Hi folks. I have read all 94 messages in this thread, and I am startled at how little the investment community knows about what industry (the Air conditioning industry) thinks and knows about this company. Those of you hoping for good news will be disappointed. There's no great market for what this company has to offer. So how come they made money in the past? Here's the scoop that everyone in the industry knows, which the investment world doesn't seem to know:
This company's main business game plan (which was mentioned in their prospectus) was to import millions of pounds of used R-12 from Russia, believing that it was legal and that used gas would not be subject to the excise tax (now $6.70 per lb.) that applies to imports of new R-12. This would give them profits of $5 million to $10 million a year. And in fact in 1994-1996 they did bring in a lot of product. Then in 1995-1996 the U.S. Environmental Protection Agency shut the door (claiming that this wasn't really used gas, but really new gas in disguise) and also the I.R.S. ruled that excise taxes needed to be paid on this stuff. Almost all of the company's profits from 1994-1996 came from the sale of whatever inventories they had of this R-12. Combined with soaring prices for R-12 in the U.S. , this made for some profit.
But now, their supply of R-12 is nearly gone, and the resale price is much lower, so there really are no good sources of revenue. The "zugibeast" technology so has no real market. Only a few companies actually are interested in "on site clean-up" of refrigerant. Check it out yourself, the next time you are in a large office building, ask the chief engineer if he would pay to have his refrigerant "cleaned" even though it is workng fine.
So here's the killer: This company continues to have overhead of over $8 million a year. There is no way to make that kind of money in the refrigerants business, without the "imports" game to play. The A/C industry does not think this company is heading anywhere but down.
As to the Dupont story, that's a whole different story, which has nothing to do with an investment in a "great company", and everything to do with Dupont's trying to find a company that could handle for it the whole nuisance of customers returning lots of small cylinders of used refrigerants that they recover from systems. If you want to know more about that, let me know.
Sorry to disappoint you guys. Unfortunately, when a stock is so small that it isn't followed by any analysts, the investors are left to do their own due diligence, and if you weren't talking to industry people you would believe all the company hype.
Reread the company's press releases about how they "decided" to stop importing refrigerants from Russia, and to concentrate on the "more profitable" reclaim and service areas. That is serious spin control, and buried in that press release of a few years ago is the whole story. |
