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Jason_K

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  • Neonode: Strong Sell On Shell Games, Fraud Litigation And Hyping Obsolete Technology [View article]
    Yes
    Jun 18, 2014. 05:39 PM | 2 Likes Like |Link to Comment
  • Neonode: Strong Sell On Shell Games, Fraud Litigation And Hyping Obsolete Technology [View article]
    Bravo. Bravo. Very well done and managed to notice some things that I have missed. I do not believe I have yet seen the 2011 investor presentation (although I knew their projections were absurd) and the Per Bystedt suit is a really great find. I have a similar chart of missed promises that is much larger and with a similar distribution of missed vs. kept promises. I actually consider the CEO not wanting old people at the company to be pretty reasonable. I believe there are even more unlisted reasons to be confident NEON will continue to be a good short. I just want to add a few things to your analysis though:

    Bystedt Suit:
    I would add that the holding company arrangement the management team uses to hold ALL of their stock makes the relevance of the suit even more understandable. I believe it could be the case that management has organized their holdings this way because in the probable case that their remaining holdings become worthless, the company's management would benefit from being able to work through large deferred tax assets they create in their holding companies for the rest of their lives. It is also worth considering the added difficulty regulators would have regulating insider transactions initially and enforcing penalties or regulation later on if the assets were both awarded to and held by holding companies overseas.

    Patents:
    I too came to conclusion that their patents are basically worthless; the idea that they might eventually be able to retain or sell off the patents in a way that benefits the management team would explain the rush to create as many patents as possible while not anticipating close to the returns or IRR implicitly required by investors. I think it would be appropriate to know how the patent rights would ultimately be handled if the company were to go bankrupt. (Even before going as far as using bankruptcy as a downside, investors ought to ask themselves how much of all of this patent preparation and filing is actually going to provide any return for investors and at what theoretical rate of return is it being done). Generally speaking it is a terrible time to be long patent value regardless of the strength of the technology (especially this type of patent).

    The prospect of a short squeeze adds absolutely nothing to the INTRINSIC value of the equity. I believe that the prospect of a short squeeze alone is causing the stock to trade at a price reflecting metrics above even relatively bullish reasonable (not analyst) consensus estimates. In reality, despite what many have said about the shorts, it is the longs that are in a race against the clock.
    Jun 18, 2014. 05:39 PM | 1 Like Like |Link to Comment
  • First Of Many HP Printers With Neonode Touch On Sale; Bloated Shorts Begging For A Squeeze [View article]
    Printers: I think your 50 cent royalty is good or at least it is more reasonable then your others given how you assumed unjustifiably high rates on the other lines.

    In reality, a large number of HP printers are not sold with any touch screen at all. The lowest-cost and consequently highest volume printers have no touch screen. The most recent HP printers to be released for the enterprise use a capacitive touch screen. The guidance and discussion around the printer release remains very sketchy.

    WRT to Vishay: I think management's delayed reaction the fact that they seemed almost surprised by the idea that they would be in all HP printers during the Ascendiant call ought to make it clear there should be little faith in this assertion. What may be true is that they have been spending resources creating designs and entering the bid process to be in nearly all of the applicable printers in HPs lineup (design wins). It may also be true that whatever guy made this Vishay presentation himself did not realize that all of the overly optimistic guidance and rhetoric about design wins should not be taken as guaranteed implementation. The company has a long and consistent history of really low design win conversion into actual revenue streams which you can find discussed in more detail in other SA articles. Assuming flawless execution, any meaningful revenue in Q1, Q2, or Q3 is out of the question not only because of revenue recognition rules, but also because of the evident delayed timing of what is just a theoretical volume ramp of a product that theoretically houses Neonode's tech at a theoretical royalty rate.

