Kevin Massengill has recently been pushing his Defense Technology Alert by dropping some hints about his two favorite investments… including what he says is “My Top Defense Play of All Time.” So what’s the story?
Well, you could subscribe to find out, I suppose, if you feel like ponying up $2,000 a year and trust yourself to think clearly when someone is promising that you can “EASILY turn $5000 into as much as $152,050 and likely more…”
Or you can keep reading, let us ID the two stocks he’s using as bait, do a bit of thinking for yourself, and then decide if you feel like walking into a high-priced defense stock advisory. Your eyes will at least, I hope, be open, and you’ll have a better chance of thinking rationally about whatever the stocks happen to be.
So let’s move right in, shall we?
Here are the first hints he drops about this “Top Defense Play of All Time”…
“This $148 million contractor is small and agile – less than 1/100th the size of the General Dynamics, the Lockheed Martins, the Boeings and the other huge players in this space.
“So it’s completely off the radar.
“But I’m convinced that could change at any minute.
“And in a very big way.
“In fact, as I’m about to show you, this firm’s technology is on the verge of creating nearly $98 billion in new wealth for American patriots who invest right now.”Are you getting our free Daily Update
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That’s pretty overwhelming — he says it “might” hand you a 2,941% windfall… and presumably he thinks this can happen soon, because he says it could be “10 times that longer term.”
So what’s the story? It’s all about something he calls “QUANTUM Vision” …. here’s a bit more from the ad:
“You see, they have achieved a series of stunning patent-pending breakthroughs.
“All of them related to a clandestine program that’s been fast-tracked by the Defense Advanced Research Projects Agency….
“And having seen what it can do, I’m convinced this mind-boggling new tech:
“Could soon turn 1.5 million U.S. soldiers into a lethal combination of the Terminator and Iron Man….
“… it’s about to solve one of the Pentagon’s biggest problems: How to get the world’s best intel into the eyes of the world’s best soldiers.”
Sound familiar? Here’s another bit of hinting:
“A device that can give our soldiers all the benefits of quantum vision and then some…
“With something as simple and inconspicuous as a contact lens….
“Except this is no ordinary contact lens…
“It’s actually more like a Bionic Eye
(But 1,000 times better)
“These new quantum vision lenses come equipped with:
➢ Night Vision…
➢ Telescopic Sight…
➢ And More…
“Including the ability to receive real-time intelligence feeds from drones… satellites… helmet cams…
“Or anything else DARPA decides to include.”
Yep, this is another pitch for what Massengill was calling “Soldier Super Sight” back in May… so presumably he’s still pitching the same little stock.
And yes, all the clues still line up — this is still EP Global Communications (EPGL), which is a little OTC-traded R&D shop that’s trying to make deals to commercialize its patented contact lens technologies… and they were so excited to see that they were being touted by the massive Agora Financial earlier this year that the CEO even made a point to issue a press release announcing that Massengill’s recommendation didn’t even focus on what they think their biggest patent is, the “Elastic Circuit” technology.
So Massengill made sure to include that this time around… this is from the ad:
“… the patent they secured six months ago was for something called an “Elastic Circuit.”
“With it, they beat all of these multibillion-dollar companies to the punch.
“And they know it.
“So what’s an elastic circuit?
“It a circuit that’s flexible in three dimensions… just like a pliable contact lens.
“So it can bend the same way as a contact does… all without fail.
“And, as far as I know, it’s the only integrated microelectronic circuit in existence that can be incorporated into the existing manufacturing process.”
So yep, he’s still talking up the same company — and this is a ridiculously low-priced penny stock, so be mindful that the attention from Massengill and Agora has been by far the most important driver of the stock price this year — despite some actual news in their press releases and their occasional conference calls (they just had a call last week about their latest press release about a commercial development project, if you want to check it out).
EPGL is still talking about a tentative plan to sell the company or their IP or make some similar deal with InWith, perhaps in conjunction with venture capital partners — InWith is apparently seeking venture capital in order to fund the “relationship” with EPGL by the end of the year… and the “vision” they put out is that EPGL shareholders will be able to secure either a cash buyout or get InWith shares after InWith gets a meaningful amount of venture capital (and then the goal of InWith will be to position themselves for an IPO). Though, of course, CEO Hayes describes that as a “hypothetical” and a “goal” on the latest conference call.
Back in January, when the joint Inwith/EPGL press release came out noting that Inwith was seeking “up to $500 million in funding” for a theoretical 9.8 cents/share buyout of EPGL, the press release indicated that “Several EPGL Shareholders have requested and will receive a gift of Inwith Corp Equity”, so my presumption is that this refers to the CEO and insiders, which makes it a pretty odd-sounding deal all around. I haven’t seen any other mention of that 9.8 cents per share buyout, perhaps because Inwith doesn’t seem to have gotten any funding.
InWith, their putative partner, doesn’t seem to have anything else ‘real’ about it — it’s a private company that has a website about some augmented reality and ‘bionics’ type stuff, but no real information… so why on earth is it InWith that’s seeking venture funding to license or buy out EPGL, and not EPGL itself that’s trying to actually fund development? I have no idea. So far, what InWith has provided is an AutoCAD design of the “EPGL Omega Contact Lens” that will supposedly be controlled by a smartphone.
