Comments on: Revolution? Now raising intellectual capital Sun, 08 Nov 2015 08:31:30 +0000 hourly 1 By: Matt Sun, 16 Aug 2009 01:47:45 +0000 &section=view&vid_id=100106 Interesting historical perspective on the company and it’s investor relations leading up to the deal.

By: York Tue, 11 Aug 2009 11:00:15 +0000 To clarify, the site is set up for INFORMAL voting.

By: York Tue, 11 Aug 2009 10:58:08 +0000 Mr. Martin brings up a very important issue surrounding the proposed acquisition of On2 by Google. There are other issues that need to be addressed before the proposed acquisition goes through, i.e., timing, price offered, material events, etc.

I see that a website has been set up for shareholders to cast an informal “no” vote to the proposed acquisition. Formal voting will occur at some point after On2 files proxy information. the web address for that site is

One might think that there are other companies in the sector who are in the process of deciding how this acquisition could impact their business objectives and whether it is in their own interest to make a counter offer. This proposed deal certainly bears watching over the coming weeks and months.

By: Scott Sun, 09 Aug 2009 20:31:07 +0000 Although frustrated with what feels like a low ball offer, my attempts to come to a logical understanding of the value and how it relates to the real value that should be offered are as follows:

FACT: On2 posted $224,000 net loss for the quarter compared to a $7.2m loss the same quarter a year ago.
Link: logies-Announces-prnews-2490718783.html? x=0&.v=1
OBSERVATION: That’s quite a turnaround… and as the COO and Interim CEO, Matt Frost, had commented in a recent CC, it was their goal to right size the company. Looks like they were on the right track and had built an operationally profitable company. For that simple fact, they should definitely be complimented.

FACT: The 224k net loss INCLUDED “$420,000 in legal and other fees incurred in the second quarter of 2009 related to the previously announced merger agreement with Google”
Link: logies-Announces-prnews-2490718783.html? x=0&.v=1
OBSERVATION #1: So, without the legal fees associated with the Google announcement, the company actually booked $196,000 in operational profits? Does that mean that by negotiating a buyout DURING a profitable quarter that the negotiation of the buyout actually HURT the perceived value of the company because it resulted in the company posting a LOSS for the quarter instead of a gain?
OBSERVATION #2: Although this could have been being discussed for some time, if this was indeed a ‘quick offer’ from Google that happened since the beginning of July (not known yet as to what the timeline might have been), were On2’s legal fees related to this acquisition actually incurred in 2q, or were they actually 3q expenses that they pulled forward into the 2q report? The answer to this will probably come in the filing of the Proxy statement and the dates of the ‘fair value’ opinions that On2 has stated they will be filing with them.

FACT: The 224k net loss ($196k gain without the acquisition legal expenses) also included “$523,000 in litigation settlement costs.”
OBSERVATION #1: If this litigation settlement cost is related to a lawsuit brough by Islandia, LLP, the management, as recently as a few months ago stated that the suit was without merit and it was working it’s way through the New York court system.
OBSERVATION #2: If this is the settlement and the $523,000 is the ‘cost of the settlement’ as released on July 23rd, 2009 (link: l), then, since the settlement was filed in late July, 2009, why is it included as an expense in 2q09? (In all fairness, this expense could also be straight legal fees associated with the court case, but regardless, this is a question that should be answered)

FACT: As recently as the 1q09 conference call, Matt Frost actually discussed openly the potential savings that On2 could bring to a company like Google and YouTube. (Replay of conference call available at On2’s website)
OBSERVATION: Hindsight is always 20/20, but it might seem curious that such a reference would be made only 3 months prior to the announcement of a buyout by that same entity.

SIMPLE FACT #1: The merger was announced less than a week before On2 announced what, for all intents and purposes, was it’s first OPERATIONALLY PROFITABLE quarter in a very long time. While one Operationally Profitable quarter is not a guarantee of a rapidly growing company with revenues guaranteed to continue to grow, any objective analysis seems to imply that the company had crossed the crux of profitability and was on it’s way to generating positive cash flow for ensuing quarters.

SIMPLE FACT #2: The value of the buyout was set based on a pps that was tracking a company that hadn’t posted operational profits in a long time, thus eliminating any ability of the company to be fairly valued by the overall stock market once announcing an operational profit. In reality the announcement of the Google deal seems to have capped the PPS that people were willing to pay for On2’s common stock at $0.60.

Regardless of any emotional undertone or frustration of individual investors, those are facts that at least lead to the underlying question of the timing of the announcement versus the release of 2q earnings, which most likely (though not definitely… this is the stock market you know) would have a significant effect on the PPS of the company as it trades on the AMEX and made a $0.60 per share offer look like much less than the 57% premium it was announced as.

So the final question is this… When was the last time that a tech company possessing significant Intellectual Property that has the potential to provide a whole new base of how something (web-based video in this case) is formatted and conveyed on the internet (I think of what CDMA has meant to digitalization of cell phones) been sold for as little as a 57% premium over it’s most recent share price just before posting it’s first potentially operationally profitable quarter?

If there is a precedent, I’d love to know what it is.

By: Rob Bland Sat, 08 Aug 2009 16:09:51 +0000 Most On2 shareholders are livid about this attempted theft of the company at $0.60 per share. It’s worth far more than that, especially with the terrific 2nd Qtr results that were released AFTER the Google deal was announced. There is a massive outcry about the Board not trying to get fair value for shareholders, withholding material information and conflicts by being given new jobs at Google if the sale goes through.