    Other lines:
    Why raise the royalty estimate on cars and computers from what seemed to be consensus previously? This seems to me to be a sneaky way to make what could seem to be reasonable unit projections to some (I still believe grossly overshot) provide for a level of revenues arguably more than 3x higher then they would actually be given your implied volumes. You go even beyond what management has laid out as the royalty rate for cars; I think its fair to say that NEON management has not missed any opportunities to be optimistic about their prospects and your analysis is clearly overoptimistic here.

    Your ereader revenue is not insane if in fact NEON gets $1 per new Amazon paperwhite sold when the new model is released. What I can find out about new Amazon Paperwhite (to be released later this year) though implies that it is in question if NEON really is involved. If Neon is in the new Paperwhite, I believe the technology being integrated is different then what had been used in previous Amazon ereaders and consequently I believe there is potential that their royalty rate going forward may be much less significant then it had been.

    I believe your childrens tablet revenue is too high by a few million.
    I believe your auto revenues are too high partially because of your high royalty rate and partially because of your unit assumptions.

    Your PC revenue is the clear stretch here. There is absolutely nothing the support this extra 48M in revenue you are presenting as inevitable. Any success at all in the PC space is seriously questionable. NEON and pumpers like to use the PC market purely because it represents a large potential market. There is no reason to believe NEON will have any success at all in the PC market. Also the royalty is probably too high.

    NEON IR has done a good job of spreading out investor expectations and only giving very vague timelines; this has allowed them to avoid delivering too big of a disappointment at any one time. The stock has appreciated greatly with no change in results and no new or increasingly convincing indication that results will change dramatically in the near future. One could argue for this dynamic if the stock had even some execution risk priced in, but it does not.

    Those that consider the short interest to be bullish should seriously reconsider what they think they may have learned in 2013 as they enjoyed high-returns holding companies with high short interest. It is mostly smart-money that is short and these professional investors are fully aware of the risks associated with the high short interest. A high short interest is especially bearish when there is very little visibility into a companies operations and its projections are wild (because the smart money knows more than the average retail investor-they have the resources that allow them to and salaries that require it).

    I believe those hoping for a short squeeze or meaningful revenues will be disappointed.

    I am short the stock.
    Apr 30, 2014. 12:13 AM | 1 Like Like |Link to Comment
  • Neonode: 6 Reasons To Buy This $6 Stock [View article]
    Since way before 2012.
    Apr 24, 2014. 01:39 PM | Likes Like |Link to Comment
  • Neonode Working With Apple In CarPlay And HP Printers Finally Gets Announced [View article]
    WRT to Volvo I think people are missing the point. It is pointless to argue whether or not NEON is in the new screens; I believe they probably are as posting this video would be a questionable maneuver even for a company known to exaggerate their prospects. The fact of the matter is that Volvo only sold 430K cars in 2013. (http://tinyurl.com/oz8...)

    Even if NEON is capable of collecting $3/car (which I believe is unlikely to be a perpetual license fee) and and penetrated Volvo's entire car fleet (in reality the screens will appear in a fraction of Volvo cars) NEON would only stand to make about $1.29M dollars (a good time to remember the company's market cap and how quickly it is burning cash).

    The screen is an-add on option and does not come standard in any of the car models. I think it is optimistic to assume 80% of customers will choose to add the screen. I also think it is reasonable to assume unit sales growth of 10%. This means that Neonode stands to make about $1.13M from Volvo.

    Some people I am sure will argue that Volvo will just be the first of many to come. This may be the case but I would discount the likelihood of this given the fact that both Volvo and Neonode are Swedish companies. I believe that NEON has a suitable offering but I believe the decision to use NEON in a car is likely more a reflection of NEON being a Swedish company than it having a superior offering. Any argument about cost saving or other hold little effect on Volvo's overall margin on the car and I believe being able to speak the same language as the Engineers behind the touch screen technology may have been the most compelling selling point.
    I do believe that being placed in Volvo makes it clear that NEON is suitable for car display screens; I do not believe it proves NEON is more suitable than any of the other touch technology that currently serves the exact same purpose (even in cars). Again it is important to remain connected to reality: even if NEON were to break into several other car makers it will take years for product to roll out and if it does the effect on NEONs top line will likely equally uninspiring.