I do know that CEO Michael Hayes is frighteningly promotional, most of the conference call was all about how it’s “time to get in” and there will be new deals and relationships that will supercharge the share price. They even tweeted out a week before the last press release that “We hit .065 just weeks ago on a newsletter article. The major update we have nxt Tues is much bigger to $EPGL future than that was.”
Penny stocks that manage to their share price and try to pump up their share price, particularly when they’re not even in the process of raising money, are frightening. And, of course, we have no idea whether they might be raising money, or what the financial picture looks like, because it appears that they haven’t filed audited financials with the SEC since 2009. They do file occasional (laughably simplistic) reports with OTCMarkets.com, like this annual report from over the Summer, but essentially the company seems to consist of some patents, some doctors who worked on EPGL’s previous technology (a muscle pain diagnostic device of some kind, referred to as MPDD), the CEO, and the promise that eventually those patents will be used for a commercial product. That press release from last week provides the latest spark of hope that such a product is in fact actually going to be developed someday, with the possibility of a self-focusing contact lens probably far, far more likely in the foreseeable future than some sort of military contact lens “heads up display” technology.
So the company looks like it’s very much for dreamers and hopers at this point, and has gotten to a $100 million market cap largely by creating more shares and keeping the stock price up above a penny — whether that stock price has been kept up at these levels because of continued promises and press attention or because of real possibilities for a commercially viable business at some point in the future, I have no idea. The insiders hold about four billion shares, so only about 10% of the company is apparently traded.
But I can pretty much promise that there will be no “super soldier” contact lenses using EPGL technology in the next few years. If there were a deal to actually create prototypes or get that far into commercialization, or a defense contract of any kind to even pursue that kind of product, presumably EPGL would be talking it up like crazy. I wrote about that back in May, and that story doesn’t seem to have changed at all — the military stuff is presumably just to get your attention, though it is, conceptually, one of the possible markets for enhanced contact lenses (and DARPA has explored several different contact lens technologies in the past).
Massengill doubles down with his promises about this company’s potential, talking up those smart contact lenses…
“According to my estimates, that could cost the Pentagon about $600 per soldier.
“Or about $900 million each and every year to outfit our troops with quantum vision lenses….
“… the cost to procure a five-year supply of quantum vision lenses could easily run as high as:
“Or 30.41 times the size of this tiny firm
“And if the share price follows suit, that would be enough to turn every $5,000 invested into nearly $152,050.”
Uh, that’s pretty hard to swallow. The only outside validation this company has, as far as I can tell, is from enthusiastic individual shareholders who have occasionally driven the share price up, creating a $100 million company. It doesn’t appear that anyone has put any meaningful amount of capital into this company at anything like that valuation, most of the shares were just created to give them to the two major shareholders (including the CEO) following their last restructuring (I didn’t look deeper into their back story), and the only assets are those patents they claim and the $15 million or so in cash that they say they had at the end of last December (in their unaudited very-short-form financial statement).
I would be really, really curious to see whether this InWith company is able to get any kind of meaningful venture capital funding that gets anywhere close to the $100 million valuation EPGL already trades at, let alone $500 million — even in today’s very loose venture capital funding environment, that seems like a stretch.
This might be just my skepticism coming through, but the little hairs on the back of my neck stand up straight when a company gets a $100 million valuation with $80 million of that hypothetical value held by the two principals, has a hyper-promotional CEO who tries to talk up the share price, and doesn’t offer audited financial statements.
But Massengill then goes even more “over the top” in projecting a valuation…
“Apple sells 395 iPhones every single minute… and there are 525,600 minutes each year!
“At a cost of around $600 each – or roughly potentially the same as a pair of quantum vison lenses…
“That adds up to a massive $124.5 billion in sales each year for Steve Job’s old firm….
“… if quantum vision lenses capture just 20% of those sales…
“Which doesn’t seem unreasonable given everything quantum vision lenses can do…
“It could add up to over $93 billion in just five years!
“Which along with $4.5 billion in military sales would add up to almost:
“Or over 650 times the size of this tiny firm.”
I’d be curious to hear from anyone who might subscribe to Agora’s Defense Technologies Alert, because we’re getting into the area of completely bizarre claims here — I hope that whatever Massengill writes to his actual subscribers is a lot more rational than that $98 billion pitch.
But I’m just getting grouchier about this one as I type, so I’ll leave it there and let you make your own call. Maybe I’m being too skeptical, maybe this company is more trustworthy than they appear, maybe they will end up being an important patent owner when it comes to smart contact lenses, you can make your own call on that. (There are thousands of contact lens-related patents, of course, and I have no idea how many of them relate to things like autofocus or circuitry or projection or connection to electronics, or whether or not this “elastic” patent they’ve claimed will end up being important.)
Let me move on to see what the other pick is that Massengill is teasing…
“Bank Gains as High as 570% Protecting America from an Attack by Kim Jong Un
“All in less than 8 months!”