The above referenced manipulation of the share price over the past is another very curious fact about On2’s shares’ highly suspicious trading patterns. Investigations are now beginning by various agencies and groups.

The timing of the Google announcement reeks. In fact, On2 actually made money this quarter if the costs of the Google transaction were deducted from the expense column. On2 also traded at $.65 several weeks ago BEFORE any word on Google’s interest and not showing a profit. Many feel it’s worth 10 times that amount.

On2 is on the cusp of exponential growth in the most explosive sector of the video universe. Their VP8 product is the game changer in the video transmission and is just now being introduced. On2’s codecs have just recently become the de facto standard in China, the largest market on the planet. Others will step up to the plate, this is far to low a price for the company.

By: Taylor Sat, 08 Aug 2009 14:23:14 +0000 What Joe Martin writes above is what in reality happened, there was a massive and well orchestrated short attack against On2.
As a long-term investor who has followed this company and video technology since 2002, we (the stockholders) are getting ripped off! The price should be 6 X .60 cents! On2 has a lot of video related patents, that alone should be worth more. Also with the end of 2010 royalty changes for MPEG and H264 streaming, Google will probably be saving a lot of fees. This current offer is out of Google’s “petty cash” box. There are many, many other comapanies that would be wise to jump on this deal NOW, before Google takes over the entire future of video monetization on the web

By: Quentin Sat, 08 Aug 2009 07:59:35 +0000 What Joe Martin writes above is what in reality happened, there was a massive and well orchestrated short attack against On2.

That attack is now under investigation of SEC, I insert an extract of Huffington Post here, whole article can be found at n/posse-on-trail-of-wall-st_b_182525.htm l.

‘The thrust of the 27 trading probes, many involving health care companies, is to determine whether any investors illegally profited by trading on privileged or inside information that had not been disclosed to the public at large. Of prime interest to regulators in the inquiries sent to various brokerage firms were the names of the clients who traded in the securities under scrutiny in specified time periods.

All three regulatory outfits mentioned in this column — the SEC, NYSE and FINRA — declined to comment on the investigations, but two regulatory contacts familiar with the probes confirmed them.

“The problem with all of this,” as the compliance chief of one brokerage firm sees it, “is that there seems to be a growing number of bad guys on Wall Street who think they can get away with murder. They can’t and they won’t.”

Rounding out the 27 investigations, largely undertaken by the SEC and FINRA, are Great Plains Energy; Terra Industries; Health Care REIT; Document Security Services; Marathon Acquisition Corp.; Deerfield Capital Corp.; On2 Technologies; BioMS Medical Corp., InterMune, and AVE BioPharma.

Also, ArcelorMittal; Synta Pharmaceuticals; La Jolla Pharmaceutical; SIRF Technology Holdings; Converted Organics; Novelos Therapeutics; Freedom Acquisition Holdings; Advanced Medical Optics; Alfacell Corp., and Future Now Group.’

Now, another thing is the fiasco of the actual price of the transaction. There are serious doubts that the On2 management did not even seek the best value for deal which is totally incomprehensible.
– Why did they not look for deal after they had released their best product ever, vp8, first. Why did they keep vp8 out of the market, and if google was testing it why not release that info to the marketplace since that would have valorised on2.
– Why did they not announce first that they were turning cash positive, without transaction costs and exceptional items and then see the share price valorisation before Google deal.
– These must have been disturbing questions to the on2 interim-CEO since he refused to deal with any of them in the questions and answers of the cc.

It is very ugly case and I am sure legal action by On2 shareholders will be opened.

By: Joe Martin Sat, 08 Aug 2009 05:25:00 +0000 Whether the shareholders vote yes or no, the crime was initiated in July, 2007 when the company’s stock became victim to an organized, methodical, unabated attack by anonymous mountebanks, likely hedge funds sponsored by the entities most threatened by what On2 Technologies had to offer. At a time when there were merely 100 million shares they had over 20 million sold short, plus an additional 2 million counterfeit shares sold Naked and Failed to Deliver, and I’m not talking late to deliver but persistent failed to deliver, for over six months on the REG SHO list and in spite of all the laws, all the rules, all the regulations AND regulators, nothing was done. They were allowed by those charged to enforce the law to steal the value the company and shareholders had so long fought to acquire. It cost On2 millions of shares and millions of dollars by their fraud. That it looks so attractively priced now for Google is only amazing in that it has taken so long for any offer to be made. Comparing this to other acquisitions many made by companies losing billions each quarter buying others who are losing billions per quarter in losing industries, this is absurd. On2 is threshold profitable at such a low revenue stream precisely because it has such low overhead, has already made the R&D, has the expertise and experience, has dozens of patents and patents pending–exclusively. It is absolutely absurd to the extreme.
The only saving grace in this is that it has finally caught the attention of the media and the investing community. That will motivate the current authorities into finding out exactly who was behind that criminal, manipulative short selling, naked short selling and the persistent fails to deliver. And when they are found out, we’ll see who’s left standing and where. One side will be either in the ground or behind bars and the other will vindicated.
If it can happen to this company, it can happen to any of them.

By: VideoKing Fri, 07 Aug 2009 23:03:39 +0000 The deal won’t stand – it’s clear the shareholders will vote it down for the price being too low.

I haven’t seen a single comment or shareowner happy about the deal so it the outcome is clear – and Google will have to up the ante to satisfy the masses… Either that, or another buyer will come in to determine the final price.

By: Chanpogo Fri, 07 Aug 2009 22:07:37 +0000 Hey stop crying .You made a bad investment.