REFR actually managed to come out with some moderately surprising news this morning, announcing that they had, effectively, sold a subscription to Hitachi Chemical for two years' worth of upgrades to SPD technology.
Never a company to ever play it completely straight, the deal was announced as being valued at "96 million yen", forcing the reader to go find a conversion table and discover that that comes to a bit under $800,000.
While this is by no means REFR's ticket to profitability in and of itself, it does show that REFR has managed to gain Hitachi's trust to the point where they are willing to give them an advance on future technology upgrades.
It's frankly a little mystifying that a company like Hitachi could view the rate of progress REFR has dragged through over the course of over 40 years, and expect the next two years to produce advances worth paying for, but then again REFR's having lasted this long in such a way is no minor miracle in itself.
At any rate, the stock is reacting as you might expect, attaching as much as $20 million in value to REFR for an $800,000 deal. But such things are liable to happen when you are in your own private market bubble, as REFR seems to be.
Tuesday, July 10, 2007
Monday, June 18, 2007
Notes from the Fox Hollow Inn
Long-time message board poster "ed_wesnofske" posted his report today on last Thursday's REFR annual meeting. The full text of his notes can be found here and here.
In addition to John Petraglia's presentation, there was a slide show presentation by Steve Abadi of Innovative Glass. Essentially, this consisted of a visual tour of that company's facilities, as well as two SPD projects it has reportedly completed.
Now, granted, two projects is better than none, but we've seen projects from this company before (viz. the Extreme Makeover link above) which have utterly failed to even show up in REFR's income statements, so we'll remain skeptical of the significance of this one as well, until proven otherwise.
Since Jim Lang of Inspectech apparently couldn't make it, it fell to Joe Harary to deliver the report on the aerospace market. Apparently the reason shades are only available on King Air is because SPD is not certified for any other models at present.
Harary's "speculation" on the royalty rates for different applications is of interest. Apparently the outsized expenses in developing an aircraft window would translate into outsized royalties for REFR. This is a double-edged sword, of course: it makes the aerospace market quite potentially lucrative should it catch on, but at the same time, the huge royalty upcharge will hamper that market's viability.
On to the questions from the shareholders. First, someone wants to see another SPD Industry Conference. Given that the last one was hastily put together in order to start things from square one in the wake of the collapse of SPD Inc., I'm not sure why.
The second one inquired about the architectural market. The posted Ed posted doesn't seem to actually answer the question, but whether that's a transcription glitch or a company evasion can't really be determined.
The last one invoked accountability for last year's projections, and was met with the predictable "it's not our fault" response. And with the the formal portion of the meeting concluded.
The trailing (informal) notes were of passing interest. Hitachi's samples have been used for testing; nothing new there. Isoclima currently plans to get back in the game later this year -- what, exactly, have they been waiting for? And Dainippon is using "toll coaters", a fancy way of saying they're outsourcing all SPD production work. To whom, exactly, wasn't specified.
Now, granted, this is a rather cynical summary of Ed's postings, but experience has shown the cynical view to be an excellent starting point in parsing the comments made by this company's management. That said, the stock market has taken a decidedly non-cynical view since the meeting, but that is what it is.
In addition to John Petraglia's presentation, there was a slide show presentation by Steve Abadi of Innovative Glass. Essentially, this consisted of a visual tour of that company's facilities, as well as two SPD projects it has reportedly completed.
Now, granted, two projects is better than none, but we've seen projects from this company before (viz. the Extreme Makeover link above) which have utterly failed to even show up in REFR's income statements, so we'll remain skeptical of the significance of this one as well, until proven otherwise.
Since Jim Lang of Inspectech apparently couldn't make it, it fell to Joe Harary to deliver the report on the aerospace market. Apparently the reason shades are only available on King Air is because SPD is not certified for any other models at present.
Harary's "speculation" on the royalty rates for different applications is of interest. Apparently the outsized expenses in developing an aircraft window would translate into outsized royalties for REFR. This is a double-edged sword, of course: it makes the aerospace market quite potentially lucrative should it catch on, but at the same time, the huge royalty upcharge will hamper that market's viability.