So this one’s all about missile defense. Here’s some more from Massengill’s ad…
“… thanks to the Patriot missile, the Terminal High Altitude Area Defense system and the SM-3 interceptor…
“All systems I’m intimately familiar with…
“Kim Jong Un’s threats aren’t much more than bluster.
“That goes for anything Iran, Pakistan, Libya and Syria can throw at us as well.
“And one small American firm – just 1.4% the size of Boeing – supplies the advanced technology that makes it all possible.”
1.4% the size of Boeing (BA) means the stock can still be fairly large, that means it would have a market cap of something near $2 billion. What else do we learn? He teases us about the actual technology a bit…
“It works using a highly maneuverable warhead that’s steered to its target…
“By the highly advanced sensors and propulsion system built in part by the Americans employed by a small California outfit.
“This system – about the size of a fire hydrant – takes out incoming missiles by slamming into them head on.
“It’s the equivalent of hitting a bullet with a bullet deep in outer space.
“And it’s 100% reliable.”
That presumably is about the “exoatmospheric kill vehicle” or one of the similar kill vehicles used in anti-ballistic missile defense systems — the biggest name in that business seems to be Raytheon, which is working at least partially under a Boeing-led contract and describes its products in broad terms here… but Raytheon (RTN) is a huge $55 billion company, so it’s roughly a third the size of Boeing, not 1% the size. Northrup Grumman and Lockheed Martin have also worked on some of the “kill vehicle” contracts over the past few years as this anti-missile technology has become a defense priority, so there’s some challenge in identifying companies that aren’t involved in missile defense.
So presumably it’s one of the subcontractors we’re dealing with here. The best we can come up with for a match given these clues, is Aerojet Rocketdyone, which does indeed provide the “liquid propulsion Divert adn Attitude Control System” that maneuvers the kill vehicle into position to intercept incoming missiles. They’ve been on this project for at least a decade or so, and have also been part of the criticism of this program (the propulsion system seems to have been part of the problem with some failed tests according to this LA Times investigation from last year, though I am not at all fully informed on this topic). And yes, I guess it kind of does look like a fire hydrant.
Aerojet Rocketdyne is about a $2.5 billion company today, and they’ve had a good year — like pretty much all defense stocks, which have benefitted from President Trump’s repeated promises to dramatically increase defense spending… and they’ve gotten more of a boost than some, since they’re still quite small and therefore are occasionally talked about as a takeover target. The “kill vehicle” is not the most important part of Aerojet’s business, space propulsion and standard missiles are likely to generate substantially more revenue, but it is a relatively large program that has already generated some multi-billion-dollar contracts over the years for the several companies who have worked on it. And they are getting some press for their involvement with missile defense, including this story from a Sacramento TV station:
So the stock isn’t particularly cheap these days — I last looked at it in detail before the merger of Rocketdyne and Aerojet a few years ago, but from what I can tell it’s a solid company with a growing backlog but is relatively expensive. They are expected to grow earnings at 10-20% over the next few years, following this year’s much faster growth, and the stock trades at about 33X next year’s earnings estimate. So it’s not ridiculous, though since AJRD is a relatively small defense contractor it’s likely that their revenue and earnings will continue to be pretty “lumpy” as big contracts come and go.
Massengill lays on the “top secret” vibe pretty thick as well, promising not only that he’ll deliver this info to you on a “titanium thumb drive” and will throw in a free laptop (don’t know what kind, but presumably it will be something like a $150 Chromebook), but also that he’ll be collecting that $2,000 from you and will not offer any refunds for any reason… including on renewals, should you let the autorenewal go through for another $2,000 next year. So that’s extra reason to think deeply about these stocks and this reasoning — is this worth $2,000 to you? If so, take your risks and see what he can do for you. If not, there’s no rush — I imagine he’ll be back to try to sell it to you again before too long.
Do note that Agora has offered similar “defense investment” newsletters in the past, notably Byron King’s Military-Tech Alert, though this particular version is new this year and we don’t know anything about the track record beyond the big gains claimed in the ad. He claims 168% on Boeing and 93% on Raytheon, which must mean he’s recommending options or something, since those stocks have not risen quite that much during the past 6-8 months… and he also claims huge gains on some defense-related penny stocks that were, like EPGL, way too small to absorb the attention of a major newsletter publisher without surging in price, albeit temporarily — he cites 289% gains on Saker Aviation (SKAS) and 150% on Coda Octopus (CODA) as “Kevin’s Big, Fast Gains” in his ad, both of those are teeny ($4 million and $40 million market cap, respectively) and had quick spikes this year that could easily have been caused by a newsletter recommendation.
And… that’s about all I’ve got for you today. Aerojet Rocketydyne is a reasonable aerospace contractor that does a lot of missile work and should benefit from increased defense or space budgets, though it’s not particularly cheap at the current price, and EPGL is a promotional pink sheets gamble without real financials. If those ring your bells, you’ve got some more info to share that would help us understand these stocks, or you’ve got other favorite ideas in the defense sector, feel free to let us know with a comment below — thanks for reading!
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