Re: 8/22/01 - [REFR] Infamous short-sellers, Asensio & Company, smoke REFR (part 1 of 2)
REFR's Silly Circus Takes To The Air, Reports Asensio & Company, Inc.
NEW YORK, Aug 22, 2001 /PRNewswire via COMTEX/ -- The following is being issued by Asensio & Company, a member of the National Association of Securities Dealers, CRD number 31742:
Last week Research Frontiers Incorporated (Nasdaq: REFR chart, msgs, $20.67 chart, msgs) made an alleged "historic" announcement: seven SPD windows had been installed in a single Learjet 25C. According to REFR "this formally marks the end of a monumental development and scale-up effort". As REFR previously promoted, InspecTech, a very small Ft. Lauderdale airplane-refurbishing outfit, persuaded National Jets of Ft. Lauderdale -- InspecTech's neighbor -- to replace 7 shades with 7 SPD slides in one of its 6 small planes. The transaction may have yielded REFR up to $780 in licensing revenue from product sales, its first after 35 years of self-promotion. Sillier still is that even this embarrassingly insignificant and long over due event is riddled with gross deception.
REFR claims that SPD shades reduce fuel consumption and increase flying range. REFR also stated that the SPD shades reduce maintenance, downtime and cost of operation. REFR did not provide any support for these absurd statements. We have advised REFR that we believe these statements to be false, and requested a response and supporting documentation. REFR failed to respond.
Additionally, InspecTech issued a press release containing statements that the replaced shades frequently jammed and did not stay up, and required constant maintenance. We checked with airplane maintenance companies. They confirmed that the shades that are a standard part of aircraft windows rarely, if ever, require maintenance. Notably, according to Lexis/Nexis, InspecTech never issued a single press release before it started issuing statements concerning the sales potential of REFR's SPD product in March 2001. We know of no reason for this oddity other than an attempt by REFR to create the illusion of independent verification of SPD.
For over 35 years REFR has been claiming to be on the verge of commercializing a 1930's light valve technology, which uses electricity to lighten windows. SPD uses organic materials, liquid suspension, requires continuous use of electricity to remain in a clear state, and has limited light and infrared control range (for instance they can not black out light in airplanes for daytime movie viewing or sleeping). Other smart windows technologies use inorganic solid materials that are more durable and do not require continuous use of electricity. These are only a few of the many good reasons that explain SPD's 35 years of failure and REFR's reliance on deception to sell its stock to the public.
Asensio & Company believes REFR is grossly overvalued and has sold REFR shares short. A complete documented history of Asensio's published work with short-selling transactions, and the firm's definition of gross overvaluation, is available on the Internet at asensio.com. Asensio & Company is actively engaged in short selling and advises its clients on securities it believes are overvalued. Short selling involves a risk not associated with the purchase of stock including, but not only limited to, unlimited loss and stock borrowing risks. Additional information is available upon request.
This report should not be construed as an offer to sell or solicitation of an offer to buy any securities. Opinions expressed are subject to change without notice. This report has been prepared from original sources and data which we believe to be reliable but accuracy is not guaranteed. This research report was prepared by Asensio & Company, Inc. whose stockholders, officers and employees will from time to time acquire, hold or sell a position in the securities mentioned herein. Asensio & Company, Inc. will act as principal for its own account or will sell or buy to or from its customers the securities described herein. Asensio & Company, Inc., will from time to time perform investment banking or other services for, or solicit investment banking or other business from, any company mentioned in this report or its affiliates.
Source: Asensio & Company, Inc.
Contact: Manuel Asensio of Asensio & Company, Inc., +1-212-702-8805
URL: asensio.com
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Research Frontiers Reports On New Developments by Its Licensees and Comments On Recent Short Selling Activities
WOODBURY, N.Y., Aug 24, 2001 (BUSINESS WIRE) -- Because of the accelerated pace of developments by its licensees and recent inquiries about activities regarding short selling in its common stock, Research Frontiers Incorporated (Nasdaq: REFR chart, msgs), the developer and licensor of SPD light-control technology is issuing this general statement.
