Microcap Tech Trader’s “Sound Laser”

By Travis Johnson, Stock Gumshoe, March 11, 2013

Louis Basenese is out with another bold prediction of a huge winner in the speaker world — and the ad promotes a past pick of his as an indication that he can select these kind of fast-breaking stories successfully.

No one can pick ’em every time, of course, but we can at least verify that Basenese did indeed actively tease a little company called Uni-Pixel (UNXL) about 18 months ago when he was first launching his Microcap Tech Trader — and that tiny company did eventually turn into a huge winner as long as you didn’t use a stop loss — it went from $6-7 down to $4 and change, stayed down around $4-5 for a year or so, then started to climb dramatically last fall and is now closing in on $30 a share.

Will his next pick have the same kind of record?

Well, it’s not a new pick — this is a stock he’s been touting for a bit over six months.

The basic pitch is that the company has perfected a “sound laser” and is going to change the world of speakers forever — with perfect, immersive sound that’s targeted specifically at a point in space so you can listen to something without bothering your neighbors or wearing bulky headphones. Basenese calls it the “sound laser,” and the company that’s trying to develop this technology and license it out to manufacturers and product designers is called Parametric Sound (PAMT).

I covered this teaser originally when it ran over the Summer, with our piece running on August 2 when the stock was around $10. After that there was a big bull/bear argument over the shares and the stock fell hard to $4 or so, then got touted again by Basenese in December when it was climbing on it’s way back up to $10. Now the shares are well over $15 and still climbing, presumably partly due to Basenese and his continued attention and partly due to the limited progress the company has made in getting deals signed and products developed.

PAMT’s quarterly release to end 2012 (their Q1 2013 report) looks a lot like the quarterly release I first checked out six months ago (their Q3 2012 report) — plenty of promise, no actual revenue to speak of. They sell a few hundred thousand worth of digital signage products per year, but that’s not why the company gets a valuation of $100 million.

The current spike of the shares seems related to three things: First and foremost, I suspect, attention from penny stock trader Timothy Sykes, who called it a hot pick for March partly because of some rumored testing of their technology in McDonald’s restaurants and potential theater deals (the technology sounds like a bad fit for theaters to me, but I don’t really know it well); second, Basenese is still touting it pretty aggressively, as we’ve seen in our email over the last couple weeks; and third, they actually did announce a broad deal with some Chinese companies last week and were apparently pretty optimistic about future deals on their conference call.

Will it come to anything? That I don’t know — as I said last August when I wrote to the Irregulars, I can make a straight-faced argument for these shares being worth $3 or $25 or anything in between, there’s just no way to know and it depends greatly on what happens with deals over the next year or two. They’re not making any money now, so future deals and the potential royalties they might generate if and when products take off will be the key.

Obviously, optimism is running pretty hard today — the stock is up about 20% this morning. Since the company has released no news that I’m aware of, and has not dramatically altered the business (the memorandum of understanding with the Chinese companies was announced a week ago), that boost is probably all from the additional and cascading attention from speculative investors and momentum-seekers who think this is just the beginning.

Will it end badly? Well, I have no idea. Again, that all depends on what the company actually does. If they suddenly get their digital signage technology rolled out to tens of thousands of McDonald’s restaurants that would obviously be huge, but no one has officially announced anything like that and the McDonald’s test could well be just a test in a few restaurants. I assume they test lots of things that don’t end up leading anywhere.

But this is a company riding on expectations and momentum and excitement and guesses — so again, you have to figure out what it might be worth on your own. The technology has been around for a long time, the consumer products announcements from Parametric have so far been pretty tepid, but it’s early days. And the digital signage stuff is an extremely small business even for this small company … assuming, of course, that it doesn’t suddenly roll out to the world’s largest restaurant chain. I’ve never owned the stock, I can see the excitement and the big potential, particularly if their partners can develop a hot high-volume consumer speaker product, but I don’t know whether the chances of developing such a product and having it take off are 1%, 30% or 90%. Or more or less.

Wishy washy enough for you? I don’t have much of an opinion on PAMT, but I’d be happy to hear yours — just shout it out with a comment below.

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