    I do not believe it is a coincidence that NEON seems to have success winning deals that nobody else of note seems to want. The substantial cash burn NEON has put on display for a long time is effectively an asset that any customer can tap into for very cheap. It is astonishing to think about how much free design work NEON has done over the last few years for its customers.

    I may weigh in on printers more rigorously at another time but it is clear revenues are being delayed further than originally implied (where they were delayed already). I again believe that the tiny screen high volume solution will command a smaller license fee than $1/unit if there is success with HP. HP also came out with high end printers that clearly do not have NEON technology in them and actually have capacitive touch screens. All of the timelines that were given around the release of the printers, the fact they were called the high end model, and were on display at trade shows implies they were actually expecting to be in the high end OfficeJet Business Printers (http://tinyurl.com/oq2...) or at least appears to be a bit mysterious.

    I would be disgusted but not entirely surprised if in fact it was not Neonode that was used in these HP printers. The company has been doing literally everything it can to keep the stock price up (CEO making a small buy to try to catch the stock as it fell after a monster sale, trying to scare shorts into covering by holding private conference calls where the shorts are told explicitly they better cover soon, hiring teams of writers to pump the stock on Seeking Alpha, and continuing to frequently distribute press releases with absolutely no material information. It is clear that they are doing what they can to keep the stock up because they know they have to raise money again, they are hoping to get another opportunity to sell more of their stock, or most likely both. Gelbtuch will read this even at the bottom of a very long list of comments because he is very good at his job. It is truly not your fault if you have lost some money holding this stock but I hope those holding the stock are aware of what is in my opinion an extreme downside risk and limited upside.

    Apr 15, 2014. 10:39 PM | 1 Like Like |Link to Comment
  • Neonode Is A Strong Buy: Invest In Groundbreaking Patented Technology For Just $5 A Share [View article]
    Cody Acree was the UNXL analyst.
    Apr 10, 2014. 12:26 AM | Likes Like |Link to Comment
  • A Very Detailed Look At Organovo [View article]
    Good Job. I have been getting crushed by this and was considering writing an article myself. You did a better job then I would have. Man were put options cheap on the way up. Hope you noticed.
    Nov 19, 2013. 01:55 PM | Likes Like |Link to Comment
  • Clearing Up Some Confusion On Organovo [View article]
    Even if the company succeeds twice as much as the potential it has for success through 2017 it would be hard to justify holding this stock. With 75M shares and the potential for many more to come on with a 100M raise, the potential valuation came close to 700M when the stock price peaked.

    Citing the Muthuselah deal is frankly comical because it will earn them 500K. That would be 1/14,000 of their potential market cap at these prices.
    Its cute to argue that this 100M raise gives them financial flexibility but really it would be insane to not do the raise while the stock sits at these extremely bloated and decade-at-least forward looking prices.
    I believe the only reason they have not yet done the raise is that they cannot find any institutional investors to participate.

    Whether or not you yourself were moved by the Popular Science article or the up-listing, it is very clear that the general market was. The fact that you do not want to give any credit to these things just further proves the point that the stock has risen above an absolutely astonishingly bloated valuation for absolutely no reason. I would warn inexperienced investors to stay away from this stock.

    The idea that people are adopting the idea that investing in this stock and looking away for an extended period as wise advice is also insane. Please try to understand what it takes to merit a 700M valuation.

    I love to point to the fact that Organovo's CTO comes from a company called Tengion (market cap < 5M dollars). If you want a speculative unlimited upside bioprinting stock, I would look there.
    There are many others working on this technology. Organovo's technology is not that much more complicated than using a centrifuge to create globules of cells before inserting them into a modified ink jet printer. $700M-really?
    Jul 25, 2013. 06:54 PM | 1 Like Like |Link to Comment
  • Uplisting To Expand Organovo's Valuation [View article]
    As a matter of fact somewhere around half of all Organovo shares are registered sold by warrant holders-some of whom held very large equivalent share amounts. If anything you should be highly concerned by the selling that we can in fact see at Organovo.