Since October 13, 2000 when the short interest reported by Nasdaq with respect to Research Frontiers common stock was 373,731 shares, the short interest has grown steadily each month to its current historically high level of 1,706,479 as of July 13, 2001. Normally, one would expect that the sale of shares of stock by a short seller would cause the price of such stock to go down over time, yet despite the net short sales of 1,332,748 shares between October 13, 2000 and July 13, 2001, the trading price of Research Frontiers common stock has actually increased from a closing price of $15.25 on October 10, 2000 (the trade date corresponding to short sales reported as of Nasdaq's October 13, 2000 monthly short interest report) to a closing price of $27.56 as of July 10, 2001. Thus, despite artificial selling pressure created by the short sale of a large number of shares, Research Frontiers common stock increased in value during this period by approximately 81% percent (compared to a 3% decline in the Dow Jones Industrial Average and a 39% decline in the Nasdaq during this same period). During this period of heavy short selling and difficult general market conditions, stock owned by shareholders of Research Frontiers increased in value by almost $150 million, while those short sellers lost millions of dollars. Research Frontiers also believes that since July 13, 2001, a large number of additional shares have been sold short.
A short sale is one in which a person or firm sells stock that it does not own (usually by borrowing that stock from the owner of that stock) in hopes that the price of that stock will decrease and allow the short seller to buy back and return the borrowed shares at a lower price. Therefore, the short seller profits if the price of a company's stock goes down, and loses money if the price goes up. This is contrary to the normal situation where an investor profits if the stock price of his company goes up.
Many investors who own a company's common stock do not realize that their broker can loan such stock to short sellers without consulting the investor if such stock is held by the investor in a margin account, rather than having their stock certificates issued in their own name and delivered to the investor. While not making any specific recommendation, Research Frontiers is aware that many of its shareholders have already requested that stock held by their brokers be either transferred into cash accounts at such broker which do not permit that these shares be loaned out to short sellers, or, in the alternative, that certificates representing such shares be issued in the name of the shareholder and delivered to the shareholder. This effectively hinders the efforts of short sellers who try to artificially depress the price of Research Frontiers common stock by selling such borrowed shares, and may even force such short sellers to try and borrow such shares elsewhere, or to go into the open market to buy back shares they borrowed previously. We are informed that it is very difficult for short sellers to currently borrow shares of Research Frontiers for continued shorting or to replace existing shares borrowed, and believe that if short sellers have to buy shares in the open market to cover the substantial number of shares they have sold short, this may substantially increase the price of Research Frontiers common stock.
Short sellers use a number of tactics to try and depress the price of a company's stock or to try and get shareholders to sell their stock to them so that they can cover their positions. These tactics include using different market makers and ECNs (electronic communication networks) to create the illusion of selling, making defamatory or untrue statements on Internet chat boards, or issuing "reports" or "press releases" on a company recommending that such company's stock be sold, or shorted.
In mid-March of this year, Mr. Manuel Asensio initiated a meeting with executives of Research Frontiers in which he had indicated that he was acting on behalf of someone with a short position in Research Frontiers stock. In the course of that meeting, Mr. Asensio noted that covering such short position in the open market would cause the price of Research Frontiers stock to go up, thereby causing the holder of such short position to lose money. Mr. Asensio then requested that Research Frontiers sell such short seller stock directly in order to permit such seller to cover its short position. Research Frontiers indicated to Mr. Asensio at the conclusion of that meeting that it would not issue such shares. After an additional 629,825 shares were sold short, Mr. Asensio's company, Asensio & Company, Inc., then issued a press release on June 15, 2001 stating that it believes that Research Frontiers is overvalued and that it has sold Research Frontiers common stock short. Later that day on a radio program, Mr. Asensio admitted that it was hard to borrow shares of Research Frontiers, which borrowing would be required to legitimately sell such shares short.
From the foregoing, one could logically conclude that Mr. Asensio or his company, having failed to obtain shares from Research Frontiers to cover its position without incurring further losses, had to find an alternative method of purchasing shares of Research Frontiers common stock in order to cover their short position without moving the price of Research Frontiers up even further. Since Mr. Asensio admitted that further shorting was difficult or not possible at the time it issued its press release on June 15th, one can reasonably conclude that the press release was issued in order to induce others to sell their stock in Research Frontiers so that Mr. Asensio and his confederates could drive the price of Research Frontiers stock down and cover their enormous short position. Asensio & Company focuses on short selling securities and issuing recommendations to others to also sell such securities short, hoping to profit if the price of such securities goes down.
