REFR blows $11.3 million, cash down to $8.3 million, reports Asensio

During the last nine months Research Frontiers Incorporated (NASDAQ: REFR) (Price: $17.46) used over $8 million in a futile attempt to prop-up its own stock. Last year REFR spent $3.3 million trading its own stock bringing the total to $11.3 million in the last 21 months. As of September 30, 2001 REFR had only $8.3 million in cash remaining.

REFR does not have earnings or cash flow to pay for its stock trading. REFR pays penny-stock promoters such as Ailouros Ltd. to get cash. Wasting $11.3 million on a stock scheme has not prevented the stock’s well-deserved drop and has drained its cash. In the last two years, REFR has paid its officers bonuses based on short-term movements of its stock. This unusual incentive to temporarily pop-up REFR’s stock may explain management’s absurd conduct.

REFR’s on-going dealings with Ailouros adds further concerns to this apparent wrongful use of $11.3 million in cash. Last year REFR and Ailouros extended their arrangement indefinitely. The agreement covers the private sale of unregistered REFR stock to Ailouros, an off-shore “underwriter” with ties to numerous defunct penny-stock scams. There is no reasonable justification for the use of cash generated entirely from these undisclosed, private stock sales to buy stock in the open market.

Asensio & Company believes REFR shares are worth less than $1 per share and expects the shares to trade for less than $1 per share soon. The firm and its clients have a short position in REFR shares. 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.

Posted in Research Frontiers Incorporated

Manuel Asensio doesn’t bet often. But when he does, it’s wise to pay attention.

Paul Kaihla
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