On to the questions from the shareholders. First, someone wants to see another SPD Industry Conference. Given that the last one was hastily put together in order to start things from square one in the wake of the collapse of SPD Inc., I'm not sure why.
The second one inquired about the architectural market. The posted Ed posted doesn't seem to actually answer the question, but whether that's a transcription glitch or a company evasion can't really be determined.
The last one invoked accountability for last year's projections, and was met with the predictable "it's not our fault" response. And with the the formal portion of the meeting concluded.
The trailing (informal) notes were of passing interest. Hitachi's samples have been used for testing; nothing new there. Isoclima currently plans to get back in the game later this year -- what, exactly, have they been waiting for? And Dainippon is using "toll coaters", a fancy way of saying they're outsourcing all SPD production work. To whom, exactly, wasn't specified.
Now, granted, this is a rather cynical summary of Ed's postings, but experience has shown the cynical view to be an excellent starting point in parsing the comments made by this company's management. That said, the stock market has taken a decidedly non-cynical view since the meeting, but that is what it is.
Friday, June 15, 2007
Private equity shutout
I've already made plenty hay over SPD Control Systems's scrambles for operating capital, but I wanted to share this presentation I came across from last year. The link is to an HTML representation of a Powerpoint slideshow presented by SCSC at "Private Equity XVI", a dog-and-pony show for venture capitalists and their would-be fundees, which took place back on June 22, 2006. So if nothing else, this shows that the licensee with the brightest spotlight in the REFR universe has been on the fund-raising trail for quite some time, without much success.
And you will note that this presentation, like the one from the annual meeting, is easily available for public view despite being labeled "confidential". That doesn't seem to speak too well of their security policy.
And you will note that this presentation, like the one from the annual meeting, is easily available for public view despite being labeled "confidential". That doesn't seem to speak too well of their security policy.
Mum's the word
The shareholders came back from yesterday's annual meeting and the reviews are... rather few and far between actually. The only thing of substance reported is the presentation by the man we can only presume was the keynote speaker, John Petraglia of SPD Control Systems. You can actually find what is apparently a transcript of his speech (along with select "confidential" Powerpoint slides) from yesterday on SCSC's website (PDF format).
Yes, that's the same SPD Control Systems that recently completed a round of financing from "close friends, family, and colleagues" , with another $150K to come from REFR pending the fulfillment of certain milestones. One can't help but wonder if the speech wasn't one of the milestones.
No word yet on the fate of the shareholder proposal to get fresh blood on the board of directors, although presumably it went down to massive defeat. After all, who in their right mind could possibly be dissatisfied with company performance like this?
Yes, that's the same SPD Control Systems that recently completed a round of financing from "close friends, family, and colleagues" , with another $150K to come from REFR pending the fulfillment of certain milestones. One can't help but wonder if the speech wasn't one of the milestones.
No word yet on the fate of the shareholder proposal to get fresh blood on the board of directors, although presumably it went down to massive defeat. After all, who in their right mind could possibly be dissatisfied with company performance like this?
Thursday, May 10, 2007
REFR's latest great investment
So REFR files another quarterly report, and, surprise surprise, for all the hype about production and products, the revenue meter remains planted firmly on "minimum license fees only" mark. On this occasion, the number happens to be $29,792. Interestingly, the company also recorded "investment income" of $56,834, meaning, it would seem, that the company's money is bearing more fruit elsewhere than at the company itself. There's a lesson for investors, I think.
But REFR's successful investment streak probably won't last much longer. Buried on page 10 of the quarterly report (yet somehow pinpointed almost instantly by supposedly casual, unconnected investors), REFR mentions an investment of "up to" $150,000 in one of its licensees, SPD Control Systems.
SPD Control Systems is a rather unusual licensee in a lot of ways. For one thing, there's no obvious reason why they would need a license. Their devices appear to be of their own making, and certainly not connected to any SPD patent. So it's not at all clear what SPD Control Systems is licensing here.
