The “Sound Laser” Discovery that will “Change the World”

An early Friday File look at a Louis Basenese teaser for his MicroCap Tech Trader

By Travis Johnson, Stock Gumshoe, December 9, 2012

This article was originally published as a Friday File for the Irregulars on August 2. The content below has not been updated or revised, but we can add that they have not yet made any of the substantial inroads in licensing that we’re looking for … and investor enthusiasm for the stock died down substantially in the month following the teaser, particularly when a widely-publicized short case made the rounds on SeekingAlpha and elsewhere (Basenese also countered that short argument, just FYI, so you can decide for yourself which side of the argument works better).

The company teased is now near a $25 million market cap, and I’d say they’re still entirely dependent on developing a licensing agreement with a consumer products company that brings in prospects of some actual royalty revenue. The digital signage stuff doesn’t seem to be moving the needle at all in terms of revenue, hopes for the company to become big are built on some kind of sound technology for the home and mass market. I still find it an appealing story, but it’s certainly a story — they have enough cash to keep up with what they’re doing for at least a couple more quarters, but they need to get beyond demos for rooms of analysts and actually have a consumer product developed to move much further, I’d speculate. They’ve talked up a “2012-2013” timeline for getting a significant licensing deal in consumer products, so they’re giving themselves some more time … but with their cash balance and high short interest, I’d say they probably have six months now to get some substantial good news out there.

And yes, though I was tempted by the story at $10 because of the size of the market, the fall to $5 reminds us of how hard it is for a new technology to break into the market. So that’s your update …. if you want to see my thoughts on the original teaser from four months ago, which is much like the current one being circulated, you can see that below.

Friday File 8/2/12

We’re getting the Friday File out to you a wee bit early this week, since yours truly will be off the Gumshoe Grid for the next several days celebrating the anniversary of my birth. This one looked like an interesting one to dig into for you before I disappear for a few days — a new teaser that just started running for a pricey service and a “breakthrough” technological advance — what could go wrong?

The ad comes in from Louis Basenese for his MicroCap Tech Trader, and they use the good old, “We’ll send you a big fat check in the mail” pitch to get your attention. Of course, the $2,650 check they want to send you to buy shares of this teased stock is really just their discount from the “full price” subscription of $3,500. In effect, what you’re getting, as you smarties already figured out, is an $850 newsletter subscription. Which is slightly less than they tried to get for the letter when they launched it a year or so ago, so I don’t know if they’ve ever gotten anyone to pay their “list price” of $3,500 or not.

I also don’t know their track record — Basenese has been around for a while and has teased many tech and “growth” stocks for various letters … the last teaser pick of his we deciphered for this newish letter was the successful but not alarmingly so Uni-Pixel (UNXL) last summer, which is churning along at trying to develop commercial scale products but hasn’t yet “changed the face of touchscreens” and probably shouldn’t be a public company.

(There are a lot of those out there — companies that go public to essentially raise R&D money, with no conceivable notion of profitability — and sometimes they work out fine and the long-term technology development done by a public company works out, as in the case of some biotech stocks, but it always seems silly to pitch a company’s idea that will revolutionize the world if the company itself is small enough that any of the potential customers for their technology could, if they believed strongly at all in the potential, buy them out without blinking an eye. UNXL, for what it’s worth, is now a $6 stock that’s losing about a dollar a share every year, up about a buck from when Louis pitched it a year ago but far below where it was in 2007 when it was losing $9 a share as a $20 stock.)

But anyway, here we’ve got a stock that Basenese says has already shown big returns but is just getting started — and he says he learned about their technology in person, it’s all about directing sound precisely at listeners with something he calls a “sound laser” … here’s how he teases us:

“I rushed back from the airport like a bat out of you know where…

“Because what I had just experienced was so incredible… so mind-blowingly powerful… and life-alteringly lucrative…

“That I had to share it with you as quickly as possible.

“What the automobile did to the horse and buggy…

“The transistor did to the vacuum tube…

“What the calculator did to the adding machine….

“And the PC did to the mainframe computer…

“Is about to happen again.

“To a technology the world has taken for granted for the past 135 years.

“I’ve never come across anything with so much pure profit potential…

“This technology has the very real potential to make investors incredibly rich.

“In fact, I’m so confident in this research that Wall Street Daily’s accounting department is prepared to authorize a certified check in your name in the amount of $2,650.”

Those are some big claims, other than the gimmicky “certified check for $2,650” bit … so what is he talking about?

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“Consider the following…

“368 million PCs will be sold this year…

“300 million smartphones sold…

“121 million tablet computers…

“214 million flat panel TVs…

“There are over 254.4 million cars on the road in the United States alone.

“And there are now three million interactive kiosks, like ATMs, in existence…

“They all have one thing in common.

“They rely on ancient technology to transmit sound.

“Since Thomas Edison first cranked the handle of his tin foil phonograph machine and played, “Mary had a little lamb…”

“The way we hear the world