The latest ad from Agora Financial’s Defense Technology Alert created a deluge of “what are those super contact lenses?” questions here at Stock Gumshoe, so as we dig out of the weekend teaser pile this one clearly rises to the “gotta answer it first” spot. What’s the story?
Well, the ad is for Defense Technology Alert, which is a high-price ($2,000/yr) “back end” newsletter co-edited by Kevin Massengill and Jim Rickards, and it’s all about profiting from high-tech military advancements — it’s pretty tough to sustain super-niche newsletters like this for very long, but it looks like this letter has taken the place of Byron King’s Military-Tech Alert that Agora published for a while.
They’re pushing the connection to President Trump’s professed desire for more military spending as a reason to invest in these smaller military technology stocks (they’re not the only ones, the Casey folks have a new “military tech” teaser pitch out as well that I’m hoping to look into soon)… and the specific bait that they dangle in front of us is a “smart contact” technology that is apparently owned by some tiny $100 million company. Here’s the headline:
“It Will Solve One of the Military’s Biggest Problems…
“Overturn Ten Industries Worth a Combined $2.46 Trillion…
“And Could Create Massive Fortunes for Investors Who Buy Into a Tiny $100 Million Company…”
And, of course, the talented copywriters at Agora make our palms prickle with anticipated wealth as they go on…
“It gives our men and women in uniform the ability to identify and see threats… know where to shoot… where NOT to shoot… where to step…
“With robotic-like precision.
“And this isn’t some distant, far-off fantasy land…
“This soldier super- technology is about to be deployed very, very soon.
“And already, the money is flowing…
“The U.S. military and the Defense Advanced Research Projects Agency both partially funded this technology’s creation…
“The National Science Foundation and the National Institutes of Health have also funded it…
“And now, finally, one small public company… trading for just 2 cents per share… has brought this revolutionary technology to the one-yard line and near completion.”
OK… so this is going to be a problem. Yes, Agora Financial is charging a lot for this subscription at $2,000… but still, if this is like past Agora ad campaigns, they’re going to send this teaser pitch to a couple million people. Some of them have their own Thinkolators at hand (not as good as ours, of course, but not every car has to be a Rolls Royce), or will subscribe, and have you ever seen what happens to a sleepy little penny stock when a couple thousand new investors get lusty about it?
Yes, that’s right, it almost doesn’t matter what we say about this one — the stock is going to go bonkers from all the new attention. We’ve seen it happen time and time again whenever a tiny stock is recommended by a big publishing house with access to huge email lists… and you should be prepared to think for a moment before considering any investment in these kinds of stocks: Am I buying it because I think this newsletter editor really has critical information that other investors don’t have, I’ve backed up that research with my own understanding of the company, and therefore the stock is really 10X more valuable than the market previously thought… or am I buying it just because I’m excited about seeing a penny stock jump dramatically?
If the latter, if you’re just caught up in the promises of Jim Rickards and Kevin Massengill, remember that stock surges that are caused by an artificial increase in the number of interested buyers tend to go away pretty quickly once the stream of new buyers rolling across the transom slows down, and getting back to a “real” equilibrium price for the stock can sometimes be painful if you get overly excited and buy it while it’s surging.
I say all that up front just because the $100 million market cap and the two cent share price make me nervous… I haven’t even fired up the Thinkolator yet to ID the company, so let’s do that and see if we have any more clues to feed into the hopper.
“If you looked at the tallest buildings in New York City…
“A big defense contractor like Lockheed Martin would be One World Trade Center.Are you getting our free Daily Update
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“Raytheon would be the Empire State Building…
“And this tiny firm would the tiny hot dog cart on the city street corner.
“That’s how tiny this firm is.
“But I believe soon this company could announce news that will send its share price soaring fourfold… all the way up to 100-fold if the stars align.”
The imaging that they use in the ad is very much like that of a “first person shooter” video game — these “smart contacts” supposedly make it possible to identify enemy soldiers through smoke and haze, to spot IEDs or other hazards, plot coordinates and map out paths to travel, identify the location of your fellow soldiers, etc.
Here’s more from the ad:
“A basic form of this technology is being used already in the helmets of F-35 pilots.
“Of course, the pilots already wore helmets that covered 100% of their face, so it was easiest to implement this technology into their existing equipment.
“But for troops on the ground in action, the military needs something less intrusive…
“According to one defense technology expert, using this kind of technology instead of a clunky headset or eyeglasses ‘eliminates the optics entirely from the eyewear frame and utilizes transparent optics, so the wearer retains his peripheral vision.’
“While another expert adds that this kind of technology ‘creates the effect of viewing a 20-foot television at a distance of 10 feet…'”
So who is this? It must be a ludicrously small penny stock called EP Global Communications (EPGL), though the company seems to have renamed itself EPGLMed on its website and uses its EPGL stock ticker as its name quite frequently (sometimes a worrisome sign).
According to the data I’m checking from Fidelity, the market cap is close to $100 million, the shares are around two cents, and the company is indeed focused on tiny circuitry for “smart” contact lenses that can be part of a future augmented reality system.