Despite accelerating efforts to drive the price of Research Frontiers common stock down through aggressive shorting of ever-increasing numbers of shares per month, these efforts proved unsuccessful. Because these efforts were unsuccessful, Mr. Asensio and those acting in concert with him apparently had to try other abusive and improper tactics. For example, Research Frontiers recently learned, and through its investigation has since obtained documentary evidence, that Manuel Asensio has personally been in contact with one or more customers of our licensees and has harassed them, accused them of being part of some sort of conspiracy between Research Frontiers and its licensees simply because they bought windows using Research Frontiers SPD light control technology, and have accused Research Frontiers, its licensees and their customers of being engaged in criminal activity, without providing the basis for these absurd and unsubstantiated statements.
Joseph M. Harary, Executive Vice President and General Counsel of Research Frontiers noted: "Of course Mr. Asensio is entitled to his opinion and to sell our stock short so long as it is done in compliance with applicable law and regulations. It is one thing to claim to be an 'analyst' and to try to discover companies that are over-valued, it is quite another thing to engage in a pattern of actively trying to sabotage a company's existing business, tortiously interfering with contractual relations, engaging in defamation per se, and otherwise violating applicable laws and regulations designed to protect investors. We have referred these matters to the proper authorities for further action, and have discussed other avenues of legal recourse with special counsel and with several of our licensees."
Research Frontiers believes that sufficient data exists for the market to make its own determination as to the value of Research Frontiers and its patented SPD technology, and the stage of product development at each of its thirteen licensees. We have read his "press releases" and in short, Mr. Asensio's conclusions are simply wrong and not based upon facts. Also, contrary to the public statements made by Mr. Asensio, in June Research Frontiers informed Mr. Asensio that the statements contained in his faxes to Research Frontiers and public statements contain too many inaccuracies, personal opinions, and material omissions to be addressed individually. Research Frontiers answered Mr. Asensio's specific questions, or, where appropriate, referred him to the relevant licensee who reported that Mr. Asensio never contacted them for answers. Research Frontiers also invited Mr. Asensio to contact senior management should he wish to ascertain accurate information about Research Frontiers or its patented light-control technology, but once again Mr. Asensio refused to avail himself of this opportunity.
Research Frontiers has an open door policy with securities analysts, investors, and prospective licensees interested in learning more about Research Frontiers, its SPD light-control technology, and the development efforts of its licensees. Interested parties can obtain comprehensive information and data about Research Frontiers and its patented SPD technology which is contained in Research Frontiers' periodic reports filed with the S.E.C, its internet web site as well as those of Research Frontiers' licensees, or by visiting Research Frontiers' exhibit at the Nasdaq Market Site in Times Square to see actual product samples of SPD smart windows, sunroofs, rear-view mirrors, sunvisors, and SPD film. These sources also contain recently announced developments which, from this year alone, include the following:
- In January, Research Frontiers' licensee Hankuk Glass Industries Inc., Korea's largest glass manufacturer, announced the formation of SPD Inc., a separate subsidiary of Hankuk Glass Industries devoted exclusively to the mass production and sale of suspended particle device (SPD) light control film and a wide variety of end products using SPD film. In April 2001, SPD Inc. announced that it acquired a new factory located in Inchon, Korea which will be dedicated exclusively to the production of SPD light-control film and end-products. SPD Inc. also announced that it expects to produce SPD film in the Fall of this year, and to commence mass production of both SPD film and SPD end-products later on this year. Reports from Hankuk indicate that they are on or ahead of their schedule, and that they have received orders from several companies, including a major automobile manufacturer. In their previous press releases, Hankuk had indicated that once the Inchon plant is fully online later this year, it will have an annual production capacity of 400,000 square meters, or approximately 4.3 million square feet. Seong Man Kim, President of Hankuk Glass Industries' Flat Glass Division and a Director of SPD Inc. stated in April that "While we can outsource additional capacity once demand for this factory's production exceeds the capacity of our coaters, we will probably build similar factories in various locations throughout the world to add further capacity to meet the growing demand we see worldwide for SPD film and end products."
- In February, Research Frontiers licensed AP Technoglass, North America's leading sunroof glass producer and a subsidiary of Asahi Glass Co. Ltd. of Japan, to manufacture and sell SPD sunroof glass for use in variable light transmission sunroofs produced by licensees of Research Frontiers. AP Technoglass reports strong interest by its customers and notes in the press release on its web site that "SPD is the first viable light control technology for the automotive industry."
