this from www ingerletter.com
from fridays issue--i guess he did some digging on todays action--any coments from this board?
"InkSure (INKS) is light-volume and sensitive to any buying or selling efforts in-size, as is common for most OTC stocks. Modestly drifting lower (for days), there's been a (filed apparently the prior day, but just visible on Edgar today) a slightly complex-to-dissect registration statement that while seemingly dilutive, actually appears to clean-up (our interpretation) previously announced warrants, converts, or registers certain stock for potential future sale by early holders. It's appears nothing material changed, and that there's no stated intention as regards timing of any future sales (just enables such sales in the future). Theoretically, some aren't even saleable under the 3 level.
A cursory interpretation (which possibly evoked some early selling in the shares here in the U.S. on Thursday) might lead one to interpret it as new, rather than newly able to sell, shares; whereas a careful read suggests it's a filing primarily for old shares as are already are issued, but not necessarily tradeable, which they now can become for action independently taken later-on as sellers may determine (if they elect to do so). We understand it's actually unusual that some have waited for years prior to even the step of having the shares registered, so that they are normal common or marketable.
So, while this presumably did take the shares down sharply, there were ready buyers willing to absorb it during that little maelstrom; so if our 'read' is right about this being basically related to older news (to wit; shares we all knew would eventually become marketable securities), it's not really a blind-siding surprise that the initial discovery (that we initially had to dig just to find) appeared. It is apparently less significant that first meets the eye.
Exclusive update: we have been able to clarify this filing further, and understand that the firm didn't see it as not particularly relevant. Senior management confirms that all this relates to 'old stuff', such as the registration of shares sold through the July, 2004 private placement. Top management confirms that there's been no new cash (since the 9/30/05 private placement of convertible notes) as well as no new dilution to the shareholders by virtue of this filing.
We always wish for transparency that enhances both the visibility and interpretation of events, whether material or less so, as appeared to be the case in this instance. It was the response I got to the effect of the firm believing this filing was not relevant as to why there was no accompanying release outlining what they have now explained.
We might even be optimistic the filing clears-the-decks of not so much weak holders (though that may be the case as hardier souls venture in), but gets this out of the way prior to ideally further clarification about new customers for their existing technologies and the forthcoming premier of the visionary future product, which is 'chipless' RFID.
As to 'chipless' RFID; while all along that's been a product intended to be presented in 2006 (early in March in Boston), if well received the company indicated previously an anticipation of it becoming hopefully a revenue contributor in 2007. Though they're quite optimistic about 2006 (as previously stated and affirmed) for their existing line of anti-counterfeiting and authentication products, we thought you'd enjoy learning that (with the help of an 'associate' super-sleuth), efforts were made to ascertain when as well as what participants are involved in the Boston presentation.
On the second day of the 'Smart Label' conference, and headlined in the agenda as a 'World's First', there are three speakers on 'Chipless RFID'. They are:
(With a caption; world's first): "Next generation of RF Tag based Track&Trace technologies - InkSure's approach"; the unveiling of a new 'chipless' technology from Inksure, Israel; Yaron Meerfeld, CEO, presenting.
Then we have 'low cost label opportunities' from Motorola, USA, with Ms Jie Zhang, Principal Staff Engineer, presenting.
Finally, we have "Fully Printed RFID for high volume application", including the status of organic electronics for RFID, from PolyIC, Germany, Wolfgang Clemens, Head of Applications, presenting.
We are unaware of any existing or pending relationships between InkSure, Motorola, PolyIC or any other companies, though do note that a host of familiar names such as Kodak, Dow Corning, Fujitsu, Proctor & Gamble, General Electric, Chevron, DHL and even several universities as well as Government agencies are participating. Note that among these are the U.S. Department of Defense/Defense Logistics Agency on the role of RFID in National Security, passive implementation, and data architecture areas. 'Wired Magazine' and 'The Boston Globe' will moderate the various sessions. Kodak is the key sponsor; and Motorola the key 'emerging technologies' sponsor (do note they speak right after InkSure's premier presentation at that segment on day 2).
Of all of participants, only InkSure is billed as a 'world's first' premier of a new product type and design. Further, it is late March (March 27-29, not early march as thought in earlier remarks), and the actual sessions will be held at The Westin Copley Place as opposed to at MIT (though introduction to qualified engineers/attendees are offered). (The original 'auto-ID' conferences started there, but have grown out of the facilities.)
Finally, while the 'vision' for the future includes lots of interest in 'chipless RFID', the firm continues to be quite optimistic about growth in the legacy business as noted. It goes without saying that while there may be parallel interest for these products over time as the new ones come available, a number of customers do not require RFID, but are very interested in the existing anti-counterfeiting/authentications products. In this regard the company anticipated moving to positive cash flow either somewhere around the transition into 2006, and in 2007's first half, and we wish them good luck in that regard, with a view of the existing product lines helping enable the new goods.
As a parting note on the stock, while we cannot specifically affirm this until reported; it was suggested that a 3rd U.S. Patent was applied for to complement the 2 received in the 'chipless RFID' field. We have heard there is a public document (haven't seen it as yet) in which the Patent application is cleared, but a number not yet assigned. If or when we hear or see any specifics on this Patent, we'll certainly apprise our readers.
Bottom line: what is relevant to the future of InkSure as a 'disruptive technology' we suspect is not how well they did with 2006 vs. 2005 (though that apparently was o.k.); and not even how well they do in 2006 with future conventional (for them) sales of a unique authentication technology (though it is important and they're quite optimistic in that regard). But rather it relates to the future of non-silicon based RFID tags; exactly what InkSure hopes to be the first to introduce to the marketplace.
"Organic", of if one prefers "polymer-based", or "chipless" RFID tags could bring tag (per impression if you prefer) prices down below one cent (far below current levels), at which point possibilities of item-level RFID tagging shoot through the roof, beyond even the most ambitious goals of mere supply chain tracking and visibility. An article just published by research firm IDTechEx notes that if sub-penny organic RFID tags took hold, the industry would see a repeat of what happened with bar codes (earlier): the once-healthy bar code-label business was sunk when the printing of bar codes directly on packaging began. Well, that could create problems for the silicon chip type manufacturers, but create an impressive potential opening for the organic 'chipless' RFID impression business; and that's why we're particularly interested in the shares as time evolves.
After InkSure's 1st patent awards (to put this in perspective), CEO Elie Housman said: "Our goal is to develop multi-bit ‘chipless’ RFID tags that can be manufactured and applied to product labels at a cost of well below one cent each." Depending on how quickly and if these technologies meaningfully develop, the possibilities could disrupt the path to widespread RFID adoption, rendering obsolete the entire notion of a five-cent silicon-based RFID tag, and that's why we became interested in the stock. We of course won't know results of this advanced product line for a while, but are optimistic the company's existing business can at least be an enabler of adequate progress that allows evolution to non-silicon 'chipless' product, ideally with competitive advantages.
Are we early, before it's on Wall Street radar screens? Hopefully. As it drops back to the original price-zone we first initiated coverage, due to apprehension or old filings (or whatever), we can only suggest it has nothing to do with the future at the same time as it provides (for those interested) an equivalent entry consideration.
As usual we caution that investor decisions are their own, and this is the best and we think the most current information that can be gleaned on this interesting small firm; a speculation to be sure, but in an area that we continue to suspect will receive at least considerable attention in the next several years.
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