And the winner is...

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

Still waiting to believe it when I see it.

You woke me up for this?

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

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

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

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















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

Now back to our regularly scheduled doldrums.

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

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

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

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

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

Exuent the indices

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

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

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

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

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

Marking time

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

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

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

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

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

The end of the insignificant rebellion

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

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

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

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

Buying and selling

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

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

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

And Joe Harary? No purchase at all. Hunh.

Annual meeting? What annual meeting?

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

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

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

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

SPD goes YouTube

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



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

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

Land of the spree, home of the knave

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

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

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

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

No shortage of excuses

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

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

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

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

And so the cycle continues.

The clock advances

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

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

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

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

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

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

Another 10-Q already?

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

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

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

Same time next quarter then?

The biggest shafting yet?

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

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

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

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

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

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

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

Words, for once, fail me.

ForecloSPD

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

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

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

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

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

There's one mystery we may never solve.

How dogged can you get?

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

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

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

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

A350XWB Will Offer Electrochromic Cabin Windows

By Kirby J. Harrison

January 1, 2008
Cabin interior and electronics

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

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

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

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

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

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

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

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

One for the books

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

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

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

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

Licensed to tout

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

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

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

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

Chain, chain, chain of foolishness

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

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

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

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

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

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

GKN

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

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

And so the cycle begins anew.

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