Another oddity is the company's location, in the "Long Island High Technology Incubator" on the campus of SUNY-Stony Brook. Is this a corporation or an academic research project?
Despite these obviously humble digs, SPD Control Systems makes some very weird claims in an edition of the company newsletter, seemingly not coincidentally published to coincide exactly with REFR's quarterly filing. So much so that they actually reference the filing in mentioning the investment from REFR. Way to keep up a pretense of independence, there.
Among the claims are "facilities in over 22 countries and 50+ locations, any of which can be utilized as a manufacturing site for product delivery in regional markets." Really, now. If SPD Control Systems has facilities in "over 22" (so, 23?) countries, you'd think that they could use one of them for office space, rather than having to mooch off a local university.
No, much more likely this claim is akin to the completion centers claimed by Inspectech as a way of making themselves seem a lot larger than they actually were. Inspectech, as we know, was a two-man operation that soon after became one-man, yet still boasted "hundreds of completion centers" as if the company had any kind of ownership relationship to any of them.
Also of note is the headline of the funding announcement: "SCSC Receives RFI and Angel Venture Capital". One might be led to think that "Angel" refers to some kind of institutional name. Because otherwise, why capitalize it, right? But in fact, the paragraph below defines the "angels" in questions as "close friends, family, and colleagues". Sounds like they learned their fund-raising techniques from Woodbury.
But REFR's successful investment streak probably won't last much longer. Buried on page 10 of the quarterly report (yet somehow pinpointed almost instantly by supposedly casual, unconnected investors), REFR mentions an investment of "up to" $150,000 in one of its licensees, SPD Control Systems.
SPD Control Systems is a rather unusual licensee in a lot of ways. For one thing, there's no obvious reason why they would need a license. Their devices appear to be of their own making, and certainly not connected to any SPD patent. So it's not at all clear what SPD Control Systems is licensing here.
Another oddity is the company's location, in the "Long Island High Technology Incubator" on the campus of SUNY-Stony Brook. Is this a corporation or an academic research project?
Despite these obviously humble digs, SPD Control Systems makes some very weird claims in an edition of the company newsletter, seemingly not coincidentally published to coincide exactly with REFR's quarterly filing. So much so that they actually reference the filing in mentioning the investment from REFR. Way to keep up a pretense of independence, there.
Among the claims are "facilities in over 22 countries and 50+ locations, any of which can be utilized as a manufacturing site for product delivery in regional markets." Really, now. If SPD Control Systems has facilities in "over 22" (so, 23?) countries, you'd think that they could use one of them for office space, rather than having to mooch off a local university.
No, much more likely this claim is akin to the completion centers claimed by Inspectech as a way of making themselves seem a lot larger than they actually were. Inspectech, as we know, was a two-man operation that soon after became one-man, yet still boasted "hundreds of completion centers" as if the company had any kind of ownership relationship to any of them.
Also of note is the headline of the funding announcement: "SCSC Receives RFI and Angel Venture Capital". One might be led to think that "Angel" refers to some kind of institutional name. Because otherwise, why capitalize it, right? But in fact, the paragraph below defines the "angels" in questions as "close friends, family, and colleagues". Sounds like they learned their fund-raising techniques from Woodbury.
Tuesday, May 01, 2007
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.
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.
Wednesday, March 28, 2007
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.
But not to worry, REFR fans! This year is the year! Again.
Wednesday, March 21, 2007
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.
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.
Friday, March 02, 2007
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.
... 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.
Tuesday, February 27, 2007
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.
Wednesday, February 14, 2007
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.
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.
Monday, February 12, 2007
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.
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.
Thursday, February 01, 2007
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.
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.
Friday, December 01, 2006
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.
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.
Tuesday, November 07, 2006
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.
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.
Thursday, October 19, 2006
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...
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...
Monday, October 02, 2006
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?
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?
Wednesday, September 20, 2006
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):
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.
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.
Monday, August 28, 2006
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.
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.
Monday, August 14, 2006
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...
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...
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