Raser came to life as a public corporation in October 2003 after its reverse merger with a shell company called Wasatch Web Advisors Inc. Moving ahead with its plans to develop its alternative electric motor, Raser ramped up spending in 2004 to about $6.8 million, from $750,000 in 2003. But most of that increased spending, $5.2 million to be exact, went to general and administrative spending like salaries and equity based compensation rather than the research and development one would have expected. For the first quarter of 2005, Raser posted a net loss of $2.2 million and no revenue with a first quarter loss of 5 cents a share. Raser is in the early stage of developing its Symetron technology which it says can improve the efficiency of electric motors. The company plans to license its technology but so far has no contract. As of the end of March, Raser had netted only $30,000 in revenues with a net loss of almost $16 million.
Despite Raser's unproven technology, the company's stock is currently trading at $21.20 a share, bringing Raser's market capitalization to about $1.04 billion.
Raser's CFO Dwyer said that the company is in discussions to license its technology. "We're hopeful that we'll have licenses well before a year but that's about as much as I can say," he said.
Like many development stage companies, Raser has made generous use of stock to finance itself. Most recently it raised $18.5 million by issuing Series C convertible preferred shares exchangeable into a minimum of 833,333 shares of common stock at an initial conversion price of $24 a share. These convertible shares are now registered with the SEC. That means that they can be converted and sold at any time which will dilute existing shares, potentially pressuring the stock price. Under the terms of the transaction, Series C convertible shares outstanding 60 days after their May 4 registration will be automatically converted into common stock "at the then-applicable conversion price."
Meanwhile, despite a recent stumble in Raser's stock price, a number of the original investors in the company have made out quite well selling shares as they became free to trade.
Perhaps perfectly illustrating the vicissitude of Raser's stock price, one very lucky shareholder named Kelly Trimble in January made a quick $125,000 selling 7,500 shares he got just two months earlier as payment for a motorcycle. Reached by telephone in Salt Lake City and asked about the transaction, Trimble simply responded "it's really none of your business." (Those shares were worth about $43,500 on the day that the motorcycle changed hands).
(Carol S. Remond is an award-winning columnist and one of four who write the "In The Money" feature)
-By Carol S. Remond; Dow Jones Newswires; 201 938 2074; email@example.com