The drama at Stinger Systems (Pink Sheets: STIY) is really too good for Wall Street. It should be a Fox reality show. This week, the CEO and his top lieutenant left the company after, by my math, less than one week at the helm. Best of all, the announcement was hidden at the very bottom of a suspiciously upbeat press release.
Stinger, you'll remember, is a would-be competitor of stun-gun king Taser International
This week, Stinger says it is introducing its long-awaited stun gun, the one that will allegedly outdistance anything Taser has to offer. There are a few flies in that ointment. The first one is that Taser introduced a long-range cartridge capable of firing 35 feet. That takes away the only purported advantage that Stinger ever had, because now, police departments can keep the stun guns they know and trust and be able to reach subjects at a longer range in the tiny minority of situations that call for it.
Here's the bigger problem, buried at the very end of the release. Ex-Smith and Wesson Holdings
Cuny told the Massachusetts paper The Republican that he resigned Feb. 28 because "This opportunity did not ultimately meet my personal goals or personal standards."
If that's true, then Stinger sat on this news for nearly a month before burying it at the bottom of yesterday's press release. (I don't see any SEC filings for Stinger after Feb. 8).
If you ask me, the evidence suggests that the spit hit the fan earlier last month, when Stinger suddenly pulled a registration statement that it had filed with the Securities and Exchange Commission only one day before, for no stated reason. The statement shows that Stinger had been planning to pay Cuny $300,000 per year. He was also promised 500,000 options at a strike price of $1. If you think that's sweet, read the rest of the registration statement and see how Gruder's family members have deals that can get them Stinger stock at a mere $0.40 per stub.
So, in one sense, Stinger is back where it was a couple of months back -- as a tiny company with an unproven product, an entrenched competitor, and a questionable CEO. But in another sense, it's much worse, because Taser's already matched Stinger on range and video recording. Will Stinger be able to sell the $1.6 million worth of stun guns it's agreed to purchase from an unidentified third-party manufacturer? Good question. Soon, we might see some answers.
As for the stock's 40% rise over the past couple of days? That just goes to show how easy it is to attract good old, nearsighted Joe Bagadonuts via PR and a thin float. Since we can't short this puppy -- and believe me, I wish we could -- the only thing for a Foolish investor to do is grab a bag of popcorn and enjoy the show.
Taser International is a Motley Fool Rule Breakers recommendation.
For related Foolishness:
- Check out Stinger's scary CEO.
- What's the deal with my so-called journalism?
- Taser has started cleaning up its mess.
- Think you're getting the next Taser? Read this, this, and this before you bet the farm.
- Of course, Taser's got issues of its own, including some recent unwanted buzz.