Platinum Research Organization, Inc.(fka PLROQ)

[shaw]

On dilution and other additives

DILUTION

There is no question that dilution is always a concern. The thing that you have to look at is how the dilution is occurring. Is the company simply issuing more shares to line the pockets of management or is the dilution occurring for good business reasons? This company has not done the former. The option pool (Incentive Plan) they set up, consisting of 35 million shares, is a bit bigger than the standard 20-25% for startups (I used to work at one) but it is not outrageous.

First, I have to address the 50 cents that the previous poster mentioned. I assume that he took the current market value of the stock as the numerator and then doubled the denominator (the outstanding shares of stock) and changed it from 42.5 million (old O/S shares) to 114 million shares (approximation of new fully diluted O/S shares). I guess this does get you to somewhere around 50 cents depending on what market value he used at the time of his post today.

The anticipated number of outstanding shares has been there in the SEC docs which he liberally quoted from. The market is fairly efficient and once information is made public, it is digested and reflected in the stock price. This information is old, the price of PLRO stock before the merger already reflected the anticipated number of shares that would be outstanding after the Contribution Agmt. Just because the transaction officially closed today/tomorrow does not mean that suddenly the shares are worth half of what they were prior to the agreement closing. The market has already taken this fact into account. If the price goes anywhere close to 50 cents tomorrow then I will make a public apology and you will never hear from me again.

Here is an article on efficient markets...
http://www.econlib.org/library/enc/EfficientCapitalMarkets.html

You also have to do fundamental analysis on the company to determine the future value of the company, discount expected future cash flows back to the present and then divide that present value figure by the outstanding shares. You notice that the report from The Research Works used 110 million shares when it estimated the worth of the stock to be $4.00. It did not use the 42.5 million which related to the old company, NorthTech.

http://www.researchworksllc.com/Research/PLRO/plro.pdf

"I think that it is important that we stop deceiving ourselves and value this business assuming all possible dilution that can take place and it will take place."

It appears that nobody is really deceiving themselves, certainly not I, and certainly not the person who did the research report on PLRO.

Other Additives and Competing Technology

Vanderlube
I looked at this company and it appears to be a different technology (Borate Ester) but it was something that they came out with in 2002 if not earlier. It does not appear to have been commercialized yet, if it has, they have not promoted that fact very much. The interesting thing I found was an article from a trade magazine that the company promoted on its website. The article talks about the new standards in car emissions that will be required and it quotes a certain Mike McMillan person quite a few times. Funny, that's the guy that just joined PLRO's board...former head of the Intl Lubricant Standardization and Approval Committee (ILSAC). See it here:

http://www.rtvanderbilt.com/Apr06GMLNG.pdf

Mobil 1 5W-50
This additive mentions nothing about reducing or replacing the use of ZDDP so it is hard for me to see how this is a direct competitor to PLRO's Techrobond --- which claims to be a replacement for ZDDP which is a pollutant on the govt's radar screen.

French product
http://cat.inist.fr/?aModele=afficheN&cpsidt=13572032
Again, no mention of replacing ZDDP. Is there a company that is taking this technology somewhere? It mentions Ciba Specialty Chemicals but this, again, was published in 2002 and I can't find anything else on its commercialization.

VA Tech scientists
This one really took off as well. The original mention of it came in 2002 (from what I could find). See http://www.eere.energy.gov/inventions/pdfs/tribochem.pdf

The professors set up their own company called Tribochem International Ltd and you can do a search on that one to see what it turns up. Google turned up mainly documents that were usually 5+ years old and it mentioned that the company is based in Poland. No website, no plans...

Chevron
http://www.physorg.com/news62919965.html
I see no mention of Chevron here, this article only refers to the VA Tech professors mentioned above.

Amsoil
Again, no mention of replacing ZDDP here. In fact the product is a "Antiwear Hydraulic Oil". It is not used in cars...

These competing products and new technoligies do not cause me much concern. Fact is, I know that the previous investors (EFO Holdings) did much more extensive research on what other things were out in the marketplace and on the horizon. It is standard DD for them to hire industry experts to check this out before they put millions of dollars into a company. Does this mean that PLRO is a bonifide winner in this market? No, a new technology could come up or they could lose some critical regulatory battles down the line but I'm certain that these old technologies that were posted are not a major threat.

I went a bit further and googled ZDDP replacement, replaces ZDDP etc to see if there were other claims out there. Very few results came up...and there were no other technologies that appeared which made me think twice. Check for yourself...

http://www.google.com/search?source=ig&hl=en&q=replace+zddp&btnG=Google+Search

Anyway, I just wanted to dig a bit deeper on the great DD that was done previously. See ya around the campus


shaw