Floorless Preferred Stock/Debenture Message Board

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Strategies & Market Trends : Floorless Preferred Stock/Debenture

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To: Roger A. Babb who wrote (119)	10/11/1998 6:48:00 PM
From: N. Dixon	Read Replies (2) of 1438

Roger, Let's stick to the facts: <<REFR is a 30 year old company which had only $60,000 in revenues last quarter and large negative earnings.>> Reread the recent Wall Street Journal (9/10/98) article and you will understand that painting this as a "30 year old company with no earnings" is disingenuous. First of all the first 20 years was spent with Saxe working with the Land patent using private funds from family and friends. He didn't go public until 1986 when there was still work to be done on the light valve and didn't come up with the first film until 1991. So it has actually been only 7 years that the first film was available. As far as "no earnings" you should know that all the R&D done by licensees saved REFR MILLIONS of dollars. That can be considered income as it affected our bottom line by making us a debt free company with 3 years of cash to burn and equity financing that would provide another $15 million if so needed and with terms that REFR controls 100%! <<Your contention that REFR can somehow make money by manipulating its share price with buybacks is pure baloney. >> That was never MY contention! You stated on this thread that the new financing obtained by REFR was tantamount to a floorless convertible. I emailed your statement to a securities lawyer who also happens to own REFR and who had told me that this was the most fantastic airtight deal he had ever seen and the REFR must have something GREAT coming down the pike for a fund to agree to this especially given the current stock price. His response which was basically showing you that if you wanted to spin some farfetched scenarios then the shorts are actually in more jeopardy by this agreement than the longs. Here is his statement: "Death spiral? Who are these guys kidding? The agreement clearly states that ALL the options are in the hands of Research Frontiers and the only death spiral I can envision is for the short seller. You see Research Frontiers has already announced that they intend to buy back stock in the open market and retire the shares. With this agreement they can now easily pick up $15million dollars worth of shorted stock and sell it back to Ailorous for a profit. Ailorous is obligated to buy and Research Frontiers sets the price. I would imagine Robert Saxe would know best how to time this since he is privileged as to what news items are coming and their potential impact. So a short seller would have all his stock bought up by the company providing a floor for the stock price until news is released and then be forced to buy it back for a loss after good news drives the price up. Then the company can just "put" the shares to Ailorous and make a tidy profit for shareholders without even diluting the float. I hope Saxe is smart enough to do it!" <<You and I have agreed to disagree on future revenue prospects.>> Others who disagree with you are the CEO of MSC Nadig and the President Kim of Hankuk Glass and St. Gobain who just went into a joint venture with Hanglas and will focus on auto glass. I feel I am in good company. ND

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