- In March, Research Frontiers licensed InspecTech Aero Service, Inc. to manufacture and sell SPD aircraft windows and SPD cabin dividers. Shortly thereafter, they exhibited their SPD aircraft windows at the Aircraft Interiors Show in Long Beach, California, and met with potential customers including the world's major aircraft manufacturers, airlines, and operators. In June, they announced their first order for SPD aircraft cabin windows, and in July they announced a subsequent order and obtained FAA approval. Last week they completed the installation of the first SPD-equipped jet using SPD film purchased from SPD Inc., and have received very positive feedback from their customer as well as from the passengers and flight crew on this jet. InspecTech will be exhibiting additional windows for a variety of aircraft at Booth no.8414 at the National Business Aviation Association's 54th Annual Meeting & Convention in New Orleans on September 18, 19, and 20th. o Also in March, Research Frontiers licensed Film Technologies International, Inc. to manufacture and sell SPD film to a growing list of Research Frontiers' current and future SPD "end-product" licensees. FTI, which has since completed their training at Research Frontiers' facilities, joins General Electric, Hankuk Glass Industries Inc., Bekaert, Polaroid Corporation, and Hitachi Chemical Co., Ltd. as a licensed producer of SPD light-control film.
- In June, the day before Mr. Asensio issued his first press release, Research Frontiers reiterated that it had substantially completed the goals set forth in the `road map' it outlined for its shareholders in mid-1999, which focused on building the SPD supply infrastructure. Research Frontiers also announced that with the achievement of those goals, and based on commercial sales projections for SPD light-control products by its licensees, for the first time in its 35-year history, Research Frontiers could reasonably predict the timing of future revenues and profits. Based upon projected timetables and sales goals of Research Frontiers' licensees for SPD film and end-products, the Company announced that it expected to earn royalties from sales of licensed products (payable under license agreements within 45 days after the end of the quarter in which sales of licensed products occur) early next year, achieve its first quarterly profit next year, and achieve its first full-year of profit in 2003, but possibly in 2002. Thereafter profits are expected to escalate rapidly.
- Licensee ThermoView Industries has also been publicly maligned by Mr. Asensio with false accusations regarding their corporate history. ThermoView has reportedly been privately apologized to by Mr. Asensio who still has not publicly retracted his false accusation despite having been publicly corrected. ThermoView Industries is currently publicly demonstrating SPD smart windows for consumers at the Nasdaq Market Site in Times Square, and has also demonstrated them at their annual stockholders meeting. More public events and trade show appearances are planned for later this year, and ThermoView expects to be selling these SPD smart windows to consumers in 2002.
- Licensees Dainippon Ink and Chemicals and Hitachi Chemical have both supplied other licensees with samples of the SPD emulsion they produced, and are gearing up for larger quantities later this year. Further details are expected to be announced by the respective licensees shortly.
- In June, N.V. Bekaert S.A. of Belgium acquired a non-exclusive license to make and sell SPD light-control film as part of its acquisition of MSC Specialty Films, Inc. from licensee Material Sciences Corp.
- Other events for the year included Research Frontiers ringing the opening buzzer on the Nasdaq Stock Market on June 29, 2001, its appearance with Qualcomm in an interactive exhibit of various products using SPD technology at the Nasdaq Market Site in Times Square, the presentation in early August of a paper containing the results of an independent survey of U.S. window manufacturers on the subject of switchable glass at the SPIE (The International Society for Optical Engineering) International Symposium on Optical Science and Technology in San Diego, California.
- On October 24-25, Research Frontiers will be hosting the international SPD Smart Window Products Conference. This
multi-industry conference will be held in New York exclusively for companies engaged in the manufacture, distribution, promotion, or use of window-related products, and will provide companies the opportunity to evaluate the benefits of offering, distributing, or working with one or more of the categories of SPD smart window products.
About SPD Technology and Research Frontiers Incorporated
SPD technology allows you to instantly and precisely control how clear or dark glass or plastic is, and adjust its light transmission by either turning a knob or having the device automatically adjust itself. This is made possible by a thin film which uses SPD light-control technology invented by Research Frontiers. SPD technology is licensed to a growing number of companies in various industries, and is covered by approximately 365 patents and patent applications held by Research Frontiers worldwide.