The actual images of this “smart contact” lens in the Agora ad seem to be taken from EPGL’s website, so that’s some decent confirmation as well. The shares trade over the counter, and the company delisted and hasn’t filed anything with the SEC since 2009… so that’s a huge red flag for any serious investor, but serious investors aren’t screwing around with little two-cent R&D companies anyway, this is the province of speculators and gamblers.
The overpromising is, of course, crazy — and it is designed to make your greed overcome your sales resistance:
“This tiny company could soon deliver investors at least 390% on the low side.
“Open a window for early investors to make historic gains over 24,500% over the long term… if you act fast.”
So… will that really happen? Are soldiers really going to be wearing these smart contacts in the near future? I’d assume not, and EPGL does not seem to have anything like an actual prototype that provides that kind of “heads up display” inside a contact lens, or even an active connection with the military (though other somewhat similar ideas have certainly been funded by the military in the past — Emacula, which used to be called Innovega, worked with the Pentagon for a while to develop augmented reality systems that use a combination of contact lenses and glasses… and this 2012 Daily Mail article looks like it’s the source for much of the “technology like this” language in the teaser pitch).
You probably don’t even really need Agora to sell you on the company, though, the company tries to promote the heck out of itself on its website here, and their “why buy EPGL” pitch reads like a paid promotion.
The language from the Agora ad about the specific patents is here:
“And the firm I think is most likely to deliver extraordinary profits in this field has two approved patents protecting its intellectual property, including:
– A patented design for a contact lens case that charges your smart contacts while they’re out at night while you sleep.
– A patented way for the movement of your eyes to automatically focus your smart contacts.
“And, according to the company, they also have a patent pending right now for the smart contact to generate its power from each blink of your eye.
“Those three patents give this company the sole right to utilize those three specific smart contact design features.”
The two leaders of EPGL, Michael Hayes and David Markus, do indeed have several patents outstanding and additional applications, many of which are related to circuitry in contact lenses — I have no idea whether or not those patents will end up being critical, but there is at least some connection to larger companies who seem to place some value on the intellectual property, particularly CooperVision (with whom they apparently did at least some of the development, they settled a dispute a couple years ago with a licensing deal).
But, as I noted, they don’t file with the SEC, and the financials are not audited, and I have no idea what the actual prospects or value might be. OTCMarkets has some information about them, but they indicate that there’s only 500 million floating shares, which means someone else, presumably insiders, must own the other 4.1 billion shares. Either that, or the information is wrong — which is possible. They do have an annual financial report of sorts that they shared at OTCMarkets, which confirms the outstanding share count, but it’s absurdly simplistic and lacking in information. There was a conference call, apparently, in late March, and there’s a recording of that call at the bottom of EPGL’s website here. I didn’t listen to it.
And as far as catalysts are concerned, they do have a Twitter account that indicates they’ve retained agreement with some kind of partner and with another startup (private) called InWIth that raised capital recently — the latest tweet, on May 2, says that “MAJOR Co. now holds first rights on $EPGL. $InWith & Co. seeking raise by May 31st. Goal now to buyout tech & shareholders entirely” … and if you scroll down their Twitter feed, there’s plenty of other language that seems dangerously promotional for a public company, interspersed with updates about their patent filings and awards. I have no idea what that “buyout” language really means, but perhaps the company’s own references to the fact that the shares were 400% higher at 10 cents a share at their peak a few years ago are the source of Agora’s enthusiasm for a 390% short term gain.
That’s probably nowhere near as much of a catalyst as this attention from Agora, the stock had already traded almost 10X their average volume over the past ten days as of lunchtime today and was up by 20% pretty much immediately this morning.
The technology is real enough in general terms — I don’t know whether contact lenses will end up being the medium used by the military or augmented reality developers, or how “smart” those contacts might end up being, but certainly the “heads up display” idea for soldiers is an area of substantial investment by the Pentagon over the past decade, and a lot of those ideas have been tested and found wanting in the field.
The ad also quotes a Wired magazine article about a “google glass for the battlefield,” and that’s three years old and talks specifically about the Q-Warrior display from BAE Systems, the first contact lens-based augmented reality project funded by DARPA (the Innovega/Emacula one I noted above) was designed to get around the problem of soldiers having to shift their field of focus from a tiny screen at their eye to the actual threats before them on the battlefield by using a contact lens that manipulates focus or enables you to focus on two things at once, though that one is apparently no longer being DARPA-funded and they’re looking for private venture investors and partners.
And, well, I’ll leave it there. There’s nothing real to examine other than patent applications and grants, or the occasional press release or the extremely limited financial report, so any conclusions you want to draw about their financial prospects will require a lot of reading between the lines or a lot of faith in the glossy presentations on their website… which is dangerous for anyone, but particularly for folks who are not expert in the sector.
I would urge you to be extremely careful about speculating on any kind of teensy weensy stock that doesn’t file with the SEC, disclose detailed financial information, or even have audited financials… but you’re a grown-up, you can certainly make your own judgements when it comes to your money. If you’ve got any thoughts to share about this technology, or about EP Global, feel free to shout them out with a comment below.