    Organovo has less than a year until it has run out of cash and its valuation is at 480M. It would be insane for Organovo to not try to do as big of an offering as possible. The only problem, if Tengion tells us anything, is there will likely not be any institutional investors willing to invest in Organovo anywhere close to this valuation.
    Jul 16, 2013. 11:00 AM | Likes Like |Link to Comment
  • Uplisting To Expand Organovo's Valuation [View article]
    The notion that Organovo has no competitors, if it were true, would solely be a result of the fact that there is no market for what Organovo does. In reality, as you could find with little dilligence, there are a large number of companies working on bioprinting. Tengion has the most advanced technology in bio printing. Tengion, where the the CTO of Organovo came from, has a market cap of $2.5M. Tengion has more employees, has been in operations longer, and has progressed further towards actual commercialization.

    Tengion does have the risk of bankruptcy weighing down any speculation but the idea that investors are only willing to offer 15M in extreme upside warrants and institution investors are only investing less than <100K at a $2.5M dollar valuation brings Organovo's $480M valuation (75M shares outstanding) into serious question.
    Jul 16, 2013. 10:45 AM | Likes Like |Link to Comment
  • Dispatch From .U. Mass Symposium: UNXL Looks Green To Go [View instapost]
    Thanks. Looks like UNXL wont have products on shelves for September though if thats just when printing lines are expected to be up and running?
    May 16, 2013. 06:12 PM | Likes Like |Link to Comment
  • Organovo: Get Rich Or Die Tryin' [View article]
    Excellent article. Thanks for putting this out there. This companies earnings potential in any near future period is so far away from meriting the current stock price that the only way to justify owning this from a ROI perspective is by thinking that their will be steep appreciation due to hype. We are far above where hope for hype spikes was reasonable even for a retail investor. Put your money in Vanguard please. I exited my short a while back because I decided that this company's valuation was too blindly disconnected from its intrinsic value to merit a short position and it is not too cheap to borrow.

    As far as an uplisting goes: I think their will be a sharp price spike followed by price decreasing down to a dollar or lower over the course of the next 6 months.

    Uplisting will not happen without the hiring of another director and also wont happen unless ONVO stays above 4 for 40 days. Sell hard if it goes below $4 again.
    May 15, 2013. 03:14 PM | Likes Like |Link to Comment
  • Uni-Pixel: Carclo, Kodak, And Apple - Facts And Rumors [View article]
    20 is not the preferred price. It is less.
    May 13, 2013. 03:21 PM | Likes Like |Link to Comment
  • Uni-Pixel: Carclo, Kodak, And Apple - Facts And Rumors [View article]
    Well done Chris,
    I would like to point out that testing done before was a different kind of testing than what is planned for the near future. Even if the testing were the same, because UNXL has been decreasing their line thickness there is a greater chance of test failure and a halt to current "planned" product releases. Although Chris' model does show upside, I believe there is potential for a larger share to go to Kodak and I also believe that pricing will be much further below $20 than $18. ($20 is what they thought they could sell it at normally but they have signed preferred pricing agreements + competitive technology pricing is dropping rapidly and will continue to drop). I believe EPS would be far below what Chris implies even with complete execution success.

    All in all a nice article.
    May 9, 2013. 08:29 PM | Likes Like |Link to Comment
  • Tech And Healthcare: Eye Catching Themes Of Early April [View article]
    Thanks for the reply. I will address your comments below as concisely as possible. I have chosen only to respond to your commentary and still do not believe my comments represent the complete bearish argument.

