From here, though, it looks like they already did.

So how's that plan coming along?

Going back into the PR archives, I want bring out the REFR's master plan as articulated three years ago, at the 2002 shareholder's meeting.

Step one appears to be "having SPD demonstration products made in large quantities". That much they seem to have successfully accomplished. This was supposed to be a "promotional tool" to "increase awareness of SPD technology". That part doesn't seem to have worked so well. Neither the "100 station" radio show, nor the "14 million viewer" TV segment spurred enough demand to, say, keep SPD Inc. in business.

Skipping a bit ahead to founder Robert Saxe's comment: "InspecTech’s model is spectacularly attractive and should convince aircraft owners to equip their planes with SPD-Smart windows." (But didn't.) "By year-end many of the world’s hundreds of ‘Completion Centers’ in which aircraft are refurbished could have this product to show their customers." (But didn't.) "Completion Centers are already being used by InspecTech to market and install SPD aircraft windows." (Meaning, they outsourced the installation.) "I expect this to be a powerful sales promotion tool for SPD technology." (As with every other expectation Saxe has had, not so much.)

You get the basic idea. All these demonstration products served two purposes: one, to allow management to claim products were being made, and two, to make it appear to the shareholders that they were getting serious about marketing SPD.

It was enough to get the shareholders excited at the time. Three years later... the results speak for themselves.