SPD technology has many applications, including "smart" windows for homes and buildings, skylights and interior partitions. A smart window using SPD film provides relief from glare or heat without blocking view, while also enabling privacy whenever desired, protection from UV damage, promotion of energy conservation, and other benefits. In automotive vehicles, SPD-smart products can include windows, sunroofs, sunvisors, rear-view mirrors, instrument panels and navigation systems. In aircraft, replacing existing window shades with SPD film can improve passenger satisfaction and comfort, while also reducing fuel consumption, maintenance, downtime and cost of operation. SPD eyewear products - sunglasses, sport goggles such as ski goggles, and visors - will continuously and instantly control glare to the degree needed. In the flat panel display industry, SPDs may be used in products such as laptop computers, cell phones, and handheld devices such as PDAs - Personal Digital Assistants, with significant performance and cost advantages over current technologies. In advertising, promotion, and retail sales environments, SPDs offer display advertising advantages, bringing large, thin, flexible yet changeable displays to stores, store windows, point-of-purchase displays, billboards, truck sidings, road signs, and other signage applications.
Research Frontiers has licensed the following companies to use its patented suspended particle device (SPD) light-control technology in emulsions, film, or end-products:
- AP Technoglass - North America's leading automotive glass and sunroof glass supplier and a subsidiary of Asahi Glass Co., Ltd., the world's largest automotive glass supplier;
- Dainippon Ink and Chemicals Incorporated-the world's largest manufacturer of organic pigments;
- Film Technologies International, Inc.-a leading worldwide manufacturer of solar control, safety and security window films
for use on motor vehicles, homes and commercial buildings.
- General Electric Company (NYSE: GE chart, msgs);
- Glaverbel, SA of Belgium - majority-owned by Asahi Glass, one of the world's leading automotive glass manufacturing companies;
- Global Mirror GmbH & Co. KG - the world's largest manufacturer of commercial vehicle mirror systems;
- Hankuk Glass Industries Inc. - Asia's largest flat glass producer (outside of Japan);
- Hitachi Chemical Co., Ltd.- majority-owned and part of Hitachi Ltd.;
- InspecTech Aero Service, Inc.- provides aerospace component design, production, marketing, and distribution to both the OEM
and aftermarket industry segments including the Fortune 10 Aerospace Corporations in the U.S.;
- N.V. Bekaert S.A. - a world leader in advanced metal transformation and coating technologies, and, through its
newly-acquired specialty films division, is the world's second-largest producer of specialty window films (Belgium Stock
Exchange:BERTT:PR);
- Polaroid Corporation-the worldwide leader in instant imaging and a supplier of instant photographic cameras and films; digital imaging hardware, software and media; secure identification systems; and sunglasses to markets worldwide (NYSE: PRD chart, msgs);
- ThermoView Industries, Inc. - a leading integrator of businesses and technologies within the replacement window industry (AMEX: THV chart, msgs);
- Vision Ease Lens - the world's largest producer of polycarbonate lenses which is owned by BMC Industries, Inc. (NYSE: BMM chart, msgs)
Research Frontiers is a technological leader in the development and licensing of suspended particle devices (SPDs)-electrically operated light-control devices using proprietary particle suspensions and films. SPD technology permits light transmission to be electrically controlled instantly, either automatically (by means of a photocell or other sensing or control device) or adjusted manually by the user. Research Frontiers' proprietary SPD technology enables users to control the amount of light passing through windows, skylights, eyewear (including prescription and non-prescription sunglasses and sports goggles), automotive sunroofs, sunvisors and rear-view mirrors, as well as enabling brighter easier to read flat panel information displays for use in computers, television, telephones and other electronic instruments and products. Research Frontiers currently has agreements in effect covering smart windows, automotive mirrors and sunvisors, eyewear, displays and other products with major international corporations and holds or has rights in over 365 patents and patent applications on SPD technology throughout the world. Licensees of Research Frontiers who incorporate SPD technology into end products will pay Research Frontiers a royalty of 5-10% of net sales of licensed products under license agreements currently in effect. Research Frontiers' common stock trades on the Nasdaq National Market under the symbol "REFR." Additional information about Research Frontiers can be found on the Internet at refr-spd.com.
Note: From time to time the Company may issue forward looking statements which involve risks and uncertainties. This press release contains forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results could differ and are not guaranteed. Any forward looking statements should be considered accordingly.
Contact:
Research Frontiers Incorporated, Woodbury
Robert L. Saxe / Joseph M. Harary
516/364-1902
info@refr-spd.com
or
Media Relations:
Golin/Harris International
Stacy Calder, 212/309-0650
scalder@golinharris.com
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