    "Thinking rationally, if Pfizers targets were met, why would they NOT want to continue working with ONVO? In the majority of cases, when targets are met it is a positive sign indicating further collaborations."
    Although am not able to know for sure whether or not Pfizer will enter into a new contract, I think there is less than 50% chance it will. Here is my reasoning:

    First, there was no award from Pfizer for meeting the the goals of the contract so it is indiscernible whether or not there was in fact some kind of success that at any point was questionable. Pfizer's targets being met just represents the fact that what was agreed upon in the original contract was in fact accomplished. This means that whatever tests and data discussed in original contract were completed. This does not imply there was some kind of breakthrough. Here is how the contract likely was pitched by Organovo: "we have this idea, would you be interested in funding some preliminary research where we give you all of the data associated? By the way, we will be funding this largely with investor money which makes this worth it as opposed to doing the research yourself with more talented and higher paid researchers."

    I do not believe Organovo is getting leverage on their current research because it is spread into so many different areas for so many different clients with a very small number of employees.

    “Stating that current government budget cuts will result in no further grants for ONVO is quite an irrational statement to make. By your justification, any company out there working with government will see a reduction in grants. That is incorrect. Nothing out there points to grants stopping for ONVO. To date, the company has received 5 grants, with 1 being for the liver assays. Again, nothing suggests that “it is safe to assume there will be no more government grants coming any time soon”, as you stated.”

    I am not going to explain the current budget situation to you. Do a little research to understand that grants for fragmented research companies like Organovo are going to be under serious pressure. They have received their grants from NIH and the Treasury. Small cuts in the overall grant budget for these agencies represent a much larger cut of new grants. There will be an 8% cut of NIH grants, but that is the same as 35% less allocated for new grants. In a more competitive market for government grants and lots of cash on the balance sheet for now, I would not expect to see any more government grants any time soon. (Why give a grant to somebody unless they need it when comps will cease to exist without it?)

    “To date, Organovo has recognized a total of $1,100,000 in payments from United Therapeutics. Based on the existing contract, $400,000 remains to be recognized in 2013.”
    This number is the same as mine but rounded up by 40K. This is a cheap attempt to discredit my argument when in actuality I believe my number is more accurate. It is simple arithmetic. Maybe the numbers reported on the income statement are inaccurate but I believe it is more likely that this number was rounded in the 10-K. Spread evenly, 188K per quarter for the next two quarters.

    “ONVO will provide a summary of the results and then publish the data afterwards (no given time frame). This can be found on the chat after the webcast.”

    As I said, a promotional summary will be given to retail investors. In the chat he said that the research would be published “in print.” It is safe to assume that no unbiased analysis of this research by any informed passersby will make it to Seeking Alpha.

    “A previous article I posted explains the requirements to up list into NASDAQ CM”

    Unfortunately you cite the requirements for a normal company. There are different listing requirements for a company that enters the markets through a reverse merger. $4 on Nasdaq and NYSE. Again. I do not see much of a reason to get excited by an up list unless you are a short term investor.

    I have done the research, read the patents, and spoken to someone that understands the technology potential in the lab. A good friend of mine wrote his thesis on 3D Organoid assays. Not mentioned or considered by most is that there is meaningful competition. Look at the patents they have; there are clear ways around them.

    A few more things to consider:
    Gabor Forgacs abandoned Organovo along with entire team of inventors to focus on Modern Meadow.

    There are meaningful potential competitors out there. If you cant find them its because there is no reason for them to have any press yet since their is no industry to support them.

    Google Anthony Atala TED talk, see what kind of printing is possible. Impressed? Now notice that the rights the commercialization of this technology is owned by a company called Tengion (PINK:TNGN), Market Cap: 1.85M. I doubt with what is possible with with Anthony Atala at Wake Forest, that they cannot create small liver assays. (And without a license to the same patents).

    If you would like to discuss, i am on Stock Twits username: Jason_K
    Apr 10, 2013. 02:51 PM | 1 Like Like |Link to Comment
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